SCHEDULE 14A INFORMATION Proxy Statement Pursuant
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Filed by the Registrant /X/ Filed by a Party other than the Registrant / / Check the appropriate box: / / Preliminary Proxy Statement / / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) /X/ Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Pursuant to Section240.14a-12 TETRA TECH, INC. ----------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) ----------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant)Payment of Filing Fee (Check the appropriate box):
/X/ No fee required. / / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: ---------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ---------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ---------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ---------------------------------------------------------- (5) Total fee paid: ---------------------------------------------------------- / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ---------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ---------------------------------------------------------- (3) Filing Party: ---------------------------------------------------------- (4) Date Filed: ----------------------------------------------------------[TETRA TECH, INC. LOGO] ------------------------rapidly navigate through this document
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY22, 2001 ------------------------ To the Stockholders of TETRA TECH, INC.: The Annual Meeting19, 2002TO OUR STOCKHOLDERS:
We will hold our 2002 annual meeting of the
Stockholders (the "Meeting")stockholders of Tetra Tech, Inc., a Delaware corporation,(the "Company"), will be heldonThursday,Tuesday, February22, 200119, 2002 at 10:00 a.m.,Pacific Standard Time,Los Angeles time, at The Doubletree Hotel,located at199 N. Los Robles Avenue, Pasadena, California91101, for the following purposes as91101. As further described in the accompanyingProxy Statement: 1. To electproxy statement, at this meeting we will:
- (1)
- Elect five directors to
the Boardour board ofDirectors of the Companydirectors to serve for a term of one year and until their successors are duly elected andqualified. 2. To consider and act upon a proposal to amend the Company's Certificate of Incorporation to increase the number of authorized shares of common stock, $.01 par value per share, from 50,000,000 to 85,000,000. 3. To considerqualified;- (2)
- Consider and act upon a proposal to approve
and adopttheCompany's 2001proposed Tetra Tech, Inc. 2002 StockPlan. 4. To transactOption Plan; and- (3)
- Transact such other business as may properly come before the
Meetingmeeting or any meetings held upon adjournmentthereof. The BoardofDirectorsthe meeting.Our board of directors has fixed the close of business on December
15, 200011, 2001 as the record date for the determination of stockholders entitled to vote at theMeetingmeeting or any meetings held upon adjournmentor adjournments thereof, and onlyof the meeting. Only record holders ofthe Company'sour common stock at the close of business on that day will be entitled to vote. A copy ofthe Company's 2000 Annual Reportour 2001 annual report to stockholders is enclosed with thisNoticenotice, but is notto be consideredpart of the proxy soliciting material.Each stockholder is cordially invitedWe invite you to
be presentattend and to vote inpersonperson.If you cannot attend, to assure that you are represented at theMeeting. TO ASSURE REPRESENTATION AT THE MEETING, HOWEVER, STOCKHOLDERS ARE URGED TO SIGN AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE POSTAGE PREPAID ENVELOPE ENCLOSED FOR THAT PURPOSE. Any stockholder attendingmeeting, please sign and return theMeetingenclosed proxy card as promptly as possible in the enclosed postage prepaid envelope. If you attend the meeting, you may vote in person, even ifhe or sheyou previously returned a signed proxy.
By
Orderorder of theBoardboard ofDirectors /s/directorsRichard A. Lemmon
Richard A. Lemmon EXECUTIVE VICE PRESIDENT AND SECRETARY
Executive Vice President, Administration and SecretaryPasadena, California
January 18, 2002670 North Rosemead Boulevard
Pasadena, CaliforniaJanuary 15, 2001[TETRA TECH, INC. LOGO] ------------------------ 670 NORTH ROSEMEAD BOULEVARD PASADENA, CALIFORNIA91107------------------------PROXY STATEMENT
------------------
GENERAL INFORMATIONThis Proxy Statement is being sentWe are sending you this proxy statement on or about January
15, 200118, 2002 in connection with the solicitation of proxies bythe Boardour board ofDirectors of Tetra Tech, Inc., a Delaware corporation (the "Company").directors. The proxies are for use atthe 2001 Annual Meetingour 2002 annual meeting ofStockholders of the Company (the "Meeting"),stockholders, which we willbe heldhold at 10:00 a.m.,Pacific Standard Time,Los Angeles time, onThursday,Tuesday, February22, 2001,19, 2002, at The Doubletree Hotel,located at199 N. Los Robles Avenue, Pasadena, California91101, and91101. The proxies will remain valid for use at any meetings held upon adjournmentthereof.of that meeting. The record date for theMeetingmeeting is the close of business on December15, 2000 (the "Record Date"), and all11, 2001. All holders of record ofthe Company'sour common stock$.01 par value per share (the "Common Stock"),on theRecord Daterecord date are entitled to notice of theMeetingmeeting and to vote at theMeetingmeeting and any meetings held upon adjournmentthereof.of that meeting. Our principal executive offices are located at 670 N. Rosemead Boulevard, Pasadena, California, 91107, and our telephone number is (626) 351-4664.A proxy form is enclosed. Whether or not you plan to attend the
Meetingmeeting in person, please date, sign and return the enclosed proxy as promptly as possible, in the postage prepaid envelope provided, toinsureensure that your shares will be voted at theMeeting. Any stockholder who returns ameeting. You may revoke your proxyin such form has the power to revoke itat any time prior to itseffectiveuse by filing with our secretary an instrument revoking it or a duly executed proxy bearing a later datewith the Secretary of the Companyor by attending theMeetingmeeting and voting in person.Unless
contrary instructions are given, any suchyou instruct otherwise, your proxy, if not revoked, will be voted at theMeeting: (a)meeting:
- •
- for
the Board of Directors'our board's slate of nominees;(b) for the proposal to amend the Certificate of Incorporation to increase the number of authorized shares of Common Stock from 50,000,000 to 85,000,000; (c) for the proposal- •
- to approve
and adopttheCompany's 2001proposed Tetra Tech, Inc. 2002 Stock Option Plan; and(d)- •
- as recommended by
the Board of Directorsour board with regard to all other matters, in its discretion.TheOur only voting securities
of the Companyare the outstanding shares ofCommon Stock.our common stock. At theRecord Date, the Companyrecord date, we had39,935,78952,381,602 shares ofCommon Stock outstanding.common stock outstanding and approximately 2,213 stockholders of record. If the stockholders of record present in person or represented by their proxies at the meeting hold at least a majority of our outstanding shares of common stock, a quorum will exist for the transaction of business at the meeting. Stockholders of record who abstain from voting, including brokers holding their customers' shares who cause abstentions to be recorded, are counted as present for quorum purposes.For each share of
Common Stock heldcommon stock you hold on theRecord Date, a stockholder isrecord date, you are entitled to one vote on all matters that we will consider at this meeting. You are not entitled tobe considered at the Meeting. The Company's Certificate of Incorporation, as amended, does not provide for cumulative voting. In the election of directors, the five candidates who receive the highest number of affirmative votes will be elected. Votes against a candidate and votes withheld have no legal effect. In matters other than the election of directors, abstentions are counted as votes against in tabulations of the votes cast on proposals presented to stockholders.cumulate your votes.Brokers holding shares of record for their customers generally are not entitled to vote on some matters unless their customers give them specific voting instructions. If the broker does not receive specific instructions, the broker will note this on the proxy form or otherwise advise
the Companyus that it lacks voting authority. The votes that the brokers would have cast if their customers had given them specific instructions are commonly called "broker non-votes."The voting requirements for the proposals we will consider at the meeting are:
- •
- Election of directors. The five candidates who receive the highest number of affirmative votes will be elected. Votes against a candidate and votes withheld from voting for a candidate will have no effect on the election.
- •
- Approval of the proposed Tetra Tech, Inc. 2002 Stock Option Plan. A majority of the votes cast on this proposal by the holders of shares of our common stock present, or represented, and entitled to vote at the annual meeting must approve this proposed plan and the total votes cast on this proposal must represent over fifty percent of all shares entitled to vote on this proposal. Abstentions count as votes cast and have the effect of a vote against the proposal. Broker non-votes are not counted as votes cast and will have no effect on the outcome.
We will pay for the cost of preparing, assembling, printing and mailing this
Proxy Statementproxy statement and the accompanying form of proxyandto our stockholders, as well as the cost of soliciting proxies relating to theMeeting, will be borne by the Company. The Companymeeting. We may request banks and brokers to solicit their customers who beneficially ownCommon Stockour common stock listed of record in names ofnominees, andnominees. We will reimbursesuchthese banks and brokers for their reasonable out-of-pocket expensesof suchregarding these solicitations.TheOur officers, directors and employees may supplement the original solicitation by mail of proxies, bymail may be supplemented bytelephone,telegramfacsimile, e-mail and personalsolicitation bysolicitations. We will pay no additional compensation to our officers, directors andregularemployeesof the Company, but no additional compensation will be paid to such individuals. 1for these activities. 2
PROPOSAL NO. 1
ELECTION OF DIRECTORSThe Company presently hasAt the meeting, you will elect five directors
all of whom are elected annually. At the Meeting, the term of office of all directors currently holding office will expire and five directors will be electedto serve for a term of officeconsistingof theensuingcoming yearandor until their respective successors are elected and qualified.Accordingly, the Board of DirectorsOur board intends to nominatethe five incumbent directors named belowLi-San Hwang, Daniel A. Whalen, J. Christopher Lewis, Patrick C. Haden and James J. Shelton for election as directors. All are current members of our board. Each nominee has consented to being named in thisProxy Statementproxy statement as a nominee for election as a director and has agreed to serve as a director if elected.The persons named as proxies in the accompanying form of proxy have advised
the Companyus that they intendat the Meetingto vote the shares covered by the proxies for the election of the nominees namedbelow.above. If any one or more of such nominees are unable to serve, or for good cause will not serve, the persons named as proxiesin the accompanying form of proxymay vote for the election of such substitute nomineesas the Board of Directorsthat our board may propose. The accompanying form of proxy contains a discretionary grant of authority with respect to this matter. The persons named as proxies in the accompanying form of proxy may not vote for a greater number of persons than the number of nominees namedherein.above.No arrangement or understanding exists between any nominee and any other person or persons pursuant to which any nominee was or is to be selected as a director or nominee. None of the nominees have any family relationship among themselves or with any of our executive
officerofficers.Information concerning members of
the Company. NOMINEES The nomineesour board ofthe Board of Directors are listed below, together with their ages, certain biographical information and all positions and offices with the Company held by them.directors
NAME AGE POSITION - ---- -------- ------------------------------------------------Name Age Position Li-San Hwang................................. 65Hwang66 Chairman of the Board of Directors, Presidentand Chief Executive Officer
Daniel A.Whalen............................. 53Whalen
54
Director
J. ChristopherLewis......................... 44Lewis
45
Director
Patrick C.Haden............................. 47Haden
48
Director
James J.Shelton............................. 84Shelton
85
DirectorDr. Hwang joined
the Company'sour predecessor in 1967 and has held his present positions sincetheour acquisitionby the Companyof the Water Management Group of Tetra Tech, Inc., a subsidiary of Honeywell Inc., in March1988 (the "Acquisition").1988. Dr. Hwang was named the Director of Engineeringat the Companyin 1972 and a Vice President in 1974. Prior to theAcquisition,acquisition, Dr. Hwang was Senior Vice President of Operations. He has served as an advisor to numerous government and professional society committees and has published extensively in the field of hydrodynamics. Dr. Hwang is a graduate of the National Taiwan University, Michigan State University and the California Institute of Technology, holding B.S., M.S. and Ph.D. degrees, respectively, in Civil Engineering, specializing in water resources.Mr. Whalen has been a member of
the Boardour board ofDirectors of the Companydirectors since July 1997. Mr. Whalen is currently serving as an advisor tothe President of the Company.our Chairman. He is a former President of Whalen & Company, Inc.(WAC)and a former executiveofficer of the Company.officer. Mr. Whalen joinedtheus and our board upon our merger with Whalen & Company,and the Board upon the merger of the Company and WACInc. in June 1997. Prior to foundingWACWhalen & Company, Inc., in 1987, Mr. Whalen co-founded and served as an executive officer of First Cellular Group, Inc., The Microwave Group, Inc., Network Building & Consulting, Inc. and Cellular Development Company.2Earlier, he was Vice President-Operations of American Tele-Services, Inc. and Director of Operations of NYNEX Mobile Services. Mr. Lewis has been a member our board of
the Board of Directors of the Companydirectors since February 1988. Since 1982, Mr. Lewis has been a general partner of Riordan, Lewis & Haden, a Los Angeles-based partnership which invests3
equity in high-growth middle market companies. Mr. Lewis also serves as a director of Emergent Information Technologies, Inc., a provider of proposal management, systems engineering and information technology services; California Beach Restaurants, Inc., an owner and operator of restaurants; and several privately-held companies.
Mr. Haden has been a member of
the Boardour board ofDirectors of the Companydirectors since December 1992. Mr. Haden is a general partner of Riordan, Lewis & Haden, which he joined in 1987. Mr. Haden also serves as a director of IndyMacBancorp,Bancorp., Inc., the holding company for IndyMac Bank. IndyMac Bank is a technology-based mortgage banker. In addition, Mr. Haden serves as a director of several privately-held companies.Mr. Shelton has been a member of
the Boardour board ofDirectors of the Companydirectors since March 1995. Mr. Shelton is a self-employed investor and venture capitalist. He is the former (retired) President of the Baker Drilling Equipment Co., and formerly served as the Director of Corporate Relations and a director of Baker Hughes Incorporated (formerly Baker International Corp.).INFORMATION REGARDING THE BOARD OF DIRECTORS AND ITS COMMITTEES The Company's BoardInformation regarding our board of
Directorsdirectors and its committeesOur board of directors met
fourfive times duringthefiscalyear ended October 1, 2000.2001. Each ofthe Company'sour directors attended 75% or more of the total number of meetings of theBoard of Directorsboard and meetings of the committees of theBoard of Directorsboard on which he served (during the period within which he was a director or member of such committee) duringthefiscalyear ended October 1, 2000. The Company has an Audit Committee which, during the2001.In fiscal
year ended October 1, 2000, was comprised2001, our audit committee consisted of Messrs. Lewis, Haden andHaden. The functionShelton. Mr. Lewis was the chairman of theAudit Committee is to consult and meetaudit committee. Each of the members of our audit committee was independent in accordance with theCompany'sstandards of the Nasdaq Stock Market. Our board of directors has adopted a written charter for our audit committee. Our audit committee monitors the integrity of the financial reporting process and systems of internal controls, monitors the independence and performance of our independent auditors andits Chief Financial Officerinternal auditing department andother financeprovides an avenue of communication among the independent auditors, management, the internal auditing department andaccounting personnel, review potential conflictour board ofinterest situations, where appropriate, and report and make recommendations to the full Board of Directors regarding such matters. The Audit Committeedirectors. Our audit committee mettwicefive times duringthefiscalyear ended October 1, 2000. The Company has a Compensation Committee which, during the2001.In fiscal
year ended October 1, 2000,2001, our compensation committee consisted of Messrs. Lewis and Haden.The Compensation CommitteeOur compensation committee reviews thecompensationperformance ofthe Company's Chief Executive Officer and reviews the recommendations of the Chief Executive Officer relating to compensation of certain of the Company's otherour chief executiveofficers. The Compensation Committee also establishes policies relating to the compensation of Company executive officersofficer and otherkeyexecutives and makes specific recommendations and decisions regarding their compensation. The committee's goal is to ensure that our compensation system for our executives, as well as our philosophy for compensation for all employees,andis aligned with the long-term interest of our stockholders. The compensation committee also administersthe Company'sour stock option plans. TheCompensation Committeecompensation committee held one meeting during fiscalyear 2000.2001. Neither Mr. Haden nor Mr. Lewiswasserved at any time duringthefiscalyear ended October 1, 20002001 or at any other time as one of our officers or as anofficer or employee of the Company. The Company does not haveemployee.In December 2001, our board created a
standingnew nominating committee,or anyconsisting of Messrs. Lewis and Haden. As the committeeperforming the functions thereof. Nowas recently formed, it did not meet during fiscal 2001.None of our executive
officer of the Companyofficers serves as a member of theBoardboard ofDirectorsdirectors, audit committee, compensation committee orCompensation Committeenominating committee of any other entity which has one or more executive officers serving as a member ofthe Company's Boardour board ofDirectorsdirectors, audit committee, compensation committee orCompensation Committee. 3DIRECTOR COMPENSATION Eachnominating committee.Director compensation
None of our non-employee
director of the Companydirectors received$10,000any cash compensation for service onthe Boardour board ofDirectors and $2,500 cash compensation for service on eachdirectors or any committee thereof during the fiscalyear ended October 1, 2000. This compensation was in lieu of options as set forth below.2001.4
Under
the Company'sour 1992 Stock Option Plan forNonemployeeNon-employee Directors,(the "Nonemployee Directors Plan"),an option to purchase4,768shares ofCommon Stockour common stock is granted to eachnonemployee directorofthe Companyour non-employee directors automatically each year, immediately followingtheour annual meeting ofstockholders of the Company. Suchstockholders. This option vests and becomes exercisable in full on the date of the next annual meeting of our stockholders, provided that the optionee is reelected as adirector of the Company.director. The exercise price of stock options granted underthe Nonemployee Directors Planthis plan is equal to the fair market value ofthe Common Stockour common stock on the date of grant. Duringthefiscalyear ended October 1, 2000,2001, at our 2001 annual meeting of stockholders, Messrs. Lewis and Haden eachnonemployee director elected at the 2000 Annual Meeting of Stockholders was entitled to receivereceived an option to purchase4,7687,500 shares ofCommon Stock atour common stock and Mr. Shelton received an option to purchase 5,000 shares of our common stock. The exercise price of$18.875each option was $15.25 pershare, but declined such grant. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONshare.Compensation committee interlocks and insider participation
No interlocking relationship exists between
the Company's Boardour board ofDirectorsdirectors and the compensation committee of any other company.LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS The Company's CertificateLimitation of
Incorporationliability and indemnification mattersOur certificate of incorporation limits the liability of our directors to the maximum extent permitted by Delaware law. Delaware law provides that directors of a company will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except for liability (i) for any breach of their duty of loyalty to the company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit.
