Exhibit 10.2


 


TETRA TECH, INC.


2005 EQUITY INCENTIVE PLAN


 


ARTICLE I.

PURPOSE


 


1.1                                 Purpose.  The purpose of the Tetra Tech, Inc.
2005 Equity Incentive Plan (the “Plan”) is to promote the interests of
Tetra Tech, Inc. (the “Company”) and its stockholders by enabling the
Company to offer Participants an opportunity to acquire an equity interest in
the Company so as to better attract, retain, and reward its Service Providers
and other persons providing services to the Company and, accordingly, to
strengthen the mutuality of interests between Participants and the Company’s
stockholders by providing Participants with a proprietary interest in pursuing
the Company’s long-term growth and financial success.  This Plan hereby amends, restates and renames
as set forth herein, effective November 14, 2005, subject to the approval
of the Company’s stockholders, the Tetra Tech, Inc. 2002 Stock Option Plan
(the “2002 Plan”).


 


ARTICLE II.

SHARE LIMITS


 


2.1                                 Shares Subject to the Plan.


 


(a)                                  Share Reserve. 
Subject to adjustment under Section 2.3 of the Plan, the sum
of Three Million (3,000,000) Shares plus the number of remaining Shares under
the 2002 Plan (not subject to outstanding Awards and not delivered out of
Shares reserved thereunder) as of the date of stockholder approval of the Plan shall
be initially reserved for issuance pursuant to Awards made under the Plan.  At all times the Company will reserve and
keep available a sufficient number of Shares to satisfy the requirements of all
outstanding Awards made under the Plan and all other outstanding but unvested
Awards made under the Plan that are to be settled in Shares.


 


(b)                                 Shares Counted Against Limitation.  If an Award is exercised, in
whole or in part, by delivery or attestation of Shares under Section 6.4(b),
or if the tax withholding obligation is satisfied by withholding Shares under Section 10.8,
the number of Shares deemed to have been issued under the Plan (for purposes of
the limitation set forth in this Section 2.1) shall be the number
of Shares that were subject to the Award or portion thereof so exercised and
not the net number of Shares actually issued upon such exercise.


 


(c)                                  Lapsed Awards.  If an Award: (i) expires; (ii) is
terminated, surrendered, or canceled without having been exercised in full; or (iii) is
otherwise forfeited in whole or in part, then the unissued Shares that were
subject to such Award and/or such surrendered, canceled, or forfeited Shares
(as the case may be) shall become available for future grant or sale under the
Plan (unless the Plan has terminated), subject however, in the case of
Incentive Stock Options, to any limitations under the Code.


 


(d)                                 Limitation on Full-Value Awards. 
Not more than Seven
Hundred Fifty Thousand (750,000) of the total number of Shares reserved for
issuance under the Plan (as adjusted under Section 2.3) may be
granted or sold as Awards of Restricted Stock, Restricted


 





















 


Stock Units, unrestricted grants of Shares
and other Awards (“Full-Value Awards”) whose intrinsic value is not
solely dependent on appreciation in the price of Shares after the date of
grant.  Options and Stock Appreciation
Rights shall not be subject to, and shall not count against, the limit
described in the preceding sentence.  If
a Full-Value Award expires, is forfeited or otherwise lapses as described in Section 2.1(c),
the Shares that were subject to the Award shall be restored to the total number
of Shares available for grant or sale as Full-Value Awards.


 


(e)                                  Substitute Awards.  The Committee may grant Awards under the Plan
in substitution for stock and stock based awards held by employees, directors,
consultants or advisors of another company (an “Acquired Company”) in
connection with a merger or consolidation of such Acquired Company with the
Company or the acquisition by the Company of property or stock of the Acquired
Company.  The Committee may direct that
the substitute Awards be granted on such terms and conditions as the Committee
considers appropriate in the circumstances. 
Any substitute Awards granted under the Plan shall not count against the
share limitations set forth in Sections 2.1(a) and 2.2.


 


2.2                                 Individual Share Limit.  In
any Tax Year, no Service Provider shall be granted Awards with respect to more
than One Million (1,000,000) Shares.  The
limit described in this Section 2.2 shall be construed and applied
consistently with Section 162(m) of the Code, except that the limit shall
apply to all Service Providers.


 


(a)                                  Awards not Settled in Shares.  If an Award is to be settled
in cash or any medium other than Shares, the number of Shares on which the
Award is based shall count toward the individual share limit set forth in this Section 2.2.


 


(b)                                 Canceled Awards.  Any Awards granted to a Participant that are
canceled shall continue to count toward the individual share limit applicable
to that Participant set forth in this Section 2.2.


 


2.3                                 Adjustments.


 


(a)                                  In the event that there is any dividend or
distribution payable in Shares, or any stock split, reverse stock split,
combination or reclassification of Shares, or any other similar change in the
number of outstanding Shares, then the maximum aggregate number of Shares
available for Awards under Section 2.1 of the Plan, the maximum
number of Shares issuable to a Service Provider under Section 2.2
of the Plan, and any other limitation under this Plan on the maximum number of
Shares issuable to an individual or in the aggregate shall be proportionately
adjusted (and rounded down to a whole number) by the Committee as it deems
equitable in its discretion to prevent dilution or enlargement of the rights of
the Participants.  The Committee’s
determination with respect to any such adjustments shall be conclusive.