The Company's BylawsOur bylaws provide that
the Company shallwe will indemnifyitsour officers and directors and may indemnifyitsour employees and other agents to the fullest extent permitted by law.The Company's BylawsOur bylaws also permititus to secure insurance on behalf of anyofficer, director, employeeof our officers, directors, employees or otheragentagents for any liability arising out of his or her actions in such capacity, regardless of whetherBylawsour bylaws would permit indemnification.The Company maintainsWe maintain director and officer liability insurance.
At present, there is no pending litigation or proceeding involving any
director, officer, employeeof our directors, officers, employees oragent of the Company, whereagents in which indemnification will be required or permitted.The Company isWe are not aware of any threatened litigation or proceeding which may result in a claim for such indemnification.45
SECURITY OWNERSHIP OFPRINCIPAL STOCKHOLDERS, DIRECTORSCERTAIN BENEFICIAL OWNERS
ANDEXECUTIVE OFFICERSMANAGEMENTThe following table sets forth information regarding the ownership of
the Company's Common Stockour common stock as of December15, 2000 by (i)11, 2001 by:
- •
- all those persons known by
the Companyus to own beneficially more than 5% ofthe Company's Common Stock, (ii)our common stock;- •
- each
director and named executive officerof our directors;- •
- each of the
Companyexecutive officers named in the "Summary Compensation Table" included in the "Executive Compensation" section of this proxy statement; and(iii)- •
- all of our directors and executive officers as a group.
Unless otherwise set forth in the following table, the address of each beneficial owner is 670 N. Rosemead Boulevard, Pasadena, California 91107. Except as otherwise noted,
the Company knowswe know of no agreements amongitsour stockholders which relate to voting or investment power overits Common Stock.
NUMBER OF PERCENTAGE OF SHARES SHARES BENEFICIALLY BENEFICIALLY NAME OF BENEFICIAL OWNER(1) OWNED OWNED(1) --------------------------- ------------ -------------T. Rowe Price Associates, Inc. (2)...................... 2,462,913 6.2% 100 East Pratt Street Baltimore, Maryland 21202 Li-San Hwang (3)........................................ 1,839,409 4.6 Daniel A. Whalen (4).................................... 550,390 * J. Christopher Lewis (5)................................ 57,182 * Patrick C. Haden (6).................................... 9,536 * James J. Shelton (7).................................... 21,320 * James M. Jaska (8)...................................... 67,657 * Richard A. Lemmon (9)................................... 32,742 * Charles R. Faust (10)................................... 62,838 William R. Brownlie (11)................................ 175,929 * Glenn S. Burkhardt (12)................................. 34,288 * Total beneficial shares of all directors and executive officers as a group (12) persons (13)................. 3,079,269 7.7%- ------------------------our common stock or any arrangement the operation of which may at a subsequent date result in a change of control of us.
Name of Beneficial Owner(1) Number of
Shares
Beneficially
OwnedPercentage of
Shares
Beneficially
Owned(1)AIM Management Group Inc.(2)
11 Greenway Plaza, Suite 100
Houston, Texas 770465,284,250 10.1 %
T. Rowe Price Associates, Inc.(3)
100 East Pratt Street
Baltimore, Maryland 21202
2,807,080
5.4
%
The Northwestern Mutual Life Insurance Company(4)
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
2,654,050
5.1
%
Li-San Hwang(5)
1,821,542
3.5
%
Daniel A. Whalen(6)
c/o Brown Investment Advisory & Trust Company
9 South Street
Baltimore, Maryland 21202
663,647
1.3
%
J. Christopher Lewis(7)
61,478
*
Patrick C. Haden(8)
11,920
*
James J. Shelton(9)
14,730
*
James M. Jaska(10)
85,399
*
Michael J. Nigro(11)
49,381
*
Glenn S. Burkhardt(12)
17,521
*
Richard A. Lemmon(13)
30,796
*
All directors and executive officers as a group (12 persons)(14)
2,847,125
5.4
%
- *
- Amount represents less than 1% of the Company's Common
Stock.stock.6
- (1)
- Applicable percentages of ownership are based on
39,935,78952,381,602 shares ofCommon Stockour common stock outstanding on December15, 2000,11, 2001, adjusted as required by the rules promulgated by the Securities and ExchangeCommission (SEC).Commission. This table is based upon information supplied by our officers, directors and principal stockholders and Schedules 13D and 13G (if any) filed with theSEC.Securities and Exchange Commission. Unless otherwise indicated, and subject to community property laws where applicable, we believe that each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. Any security that any person named above has the right to acquire within 60 days is deemed to be outstanding for purposes of calculating the percentage ownership of such person, but is not deemed to be outstanding for purposes of calculating the ownership percentage of any other person.- (2)
- All information regarding share ownership is taken from and furnished in reliance upon the Schedule
13G,13G/A, dated as of May 10, 2001, filed by AIM Management Group Inc. on behalf of itself and its wholly-owned subsidiaries, AIM Advisors, Inc. and AIM Capital Management, Inc.- (3)
- All information regarding share ownership is taken from and furnished in reliance upon the Schedule 13G/A, dated as of February
8, 2000,14, 2001, filed by T. Rowe Price Associates, Inc.(3)- (4)
- All information regarding share ownership is taken from and furnished in reliance upon the Schedule 13G/A, dated as of February 6, 2001, filed by The Northwestern Mutual Life Insurance Company.
- (5)
- Includes
63,952108,262 shares issuable with respect to stock options exercisable within 60 days after December15, 1999.11, 2001. Also includes133,3331,713,280 sharesof Common Stockheld by Li-San Hwang and Anne H. Hwang, as Trustees for theMesa Charitable Trust, of which Dr.Li-San Hwangis the Trustee. (4)and Anne H. Hwang Community Property Trust.- (6)
- Includes
14,64824,414 shares issuable with respect to stock options exercisable within 60 days after December15, 2000.11, 2001. Also includes535,742578,343 sharesof Common Stockheld by Daniel A. Whalen and Katharine C. Whalen, as Trustees for the Whalen Family Trust U/A/D 4/30/92. (5)92, and 60,890 shares held by Brown Investment Advisory & Trust Company, as Trustee for the Whalen Family Foundation.- (7)
- Includes
28,60835,760 shares issuable with respect to stock options exercisable within 60 days after December15, 2000. 5(6) Excludes an aggregate of 3,353 shares of Common Stock owned by Mr. Haden's wife as to which Mr. Haden disclaims beneficial ownership.11, 2001.- (8)
- Includes
9,53611,920 shares issuable with respect to stock options exercisable within 60 days after December15, 2000. (7)11, 2001.- (9)
- Includes
4,7685,960 shares issuable with respect to stock options exercisable within 60 days after December15, 2000.11, 2001. Also includes7,0168,770 sharesof Common Stockheld byJJS Holdings Limited Partnership, of which Mr.James J. Shelton, Sarah Belle Shelton andhis wife areJames J. Shelton, Jr., Trustees of theGeneral Partners. (8)James J. Shelton and Sarah Belle Shelton Family Trust dated August 19, 1987.- (10)
- Includes
66,70084,208 shares issuable with respect to stock options exercisable within 60 days after December15, 2000. (9)11, 2001.- (11)
- Includes
28,49749,381 shares issuable with respect to stock options exercisable within 60 days after December15, 2000. (10)11, 2001.- (12)
- Includes
31,6218,048 shares issuable with respect to stock options exercisable within 60 days after December15, 2000.11, 2001. Also includesan aggregate of 3,6009,473 sharesof Common Stock ownedheld byDr. Faust's minor children. (11)Glenn S. Burkhardt, as Trustee for the Glenn S. Burkhardt Trust.- (13)
- Includes
46,08328,871 shares issuable with respect to stock options exercisable within 60 days after December15, 2000. Also includes 4,083 shares of Common Stock owned by Dr. Brownlie's wife and an aggregate of 2,100 shares of Common Stock owned by his minor children. (12)11, 2001.- (14)
- Includes
1,437416,297 shares issuable with respect to stock options exercisable within 60 days after December15, 2000. (13) Includes 345,947 shares issuable with respect to stock options exercisable within 60 days after December 15, 2000. 6EXECUTIVE OFFICERS' COMPENSATION AND OTHER INFORMATION EXECUTIVE OFFICERS The following table sets forth certain information11, 2001.7
Information concerning
each person who is anour executiveofficer of the Company:officers
NAME AGE POSITION - ---- -------- -------------------------------------------------------Name Age Position Li-San Hwang.................. 65Hwang66 Chairman of the Board of Directors, Presidentand Chief Executive Officer
James M.Jaska................ 49 Executive ViceJaska
50
President, Chief Financial Officer and Treasurer
Richard A.Lemmon............. 41Lemmon
42
Executive Vice President, Administration and SecretaryGlenn S. Burkhardt............ 48
Michael J. Nigro
41
Executive Vice President,William R. Brownlie........... 47 SeniorResource Management
Glenn S. Burkhardt
49
Executive Vice President,Steven A. Gherini............. 55Infrastructure
Michael C. Bush
44
Executive Vice President, Communications
James T. Haney
56
Executive Vice President, Corporate Development
Charles R.Faust.............. 55Faust
56
Vice PresidentArkan Say..................... 65 Vice PresidentExecutiveOur executive officers
of the Companyare elected by and serve at the discretion ofthe Boardour board ofDirectors.directors. Set forth below is a brief description of the business experience of all executive officers other than Li-San Hwang. For information concerning the business experience of Dr. Hwang, who is also a director,of the Company,see "Proposal No.1--Election1—Election ofDirectors--Nominees.Directors—Nominees."Mr. Jaska joined
the Companyus in 1994 as our Vice President, Chief Financial Officer and Treasurer and was namedExecutive VicePresident inDecember 2000.November 2001. From 1991 to 1994, Mr. Jaska held several operations and management positions at Alliant Techsystems, Inc., in addition to leading the environmental business venture and having operational responsibility for large government defense plants. From 1988 to 1990, he served as the Director of Finance and Business Management at Honeywell Inc.'s Precision Weapons Operations. From 1981 to 1987, he was responsible for environmental affairs at Honeywell Inc. From 1977 to 1981, he managed regulatory affairs dealing with the production of specialty chemicals at Ecolab, Inc. Mr. Jaska also served as an advisor to numerous governmental and professional committees. Mr. Jaska holds B.S. and M.S. degrees from Western Illinois University and completed an executive management program through Harvard University.Mr. Lemmon
Executive Vice President and Secretary,joinedthe Companyour predecessor in1981. Until1981, serving in a technical capacity. In 1985, heservedjoined our predecessor's corporate staff inseveral technical capacities. He transferred to Corporate Human Resources, and was promoted to Corporate Managera management position. In 1988, at the time ofHuman Resources in 1987. Following the Company's divestitureour divestment from Honeywell Inc., Mr. Lemmon structured and managed many of theCompany's Risk Management, Human Resource and Office Leasing programs.corporate functions. In 1990, he was promoted to Director of Administration and in 1994assumed responsibility for contracts administration andwas electedas the Company'sCorporate Secretary. In November 1995, Mr. Lemmon was electedaVice President and was named Executive Vice President in December 2000. Mr. Lemmon holds a B.A. degree in Business Administration.Mr. Nigro joined us in 1995 through our acquisition of Tetra Tech EM Inc., formerly known as PRC Environmental Management, Inc., and was named Executive Vice President in February 2001. He joined PRC Environmental Management, Inc. in 1982 and served the Environmental Protection Agency in the capacity of Project Engineer, Program Liaison and Program Manager for numerous programs and initiatives. In 1987, Mr. Nigro was named Vice President of Tetra Tech EM Inc., and was responsible for business development, budget management and forecasting, quality control review of technical reports and assisting in corrective actions for projects and programs. He was named President of Tetra Tech EM Inc. in 1996. Mr. Nigro holds a B.S. degree in Civil Engineering from Marquette University.
8
Mr. Burkhardt joined
the Companyus in 1998 throughthe Company'sour acquisition of McNamee, Porter & Seeley, Inc. and was named Executive Vice PresidentInfrastructurein December 2000. Mr. Burkhardt joined McNamee, Porter & Seeley, Inc. in 1973 and has served as project manager, operations director, business development director, financial officer and, most recently, President. Mr. Burkhardt has managed the conceptual planning, design and construction administration of water,7wastewater and transportation programs for public and private sector clients. He is a recipient of the 1993 George J. Schroepfer Medal in advancements in wastewater treatment. Mr. Burkhardt holds a B.S. degree in Civil Engineering from the University of Michigan. Dr. BrownlieMr. Bush joined
theus in 1997 through our acquisition of Whalen & Company,in 1981, has been aInc. where he served as Vice Presidentsince 1988and Chief Operating Officer, and was nameda SeniorPresident in 2000. He was named Executive Vice President in December1993. Dr. Brownlie has managed2001. Prior to his positions at Whalen & Company, Inc., Mr. Bush held management positions at Kaiser Permanente and Hewlett Packard. Mr. Bush holds a B.S. degree in Industrial Engineering from Stanford University and an M.S. degree in Management from the Graduate School of Business at Stanford University.Mr. Haney joined us in May 2001 through our acquisition of Maxim Technologies, Inc. and was named Executive Vice President in December 2001. Mr. Haney joined Maxim Engineers, Inc., the predecessor of Maxim Technologies, Inc., in 1992 as President and Chief Executive Officer. During his tenure at Maxim Engineers, Inc., Mr. Haney was directly involved in the acquisition of the U.S. subsidiary of Huntingdon International Holdings, PLC, Huntingdon Engineering and Environmental, Inc. and the formation of Maxim Technologies, Inc. Prior to his positions at Maxim Technologies, Inc., among other companies, Mr. Haney held several
large government environmental support programs. Dr. Brownlie is a registered Civil Engineer with a technical backgroundengineering and management positions at Lockwood Greene Engineers, Inc. and served as Captain and Project Officer inhydrology, hydraulics, water quality analysis and numerical modeling. Dr. Brownliethe Biomedical Sciences Corps for the U.S. Air Force Weapons Laboratory. Mr. Haney holds B.S. and M.S. degrees inCivilChemical Engineering fromthe State University of New York at Buffalo, and earned a Ph.D. in Civil Engineering from the California Institute of Technology. Mr. Gherini joined the Company in 1976. Mr. Gherini has served as Program Manager on a variety of contracts involving chemistry, water quality control and water quality modeling, and served as Division Vice President prior to being named to his present position in 1988. He is the author of numerous technical publications and is the developer of several models for pollutant fate and transport. He has served on two National Academy of Science panels. Mr. Gherini is a registered engineer with B.S. and M.S. degrees in Civil Engineering from Stanford University, and a M.S. degree in Aquatic Chemistry from HarvardClemson University.Dr. Faust, Vice President
of the Companysince 1988 and President of our subsidiary GeoTrans, Inc.("GEO"),a subsidiary of the Company,co-foundedGEOGeoTrans, Inc. in 1979. In addition to his management responsibilities, he is engaged in the quantitative assessment and investigation of highly technical groundwater problems. He has published 23 articles and has co-authored a book on groundwater modeling. Dr. Faust holds B.S. and Ph.D. degrees in Geology from Pennsylvania State University.Mr. Say joined Edward H. Richardson & Associates (a firm that was acquired by the Company's predecessor in 1981 and became a divisionSection 16(a) beneficial ownership reporting compliance
Section 16(a) of the
CompanySecurities Exchange Act requires "insiders," including our executive officers, directors and beneficial owners of more than 10% of our common stock, to file reports of ownership and changes in1991)ownership of our common stock with the Securities and Exchange Commission and Nasdaq Stock Market, and to furnish us with copies of all Section 16(a) forms they file. We became subject to Section 16(a) in1958 and was named to his present positionconjunction with the registration of our common stock under the Securities Exchange Act in1988. He has authored several publications1991. Based solely onsite development, engineering and storm drainage. Mr. Say holds a B.S. in Civil Engineeringour review of the copies of such forms received by us, or written representations fromRobert College in Istanbul, Turkey and a M.S. in Civil Engineering from the University of Delaware. 8reporting persons that no Form 5's were required for those persons, we believe that our insiders complied with all applicable Section 16(a) filing requirements during fiscal 2001. 9
The following table sets forth the
cashcompensation paid or accrued bythe Company to the Chief Executive Officer and to each of the four additional most highly compensated executive officersus for each of the fiscal years in the three-year period endedOctober 1, 2000: SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION ---------------------------------- AWARDS PAYOUTS ANNUAL COMPENSATION ----------------------- -------- ---------------------------------------------- RESTRICTED SECURITIES OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER SALARY BONUS COMPENSATION AWARD(S) OPTIONS/ PAYOUTS COMPENSATION NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (1) ($) SARS (#) ($) ($) - --------------------------- -------- -------- -------- ------------- ---------- ---------- -------- -------------Li-San Hwang................ 2000 220,000 40,000 913(2) 0 30,000 0 4,305(3) Chairman, Chief Executive 1999 195,000 0 1,801 0 15,000 0 8,350 Officer and President 1998 185,000 85,000 601 0 15,625 0 10,266 James M. Jaska.............. 2000 170,000 50,000 5,400(4) 0 25,000 0 4,939(5) Executive Vice President, 1999 150,000 0 5,400 0 10,000 0 8,696 Chief Financial Officer 1998 120,000 60,000 4,950 0 3,125 0 7,060 and Treasurer Richard A. Lemmon........... 2000 135,000 50,000 5,400(6) 0 10,000 0 3,972(7) Executive Vice President 1999 118,000 30,000 5,400 0 7,500 0 6,898 and Secretary 1998 100,000 35,000 4,950 0 3,125 0 5,871 Charles R. Faust............ 2000 130,000 30,000 7,650(8) 0 3,000 0 7,788(9) Vice President 1999 125,000 10,260 7,650 0 3,000 0 7,480 1998 120,000 25,000 7,650 0 6,250 0 7,155 William R. Brownlie......... 2000 120,000 20,000 5,400(10) 0 3,000 0 3,587(11) Senior Vice President 1999 117,000 30,000 16,458 0 3,750 0 7,000 1998 115,000 35,000 5,400 0 3,906 0 6,890- ------------------------------September 30, 2001 to the following persons:
- •
- Our chief executive officer; and
- •
- Our four most highly compensated executive officers other than our chief executive officer at September 30, 2001.
Compensation is presented only for years in which each person was an executive officer.
Long-Term Compensation Annual Compensation Awards Payouts Name and Principal Position Year Salary
($)Bonus
($)Other Annual
Compensation
($)(1)Restricted
Stock
Award(s)
($)Securities
Underlying
Options
(#)Payouts
LTIP
($)All Other
Compensation
($)Li-San Hwang
Chairman, Chief Executive
Officer and President2001
2000
1999250,000
220,000
195,000100,000
40,000
01,683
913
1,801(2) 0
0
035,000
30,000
15,0000
0
011,615
4,305
8,350(3)
James M. Jaska(4)
Executive Vice President,
Chief Financial Officer
and Treasurer
2001
2000
1999
190,000
170,000
150,000
90,000
50,000
0
5,400
5,400
5,400
(5)
0
0
0
30,000
25,000
10,000
0
0
0
13,954
4,939
8,696
(6)
Michael J. Nigro
Executive Vice President,
Resource Management
2001
144,000
100,000
2,700
(7)
0
18,000
0
11,772
(8)
Glenn S. Burkhardt
Executive Vice President,
Infrastructure
2001
170,000
60,000
4,050
(9)
18,000
10,822
(10)
Richard A. Lemmon
Executive Vice President,
Administration and Secretary
2001
2000
1999
160,000
135,000
118,000
70,000
50,000
30,000
5,400
5,400
5,400
(11)
0
0
0
18,000
20,000
7,500
0
0
0
11,369
3,972
6,898
(12)
- (1)
- No named executive officer received other annual compensation in excess of the lesser of $50,000 or 10% of such officer's compensation in fiscal
2000.2001.- (2)
- Comprised of
$913$1,683 in benefits and premiums paidby the Company to Dr. Hwang pursuant tounder the Executive Medical Reimbursement Plan.- (3)
- Comprised of
$4,305$11,615 ofCompanyretirement plan contributionsto its Retirement Plan.- (4)
- Mr. Jaska was named President in November 2001.
- (5)
- Comprised of $5,400 in automobile allowances.
(5)- (6)
- Comprised of
$4,939$13,954 ofCompany contributions to its Retirement Plan. (6)retirement plan contributions.- (7)
- Comprised of $2,700 in automobile allowances.
- (8)
- Comprised of $11,772 of retirement plan contributions.
- (9)
- Comprised of $4,050 in automobile allowances.
- (10)
- Comprised of $10,822 of retirement plan contributions.
- (11)
- Comprised of $5,400 in automobile allowances.
(7)- (12)
- Comprised of
$3,972$11,369 ofCompany contributions to its Retirement Plan. (8) Comprised of $5,400 in automobile allowances and $2,250 in life insurance premiums paid on behalf of Dr. Faust. (9) Comprised of $7,788 of Company contributions to its Retirement Plan. (10) Comprised of $5,400 in automobile allowances. (11) Comprised of $3,587 of Company contributions to its Retirement Plan. 9retirement plan contributions. 10
The following table sets forth information concerning options granted to each of the named executive officers during fiscal
2000: OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT ASSUMED INDIVIDUAL GRANTS ANNUAL RATES OF ---------------------------------------------------- STOCK PRICE NUMBER OF % OF TOTAL APPRECIATION FOR SECURITIES OPTIONS/SARS EXERCISE OPTION TERM UNDERLYING GRANTED TO OR BASE --------------------- OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION 5% 10% NAME GRANTED(#)(1) FISCAL YEAR ($/SH) DATE ($)(2) ($)(2) - ---- ------------- ------------ -------- ---------- --------- ---------Li-San Hwang................... 30,000 4.23 10.91 11/14/09 205,837 521,632 James M. Jaska................. 25,000 3.52 10.91 11/14/09 171,531 434,693 Richard A. Lemmon.............. 10,000 1.41 10.91 11/14/09 68,612 173,877 Charles R. Faust............... 3,000 0.42 10.91 11/14/09 20,584 52,163 William R. Brownlie............ 3,000 0.42 10.91 11/14/09 20,584 52,163- ------------------------2001:
Option Grants In Last Fiscal Year
Potential
Realizable Value
at Assumed
Annual Rates of
Stock Price
Appreciation for
Option TermIndividual Grants Number of
Securities
Underlying
Options
Granted(#)(1)% of Total
Options
Granted to
Employees in
Fiscal YearExercise
or Base
Price
($/Sh)Name Expiration
Date5%
($)(2)10%
($)(2)Li-San Hwang 37,500 3.14 21.80 01/16/11 514,121 1,302,884
James M. Jaska
31,250
2.61
21.80
01/16/11
428,434
1,085,737
Michael J. Nigro
25,000
2.09
21.80
01/16/11
342,748
868,590
Glenn S. Burkhardt
25,000
2.09
21.80
01/16/11
342,748
868,590
Richard A. Lemmon
25,000
2.09
21.80
01/16/11
342,748
868,590
- (1)
- All options are incentive stock options
and weregranted underthe Company'sour 1992 Incentive Stock Plan. Such options vest over four year periods at an annual rate of 25% beginning on the first anniversary of the date of grant.- (2)
- Potential realizable value is determined by multiplying the exercise or base price per share by the stated annual appreciation rate compounded annually for the term of the option (10 years), subtracting the exercise or base price per share from the product, and multiplying the remainder by the number of options granted. Actual gains, if any, on stock option exercises and
Common Stockcommon stock holdings are dependent on the future performance ofthe Common Stockour common stock and overall stock market conditions. There can be no assurance that the amounts reflected in this table will be achieved.1011
The following table sets forth information concerning the aggregate number of options exercised
during fiscal 2000by, and year-end option values for, each of the named executiveofficers: OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION/SAR VALUES
NUMBER OF VALUE OF UNEXERCISED UNEXERCISED IN-THE-MONEY OPTIONS/SARS OPTIONS/SARS AT FY-END AT FY-END SHARES ---------------- -------------------- ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/ NAME EXERCISE(#) REALIZED($) UNEXERCISABLE(#) UNEXERCISABLE($)(1) - ---- ----------- ----------- ---------------- --------------------Li-San Hwang........................ 0 0 46,354/51,005 886,612/833,282 James M. Jaska...................... 0 0 82,192/39,923 1,742,385/673,219 Richard A. Lemmon................... 5,000 105,645 22,364/20,607 435,089/336,426 Charles R. Faust.................... 0 0 31,661/10,649 670,948/167,557 William R. Brownlie................. 1,093 24,422 54,365/8,744 1,230,696/135,798- ------------------------officers during fiscal 2001:
Option Exercises In Last Fiscal Year And
Fiscal Year End Option Values
Number of
Unexercised
Options
at FY-EndValue of Unexercised
In-the-Money
Options
at FY-EndName Shares
Acquired on
Exercise(#)Value
Realized($)(1)Exercisable/
Unexercisable(#)Exercisable/
Unexercisable($)(2)Li-San Hwang 0 0 79,940/79,884 758,281/329,443
James M. Jaska
57,500
1,124,109
64,479/61,915
651,878/244,654
Michael J. Nigro
24,413
356,981
38,911/35,313
379,496/60,122
Glenn S. Burkhardt
1,210
10,618
586/28,048
1,219/19,229
Richard A. Lemmon
22,500
338,417
16,174/40,040
124,168/111,850
- (1)
- Value realized upon exercise is determined by subtracting the exercise price from the closing price for our common stock on the date of exercise as reported by the Nasdaq National Market and multiplying the remainder by the number of shares of common stock exercised.
- (2)
- Year end value is determined by subtracting the exercise price from the fair market value of
$28.56$17.68 per share (the closing price forthe Company's Common Stockour common stock as reported by the NasdaqStockNational Market as of September29, 2000)28, 2001) and multiplying the remainder by the number of underlying shares ofCommon Stock. BONUS PROGRAMS The Boardcommon stock.Bonus programs
Our board of
Directorsdirectors awards, at its discretion, annual bonuses toitsour executive officers based upon recommendations made bythe Compensation Committeeour compensation committee (as to Dr. Hwang) and Dr. Hwang (as to the other executive officers) concerning individual performance andthe Company'sour achievement of certain operating results.The Company maintainsWe maintain a separate bonus program for other key employees.Under that program, the Company is divided into 22 operating units.If the operating profit for any our operatingunitunits, determined on an annual basis following the conclusion of the fiscal year, exceeds the targeted percentage for that year, then a bonus equal to 25% of the amount in excess of the target is allocated to thatprofit centeroperating unit and thegroupunit manager divides it amonggroupunit members in his or her discretion based upon individual performance.2001 STOCK PLAN2002 Stock Option Plan
On December
29, 2000, the Board18, 2001, our board ofDirectorsdirectors adopted theCompany's 2001Tetra Tech, Inc. 2002 Stock Option Plan, as described in Proposal No.3.2. To date,nogrants of optionsor restrictedcovering 145,000 shares of common stock have been made under thisPlan.plan.1992
INCENTIVE STOCK PLANIncentive Stock PlanThe
Company's1992 Incentive Stock Plan(the "Plan")was adopted bythe Company's Boardour board ofDirectorsdirectors on December 1, 1992 and was subsequently approved bythe Company'sour stockholders. ThePlanplan provides for the granting of incentive stock options, nonqualified stock options and rights to purchase restricted stock to our key employees and officers,of the Company or any of its subsidiaries,including directors who are also our key employees orofficers of the Company and its subsidiaries.officers. The maximum number of shares ofCommon Stockcommon stock authorized for issuance under thePlanplan is5,761,718. EMPLOYEE STOCK PURCHASE PLAN7,202,147. As of December 11, 2001, 4,320,474 shares were subject to outstanding options granted under the plan and 136,038 shares were available for future option grants. TheCompany'splan terminates in December 2002.12
Employee Stock Purchase Plan
The Employee Stock Purchase Plan
(the "Purchase Plan")was adopted bythe Company's Boardour board ofDirectorsdirectors on November 15, 1995 and was subsequently approved bythe Company'sour stockholders. ThePurchase Planplan provides for the granting ofPurchase Rightspurchase rights to purchaseCommon Stockour common stock to our regular11full-time and regular part-time employees and officers, of the Company or any of its subsidiaries,including directors who are also employees orofficersofficers. Under this plan, 1,373,290 shares ofthe Company or any of its subsidiaries. Under the Purchase Plan, 1,098,632 sharesour common stock may be issued upon the exercise ofPurchase Rights.purchase rights.Each
Purchase Rightpurchase right lasts for a period of 52weeks (a "Purchase Right Period").weeks. Prior to the beginning of eachPurchase Right Period,purchase right period, our employees may elect to contribute fixed amounts to thePurchase Planplan during thatPurchase Right Periodpurchase right period to purchaseCommon Stock.our common stock. The maximum amount that an employee can contribute during aPurchase Rightpurchase right period is $4,000, and the minimum contribution per payroll period is $25.Under the
Purchase Plan,plan, the exercise price of aPurchase Rightpurchase right will be the lesser of 100% of the fair market value of such shares (based uponitsthe closing price on the NasdaqStockNational Market) on the first day of thePurchase Right Periodpurchase right period or 85% of the fair market value on the last day of suchPeriod.period. Employees' contributions to thePurchase Planplan are automatically used to purchaseCommon Stockour common stock on the last day of thePurchase Right Periodpurchase right period unless an employee elects to withdraw from thePurchase Planplan or is terminated prior to that date. Ifthe Company iswe are sold, allPurchase Rightspurchase rights will become exercisable immediately preceding the sale. Employees who elect to suspend their contributions can elect either to withdraw their contributions or leave those amounts in thePurchase Planplan to be used to purchaseCommon Stockour common stock at the end of thePurchase Right Period. RETIREMENT PLANS THE COMPANY RETIREMENT PLAN. The Company maintainspurchase right period.Retirement plans
Our Retirement Plan. We maintain a combined discretionary profit-sharing contribution and 401(k) retirement plan
(the "Retirement Plan")covering all of our employees and employees ofthe Company and itsour subsidiaries and related participating employers.The Retirement PlanOur retirement plan is qualified under Section 401(a) of the Internal Revenue Code,of 1986, as amended (the "Code"),and the 401(k) portion ofthe Retirement Planour retirement plan is intended to qualify under Section 401(k) of the Code.Under the terms of
the Retirement Plan,our retirement plan, each eligible employee may elect to defer up to 15% of base compensation or the maximum 401(k) contribution allowed under Federal law and to have such deferred amount contributed to theRetirement Planretirement plan on his or her behalf.The Company makesWe make a matching contribution to each employee who elects to participate in the 401(k) portion ofthe Retirement Plan.our retirement plan. In addition,the Boardour board ofDirectorsdirectors may elect to havethe Companyus make a profit sharing contribution that will be allocated among the eligible participantsin the ratio that each participant's grossbased on a percentage of base compensationbears toearned during thetotal gross base compensationplan year and the participants' employment on the last day ofall eligible employees. Companythe plan year. Our matching and profit sharing contributions fully vest upon the earlier of the employee's retirement, death, disability or fifth year of service. Benefits underthe Retirement Planour retirement plan are generally distributed in the form of a lump sum following a participant's retirement, death, disability or termination of employment. Benefits may be distributed prior to termination of employment under certain circumstances including hardship.The Company paysWe pay all costs associated with the administration of the retirement plan.Other Retirement
Plan. OTHER RETIREMENT PLANS.Plans. Certain of our subsidiaries, SCM Consultants, Inc., McNamee, Porter & Seeley, Inc., the Sentrex Group of Companies, MFG, Inc., Collins/Piña Consulting Engineers, Inc., Cosentini Associates, Inc., PDR Engineers, Inc., Evergreen Utility Contractors, Inc.,FHC, Inc., Rizzo Assoicates, Inc., Utilities & C.C., Inc.,eXpert Wireless Solutions, Inc.,andFHC, Inc., Rizzo Associates, Inc., Rocky Mountain Consultants, Inc.,subsidiaries of the Company,Williams, Hatfield & Stoner, Inc., Vertex Engineering Services, Inc., Commonwealth Technology, Inc., Western Utility Contractors, Inc. and Sciences International, Inc., participate in separate retirement plans covering their respective employees.EXECUTIVE MEDICAL REIMBURSEMENT PLAN TheIn addition, certain former employees of Shepherd Miller, Inc. participate in a separate retirement plan.Executive Medical Reimbursement Plan
Our Executive Medical Reimbursement Plan,
(the "Medical Plan"),which was established bythe Company'sour predecessor in 1975 for the benefit ofthe Company'sour executive officers, reimburses participants, their spouses and covered children for medical expenses not covered bythe Company'sour regular group medical plan. In effect,this Medical Planour medical plan provides participants with 100% medical coverage for all allowable medical expenses.During the fiscal year ending October 1, 2000, premiums totaling $500 were paid by the Company in connection with the Medical Plan.At the present time,Messrs.Dr. Hwang andGherinione former officer are the onlyexecutive officersindividuals covered by theMedical Planmedical plan andthe Company doeswe do not intend to offer theMedical Planmedical plan to any additional executive officers in the future.12REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS The Audit Committee of the Board of Directors is composed of two directors who are independent directors. The purpose of the Audit Committee is to review the Company's financial reporting process on behalf of the Board of Directors. The Audit Committee operates under a written charter which is included as Annex A to this proxy statement. Management has the primary responsibility for the financial statements and the reporting process. The Company's independent auditors are responsible for expressing an opinion on the conformity of the Company's audited financial statements to accounting principles generally accepted in the United States of America. The Audit Committee has reviewed and discussed with management and the independent auditors the audited financial statements. The Audit Committee has discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, COMMUNICATION WITH AUDIT COMMITTEES. In addition, the Audit Committee has received from the independent auditors the written disclosures required by Independence Standards Board No. 1, INDEPENDENCE DISCUSSIONS WITH AUDIT COMMITTEES and discussed with them their independence from the Company and its management. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors, and the Board has approved, that the audited financial statements be included in the Company's Annual Report on SEC Form 10-K for the year ended October 1, 2000, for filing with the Securities and Exchange Commission. AUDIT COMMITTEE J. Christopher Lewis Patrick C. Haden13
REPORT OF THE COMPENSATION COMMITTEEOF THE BOARD OF DIRECTORS
REGARDING COMPENSATIONThe
Compensation Committee (the "Committee")compensation committee ofthe Boardour board ofDirectors oversees the general compensation policies of the Company, oversees the compensation plans, establishes the specific compensation of Dr. Hwang, the Company's Chief Executive Officer, reviews the Chief Executive Officer's recommendations as to the specific compensation levels for the other executive officers and oversees the Company's stock incentive plans. The Compensation Committeedirectors is currently composed of two independent, non-employee directors who have no interlocking relationships as defined by the Securities and Exchange Commission.COMPENSATION POLICY AND PROGRAMS.TheCommittee'scommittee regularly meets at least once each year and holds additional meetings as required. The compensation committee met once during fiscal 2001.Compensation committee responsibilities
The compensation committee has the following responsibilities:
- •
- Overseeing our general compensation policies;
- •
- Overseeing our compensation plans;
- •
- Establishing the compensation of our chief executive officer;
- •
- Reviewing our chief executive officer's recommendations as to the specific compensation levels for the other executive officers; and
- •
- Overseeing our stock incentive plans.