 


(b)                                 In the event that there is any extraordinary
dividend or other distribution in respect of the Shares, recapitalization,
reclassification, merger, reorganization, consolidation, combination, sale of
assets, split-up, exchange, spin-off or other extraordinary event, then the
Committee shall make provision for a cash payment, for the substitution or
exchange of any or all outstanding Awards or a combination of the foregoing,
based upon the distribution or consideration payable to holders of the Shares
in respect of such event or on such other terms as the Committee otherwise
deems appropriate.


 


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ARTICLE III.

ADMINISTRATION OF THE PLAN


 


3.1                                 Administration.  The
Plan shall be administered and interpreted by a compensation committee (the “Committee”).  The Committee shall consist of two or more
members of the Board who are “outside directors” as defined under Section 162(m)
of the Code and “non-employee directors” as defined under Rule 16b-3 under
the Exchange Act.


 


3.2                                 Authority of Committee.  The
Committee has the sole authority, subject to the provisions of the Plan, to (i) select
the employees and other individuals to receive Awards under the Plan, (ii) determine
the type, size and terms of the Awards to be made to each individual selected, (iii) determine
the Fair Market Value, (iv) determine the time when the Awards will be
granted and the duration of any applicable exercise and vesting period,
including the criteria for exercisability and vesting and the acceleration of
exercisability and vesting with respect to each individual selected, (v) make
such adjustments or modifications to Awards to Participants who are foreign
nationals or employed outside of the United States in order to recognize
differences in local law, tax policies or customs and (vi) deal with any
other matter arising under the Plan.  The
Committee is authorized to interpret the Plan and the Awards granted under the
Plan, to establish, amend and rescind any rules and regulations relating
to the Plan, and to make any other determination that it deems necessary or
desirable for the administration of the Plan. 
The Committee may correct any defect or supply any omission or reconcile
any inconsistency in the Plan or in any Award in the manner and to the extent
the Committee deems necessary or desirable. 
Any decision of the Committee in the interpretation and administration
of the Plan shall lie within its sole and absolute discretion and shall be
final, conclusive and binding on all parties concerned.  All powers of the Committee shall be executed
in its sole discretion and need not be uniform as to similarly situated
individuals.


 


3.3                                 Committee Manner of Action. 
Unless otherwise provided in the bylaws of the Company or the charter of
the Committee: (i) a majority of the members of a Committee shall
constitute a quorum, and (ii) the vote of a majority of the members
present who are qualified to act on a question assuming the presence of a
quorum or the unanimous written consent of the members of the Committee shall
constitute action by the Committee.  The
Committee may delegate the performance of ministerial functions in connection
with the Plan to such person or persons as the Committee may select.


 


3.4                                 Responsibility of Committee.  No
member of the Board, no member of the Committee and no employee of the Company
shall be liable for any act or failure to act hereunder, except in
circumstances involving his or her bad faith, gross negligence or willful
misconduct, or for any act or failure to act hereunder by any other member of
the Committee or employee of the Company. 
The Company shall indemnify members of the Committee and any employee of
the Company against any and all liabilities or expenses to which they may be
subjected by reason of any act or failure to act with respect to their duties
under the Plan, except in circumstances involving his or her bad faith, gross
negligence or willful misconduct.


 


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ARTICLE IV.

PARTICIPATION


 


4.1                                 Participants.  All Service
Providers are eligible to participate in the Plan; provided, however,
that no Reporting Person may receive an Award unless such person is employed by
or serves as a consultant to the Company. 
Incentive Stock Options may be granted only to Employees.  Consistent with the purposes of the Plan, the
Committee shall have exclusive power to select the Service Providers who may
participate in the Plan (“Participants”).  Eligible individuals may be selected
individually or by groups or categories, as determined by the Committee in its
discretion, and designation as a person to receive Awards in any year shall not
require the Committee to designate such a person as eligible to receive Awards
in any other year.


 


ARTICLE V.

VESTING AND PERFORMANCE OBJECTIVES


 


5.1                                 General.  The vesting schedule or
Period of Restriction for any Award shall be specified in the Award Agreement.  The criteria for vesting and for removing
restrictions on any Award may include (i) performance of substantial
services for the Company for a specified period; (ii) achievement of one
or more Performance Objectives; or (iii) a combination of clauses (i) and
(ii), as determined by the Committee.


 


5.2                                 Period of Absence from Providing Substantial
Services.  To the extent that vesting or removal of
restrictions is contingent on performance of substantial services for a
specified period, a leave of absence (whether paid or unpaid) shall not count
toward the required period of service unless the Award Agreement provides
otherwise.