Compensation policy and programs
The compensation committee's responsibility is to provide a strong and direct link among stockholder values,
Companyour financial performance andexecutiveour executives' compensation throughitstheir oversight of the design and implementation of a sound compensation program that will attract and retain highly qualified personnel. Compensation programs are intended to complementthe Company'sour short- and long-term business objectives and to focus executive efforts on the fulfillment of these objectives.Each year the
Committee has conductedcommittee conducts a full review ofthe Company'sour executive compensation program. It has beenthe Committee'stheir practice to establish target levels of compensation for our senior officers consistent with that of companies comparable in size and complexity tothe Company,us, as well as companies which are direct business competitors ofthe Company.ours. After their review of data relating to all aspects of compensation paid by such groups of companies, actual compensation ofthe Company'sour executive officers is subject to increase or decrease by theCommitteecommittee from targeted levels according tothe Company'sour overall performance and the individual's efforts and contributions. A significant portion of executive compensation is directly related tothe Company'sour financial performance and is therefore at risk. Total compensation forthe Company'sour senior management is composed of base salary, near-term incentive compensation in the form of bonuses and long-term incentive compensation in the form of stock options. TheCommitteecommittee retains the discretion to adjust the formula for certain items of compensation so long as total compensation reflects overall corporate performance and individual achievement.BASE SALARY.Base salary
In establishing base salary levels for senior officer positions, the
Committeecommittee and Dr. Hwang consider levels of compensation at similarly situated companies and at direct competitors, levels of responsibility and internal issues of consistency and fairness. In determining the base salary of a particular executive, theCommitteecommittee and Dr. Hwang consider individual performance, including the accomplishment ofshort- andshort-and long-term objectives, and various subjective criteria including initiative, contribution to overall corporate performance and leadership ability.In fiscal
2000,2001, the annual base salary of Dr. Hwang was determined by theCommitteecommittee basedon comparableupon:
- •
- Comparable chief executive salaries of a peer group of companies and of direct
competitors referred to above, the Company'scompetitors;14
- •
- Our overall performance and profitability in fiscal
2000,2001;- •
- Dr. Hwang's efforts and contributions to
the Companyus; and- •
- Dr. Hwang's ownership interest in
the Company. BONUSES. The Company'sus.Bonuses
Our executive officers are eligible for annual bonuses based upon recommendations made by Dr. Hwang (as to the other executive officers) and the
Compensation Committeecompensation committee (as to Dr. Hwang) based upon their individual performance andthe Company'sour achievement of certain operating results.Amounts of individual awards are based principally upon the results of
the Company'sour financial performance during the prior fiscal year. The amount of awards for senior officers are within guidelines established by theCommitteecommittee and Dr. Hwang as a result of their review of total compensation for senior management of peer companies and competitors. The actual amount awarded, within these guidelines,will beis determined principally by theCommittee'scommittee's and Dr. Hwang's assessment of the individual's contribution tothe Company'sour overall financial performance. Consideration is also given to factors such as the individual's successful completion of a special project, any significant increase or decrease in the level of14the participant's executive responsibility, and the Committee'scommittee's and Dr. Hwang's evaluation of the individual's overall efforts and ability to discharge the responsibilities of his or her position. In fiscal2001,2002, cash bonuses related to performance in fiscal20002001 paid tothree ofthe five named executive officers ranged from$20,000$60,000 to$50,000,$100,000, and ranged from17%35% to37%69% of such officers' base salaries.STOCK OPTIONS.Stock Options
In fiscal 1992,
the Committeeour board adopted theCompany's1992 Incentive StockPlan (the "1992 Plan"). The purposePlan. Due to the limited number of stock options available for grant under the 1992 plan and the termination of the 1992 plan in December 2002, our board adopted the 2002 Stock Option Plan in December 2001, subject to stockholder approval. The primary purpose of both the 1992 plan and the 2002 plan is to provide incentives and reward the contributions of key employees and officers for the achievement of our long-termCompanyperformance, as measured by earnings per share and the market value ofthe Common Stock.our common stock. TheCommitteecommittee and Dr. Hwang set guidelines for the number and terms of stock optionor restricted stockawards based on factors similar to those considered in connection withrespect to theother components ofthe Company'sour compensation program, including a comparison with the practices of our peer group companies and direct competitors.InIf our performance is unsatisfactory, theevent of unsatisfactory corporate performance, the Committeecommittee may decide not to award stock optionsor restricted stockin any given fiscal year, although exceptions to this policy may be made for individuals who have assumed substantially greater responsibilities and other similar factors. Theawardsgrants under the 1992Planplan and the 2002 plan are designed to align the interests of the executives with those oftheour stockholders. Generally, stock options under the 1992 plan become exercisable in cumulative installments over a period of four years,butwhile stock options under the 2002 plan become exercisable as to 25% of the shares covered thereby on the first anniversary of the grant date and as to the balance in 36 cumulative monthly installments following such first anniversary date. In both cases, the individual forfeits any installment which has not vested during the period of his or her employment.Under the 1992
Plan,plan, theCommitteecommittee awarded stock options covering an aggregate of 143,750 shares in fiscal20002001 toallthe five named executiveofficers. INTERNAL REVENUE CODE SECTION 162(M).officers for their contributions to our performance in fiscal 2000. Under the 2002 plan, the committee awarded stock options covering an aggregate of 119,000 shares in fiscal 2002 to the five named executive officers for their contributions to our performance in fiscal 2001.15
Internal Revenue Code Section 162(m)
Under Section 162 of the Internal Revenue Code,
of 1986, as amended,the amount of compensation paid to certain executives that is deductible with respect tothe Company'sour corporate taxes is limited to $1,000,000 annually. It is the current policy of theCommitteecompensation committee to maximize, to the extent reasonably possible,the Company'sour ability to obtain a corporate tax deduction for compensation paid to our executive officersof the Companyto the extent consistent withtheour best interests and those of our stockholders.
COMPENSATION COMMITTEE
J. Christopher Lewis
Patrick C. Haden16
The audit committee of our board of directors is composed of three directors who are independent directors. The purpose of our audit committee is to monitor the integrity of the
Companyfinancial reporting process andits stockholders. COMPENSATIONsystems of internal controls, monitor the independence and performance of our independent auditors and internal auditing department and provide an avenue of communication among the independent auditors, management, the internal auditing department and our board of directors. Our audit committee operates under a written charter approved by our board of directors. Our independent auditors are responsible for expressing an opinion of the conformity of our audited financial statements to accounting principles generally accepted in the United States of America.Our audit committee has reviewed and discussed with management and the independent auditors the audited financial statements. Our audit committee has discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61,Communication with Audit Committees. In addition, our audit committee has received from the independent auditors the written disclosures required by Independence Standards Board No. 1,Independence Discussion with Audit Committees and discussed with them their independence from us and our management.