 


5.3                                 Performance Objectives.


 


(a)                                  Possible Performance Objectives.  Any Performance Objective
shall relate to the Participant’s performance for the Company or the Company’s
business activities or organizational goals, and shall be sufficiently specific
that a third party having knowledge of the relevant facts could determine
whether the Performance Objective is achieved. 
The Performance Objectives with respect to any Award may be one or more
of the following objectives, as established by the Committee in its sole
discretion:


 


•      Achieving
a target level of revenue and/or revenue, net of subcontractor costs;


 


•      Achieving
a target level of income from operations;


 


•      Achieving
a target level of net income;


 


•      Achieving
a target return on the Company’s capital, assets or stockholders’ equity;


 


•      Maintaining
or achieving a target level of appreciation in the price of the Shares;


 


•      Achieving
or maintaining a Share price that meets or exceeds the performance of specified
stock market indices or other benchmarks over a specified period;


 


•      Achieving
a level of Share price, earnings or income performance that meets or exceeds
performance in comparable areas of peer companies over a specified period;


 


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•      Achieving
specified reductions in costs;


 


•      Achieving
specified improvements in collection of outstanding accounts receivable or
specified reductions in write-offs;


 


•      Achieving
a target days sales in receivables (DSR) level; and


 


•      Achieving
a target level of cash flow from operations.


 


(b)                                 Stockholder Approval of Performance Objectives.  The
list of possible Performance Objectives set forth in Section 5.3(a),
above, and the other material terms of Awards of Restricted Stock or Restricted
Stock Units that are intended to qualify as “performance-based compensation”
under Section 162(m) of the Code, shall be subject to reapproval by the
Company’s stockholders at the first stockholder meeting that occurs in 2011.  No Award of Restricted Stock or Restricted
Stock Units that is intended to qualify as “performance-based compensation”
under Section 162(m) of the Code shall be made after that meeting unless
stockholders have reapproved the list of Performance Objectives and other
material terms of such Awards, or unless the vesting of the Award is made
contingent on stockholder approval of the Performance Objectives and other
material terms of such Awards.


 


(c)                                  Documentation of Performance Objectives.  With
respect to any Award, the Performance Objectives shall be set forth in writing
no later than 90 days after commencement of the period to which the Performance
Objective(s) relate(s) (or, in the case of performance periods of less than one
year, in no event after 25% of such period has elapsed) and at a time when
achievement of the Performance Objectives is substantially uncertain.  Such writing shall also include the period
for measuring achievement of the Performance Objectives, which shall be no less
than three consecutive months or greater than five consecutive years, as
established by the Committee.  Once
established by the Committee, the Performance Objective(s) may not be changed
to accelerate the settlement of an Award or to accelerate the lapse or removal
of restrictions on Restricted Stock that otherwise would be due upon the
attainment of the Performance Objective(s).


 


(d)                                 Committee Certification.  Prior to settlement of any Award that is
contingent on achievement of one or more Performance Objectives, the Committee
shall certify in writing that the applicable Performance Objective(s) and any
other material terms of the Award were in fact satisfied.  For purposes of this Section 5.3(d),
approved minutes of the Committee shall be adequate written certification.


 


(e)                                  Negative Discretion.  The Committee may reduce, but may not
increase, the number of Shares deliverable or the amount payable under any
Award after the applicable Performance Objectives are satisfied.


 


ARTICLE VI.

STOCK OPTIONS


 


6.1                                 Terms of Option. Subject to the provisions of the Plan, the
type of Option, term, exercise price, vesting schedule and other
conditions and limitations applicable to each Option shall be as determined by
the Committee and shall be stated in the Award Agreement.


 


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6.2                                 Type of Option.


 


(a)                                  Each Option shall be designated in the Award
Agreement as either an Incentive Stock Option or a Nonqualified Stock Option.


 


(b)                                 Neither the Company nor the Committee shall
have liability to a Participant or any other party if an Option (or any part
thereof) which is intended to be an Incentive Stock Option does not qualify as
an Incentive Stock Option.  In addition,
the Committee may make an adjustment or substitution described in Section 2.3
that causes the Option to cease to qualify as an Incentive Stock Option without
the consent of the affected Participant or any other party.


 


6.3                                 Limitations.


 


(a)                                  Maximum Term.  No Option shall have a term in excess of eight
(8) years measured from the date the Option is granted.  In the case of any Incentive Stock Option
granted to a 10% Stockholder (as defined in Section 6.3(e)), the
term of such Incentive Stock Option shall not exceed five years measured from
the date the Option is granted.


 


(b)                                 Minimum Exercise Price.  Subject to Section 2.3(b), the
exercise price per share of an Option shall not be less than 100% of the Fair
Market Value per Share on the date the Option is granted.  In the case of any Incentive Stock Option
granted to a 10% Stockholder (as defined in Section 6.3(e)),
subject to Section 2.3(b), the exercise price per share of such
Incentive Stock Option shall not be less than 110% of the Fair Market Value per
Share on the date the Option is granted.


 


(c)                                  Repricing Prohibited.  Except as provided in Section 2.3,
the Committee shall not amend any outstanding Option to reduce its exercise
price.  Further, the Committee shall not,
without the approval of the stockholders, cancel any Option and grant a new
Option with a lower exercise price such that the effect would be the same as
reducing the exercise price.


 


(d)                                 $100,000 Limit for Incentive Stock Options. 
Notwithstanding an Option’s designation, to the extent that Incentive
Stock Options are exercisable for the first time by the Participant during any
calendar year with respect to Shares whose aggregate Fair Market Value exceeds
$100,000 (regardless of whether such Incentive Stock Options were granted under
this Plan, the 2002 Plan, or any other plan of the Company), such Options shall
be treated as Nonqualified Stock Options. 
For purposes of this Section 6.3(d), Fair Market Value shall
be measured as of the date the Option was granted and Incentive Stock Options
shall be taken into account in the order in which they were granted.


 


(e)                                  10% Stockholder.  For purposes of this Section 6.3,
a “10% Stockholder” is an individual who, immediately
before the date an Award is granted, owns (or is treated as owning) stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, determined under Section 424(d) of the Code.


 


6.4                                 Form of Consideration.  The
Committee shall determine the acceptable form of consideration for exercising
an Option, including the method of payment. 
In the case of an Incentive Stock Option, the Committee shall determine
the acceptable form of consideration at the time of grant.  To the extent approved by the Committee, the
consideration for exercise of an Option may be paid in any one, or any
combination, of the forms of consideration set forth in subsections (a), (b) and
(c) below.


 


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(a)                                  Cash Equivalent.  Consideration may be paid by cash, check or
other cash equivalent approved by the Committee.


 


(b)                                 Tender or Attestation of Shares. 
Consideration may be
paid by the tendering of other Shares to the Company or the attestation to the
ownership of the Shares that otherwise would be tendered to the Company in
exchange for the Company’s reducing the number of Shares issuable upon the
exercise of the Option.  Shares tendered
or attested to in exchange for Shares issued under the Plan must be held by the
Participant for at least six months prior to their tender or their attestation
to the Company and may not be shares of Restricted Stock at the time they are
tendered or attested to.  The Committee
shall determine acceptable methods for tendering or attesting to Shares to
exercise an Option under the Plan and may impose such limitations and prohibitions
on the use of Shares to exercise Options as it deems appropriate.  For purposes of determining the amount of the
Option price satisfied by tendering or attesting to Shares, such Shares shall
be valued at their Fair Market Value on the date of tender or attestation, as
applicable.


 


(c)                                  Other Methods.  Consideration may be paid using such other
methods of payment as the Committee, at its discretion, deems appropriate from
time to time.


 


6.5                                 Exercise of Option.


 


(a)                                  Procedure for Exercise.  Any Option granted hereunder shall be
exercisable according to the terms of the Plan and at such times and under such
conditions as set forth in the Award Agreement. 
Each Option shall become exercisable in four equal annual installments
commencing on the first anniversary of the date of grant, or in such other
installments and at such other intervals as the Committee may in any specific
case otherwise determine.  An Option
shall be deemed exercised when the Committee receives: (i) written or
electronic notice of exercise (in accordance with the Award Agreement) from the
person entitled to exercise the Option and (ii) full payment for the
Shares (in a form permitted under Section 6.4) with respect to
which the Option is exercised.


 


(b)                                 Termination of Relationship as a Service Provider. 
Following a Participant’s Termination of Service, the Participant (or
the Participant’s Beneficiary, in the case of Termination of Service due to
death) may exercise his or her Option within such period of time as is
specified in the Award Agreement, subject to the following conditions:


 


(i)                                     An Option may be exercised after the
Participant’s Termination of Service only to the extent that the Option was
vested as of the Termination of Service;


 


(ii)                                  An Option may not be exercised after the
expiration of the term of such Option as set forth in the Award Agreement;


 


(iii)                               Unless a Participant’s Termination of Service
is the result of the Participant’s Disability, the Participant may not exercise
an Incentive Stock Option more than three months after such Termination of
Service;


 


(iv)                              If a Participant’s Termination of Service is
the result of the Participant’s Disability, the Participant may exercise an
Incentive Stock Option up to 12 months after Termination of Service; and


 


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(v)                                 After the Participant’s death, his
Beneficiary may exercise an Incentive Stock Option only to the extent that that
the deceased Participant was entitled to exercise such Incentive Stock Option
as of the date of his death.


 


In the absence of a specified time in the Award
Agreement, the Option shall remain exercisable for three months after the
Participant’s Termination of Service for any reason other than Disability or
death, and for 12 months after the Participant’s Termination of Service on
account of Disability or death.


 


(c)                                  Rights as a Stockholder.  Shares subject to an Option shall be deemed
issued, and the Participant shall be deemed the record holder of such Shares,
on the Option exercise date.  Until such
Option exercise date, no right to vote or receive dividends or any other rights
as a stockholder shall exist with respect to the Shares subject to the
Option.  In the event that the Company
effects a split of the Shares by means of a stock dividend and the exercise
price of, and number of shares subject to, an Option are adjusted as of the
date of distribution of the dividend (rather than as of the record date for
such dividend), then a Participant who exercises such Option between the record
date and the distribution date for such stock dividend shall be entitled to
receive, on the distribution date, the stock dividend with respect to the
Shares subject to the Option.  No other
adjustment shall be made for a dividend or other right for which the record
date is prior to the date the Shares are issued.