In reliance on the reviews and discussions referred to above, our audit committee recommended to our board of directors, and our board has approved, that our audited financial statements be included in our annual report on the Form 10-K, for the year ended September 30, 2001, for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
J. Christopher Lewis (Chair)
Patrick C. Haden15
James J. Shelton17
The following graph shows a comparison of our cumulative total returns
for the Company,with those of the Nasdaq Stock Market (U.S. Companies) Index anda Company-constructedour self-constructed Peer Group Index (as defined below). The graph assumes that the value of an investment inCommon Stockour common stock and in each such index was $100 on September29, 1995,27, 1996, and that all dividends have been reinvested.The Company-constructedOur self-constructed Peer Group Index includes the following companies: Fluor Corporation, IT Group, Inc., Jacobs Engineering Group Inc., LCC International, Inc., Mastec, Inc., Quanta Services, Inc., URS Corporation and Wireless Facilities, Inc.The Company believesWe believe that the companies included in the Peer Group Index are amongtheour primarycompetitors of the Company.competitors.The comparison in the graph below is based on historical data and is not intended to forecast the possible future performance of
the Company's Common Stock. COMPARISON OF CUMULATIVE TOTAL RETURN AMONG TETRA TECH, NASDAQ STOCK MARKET (U.S. COMPANIES), AND TETRA TECH'S SELF-CONSTRUCTED PEER GROUP EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
TETRA TECH NASDAQ STOCK MARKET PEER INDEX9/29/95 $100.0 $100.0 $100.0 12/29/95 $97.8 $101.2 $115.6 3/29/96 $95.7 $106.0 $119.9 6/28/96 $107.5 $114.6 $119.3 9/30/96 $127.7 $118.7 $114.8 12/31/96 $106.2 $124.5 $122.5 3/31/97 $78.6 $117.8 $103.8 6/30/97 $129.7 $139.4 $119.1 9/30/97 $131.7 $162.9 $118.7 12/31/97 $134.4 $152.5 $82.2 3/31/98 $163.0 $178.5 $109.5 6/30/98 $163.0 $183.4 $107.4 9/30/98 $189.0 $165.5 $87.1 12/31/98 $227.3 $215.1 $101.9 3/31/99 $176.9 $241.2 $82.5 6/30/99 $173.3 $263.9 $114.0 9/30/99 $175.2 $270.4 $102.5 12/31/99 $161.0 $399.7 $105.2 3/31/00 $249.4 $448.6 $148.8 6/30/00 $240.2 $390.0 $120.4 9/29/00 $299.9 $358.9 $100.816PROPOSAL NO. 2 APPROVAL OF AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION OVERVIEW In December 2000, the Board of Directors declared advisable and unanimously approved an amendment of the Company's Certificate of Incorporation to increase the number of authorized shares of Common Stock from 50,000,000 shares to 85,000,000 shares (the "Amendment"). No increase in the number of shares of Preferred Stock of the Company, currently 2,000,000 shares, is proposed or anticipated. As more fully set forth below, the proposed Amendment is intended to improve the Company's flexibility in meeting its future needs for unreserved Common Stock. If the Amendment is approved by the stockholders, it will become effective upon the filing of a Certificate of Amendment of Certificate of Incorporation (the "Certificate of Amendment") with the Delaware Secretary of State. The text of the first paragraph of Article IV of the Company's Certificate of Incorporation will read as follows: "The total number of shares of stock that the Corporation shall have authority to issue is eighty-seven million (87,000,000), consisting of eighty-five million (85,000,000) shares of common stock, par value $0.01, and two million (2,000,000) shares of preferred stock, par value $0.01. The designations and the powers, preferences and rights, and the qualifications, limitations or restrictions thereof are as follows:" As of the close of business on the Record Date, of the 50,000,000 shares authorized, 39,935,789 shares of Common Stock of the Company were issued and outstanding, 3,339,007 shares of Common Stock were reserved for issuance upon exercise of outstanding stock options, 1,423,433 shares were reserved for future issuance under the Company's stock benefit plans and 1,021,908 shares were reserved for issuance upon the exchange of the outstanding Exchangeable Shares issued by Tetra Tech Canada Ltd., the Company's majority-owned subsidiary. Accordingly, only 4,279,863 shares of Common Stock were unreserved on the Record Date. REASONS FOR AND POSSIBLE EFFECTS OF THE PROPOSED AMENDMENT FLEXIBILITY IN SHARE ISSUANCE As indicated above, the Company has only 4,279,863 authorized but unreserved and unissued shares of Common Stock available for future issuance. This severely limits the ability of the Board of Directors to issue shares of Common Stock without seeking stockholder approval. Obtaining stockholder approval is a time consuming, expensive process and could delay or prevent the Company from taking such actions as potential acquisitions, financings, stock splits, stock dividends or additional compensation plans. If the Amendment is approved, 39,279,863 authorized, unreserved and unissued shares of Common Stock will be available for issue from time to time for such purposes as the Board of Directors may approve. No further vote of the stockholders of the Company will be required, except as provided under Delaware law or under the rules of theNasdaq Stock Marketor any other national securities exchange on which shares of Common Stock of the Company are then listed. The availability of additional shares for issue, without the delay(U.S. Companies),
andexpense of obtaining the approval of stockholders at a subsequent special meeting, will afford the Company greater flexibility in acting upon proposed transactions in which shares of Common Stock may be issued. 17POSSIBLE EFFECTS The additional shares of Common Stock to be authorized by adoption of the Amendment would have rights identical to the currently outstanding shares of Common Stock of the Company. Adoption of the proposed Amendment and issuance of the Common Stock would not affect the rights of the holders of currently outstanding shares of Common Stock, except for effects incidental to increasing the number of outstanding shares of Common Stock such as dilution of the earnings per share and voting rights of current holders of Common Stock. Stockholders should note, however, that authorized but unissued stock could be issued by the Board of Directors for the purpose of countering an unsolicited takeover or other proposal that is opposed by the Board. Accordingly, an effect of the increase in the number of authorized shares may be to deter a future takeover attempt which holders of Common Stock may deem to be in their best interest or in which holders of Common Stock are offered a premium for their shares over the market price. The Board is not currently aware of any attempt to takeover or acquire the Company, and has no current plans to issue additional shares of Common Stock other than pursuant to the exercise of outstanding stock options and stock options that might be granted in the future under the Company's employee benefit plans, or pursuant to a possible split of the Common Stock. In addition, the Company continuously evaluates the marketplace for strategic acquisition opportunities to position itself to address existing and emerging markets. The Company views acquisitions as a key component of its growth strategy, and intends to use both securities and cash, as it deems appropriate, to fund such acquisitions. The Board of Directors believes that the benefits of providing the Company with the flexibility to issue shares without delay for any purpose outweighs the possible disadvantages discussed above, and that it is prudent and in the best interests of the stockholders to provide the greater flexibility that will result from the approval of the proposed increase in authorized shares. VOTE REQUIRED The approval of the Amendment requires the affirmative vote of a majority of the outstanding shares of Common Stock as of the Record Date entitled to vote on this matter at the Meeting. Neither an abstention nor a broker non-vote is an affirmative vote and, therefore, both will have the same effect as a vote against the Amendment. See "General Information." RECOMMENDATIONTetra Tech's Self-Constructed Peer Group18
PROPOSAL NO. 2
APPROVAL OF THEBOARD OF DIRECTORS FOR ALL OF THE FOREGOING REASONS, THE BOARD BELIEVES THAT THE AMENDMENT IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL THEREOF. PROXIES WILL BE VOTED FOR THIS PROPOSAL UNLESS OTHERWISE SPECIFICALLY INDICATED.2002 STOCK OPTION PLANOn December 18,
PROPOSAL NO. 32001,STOCK PLAN PROPOSAL The 2001 Stock Plan (the "Plan"), which wasour board of directors adopted,by the Board of Directors,subject to stockholder approval,on December 29, 2000, provides forthegranting2002 Stock Option Plan. Under the 2002 plan, up to 4,000,000 shares ofincentiveour common stock may be issued upon the exercise of stock optionsnonqualifiedgranted under the 2002 plan. At this meeting, our stockholders will be asked to approve the 2002 plan.The 2002 plan is intended to replace our existing stock option plan, the 1992 Incentive Stock Plan, which terminates in December 2002. Of the 7,202,147 shares authorized to be issued under the 1992 plan, as of December 11, 2001, 4,320,474 shares were subject to outstanding options granted under the 1992 plan and
rights136,038 shares remained eligible for future option grants.The 2002 plan will play an important role in our efforts to
purchase restricted stock (as described below).attract and retain employees, and to align the interests of our employees with those of our stockholders through increased ownership of our company by those employees. ThePlan2002 plan is attached to thisProxy Statementproxy statement as AnnexBA and incorporated by reference into thisProxy Statement. SUMMARY DESCRIPTION OF THE PLAN GENERAL.proxy statement.Summary description of the 2002 plan
Purpose of the 2002 plan
The
Plan provides for the granting of incentive2002 plan allows us to grant to participants stock optionsnonqualified stock options and rightsto purchaserestricted stockshares of our common stock. The purpose of the 2002 plan is to enable us to offer participants an opportunity to acquire an equity interest in us. We believe that this will improve our ability to attract, retain and reward employeesdirectorsand other persons providing services tothe Company. Under the Plan, shares of Common Stock may be issued pursuant to the Plan, either upon exercise of options or purchases of restricted stock. If the Plan is approved by the stockholders, the Companyus. It willcease granting stock options under its 1992 Incentive Stock Plan. Under the Plan, 5,000,000 shares may be issued either as restricted stock or upon the exercise of options. The purpose of the Plan is to promote the interests of the Company and its stockholders by enabling it to offer grants of stock to better attract, retain and reward its employees, directors and other persons providing services to it and, accordingly, toalso strengthen the mutuality of interests betweenthose personsplan participants andthe Company'sour stockholders by providing thosepersonsparticipants with a proprietary interest in pursuingthe Company'sour long-term growth and financial success.ADMINISTRATION. The PlanEligibility and participation
Generally, all employees, directors (excluding non-employee directors) and other persons providing bona fide services to us or any of our subsidiaries are eligible to receive grants of options under the 2002 plan. Subject to the adjustments described below, we may not issue more than 200,000 shares of common stock pursuant to options granted to any single participant under the 2002 plan during any calendar year. Currently, we have over 7,000 employees. Except as set forth below, we have not determined the options that we will
be administered bygrant to any particular individual or group of individuals.Administration of the 2002 plan
Our board, or a committee
(the "Committee")appointed by our board consisting of two or more members of our board, may administer theBoard. To2002 plan. The committee has theextent possible and advisable, the Committee will be composed of individuals who satisfy Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and Section 162(m) of the Internal Revenue Code of 1986 (the "Code"). The Committee is authorizedauthority to interpret thePlan2002 plan and to adopt rules and procedures relating toits administration.the administration of the 2002 plan.Shares subject to the 2002 plan
Subject to
specified limitations,adjustments to reflect certain corporate events that are described below, we may grant options with respect to up to 4,000,000 shares of our common stock under theCommittee is2002 plan. We may not increase this maximum number of shares without the approval of our stockholders. If an option granted under the 2002 plan expires or terminates without having been exercised in full, the shares of common stock remaining unissued under that option will again become available for issuance under the 2002 plan. The shares of common stock to be issued upon the exercise of options granted under the 2002 plan will be issued directly from our authorizedto make such modifications tobut unissued shares of common stock.19
Options
Options granted under the
Plan and to the grants thereunder as are necessary to effectuate the intent of the Plan as a result of any changes in the tax, accounting or securities laws treatments of participants, the Company and the Plan. Further, the Committee may modify an existing option or a restricted stock grant; however, no modification2002 plan may bemade that would impair the rights of the participant without the participant's consent. OPTIONS. Each option will be granted on such terms and in such form as the Committee may approve, which shall not be inconsistent with the provisions of the Plan. The Committee determines whether the options will beeither incentive stock options, or ISOs, or nonqualified stockoptions. Underoptions, or NQSOs. We will determine thePlan,terms and conditions of each option and include them in a written agreement between the participant and us. Each option agreement will set forth:
- •
- the per share exercise price of
anythe option,may notwhich will generally beless thanthefair market valueclosing price ofsuch sharesa share of our common stock as reported on the Nasdaq National Market on the date of grant;- •
- the
grantvesting provisions of the option,and, solely with respect to any incentive stock option granted to a participant who is a ten percent stockholder ofwhich will typically provide that theCompany, will not be less than 110% of the fair market value on the date of the grant of the incentive stock option. EXERCISE. Eachoption will become exercisable(i)as toone-fourth ( 1/4)1/4 of thefullnumber of shares subject thereto one year after the date of grant, and(ii)as to the balance inthirty-six (36)36 equal cumulative monthly installments following such first anniversary date;- •
- the termination date of the option, which will not be later than ten years after the date of grant; and
- •
- the effect on the option of the termination of the participant's employment.
Each option agreement will also contain other terms and conditions that we may establish. The closing price for our common stock as reported on the Nasdaq National Market on December 27, 2001 was $20.55 per share. Options are not transferable during the individual's lifetime.
To the extent an option is intended to qualify as an ISO, the option is required to have terms and conditions consistent with the requirements for that treatment under the Internal Revenue Code. ISOs are subject to the following special restrictions:
- •
- ISOs may only be granted to our, or our subsidiaries', employees;
- •
- the exercise price for an ISO must be at least equal to 100%, or 110% in
such other installments andthe case of stockholders holding more than 10% of the total combined voting power of all classes of our stock, of the fair market value of our common stock, determined on the date of grant;- •
- the aggregate fair market value of the shares of common stock issuable upon exercise of all ISOs granted to a participant, determined at
such other intervals astheBoard or the Committee may otherwise determine. No persons may receive incentive stock optionstime each ISO is granted, thatarebecome exercisable for the first time duringanya calendar yearwith respectcannot exceed $100,000; and- •
- ISOs must terminate no later than the first to
Common Stock having a fair market value ofoccur of:
- (1)
- ten years, or five years for stockholders holding more than
$100,000. In calculating10% of the$100,000 limit, Common Stock is valued at its fair market value ontotal combined voting power of all classes of our stock, from the date ofgrant. If an option expires or terminates before it is exercised in full,grant; and- (2)
- three months following the
unissued stock reserved for the option becomes available for the granting of new options or the issuance of restricted stock. Options may be exercised by paymenttermination of thefull purchase price in cashparticipant's employment, unless the termination is the result of the participant's death orby any other form of consideration that the Committee has approved, such as the surrender of outstanding shares of Common 19Stock owned bydisability or if the participantor by withholding shares that would otherwise be issued upondies during theexercisethree month period following the termination, in which case other rules apply.Modification of options
We have the
option. The Committee may also authorizeauthority to modify any outstanding option as we consider appropriate, including theexercise of options by the delivery of an irrevocable written notice of exercise form together with irrevocable instructionsauthority toa broker-dealer to sell or margin a sufficient portion of the shares of Common Stock and to deliver the sale or margin loan proceeds directly to the Company to paymodify the exercise price ofthe option. All rights to exercise options terminate three months following the participant's severance foranyreason other than death or disability, or upon expiration of theoption,whichever occurs first. During such three month period, the participant may only exercise options to the extent they were exercisable on the date of the participant's severance. If a participant dies without having fully exercised his or her options during the period of his or her employment or within three months of his or her severance, the options may be exercised within a period of one year following his or her death, if the expiration of the option period has not first occurred to the extent the participant could have exercised them on the date of his or her death. If the participant was disabled at the time of severance, the options may be exercised within a period of one year following his or her severance, if the expiration date has not first occurred, to the extent the participant could have exercised them on the date of his or her severance. SUBSTITUTE OPTIONS. The Company may grant options to employees of acquired companies who hold stock options of the acquired company upon such terms and conditions as the Committee may determine but may not be contrary to applicable law. TRANSFER RESTRICTIONS. Options may be transferred only by will or the laws of descent and distribution. RESTRICTED STOCK. Pursuant to the Plan, the Committee will from time to time determine, in its discretion, those persons who will be offeredaccelerate the right topurchase sharesexercise any option, and extend or renew any option. However, we may not modify any option in a manner adverse to the participant holding that option without that participant's consent. Furthermore, we may not reduce the exercise price ofrestrictedany outstanding option, including any repricing effected by issuing replacement stockand the number of sharesoptions for outstanding stock options thatmay be purchased by each such person. The purchase price per share of all restricted stock will be determined by the Committee, in its sole discretion, so long as the purchase price is not lesshave exercise prices higher than thefairprevailing marketvalue of Common Stock on the date the right to purchase such restricted stock is granted. A participant will not have a vested right to the shares subject to the grant of restricted stock until satisfactionprice of thevesting requirements specified inunderlying stock, without first obtaining thegrant. The participant may not assign or alienate his or her interest in the sharesapproval ofrestricted stock prior to vesting. ADJUSTMENTS. The maximum numberour stockholders.20
Adjustments
In connection with certain types of
shares that may be issued under the Plan, and all outstanding options and outstanding securities subject to the Company's repurchase right, will be adjusted forcorporate events like stock splits, stock dividends, recapitalizations, consolidations or reclassifications, we may make appropriate andsimilar capital changes. The Committee may also make suchequitable adjustments to:
- •
- the aggregate number of shares for which we can grant options under the 2002 plan;
- •
- the number and kind of shares covered by outstanding options; and
- •
- the per share exercise price of outstanding options.
Change in
the event of a spin-off or other distribution of Company assets to stockholders, other than normal cash dividends. MERGERS; REORGANIZATIONS.controlIn
the event of aconnection with any mergershare exchange, reorganizationor consolidationof the Companyin whichthe Company iswe are not the surviving corporation, orsurvivesas asubsidiaryresult ofanother corporation, eachwhich our common stock ceases to be publicly traded, we may, but are not required to, terminate all outstandingoption will be assumedoptions upon the consummation of that merger oran equivalent option substituted byconsolidation. However, as a condition to thesuccessor corporation. Intermination, we must eliminate all restrictions on theeventexercisability of thesuccessor corporation refuses to assume or substitute for the option,options and give the participantwill fully vest in and haveat least 20 days prior to therighttermination to exercise those options without regard to any of these restrictions.Tax matters
We are authorized to withhold from the
option as to allcompensation of theshares of Common Stock purchasableparticipants amounts necessary to satisfy the tax withholding obligations arising from the 2002 plan.Compliance with securities laws
We are not obligated to issue any common stock under the
option, including2002 plan if we determine that the issuance would violate applicable state or federal securities laws. We intend to file a registration statement on Form S-8 to register the sharesthat would not otherwise be vestedissuable under the 2002 plan promptly following the approval of the 2002 plan by our stockholders.Termination or
exercisable. Notwithstandingamendment of theforegoing,2002 planOur board of directors may terminate the
Board or Committee may, in any specific case, provide for the treatment of an option in a manner different than that described above. AMENDMENT AND TERMINATION. The Board of Directors may2002 plan at anytime amend ortime. Unless earlier terminated by our board, the 2002 plan will terminate on December 17, 2011, thePlan. However, no modification may be made that would impairtenth anniversary of the effective date of the 2002 plan. We cannot grant options under the 2002 plan after its termination date. Termination of the 2002 plan will not affect the rights of any participant with respect to any option outstanding as of the time of the termination. Our board may also amend the 2002 plan at any time. However, no amendment may adversely affect the rights of any participantholding an option without the participant's consent.with respect to any outstanding award. Further, without the approval ofthe majority of the Company'sour stockholders,the Boardour board may not amend the provisions of thePlan regarding (i)2002 plan for the purpose of:
- •
- modifying the class of individuals
20entitled to receive incentive stockoptions;or (ii)- •
- increasing the maximum number of shares of
Common Stockcommon stock that may be issued under thePlan (except in2002 plan, except as to thecaseadjustments described above; and- •
- materially increasing the benefits which accrue to participants under the 2002 plan.