 


6.6                                 Repurchase Rights.  The
Committee shall have the discretion to grant Options which are exercisable for
unvested Shares.  If the Participant
ceases to be a Service Provider while holding such unvested Shares, the Company
shall have the right to repurchase any or all of those unvested Shares at a
price per share equal to the lower of (i) the exercise price paid per
Share, or (ii) the Fair Market Value per Share at the time of
repurchase.  The terms upon which such
repurchase right shall be exercisable by the Committee (including the period
and procedure for exercise and the appropriate vesting schedule for the
purchased Shares) shall be established by the Committee and set forth in the
document evidencing such repurchase right.


 


ARTICLE VII.

STOCK APPRECIATION RIGHTS


 


7.1                                 Terms of Stock Appreciation Right.  The
term, base amount, vesting schedule, and other conditions and limitations
applicable to each Stock Appreciation Right, except the medium of settlement,
shall be as determined by the Committee and shall be stated in the Award
Agreement.  All
Awards of Stock Appreciation Rights shall be settled in Shares issuable upon
the exercise of the Stock Appreciation Right.


 


7.2                                 Exercise of Stock Appreciation Right.


 


(a)                                  Procedure for Exercise.  Any Stock Appreciation Right granted
hereunder shall be exercisable according to the terms of the Plan and at such
times and under such conditions as set forth in the Award Agreement.  A Stock Appreciation Right shall be deemed
exercised when the Committee receives written or electronic notice of exercise
(in accordance with the Award Agreement) from the person entitled to exercise
the Stock Appreciation Right.


 


(b)                                 Termination of Relationship as a Service Provider. 
Following a Participant’s Termination of Service, the Participant (or
the Participant’s Beneficiary, in the case


 


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of
Termination of Service due to death) may exercise his or her Stock Appreciation
Right within such period of time as is specified in the Award Agreement to the
extent that the Stock Appreciation right is vested as of the Termination of
Service.  In the absence of a specified
time in the Award Agreement, the Stock Appreciation Right shall remain
exercisable for three months following the Participant’s Termination of Service
for any reason other than Disability or death, and for 12 months after the
Participant’s Termination of Service on account of Disability or death.


 


(c)                                  Rights as a Stockholder.  Shares subject to a Stock Appreciation Right
shall be deemed issued, and the Participant shall be deemed the record holder
of such Shares, on the date the Stock Appreciation Right is exercised.  Until such date, no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the
Shares subject to the Stock Appreciation Right. 
If the Company effects a split of the Shares by means of a stock
dividend and the exercise price of, and number of shares subject to, a Stock
Appreciation Right are adjusted as of the date of distribution of the dividend
(rather than as of the record date for such dividend), then a Participant who
exercises such Stock Appreciation Right between the record date and the
distribution date for such stock dividend shall be entitled to receive, on the
distribution date, the stock dividend with respect to the Shares subject to the
Stock Appreciation Right.  No other
adjustment shall be made for a dividend or other right for which the record
date is prior to the date the Shares are issued.


 


ARTICLE VIII.

RESTRICTED STOCK


 


8.1                                 Terms of Restricted Stock. 
Subject to the provisions of the Plan, the Period of Restriction, the
number of Shares granted, and other conditions and limitations applicable to
each Award of Restricted Stock shall be as determined by the Committee and
shall be stated in the Award Agreement; provided, however, that
the Period of Restriction, (i) if time-based, shall be not less than three
(3) years and (ii) if based on Performance Objectives, shall be not
less than one (1) year.  Unless the
Committee determines otherwise, Shares of Restricted Stock shall be held by the
Company as escrow agent until the restrictions on such Shares have lapsed.


 


8.2                                 Transferability. 
Except as provided in this Article VIII, Shares of
Restricted Stock may not be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated until the end of the applicable Period of
Restriction.


 


8.3                                 Other Restrictions.  The
Committee, in its sole discretion, may impose such other restrictions on Shares
of Restricted Stock as it may deem advisable or appropriate.


 


8.4                                 Removal of Restrictions. 
Except as otherwise provided in this Article VIII, and
subject to Section 10.6, Shares of Restricted Stock covered by an
Award of Restricted Stock made under the Plan shall be released from escrow,
and shall become fully transferable, as soon as practicable after the Period of
Restriction ends, and in any event no later than 21⁄2 months after the end of the
Tax Year in which the Period of Restriction ends.


 


8.5                                 Voting Rights. 
During the Period of Restriction, Participants holding Shares of
Restricted Stock granted hereunder may exercise full voting rights with respect
to those Shares, unless otherwise provided in the Award Agreement.


 


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8.6                                 Dividends and Other Distributions. 
During the Period of Restriction, Participants holding Shares of
Restricted Stock shall be entitled to receive all dividends and other
distributions paid with respect to such Shares unless otherwise provided in the
Award Agreement.


 


(a)                                  If any such dividends or distributions are
paid in Shares, the Shares shall be subject to the same restrictions (and shall
therefore be forfeitable to the same extent) as the Shares of Restricted Stock
with respect to which they were paid.


 


(b)                                 If any such dividends or distributions are
paid in cash, the Award Agreement may specify that the cash payments shall be
subject to the same restrictions as the related Restricted Stock, in which case
they shall be accumulated during the Period of Restriction and paid or
forfeited when the related Shares of Restricted Stock vest or are
forfeited.  Alternatively, the Award
Agreement may specify that the dividend equivalents or other payments shall be
unrestricted, in which case they shall be paid as soon as practicable after the
dividend or distribution date.  In no
event shall any cash dividend or distribution be paid later than 21⁄2 months
after the Tax Year in which the dividend or distribution becomes nonforfeitable.


 


8.7                                 Right of Repurchase of Restricted Stock.  If,
with respect to any Award, (i) a Participant’s Termination of Service
occurs before the end of the Period of Restriction or (ii) any Performance
Objectives are not achieved by the end of the period for measuring such
Performance Objectives, then the Company shall have the right to repurchase
forfeitable Shares of Restricted Stock from the Participant at their original
issuance price or other stated or formula price (or to require forfeiture of
such Shares if issued at no cost).


 


ARTICLE IX.

RESTRICTED STOCK UNITS


 


9.1                                 Terms of Restricted Stock Units. 
Subject to the provisions of the Plan, the Period of Restriction, number
of underlying Shares, and other conditions and limitations applicable to each
Award of Restricted Stock Units shall be as determined by the Committee and
shall be stated in the Award Agreement.


 


9.2                                 Settlement of Restricted Stock Units. 
Subject to Section 10.5, the number of Shares specified in
the Award Agreement, or cash equal to the Fair Market Value of the underlying
Shares specified in the Award Agreement, shall be delivered to the Participant
as soon as practicable after the end of the applicable Period of Restriction,
and in any event no later than 21⁄2 months after the end of the Tax Year in which
the Period of Restriction ends.


 


9.3                                 Dividend and Other Distribution Equivalents.  The
Committee is authorized to grant to holders of Restricted Stock Units the right
to receive payments equivalent to dividends or other distributions with respect
to Shares underlying Awards of Restricted Stock Units.  The Award Agreement may specify that the
dividend equivalents or other distributions shall be subject to the same
restrictions as the related Restricted Stock Units, in which case they shall be
accumulated during the Period of Restriction and paid or forfeited when the
related Restricted Stock Units are paid or forfeited.  Alternatively, the Award Agreement may
specify that the dividend equivalents or other distributions shall be unrestricted,
in which case they shall be paid on the dividend or distribution payment date
for the underlying Shares, or as soon as practicable thereafter.  In no event shall any unrestricted dividend
equivalent or other distribution


 


10





















 


be paid later than 21⁄2 months after the Tax
Year in which the record date for the dividend or distribution occurs.


 


9.4                                 Forfeiture.  If, with respect to any Award,
(i) a Participant’s Termination of Service occurs before the end of the
Period of Restriction, or (ii) any Performance Objectives are not achieved
by the end of the period for measuring such Performance Objectives, then the
Restricted Stock Units granted pursuant to such Award shall be forfeited and
the Company shall have no further obligation thereunder.


 


ARTICLE X.

ADDITIONAL TERMS OF AWARDS


 


10.1                           Change in Control.


 


(a)                                  Effect.  Upon the occurrence of a Change in Control
(as defined below), each outstanding Award shall immediately become exercisable
or payable in full (if applicable, and whether or not then exercisable), and any
forfeiture and vesting restrictions thereon shall lapse.  Notwithstanding the foregoing, prior to a
Change in Control, the Committee may determine that, upon the occurrence of a
Change in Control, there shall be no acceleration of benefits under Awards or
determine that only certain or limited benefits under Awards shall be
accelerated and the extent to which they shall be accelerated, and/or establish
a different time in respect of such event for such acceleration.  In that event, the Committee will make
provision in connection with such transaction for the continuance of the Plan
and the assumption of Options and Awards theretofore granted, or the substitution
for such Options and Awards with new options and awards covering the stock of a
successor employer corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices.  In addition, the Committee may override the
limitations on acceleration in this Section 10.1(a) by express
provision in the Award Agreement and may accord any Participant the right to
refuse any acceleration, whether pursuant to the Award Agreement or otherwise,
in such circumstances as the Committee may approve.  Any acceleration of Awards shall comply with
applicable regulatory requirements, including without limitation Section 422
of the Code.