The above description summarizes the main provisions of
adjustments for stock splits, stock dividends or similar events). The Planthe 2002 plan and the options to be granted thereunder. This description does notpreventpurport to be complete and is qualified in its entirety by theCompany from establishing any other plan, program or arrangement of any kind relating to employee compensation or benefits or providing for the issuance of shares of Common Stock, and the grant of options or opportunities to purchase restricted stock under the Plan will not preclude any employee from participating in any other plan, program or arrangementprovisions of theCompany or2002 plan. Stockholders are urged to read the 2002 plan in itssubsidiaries. THE ABOVE DESCRIPTION SUMMARIZES THE MAIN PROVISIONS OF THE PLAN AND THE STOCK INCENTIVES GRANTED THEREUNDER. THIS DESCRIPTION DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY THE PROVISIONS OF THE PLAN. STOCKHOLDERS ARE URGED TO READ THE PLAN IN ITS ENTIRETY. FEDERAL INCOME TAX CONSEQUENCESentirety.21
Federal income tax consequences of the 2002 plan
The following
is ageneral discussion ofcertainthe principal federal income tax consequencesto a participantof participation in the 2002 plan is based on the statutes andthe Company with respect to sharesregulations existing as ofCommon Stock issued under the Plan.December 15, 2001. In addition,thereparticipation in the 2002 plan maybehave state and local tax consequences. We encourage participants to consult their own tax advisors with respect to the tax consequencesto aof their participation in the 2002 plan.Incentive stock options
A participant
which may vary between each state and locality. INCENTIVE STOCK OPTIONS. Nowill not recognize taxable incomewill be recognized by a participantupon the grant orexercise of any incentive stock option underthePlan. However the amount by which the fair market value of stock purchased uponexercise of anincentive stock option exceeds the option price of such stock constitutes an item of tax preference which could then be subject to the alternative minimum tax in the year that the option is exercised. The Company willISO, and we are notbeentitled toanyan income tax deduction as the result of the grant or exercise ofany incentive stock option. Gainan ISO. However, the Internal Revenue Service has issued proposed regulations that, if finalized, would require us to withhold employment taxes (e.g., FICA and FUTA) at the time of exercise of an ISO. If the proposed regulations are finalized, this new rule is anticipated to apply to ISOs that are exercised on or after January 1, 2003. Any gain or loss resulting from the subsequent sale of shares of common stock acquired upon exercise of anincentive stock optionISO will be long-term capital gain or loss ifsuchthe sale is made after the later of:
- •
- two years from the date of
thegrant of theoption and afterISO; or- •
- one year from the
transferdate ofsuch stock to the participant uponexerciseprovided that the participant is an employeeof theCompany fromISO.If a participant sells common stock acquired upon the
date of grant until three months before the date of exercise. In the event of the participant's death or disability prior toexercise of anincentive stock option, special rules apply in determining whether gain or loss upon sale of the stock acquired upon exercise of such option will be taxable as long-term capital gain or loss or ordinary income. If the subsequent sale of stock is madeISO prior to the expiration ofsuch two-year or one-yearboth of these periods, the sale will be a "disqualifying disposition" under the federal tax laws. The participant will generally recognize ordinary income in the year ofsalethe disqualifying disposition in an amount equal to the difference between the exercise price of the ISO and the fair market value of the shares of our common stock on the date of exerciseprovided that if such sale is a transaction in which a loss (if sustained) would have been recognized byof theparticipant,ISO. However, the amount of ordinary income recognized by the participant generally will not exceed theexcess (if any) ofdifference between the amount realized on the saleoverand theoptionexercise price.The CompanyWe willthenbe entitled to an income tax deductionof like amount.equal to the amount taxable as ordinary income to the participant. Anyexcessadditional gain recognized by the participant uponsuch sale would thenthe disqualifying disposition will be taxable as long-term capital gaineither long-term or short-term depending upon whetherif the shares of common stockhadhave been held for more than one yearprior to sale. Ifbefore thesaledisqualifying disposition or short-term capital gain if the shares of common stockreceivedhave been held for less than one year before the disqualifying disposition.The amount by which the fair market value, determined on the date of exercise, of the shares of common stock purchased upon exercise of an
option qualifies for long-term capital gain treatment,ISO exceeds thecapital gain wouldexercise price is also an item of tax preference that may betaxedsubject toindividualsalternative minimum tax inaccordancethe year that the ISO is exercised.Nonqualified stock options
As with an ISO, a participant will not recognize taxable income on the grant of an NQSO, and we are not entitled to an income tax
rates then in effect underdeduction as theCode. Long-term capital gains are currently taxed at a maximum federal rate of 28%. NONQUALIFIED STOCK OPTIONS. Generally, at the timeresult of the grant ofany nonqualified stock option under the Plan, no taxable income will be recognized by the participant and the Company will not be entitled to a deduction. Uponan NQSO. Unlike an ISO, however, upon the exercise ofsuch option,an NQSO, the participant generally will recognizetaxableordinary income, andthe Companywe willthenbe entitled toaan income tax deduction, in the amount by which thethenfair market value of the shares ofCommon Stock issued to such participantcommon stock purchased upon exercise, determined as of the date of exercise, exceeds theoptionexercise price.21Income recognized by the participant upon exercise of a nonqualified stock option will be taxed as ordinary income in accordance with the tax codes then in effect under the Code. OrdinaryThis income iscurrently taxed at a maximum federal ratepart of39.6%. Iftheparticipant is an employee, such income will constituteparticipant's "wages"with respect tofor whichthe Company iswe are required todeduct andwithhold federal and state incomeand payrollas well as employment taxes.Any such deductions will be made from the wages, salary, bonus or other income to which the participant would otherwise be entitled and, at the Company's election, the participant may be required to pay to the Company (for withholding on the participant's behalf) any amount not so deducted but required to be so withheld.Upon the
subsequent dispositionsale of shares of common stock acquired upon the exercise of anoption other than an incentive stock option,NQSO, the participant will recognize capital gain or loss in an amount equal to the difference between the proceeds received upondispositionsale and the fair market value ofsuchthe sharesaton thetimedate of exercise. Ifsuchthe participant has held the shareshave been heldfor more than one year at the time ofsuch disposition,the sale, the capital gain or loss will belong-term. ACCELERATION OF STOCK OPTIONS UPON A TRANSFER OF CONTROL. If,long-term, otherwise the capital gain will be short-term.22
Acceleration of stock options upon a transfer of control
Upon a reorganization, merger, sale or other transaction resulting in a change
inof control,of the Company,the exercisability of stock options held by certain of our employees (generally officers, stockholders and highly compensatedemployees of the Company) isemployees) may be accelerated (or paymentsaremay be made to cancel unexercisable options of such employees), such. The acceleration of exercisability or this type of payment may be determined to be, in whole or in part, a "parachute payment" for federal income tax purposes. If the present value of all ofthea participant's parachute payments equals or exceeds threetimetimes the participant's average compensation for the past five years, the participant also willbe subject toowe a 20% excise tax on the amount ofsuchthe parachute payment which is in excess of the greaterof suchof:
- •
- the average compensation of the participant for the past five years; or
- •
- an amount which the participant establishes as reasonable compensation.
In addition,
the Companywe will not be alloweda deduction for suchto deduct any excess parachutepayment. RESTRICTED STOCK. A purchaserpayments.Capital gains and ordinary income tax
Long-term capital gains are currently taxed at a maximum federal rate of
restricted stock will be required to include in his or her gross income, in the taxable year of such purchaser in which the shares of restricted stock vest, the amount by which the then fair market value of such restricted stock (determined at the date of vesting) exceeds the purchase price paid for such restricted stock.20%. However,a purchaser may elect pursuant to Section 83(b) of the Code to include in his or her gross income for the taxable year in which the restricted stock is issued, the excess of the fair market value of all such restricted stock at the time of such issuance (determined without reference to the Company's repurchase rights) over the amount paid for such restricted stock. In this event, the purchaser will not recognize taxable income when the restricted stock vests. If shareslong-term capital gains with respect towhichstock with aSection 83(b) election has been made are later repurchased byholding period of more than five years may qualify to be taxed at a maximum federal rate of 18% if theCompany, the purchaser will not be entitled to a deduction. As a result of issuing restrictedstocksubject to a repurchase right, the Company will be entitled to a deduction for its taxable year within which ends the taxable year of the purchaser of such stock in which such purchaser is required to include an amount in gross income, either as a result of the vesting of the shares or of making a Section 83(b) election. The amount of such deduction will be equalwas acquired pursuant to theamount, if any, whichexercise of an option that was granted to thepurchaserparticipant no earlier than January 1, 2001. Short-term capital gains and ordinary income are taxed at marginal federal rates ofsuch stockup to 39.6% (although current law provides that this rate isrequired to include in his or her gross income. Any amount included in a purchaser's gross income as a result of the issuance of shares of restricted stock under the Plan or the vesting of shares of stock will be taxed a ordinary income. If the purchaser is an employee, such amount will constitute "wages" with respect to which the Company is required to deduct and withhold federal and state income and payroll taxes. Any such deductions will be made from the wages, salary, bonus or other income to which the purchaser would otherwise be entitled and, at the Company's election, the purchaser may be required to pay the Company (for withholding on such purchaser's behalf) any amount not so deducted but requiredto beso withheld. Except as described above, upon the disposition of shares of vested restricted stock, the purchaser will recognize capital gain or loss in an amount equalreduced tothe difference between the proceeds received from the 22disposition38.6% for years 2002 andthe purchaser's tax basis in the shares. If such shares have been held at the time of their disposition2003, to 37.6% formore than oneyears 2004 and 2005 and to 35% for yearfrom the earlier of the date of a2006 and thereafter).Section
83(b) election or the date the Company's repurchase right terminates as to the shares, the capital gain or loss will be long-term. A purchaser of restricted stock may not assign or alienate his or her interest in the restricted stock prior to vesting. However, if a purchaser of restricted stock does dispose of such unvested shares of stock, the purchaser will recognize compensation in the amount equal to the difference between the proceeds received from the disposition and the purchaser's tax basis in the shares. COMPENSATION DEDUCTION LIMITATION. In certain circumstances, a publicly held corporation such as the Company is denied an income tax deduction for162(m) limitationWe generally cannot deduct compensation paid to certain
"covered employees" (as defined below)key executives in excess of$1.0 million$1,000,000 peryear.year unless certain conditions are satisfied. In general, only our CEO and our four other highest paid executive officers are subject to this limitation. The income that an executive would recognize by reason of the exercise of an NQSO is subject to this deduction limitation. However,uponthis limitation does not apply if:
- •
- the 2002 plan is approved by our stockholders;
- •
- the exercise
nonqualified stockprice of options grantedunder the Plan with an option priceis at least equal toor greater thanthe fair market value of theCommon Stock atcommon stock upon thetimedate ofgrant generally willthe grant; and- •
- the options are granted by a committee composed exclusively of members of our board of directors who are not
beour employees or employees of one of our subsidiaries.Section 16 of the Exchange Act
Special rules apply in the case of individuals subject to
the $1.0 million deduction limitation so long as the Committee is at all times composed of "outside directors" as defined in applicable Treasury Regulations. If so, the nonqualified stock options should then meet the exemption for "performance-based" compensation. A "covered employee" is a participant who, on the last day of the taxable year of the Company, is the chief executive officer or one of the four other most highly compensated executive officers of the Company for proxy disclosure purposes. Sales of restricted stock are also subject to this $1.0 million deduction limitation. THE FOREGOING SUMMARY OF THE EFFECTS OF FEDERAL INCOME TAXATION UPON PARTICIPANTS, HOLDERS OF RESTRICTED STOCK AND THE COMPANY WITH RESPECT TO SHARES ISSUED UNDER THE PLAN DOES NOT PURPORT TO BE COMPLETE AND REFERENCE IS MADE TO THE APPLICABLE PROVISIONS OF THE CODE. REASONS FOR APPROVAL OF PLAN PROPOSAL The Board of Directors believes that the selected use of stock options and restricted stock is an effective means of attracting, motivating and retaining employees and that the availability of the number of shares covered by the Plan is important to the Company's business prospects and operations. VOTE REQUIRED The approval of the Plan requires the affirmative vote of a majority of the votes cast at the Meeting. Neither an absention nor a broker non-vote is an affirmative vote and, therefore, both will have the same effect as a vote against the Plan. See "General Information." RECOMMENDATION OF THE BOARD OF DIRECTORS FOR ALL OF THE FOREGOING REASONS, THE BOARD BELIEVES THAT THE PLAN IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL THEREOF. PROXIES WILL BE VOTED FOR THIS PROPOSAL UNLESS OTHERWISE SPECIFICALLY INDICATED. 23COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934Section16(a)16(b) of the Securities Exchange Act of1934 ("1934. In particular, under current law, unless a participant that is subject to Section16")16(b) of the Exchange Act timely makes an election under Section 83(b) of the Internal Revenue Code within 30 days following the exercise of an option, shares of common stock received pursuant to the exercise of a stock option may be treated as restricted as to transferability and subject to a substantial risk of forfeiture for a period of up to six months after the date of receipt. Accordingly, the amount of ordinary income recognized, and the amount of our tax deduction, may be determined as of the end of such period.23
Applicability of ERISA
The 2002 plan is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974 and it is not a tax-qualified retirement plan under Section 401(a) of the Internal Revenue Code.
The foregoing summary of the effects of federal income taxation upon us and participants with respect to shares issued under the 2002 plan does not purport to be complete. Each participant is urged to consult with his or her personal tax advisor regarding the federal, state and local tax consequences of participating in the 2002 plan.
Options granted under the 2002 plan
We cannot determine at this time either the number of options that we will allocate to our directors and executive officers participating in the 2002 plan and to other participants in the future or the number of options that these persons will actually receive in the future because the amount and value of awards that we will grant to any participant are within our discretion, subject to the limitations described above. The table below sets forth information concerning all options granted under the 2002 plan, subject to stockholder approval, as of December 18, 2001. Our non-employee directors are not eligible to receive grants under the 2002 plan.
Individual or Group Number of
Options
ReceivedExercise
Price($)Li-San Hwang
Chairman of the Board and Chief Executive Officer35,000 20.00
James M. Jaska
President, Chief Financial Officer and Treasurer
30,000
20.00
Richard A. Lemmon
Executive Vice President, Administration and Secretary
18,000
20.00
Michael J. Nigro
Executive Vice President, Resource Management
18,000
20.00
Glenn S. Burkhardt
Executive Vice President, Infrastructure
18,000
20.00
Michael C. Bush
Executive Vice President, Communications
18,000
20.00
Charles R. Faust
Vice President
8,000
20.00Vote required
The approval of the 2002 plan requires the
Company's executive officers, directors and beneficial ownersconsent ofmore than 10%a majority of theCompany's Common Stock (collectively, "Insiders") to file reportsshares ofownership and changesour common stock. Any action other than the delivery of a properly executed proxy will have the practical effect of voting against the 2002 plan.Recommendation of our board of directors
Our Board believes that the 2002 plan is in
ownership of Common Stock of the Company with the Securities and Exchange Commissionour best interests and theNasdaq Stock Market,best interests of our stockholders andto furnish the Company with copiesunanimously recommends a vote "for" approval ofall Section 16(a) forms they file. Based solely on its review of the copies of such forms received by it, or written representations from certain reporting persons that no Form 5s were requiredthis proposal. Your proxies will be voted forthose persons, the Company believes that its Insiders complied with all applicable Section 16 filing requirements for fiscal 2000.this proposal unless you specifically indicate otherwise.24
INDEPENDENT PUBLIC ACCOUNTANTSDeloitte & Touche LLP, certified public accountants, acted as
the Company'sour independent auditors and auditedtheour consolidated financial statementsof the Companyfor the fiscal year endedOctober 1, 2000. The Company hasSeptember 30, 2001. We have been advised that Deloitte & Touche LLP is independent with respect tothe Companyus within the meaning of the Securities Act of1993,1933, as amended, and the applicable published rules and regulations thereunder. The audit committee of the board has selected Deloitte & Touche LLP as independent accountants to audit our consolidated financial statements for fiscal 2002. Arepresentativemember of that firm is expected to be present at theMeetingmeeting, will have an opportunity to make a statement if he or she desires to do so, andthe representative is expected towill be available to respond to appropriate questions.The Board of Directors has recommended thatIf Deloitte & Touche LLPbe appointedshould decline to act or otherwise become incapable of acting, or if Deloitte & Touche LLP's engagement is discontinued for any reason, the audit committee will appoint another accounting firm to serve asthe Company's auditorsour independent public accountants for fiscal 2002.Audit fees
Deloitte & Touche LLP's fees for the fiscal 2001 audit and the quarterly reviews, including review of Forms 10-Q, were $546,000, of which an aggregate amount of $262,000 was billed through September 30, 2001.
Financial information systems and implementation fees
Deloitte & Touche LLP did not render any services related to financial information systems design and implementation for the fiscal year ended September 30, 2001.
All other fees
Aggregate fees billed for all other services rendered by Deloitte & Touche LLP for the fiscal year ended September 30, 2001 were $58,000. The audit committee of our board of directors considers these services compatible with maintaining Deloitte & Touche LLP's independence.
STOCKHOLDER PROPOSALS FOR20022003 ANNUAL MEETINGAny stockholder who wishesIf you wish to present a proposal for action at
the 2002 Annual Meetingour 2003 annual meeting ofStockholdersstockholders andwho wisheswish to have it set forth in thecorrespondingproxy statement andidentified in the correspondingform of proxyprepared bythat management will prepare, you must notifythe Companyus no later than September 1,20012002 insuchthe formasrequired under the rules and regulations promulgated by the Securities and Exchange Commission. Otherwise, your proposal will not be included in management's proxy materials.If you wish to present a proposal for action at our 2003 annual meeting of stockholders, even though it will not be included in management's proxy materials, our bylaws require that you must notify us no earlier than 90 days, and no later than 60 days, before the date of the 2003 annual meeting. However, if we do not notify you, or otherwise publicly disclose, the date of the 2003 annual meeting at least 70 days before the date of the meeting, you may notify us of the proposal you wish to present within ten days after the day on which we mail notice of, or otherwise publicly disclose, the date of our 2003 annual meeting. Your notice must be in the form required by our bylaws.
Our board of
Directorsdirectors does not know of any other matters to be presented at theMeeting,2002 annual meeting of stockholders but, if other matters do properly come before theMeeting,meeting, it is intended that the persons named as proxies in the proxy will vote on them in accordance with their best judgment.A copy of
the Company's 2000 Annual Report for the fiscal year ended October 1, 2000our 2001 annual report is being mailed to each stockholder of record together with thisProxy Statement.proxy statement. TheCompany has filed with2001 annual report includes our audited financial statements for theSecurities and Exchange Commission its Annual Reportfiscal year25
ended September 30, 2001. Our annual report on Form 10-K
for the fiscal year ended October 1, 2000. This Report containsincludes these financial statements, as well as more detailed informationconcerning the Companyabout us anditsour operations, supplementary financial information and certainschedules whichschedules. The annual report and Form 10-K are notincluded in the 2000 Annual Report. A COPYpart of our proxy soliciting material. COPIES OFTHISTHE ANNUAL REPORTWILLON FORM 10-K, WITHOUT EXHIBITS, CAN BEFURNISHED TO STOCKHOLDERSOBTAINED WITHOUT CHARGEUPON REQUEST TO:BY CONTACTING US AT: Investor Relations, Tetra Tech, Inc., 670 North Rosemead Boulevard, Pasadena, California 91107; telephone number (626)351-4664; or via e-mail at ir@tetratech.com. The Annual Report and Form 10-K are not part351-4664.
By order of the
Company's soliciting material. By Orderboard ofthe Board of Directors /s/directorsRichard A. Lemmon
Richard A. Lemmon
Executive Vice President, Administration and SecretaryPasadena, California
January15, 2001 2418, 2002 26
ANNEX ATETRA TECH, INC. BOARD OF DIRECTORS INDEPENDENT AUDIT COMMITTEE CHARTER SCOPE OF RESPONSIBILITY The Independent Audit Committee (the "Audit Committee") of the Board of Directors (the "Board") forTetra Tech, Inc.
(the "Company") is responsible for effective oversight of the Company's financial reporting process and adequacy of internal controls, relationships with external and internal auditors and financial compliance issues. The Company's independent auditor is accountable to the Audit Committee and the Board, as representatives of the Company's stockholders. The Audit Committee and the Board have the ultimate authority to select (or nominate for stockholder approval), evaluate and, where appropriate, replace the independent auditor. DESCRIPTION OF FUNCTIONS AND ACTIVITIES
2002 Stock Option Plan
1.
Shall be an effective independent committee with oversight responsibility for and an understanding of the Company's financial statements. Members of the Audit Committee shall have no relationship to the Company that may interfere with a Committee member's exercising their independence from management and the corporation. At least one member of the Committee shall have accounting or related financial management expertise. 2. Evaluate the audit activities of the Company's independent public accountants and internal auditors. 3. Receive periodic reports from the independent auditor regarding the auditor's independence consistent with Independent Standards Board Standard 1, discuss such reports with the auditor, and if so determined by the Audit Committee, recommend that the Board take appropriate action to oversee the independence of the independent auditor. 4. Review and approve the Company's operating policies and practices, including information security practices. 5. Provide oversight of the financial reporting process and adequacy of internal controls. 6. Maintain direct relationship with external and internal auditors. 7. Examine the external and internal auditors' findings relevant to: - significant accounting policies - significant audit adjustments - any significant disagreements with management - auditors' awareness of management consultation with other accountants 8. Encourage and strongly support enhanced dialogue about the Company's financial statements among corporate management and outside auditors relevant to: - quality of earnings - accounting practices adopted - estimates and judgments made by management - unrecorded audit adjustments - clarity of financial disclosures 9. Conduct a review meeting following the completion of the Company's fiscal year with at least one additional meeting conducted within the fiscal year. 10. Continually review approaches to improving the Audit Committee effectiveness. A-1Purpose. ANNEX B TETRA TECH, INC. 2001 STOCK PLAN 1. PURPOSE.The purpose of the Tetra Tech, Inc.
20012002 Stock Option Plan ("Plan") is to promote the interests of Tetra Tech, Inc. ("Company") and its stockholders by enablingitthe Company to offergrants of stockParticipants an opportunity to acquire an equity interest in the Company so as to better attract, retain, and reward its employees, directors (excluding non-employee directors) and other persons providing services toitthe Company and, accordingly, to strengthen the mutuality of interests betweenthose personsParticipants and the Company's stockholders by providingthose personsParticipants with a proprietary interest in pursuing the Company's long-term growth and financial success.
2.
DEFINITIONS.Definitions.For purposes of this Plan, the following terms shall have the meanings set forth below.
- (a)
"Board"- "Board" means the Board of Directors of Tetra Tech, Inc.
- (b)
"Code"- "Code" means the Internal Revenue Code of
1986.1986, and the applicable regulations thereunder. Reference to any specific section of the Code shall be deemed to be a reference to any successor provision.- (c)
"Committee"- "Committee" means the
administrative Committee ofcommittee appointed by the Board, if any, to administer this Planthatas permitted bySection 5below or, if no such committee isprovided in Section 3 of this Plan.appointed, the Board.- (d)
"Common- "Common Stock" means the common stock of the Company or any security issued in substitution, exchange, or in lieu thereof.
- (e)
"Company"- "Company" means Tetra Tech, Inc., a Delaware corporation, or any successor corporation. Except where the context indicates otherwise, the term "Company" shall include its
Parent andSubsidiaries.- (f)
"Disabled"- "Disabled" means permanent and total disability, as defined in Code Section 22(e)(3).
- (g)
"Exchange- "Exchange Act" means the Securities Exchange Act of 1934.
- (h)
"Fair- "Fair Market Value" of Common Stock for any day shall be determined in accordance with the following
rules.rules:
- (i)
- If the Common Stock is admitted to trading or listed on a national securities exchange, the last reported sale price on that day regular way, or if no such reported sale takes place on that day, the average of the last reported bid and ask prices on that day regular way, in either case on the principal national securities exchange on which the Common Stock is admitted to trading or listed.
- (ii)
- If not listed or admitted to trading on any national securities exchange, the last sale price regular way on that day reported on the Nasdaq National Market ("Nasdaq National Market") of the Nasdaq Stock Market ("NSM") or, if no such reported sale takes place on that day, the average of the closing bid and ask prices regular way on that day.
- (iii)
- If not traded or listed on a national securities exchange or included in the Nasdaq National Market, the last reported sale price on that day regular way, or if no such reported sale takes place on that day, the average of the closing bid and ask prices regular way on that day reported by the NSM, or any comparable system on that day.
27
- (iv)
- If the Common Stock is not included in (i), (ii) or (iii) above, the last reported sale price on that day regular way, or if no such reported sale takes place on that day, the closing bid and ask prices regular way on that day as furnished by any member of the National Association of Securities Dealers, Inc. ("NASD") selected from time to time by the Company for that purpose.
B-1If the national securities exchange, Nasdaq National Market, NSM or NASD, as applicable, are closed on such date, the "Fair Market Value" shall be determined as of the last preceding day on which the Common Stock was traded or for which bid and ask prices are available. In the case of an Incentive Stock Option, "Fair Market Value" shall be determined without reference to any restriction other than one that, by its terms, will never lapse.
- (i)
"Incentive- "Incentive Stock Option" means an option to purchase Common Stock that is an incentive stock option within the meaning of Code Section 422.
- (j)
"Insider"- "Insider" means a person who is subject to Section 16 of the Exchange Act.
- (k)
"Non-Qualified- "Non-Qualified Stock Option" means any option to purchase Common Stock that is not an Incentive Stock Option.
- (l)
"Option"- "Option" means an Incentive Stock Option or a Non-Qualified Stock Option.
- (m)
"Parent" shall mean any corporation (other than Tetra Tech, Inc.) in an unbroken chain of corporations ending with Tetra Tech, Inc. if each of the corporations (other than Tetra Tech, Inc.) owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in the chain, as determined in accordance with the rules of Code Section 424(e). (n) "Participant"- "Participant" means a person who was been granted an Option
or Restricted Stockunder the Plan.(o) "Plan"- (n)
- "Plan" means this Tetra Tech, Inc.
20012002 Stock Option Plan, as it may be amended from time to time.(p) "Restricted Stock" means shares of Common Stock issued under Section 9 of this Plan below that are subject to restrictions upon assignment or alienation prior to vesting. (q) "Severance"- (o)
- "Severance" means, with respect to a Participant, the termination of the Participant's provision of services to the Company as an employee
director,or independent contractor, whether by reason of death, disability, or any other reason. For purposes of determining the exercisability of an Incentive Stock Option, a Participant who is on a leave of absence that exceeds ninety (90) days will be considered to have incurred a Severance on the ninety-first (91st) day of the leave of absence, unless the Participant's rights to reemployment are guaranteed by statute or contract. However, a Participant will not be considered to have incurred a Severance because of a transfer of employment between the Company and a Subsidiaryor Parent(or vice versa).(r) "Subsidiary"- (p)
- "Subsidiary" means any corporation or entity in which Tetra Tech, Inc., directly or indirectly, controls fifty percent (50%) or more of the total voting power of all classes of its stock having voting power, as determined in accordance with the rules of Code Section 424(f).
(s) "Ten- (q)
- "Ten Percent Shareholder" means any person who owns (after taking into account the constructive ownership rules of Code Section 424(d)) more than ten percent (10%) of the stock of the Tetra Tech, Inc. or of any of its
ParentsSubsidiaries.
3. Eligibility.
All employees (including employee directors) and other persons providing bona fide services to the Company or
Subsidiaries. 3. ADMINISTRATION.any Subsidiary are eligible to receive Options under this Plan. However, Incentive Stock Options may only be granted to employees of the Company or of a Subsidiary.
4. Substitute Options.
In the event the Company acquires another entity, the Committee may authorize the issuance of Options ("Substitute Options") to employees and other persons in substitution of stock options previously granted to them in connection with their performance of services for such acquired entity
28
upon such terms and conditions as the Committee shall determine but which shall not be contrary to applicable law, taking into account the limitations of Code Section 424(a) in the case of any Substitute Option that is intended to be an Incentive Stock Option.
5. Administration.
- (a)
- This Plan shall be administered by a Committee consisting of two or more members of the Board appointed by the Board. The Board may remove members from, or add members to, the Committee at any time. To the extent possible and advisable, the Committee shall be composed of individuals
thatwho satisfy Rule 16b-3 under the Exchange Act and Code Section 162(m). Notwithstanding anything herein to the contrary, any action which may be taken by the Committee may also be taken by the Board.B-2- (b)
- The Committee may conduct its meetings in person or by telephone. A majority of the members of the Committee shall constitute a quorum, and any action shall constitute the action of the Committee if it is authorized by:
- (i)
- A majority of the members present at any meeting conducted in accordance with the Company's bylaws; or
- (ii)
- The unanimous consent of all of the members in writing without a meeting.
- (c)
- The Committee is authorized to interpret this Plan and to adopt rules and procedures relating to the administration of this Plan. All actions of the Committee in connection with the interpretation and administration of this Plan shall be binding upon all parties.
- (d)
- Subject to the limitations
of Sections 10 and 14 of this Plan,set forth below, the Committee is expressly authorized to make such modifications to this Plan andtothegrants of Restricted StockOptions granted hereunder as are necessary to effectuate the intent of this Plan as a result of any changes in the tax, accounting, or securities laws treatment of Participants, the Company and the Plan.- (e)
- The Committee may delegate its responsibilities to others under such conditions and limitations as it may prescribe, except that the Committee may not delegate its authority with regard to the granting of Options
or Restricted Stockto Insiders if that would cause such grants to fail to satisfy Rule 16b-3 under the Exchange Act or Code Section 162(m).4. DURATION OF PLAN. (a)
6. Effective Date.
This Plan shall be effective
as ofon December29, 2000,18, 2001, provided it is approved by the holders of a majority of the Common Stock, at the Company'sstockholders, in accordance with2002 Annual Meeting. If theprovisions of Code Section 422, within twelve (12) months before or after the date of its adoption by the Board. (b) In the event that thisPlan is notsoapproved by the stockholders at that meeting, the Plan and all Options issued under the Plan will terminate. The approval by the stockholders must relate to:
- (a)
- The class of individuals who are entitled to receive Incentive Stock Options; and
- (b)
- The maximum number of shares of Common Stock that may be issued under the Plan, except as adjusted pursuant toSection 13of this
Plan shall terminate and any Options granted under this Plan shallPlan.If either of those items is changed, the approval of the stockholders must again be
void. (c)obtained.
7. Termination of Plan.
This Plan shall terminate on December
29, 2010,17, 2011, except with respect to Options then outstanding.5. NUMBER OF SHARES. (a)However, the Board may elect to terminate the Plan on a prior date. Theaggregatetermination of this Plan shall not adversely affect the rights of any Participant with respect to any Option outstanding as of the time of such termination.29
8. Shares Subject to this Plan.
- (a)
- The maximum number of shares of Common Stock which may be issued pursuant to this Plan shall be
FiveFour Million(5,000,000)(4,000,000).The maximum number of shares that may be issued to a single Participant is One Million (1,000,000). (b)Upon the expiration or termination of an outstanding Option which shall not have been exercised in full, the shares of Common Stock remaining unissued under the Option shall again become available for use under the Plan.(c) Upon the forfeiture- (b)
- The maximum number of
shares of Restricted Stock, the forfeitedshares of Common Stock that may be issuable pursuant to Options granted during any calendar year to any Participant is two hundred thousand (200,000) shares. For purposes of determining the maximum number of shares that may be issued to a single Participant, shares subject to a terminated Option shallagain become availablebe considered outstanding.- (c)
- In the event a Participant pays part or all of the exercise price of an Option by surrendering shares of Common Stock that the Participant previously acquired, only the number of shares issuable to the Participant in excess of those surrendered shall be taken into account for
usepurposes of determining the maximum number of shares that may be issued under thePlan. 6. ELIGIBILITY. (a) Persons eligible for Options under thisPlan,shall consist of employees, directors,both as to that Participant andother persons providing services to the Company. However, Incentive Stock Options may only be granted to employees. (b) Notwithstanding anything in this Plan to the contrary,in theevent that the Company acquires another entity, the Committee may authorize the issuanceaggregate (to all Participants).
9. Form of
Options ("Substitute Options") to individuals or entities in substitution of stock options previously granted to those individuals or entities in connection with their performance of services for such acquired entity upon such terms and conditions as the Committee shall determine but which shall not be contrary to applicable law, taking B-3into account the limitations of Code Section 424(a) in the case of a Substitute Option that is intended to be an Incentive Stock Option. 7. FORM OF OPTIONS.Options.