 


(b)                                 Defined.  For purposes of this Plan, a “Change in
Control” shall be deemed to have occurred if:


 


(i)                                     any Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company (not including in
the securities beneficially owned by such Person any securities acquired
directly from the Company or its Affiliates) representing 30% or more of the
combined voting power of the Company’s then outstanding securities;


 


(ii)                                  the date when Continuing Directors cease to
be a majority of the members of the Board then in office;


 


(iii)                               the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation, which merger
or consolidation is consummated, other than (i) a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity), in combination with newly acquired ownership acquired in such


 


11





















 


transaction by any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or an
Affiliate, at least 50% of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which
no Person acquires more than 50% of the combined voting power of the Company’s
then outstanding securities; or


 


(iv)                              the stockholders of the Company approve a
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company’s assets, which
liquidation, sale or disposition is consummated.


 


(c)                                  Other Terms.  For purposes of Section 10.1(b),
the following terms shall have the following meanings:


 


(i)                                     “Affiliate” shall mean any entity that
directly or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the Company as determined by the
Board in its discretion.


 


(ii)                                  “Beneficial Owner” shall have the
meaning given to such term in Rule 13d-3 under the Exchange Act.


 


(iii)                               “Continuing Directors” shall mean the
persons who constitute the Board on the date hereof together with their successors
whose nominations were approved by a majority of Continuing Directors.


 


(iv)                              “Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended.


 


(v)                                 “Person” shall have the meaning as set
forth in Sections 13(d) and 14(d) of the Exchange Act; provided,
however, that Person shall exclude (i) the Company or any of its
Affiliates, (ii) any trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, and (iv) any corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportion as their
ownership of stock of the Company.


 


10.2                           Transferability of Awards.  Except as provided below, a
Participant’s rights under an Award may not be transferred or encumbered,
except by will or by the laws of descent and distribution or, in the case of
Awards other than Incentive Stock Options, pursuant to a qualified domestic
relations order (as defined under Section 414(p) the Code).  The Committee may provide, in an Agreement
for a Nonqualified Stock Option or Restricted Stock Award, for its
transferability as a gift to family members, one or more trusts for the benefit
of family members, or one or more partnerships of which family members are the
only partners, according to such terms as the Committee may determine; provided
that the Participant receives no consideration for the transfer and the
transferred Nonqualified Stock Option or Restricted Stock Award shall continue
to be subject to the same terms and conditions as were applicable to the
Nonqualified Stock Option or Restricted Stock Award immediately before the
transfer.


 


10.3                           Effect of Termination of Employment.  The Committee shall establish
in respect of each Award Granted to an Employee the effect of a termination of
employment on the


 


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rights and benefits thereunder and in so
doing may make distinctions based upon the cause of termination, e.g.
retirement, early retirement, termination for cause, disability or death.  Notwithstanding any terms to the contrary in
an Award Agreement or this Plan, the Committee may decide in its complete
discretion to extend the exercise period of an Award (although not beyond the
period described in Section 6.3(a)) and the number of Shares
covered by the Award with respect to which the Award is exercisable or vested.


 


10.4                           No Fractional Shares.  No fractional shares of Common Stock shall be
issued or delivered pursuant to the Plan or any Award.  The Committee shall determine whether cash
shall be paid in lieu of fractional shares or whether such fractional shares or
any rights thereto shall be forfeited or otherwise eliminated.


 


10.5                           No Effect on Employment or Service.  Neither the Plan nor any Award
shall confer upon a Participant any right with respect to continuing the
Participant’s relationship as a Service Provider with the Company; nor shall
they interfere in any way with the Participant’s right or the Company’s right
to terminate such relationship at any time, with or without cause, to the
extent permitted by Applicable Laws and any enforceable agreement between the Service
Provider and the Company.


 


10.6                           Conditions On Delivery of Shares and Lapsing of Restrictions.  The
Company shall not be obligated to deliver any Shares pursuant to the Plan or to
remove restrictions from Shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Committee, (ii) subject to approval of the Company’s counsel, all other
legal matters (including any Applicable Laws) in connection with the issuance
and delivery of such Shares have been satisfied, and (iii) the Participant
has executed and delivered to the Company such representations or agreements as
the Committee may consider appropriate to satisfy the requirements of
Applicable Laws.


 


10.7                           Inability to Obtain Authority.  The inability of the Company
to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company’s counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.


 


10.8                           Withholding.  All distributions or payments made with
respect to an Award shall be net of any amounts required to be withheld
pursuant to applicable federal, state and local tax withholding
requirements.  The Company may require a
Participant to remit to it or to the subsidiary that employs a Participant an
amount sufficient to satisfy such tax withholding requirements prior to the
delivery of any certificates for Common Stock. 
In lieu thereof, the Company or the employing corporation shall have the
right to withhold the amount of such taxes from any other sums due or to become
due to the Participant as the Company shall prescribe.  The Committee may, in its discretion and
subject to such rules as it may adopt, permit a Participant to pay all or
a portion of the federal, state and local withholding taxes arising in
connection with any Award by electing to have the Company withhold shares of
Common Stock deliverable thereunder having a Fair Market Value that is not in
excess of the amount of tax to be withheld.