- (a)
- Options shall be granted under this Plan on such terms and in such form as the Committee may approve, which shall not be inconsistent with the provisions of this
Plan.Plan, but which need not be the same for each such grant. Options may be either Nonqualified Stock Options or Incentive Stock Options.- (b)
- The
exercise priceterms and conditions of each Option shall include, in addition to such other terms and conditions as may be established by the Committee, (i) the per shareof Common Stock purchasable under an Option shall be set forth in the Option, which in all cases shall be at least equal to the Fair Market Value of the Common Stock on the date of the grant. (c) Theexercise price ofan Incentive Stocksuch Optiongranted to a Ten Percent Shareholder shall be no less than one hundred ten percent (110%)in accordance withsubparagraph (c)below, (ii) the termination date of such Option, and (iii) the effect on such Option of theFair Market Value of the Common Stock on the date of the grant. 8. EXERCISE OF OPTIONS. (a)Participant's Severance. Subject to all other provisions of this Plan, each Option shall become exercisable (i) as to one-fourth (1/4)1/4) of the full number of shares subject thereto one year after the date of grant and (ii) as to the balance in thirty-six (36) equal cumulative monthly installments following such first anniversary date, or in such other installments and at such other intervals as the Board or the Committee may in any specific case otherwise determine in granting such Option. Any Option shall be exercisable following the date of the Participant's Severance only to the extent (if at all) such Option was exercisable on the date of Severance.(b)- (c)
- The
aggregateexercise price per share of Common Stock purchasable under an Option shall be set forth in the Option, which in all cases shall be at least equal to the Fair Market Value(determined asof the Common Stock on the date ofgrant) ofthenumber of shares of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year shall not exceed one hundred thousand dollars ($100,000) or such other limit as may be required by Section 422 of the Code. To the extent this limit is exceeded, the surplus shares shall be treated as acquired upon the exercise of a Non-Qualified Stock Option. For this purpose, the shares will be taken into account in the order in which the underlying Options were granted. (c) Options shall only be exercisable for whole numbers of shares and for a minimum of 100 shares. (d) Options are exercised by payment of the full amount of the purchase price to the Company. (i)grant. Thepayment shall be in the form of cash or such other forms of consideration as the Committee shall deem acceptable, such as the surrender of outstanding shares of Common Stock owned by the Participant (that have been held a sufficient period of time (if any) to avoid adverse accounting treatment) or by withholding shares that would otherwise be issued upon the exercise of the Option. (ii) If the payment is made by means of the surrender of Restricted Stock, a number of shares issued upon the exercise of the Option equal to the number of shares of Restricted Stock surrendered shall be subject to the same restrictions as the Restricted Stock that was surrendered. (iii) After giving due considerations to the consequences under Rule 16b-3 under the Exchange Act and under the Code, the Committee may also authorize the exercise of Options by the delivery to the Company or its designated agent of an irrevocable written notice of exercise form together with irrevocable instructions to a broker-dealer to sell or margin a sufficient portion of the shares of Common Stock and to deliver the sale or margin loan proceeds directly to the Company to pay theexercise price of an Incentive Stock Option granted to a Ten Percent Shareholder shall be no less than one hundred ten percent (110%) of theOption. B-49. RESTRICTED STOCK. (a) The Committee may issue grantsFair Market Value ofRestrictedthe Common Stockuponon the date of the grant.- (d)
- Any Option which is intended, as evidenced by its designation, as an Incentive Stock Option shall be made subject to such terms and conditions as
itmaydeem appropriate, which need notbe required for such Option to qualify as an Incentive Stock Option. Incentive Stock Options granted under this Plan shall also include a requirement that thesame for eachParticipant receiving suchgrant. (b) RestrictedIncentive Stockmay notOption must notify the Company if he or she disposes of Common Stock acquired pursuant to the exercise thereof prior to the expiration of the holding periods prescribed in Section 422(a)(1) of the Code.30
- (e)
- If an Option is intended to be
soldexempt from the million dollar ($1,000,000) compensation deduction limitation of Code Section 162(m), in addition toParticipants for less than Fair Market Value without taking into consideration any consequencesthe exercise price requirement ofsubparagraph (c), the grant must be made by a committee composed exclusively of two (2) or more "outside directors" as that term is defined under Code Section 162(m).(c) A Participant shall not have a vested right to the shares subject to the grant10. Modification of
Restricted Stock until satisfaction of the vesting requirements specified in the grant. The Participant may not assign or alienate the Participant's interest in the shares of Restricted Stock prior to vesting. (d) The following rules apply with respect to events that occur prior to the date on which the Participant obtains a vested right to the Restricted Stock. (i) Stock dividends, shares resulting from stock splits, ETC. that are issued with respect to the shares covered by a grant of Restricted Stock shall be treated as additional shares received under the grant of Restricted Stock. (ii) Cash dividends constitute taxable compensation to the Participant that is deductible by the Company. 10. MODIFICATION OF OPTIONS.Options.
- (a)
- The Committee may modify
anany existing Optionincludingas it deems appropriate. Such authority shall include, without limitation, the rightto: (i) Accelerateto accelerate the right to exerciseit; (ii) Extendany Option, extend or renewit; or (iii) Cancel itany Option, andissue a newmodify any restrictions with respect to any Option. However, in no event will the exercise price of any outstanding Option be reduced or repriced (as determined under applicable accounting standards), including any repricing effected by issuing replacement stock options for outstanding stock options that have an exercise price greater than the Fair Market Value of the Common Stock, without first obtaining stockholder approval.- (b)
- No modification may be made to
anany Option that wouldimpairadversely affect the rights of the Participant holding the Option without the Participant's consent. Further, no such modification may be made within taking into consideration any consequences under Code Section 162(m).Modifications similar- (c)
- In the event the Committee amends the terms of an Option so that it no longer qualifies as an Incentive Stock Option, the limitations imposed upon the Option under the Code and the Plan by virtue of it (formerly) qualifying as an Incentive Stock Option shall no longer apply, to
those described above can be made to grants of Restricted Stock. (b)the extent specified in the amendment.- (d)
- Whether a modification of an existing Incentive Stock Option will be treated as the issuance of a new Incentive Stock Option will be determined in accordance with the rules of Code Section 424(h).
(c)Whether a modification of an existinggrant of Restricted Stock or of anOption granted to an Insider will be treated as a new grant for purposes of Section 16 of the Exchange Act will be determined in accordance with Rule 16b-3 under the Exchange Act.11.
TERMINATION OF OPTIONS. (a)Termination of Options.Except to the extent the terms of an Option require its prior termination, each Option shall terminate on the earliest of the following dates:
(i)
- (a)
- The date which is ten (10) years from the date on which the Option is granted or five (5) years in the case of an Incentive Stock Option granted to a Ten Percent Shareholder.
(ii)- (b)
- The date which is one (1) year from the date of the Severance of the Participant to whom the Option was granted, if the Participant was Disabled at the time of Severance.
(iii)- (c)
- The date which is one (1) year from the date of the Severance of the Participant to whom the Option was granted, if the Participant's death occurs:
(A)
- (i)
- While the Participant is employed by the Company; or
B-5(B)- (ii)
- Within three (3) months following the Participant's Severance.
(iv)
- (d)
- In the case of any Severance other than one described in
Subparagraphs (ii)subparagraphs (b) or(iii)(c) above, the date that is three (3) months from the date of the Participant's Severance.31
12.
NON-TRANSFERABILITY OF GRANTS. (a)Non-transferability of Options.No Option under this Plan shall be assignable or transferable except by will or the laws of descent and distribution.
(b) Grants of Restricted Stock shall be subject to such restrictions on transferability as may be imposed in such grants.
13.
ADJUSTMENTS.Adjustments
- (a)
- In the event of any change in the capitalization of the Company affecting its Common Stock
(E.G.(e.g., a stock split, reverse stock split, stock dividend, recapitalization, combination, or reclassification), the Committee shall authorize such adjustments as it may deem appropriate with respect to:
- (i)
- The maximum number of shares of Common Stock that may be issued under this Plan;
- (ii)
- The number of shares of Common Stock covered by each outstanding Option;
- (iii)
- The exercise price per share in respect of each outstanding Option; and
- (iv)
- The maximum number of shares that may be issued to a single individual.
- (b)
- The Committee may also make such adjustments in the event of a spin-off or other distribution of Company assets to stockholders, other than normal cash dividends.
14.
MERGERS; REORGANIZATIONS. NotwithstandingChange in Control.In connection with any
other provision of this Plan, in the event of amergershare exchange, reorganizationor consolidation of the Company with or into another entity in which the Company is not the surviving corporation orsurvivesas asubsidiaryresult ofanother corporation (a "Merger"), each outstanding Option shall be assumed or an equivalent option substituted bywhich thesuccessor corporation or a Parent or Subsidiary of the successor corporation (the "Successor Corporation"). In the event that the Successor Corporation refuses to assume or substitute for the Option, the Participant shall fully vest in and have the right to exercise the Option as to all of the shares ofCommon Stockpurchasable under the Option, including shares that would not otherwise be vestedceases orexercisable. If an Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a Merger, the Company shall notify the Participant in writing or electronically that the Option shall be fully vested and exercisable for a period of fifteen (15) days from the date of such notice, and the Option shall terminate upon the expiration of such period. For purposes of this Section 14, the Option shall be considered assumed if, following the Merger, the option confers the right to purchase or receive, for each share of Common Stock subject to the Option immediately prior to the Merger, the consideration (whether stock, cash or other securities or property) received in the Merger by holders of Common Stock for each share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the Merger is not solely common stock of the Successor Corporation or its Parent, the Company may, with the consent of the Successor Corporation, provide for the considerationwill cease to bereceived upon the exercise of the Option, for each share of Common Stock subject to the Option, to be solely common stock of the Successor Corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Merger. The Board orpublicly traded, the Committee may,in any specific case, specifically provide, in an option agreement or otherwise, forbut shall not be required to, authorize thetreatmenttermination ofan Option in a manner different than that set forth aboveall outstanding Options upon theB-6occurrenceconsummation of such merger or consolidation. However, as a condition to such termination, all restrictions on the exercisability of such Options (i.e., vesting provisions) shall be eliminated and the holders thereof shall be given at least twenty (20) days prior to such termination to exercise their Options without regard to anyMerger, but in the absence thereof the above provisions of this Section 14 shall govern the Option.such restrictions.
15.
AMENDMENT AND TERMINATION.Amendment and Termination.
- (a)
- The Board may at any time amend or terminate this Plan. However, no modification may be made to the Plan that would impair the rights of the Participant holding an Option without the Participant's consent.
- (b)
- Without the approval of the holders of a majority of the
stockholders of the Company,Common Stock, the Board may not amend the provisions of this Planregarding:for the purpose of:
- (i)
The- Modifying the class of individuals entitled to receive
Incentive StockOptions;or- (ii)
The- Increasing the maximum number of shares of Common Stock that may be issued under the Plan, except as provided inSection 13of this Plan; or
- (iii)
- Materially increasing the benefits which accrue to Participants under this Plan.
16.
NOTICE OF DISQUALIFYING DISPOSITION. A Participant must notify the Company if the Participant disposes of stock acquired pursuant to the exercise of an Incentive Stock Option issued under the Plan prior to the expiration of the holding periods required to qualify for long-term capital gains treatment on the disposition. 17. TAX WITHHOLDING.Withholding.
- (a)
- The Company shall have the right to take such actions as may be necessary to satisfy its tax withholding obligations relating to the operation of this Plan.
- (b)
- If Common Stock that was surrendered by the Participant is used to satisfy the Company's tax withholding obligations, the stock shall be valued based on its Fair Market Value when the tax withholding is required to be made. The maximum number of shares
32
that may be withheld is the minimum number of shares necessary to satisfy the applicable tax withholding rules.
18. NO ADDITIONAL RIGHTS.
17. Additional Rights.
- (a)
- Neither the adoption of this Plan nor the granting (or exercise) of any Option
or Restricted Stockshall:
- (i)
- Affect or restrict in any way the power of the Company to undertake any corporate action otherwise permitted under applicable law;
or- (ii)
- Confer upon any Participant the right to continue performing services for the
Company, nor shall it interfereCompany; or- (iii)
- Interfere in any way with the right of the Company to terminate the services of any Participant at any time, with or without
cause.cause, subject to such other contractual obligations as may exist.
- (b)
- No Participant shall have any rights as a
shareholderstockholder with respect to any shares covered by an Option granted to the Participantor subject to a grant of Restricted Stockuntil the date a certificate for such shares has been issued to theParticipant. 19. SECURITIES LAW RESTRICTIONS.Participant following the exercise of the Option.
18. Securities Law Restrictions.
- (a)
- No shares of Common Stock shall be issued under this Plan unless the Committee shall be satisfied that the issuance will be in compliance with applicable federal and state securities
laws.laws, as well as the requirements of any stock exchange or quotation system upon which the Common Stock is listed or quoted.- (b)
- The Committee may require certain investment (or other) representations and undertakings by the Participant (or other person exercising an Option
or purchasing Restricted Stockby reason of the death of the Participant) in order to comply with applicable law.- (c)
- Certificates for shares of Common Stock delivered under this Plan may be subject to such restrictions as the Committee may deem advisable. The Committee may cause a legend to be placed on the certificates to refer to these restrictions.
B-720. INDEMNIFICATION.
19. Indemnification.
- (a)
- To the maximum extent permitted by law, the Company shall indemnify each member of the Board, as well as any other employee of the Company with duties under this Plan, against expenses (including any amount paid in settlement) reasonably incurred by the individual in connection with any claims against him or her by reason of the performance of the individual's duties under this Plan, unless the losses are due to the individual's gross negligence or lack of good faith.
21. GOVERNING LAW.- (b)
- The Company will have the right to select counsel and to control the prosecution or defense of the suit.
- (c)
- In the event that more than one person who is entitled to indemnification is subject to the same claim, all such persons shall be represented by a single counsel, unless such counsel advises the Company in writing that he or she cannot represent all such persons under applicable rules of professional responsibility.
- (d)
- The Company will not be required to indemnify any person for any amount incurred through any settlement unless the Company consents in writing to the settlement.
20. Governing Law.
This Plan and all actions taken thereunder shall be governed by and construed in accordance with the laws of the State of Delaware.
B-833
COMMON STOCK
PROXY
TETRA TECH, INC.
BOARD OF DIRECTORS
The undersigned hereby appoints Li-San Hwang and Richard A. Lemmon, or either of them, the true and lawful attorneys and proxies of the undersigned, with full power of substitution, to vote all shares of the Common Stock, $.01 par value ("Common Stock"), of TETRA TECH, INC. (the "Company") which the undersigned is entitled to vote, at the Annual Meeting of the Stockholders of the Company to be held at The Doubletree Hotel, 199 N. Los Robles Avenue, Pasadena, California 91101 on
Thursday,Tuesday, February22, 200119, 2002 at 10:00 a.m., Pacific Standard Time, and at any and all adjournments thereof, on the proposals set forth below and any other matters properly brought before the Meeting.1. ELECTION OF DIRECTORS FOR all nominees WITHHOLD AUTHORITY / / listed below / / to (except
1. ELECTION OF DIRECTORS / / FOR all nominees listed below / / WITHHOLD AUTHORITY to (except as marked to the contrary below) vote for all nominees (INSTRUCTION: To withhold authority to vote for
allany individual nominee, mark thecontrary below) nominees (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE BOX NEXT TO THE NOMINEE'S NAME BELOW.box next to the nominee's name below.)/
/LI-SAN HWANG/Li-San Hwang / /J.CHRISTOPHER LEWISChristopher Lewis //PATRICK/Patrick C.HADENHaden/
/JAMES/James J.SHELTONShelton //DANIEL/Daniel A.WHALEN 2. AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 50,000,000 TO 85,000,000.Whalen/ / FOR / / AGAINST / / ABSTAIN
3.2. Approval and adoption of the Company's
20012002 Stock Option Plan./ / FOR / / AGAINST / / ABSTAIN
4.3. Such other matters as may properly come before the Meeting.
THE DIRECTORS RECOMMEND A VOTEThe Directors recommend a vote FOR
ALL NOMINEES LISTED IN PROPOSALall Nominees listed in Proposal 1 and FORPROPOSAL 2 AND FOR PROPOSAL 3. (CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)(CONTINUED FROM OTHER SIDE)Proposal 2.(Continued and to be signed on the other side)
(Continued from other side)
Unless a contrary direction is indicated, this Proxy will be voted FOR all nominees listed in Proposal 1
FOR Proposal 2and FOR Proposal3;2; if specific instructions are indicated, this Proxy will be voted in accordance therewith.All proxies to vote at said Meeting or any adjournment thereof heretofore given by the undersigned are hereby revoked. Receipt of Notice of Annual Meeting and Proxy Statement dated January
15, 200118, 2002 is acknowledged.Please mark, sign, date and return this Proxy in the accompanying prepaid envelope.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF TETRA TECH, INC.This Proxy is solicited on behalf of the Board of Directors of Tetra Tech, Inc.
Dated:
_________________, 2001 ______________________________, 2002(Signature)
______________________________(Signature)
Please sign exactly as your name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney, as executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person.