 


10.9                           Other Provisions.  In addition to the provisions described in
the Plan, any Award Agreement may include such other provisions (whether or not
applicable to the Award of


 


13





















 


any other Participant) as the Committee
determines appropriate, including restrictions on resale or other disposition
and provisions to comply with Applicable Laws.


 


10.10                     Section 16 of the Exchange Act.  It is the intent of the
Company that Awards and transactions permitted by Awards be interpreted in a
manner that, in the case of Participants who are or may be subject to Section 16
of the Exchange Act, qualify, to the maximum extent compatible with the express
terms of the Awards, for exemption from matching liability under Rule 16b-3
promulgated under the Exchange Act.  The
Company shall have no liability to any Participant or other person for Section 16
consequences of Awards or events in connection with Awards if an Award or
related event does not so qualify.


 


10.11                     Not Benefit Plan Compensation.  Payments and other benefits
received by a Participant under an Award made pursuant to the Plan shall not be
deemed a part of a Participant’s compensation for purposes of determining the
Participant’s benefits under any other employee benefit plans or arrangements
provided by the Company, except where the Committee expressly provides
otherwise in writing.


 


ARTICLE XI.

TERM, AMENDMENT AND TERMINATION OF PLAN


 


11.1                           Term of Plan.  The Plan shall become effective on the
Effective Date.


 


11.2                           Termination of the Plan.  The Plan shall terminate upon the earliest to
occur of (i) the date that is 10 years after the Plan is approved by the
Company’s stockholders; (ii) the date on which all Shares available for
issuance under the Plan have been issued as fully vested Shares; or (iii) the
date determined by the Board pursuant to its authority under Section 11.3.


 


11.3                           Amendment of the Plan.  The Board or the Committee may at any time
amend, alter, suspend or terminate the Plan, without the consent of the
Participants or Beneficiaries.  The
Company shall obtain stockholder approval of any Plan amendment to the extent
necessary to comply with Applicable Laws.


 


11.4                           Effect of Amendment or Termination.  Except as provided in Section 11.5
of the Plan, no amendment, alteration, suspension or termination of the Plan
shall impair the rights of any Participant or Beneficiary under an outstanding
Award, unless required to comply with an Applicable Law or mutually agreed
otherwise between the Participant and the Committee; any such agreement must be
in writing and signed by the Participant and the Company.  Termination of the Plan shall not affect the
Committee’s ability to exercise the powers granted to it hereunder with respect
to Awards granted under the Plan prior to the date of such termination.


 


11.5                           Adjustments of Awards Upon the Occurrence of Unusual or Nonrecurring
Events.  The Committee may, in its sole discretion
(but subject to the limitations and conditions expressly stated in the Plan,
such as the limitations on adjustment of Performance Objectives), adjust the
terms and conditions of Awards during the pendency or in recognition of (i) unusual
or nonrecurring events affecting the Company (such as a capital adjustment,
reorganization or merger) or the financial statements of the Company, or (ii) any
changes in Applicable Laws or accounting principles.  By way of example, the power to adjust Awards
shall include the power to suspend the exercise of any Option or Stock
Appreciation Right.


 


14





















 


ARTICLE XII.

MISCELLANEOUS


 


12.1                           Governing Law.  This Plan, Awards granted hereunder and
actions taken in connection with the Plan shall be governed by the laws of the
State of Delaware regardless of the law that might otherwise apply under
applicable principles of conflicts of laws.


 


12.2                           Authorization of Sub-Plans.  The Committee may from time to
time establish one or more sub-plans under the Plan for purposes of satisfying applicable
blue sky, securities and/or tax laws of various jurisdictions.  The Committee shall establish such sub-plans
by adopting supplements to this Plan containing (i) such limitations as
the Committee deems necessary or desirable, and (ii) such additional terms
and conditions not otherwise inconsistent with the Plan as the Committee shall
deem necessary or desirable.  All
sub-plans adopted by the Committee shall be deemed to be part of the Plan, but
each sub-plan shall apply only to Participants within the affected jurisdiction
and the Company shall not be required to provide copies of any sub-plans to
Participants in any jurisdiction which is not the subject of such sub-plan.


 


12.3                           Expenses.  The costs of administering the Plan shall be
paid by the Company.


 


12.4                           Severability.  If any provision of the Plan or any Award
Agreement is determined by a court of competent jurisdiction to be invalid,
illegal or unenforceable in any jurisdiction, or as to any person or Award,
such provision shall be construed or deemed to be amended to resolve the
applicable infirmity, unless the Committee determines that it cannot be so
construed or deemed amended without materially altering the Plan or the Award,
in which case such provision shall be stricken as to such jurisdiction, person,
or Award, and the remainder of the Plan and any such Award shall remain in full
force and effect.


 


12.5                           Construction.  Unless the contrary is clearly indicated by
the context, (i) the use of the masculine gender shall also include within
its meaning the feminine and vice versa; (ii) the use of the singular
shall also include within its meaning the plural and vice versa; and (iii) the
word “include” shall mean to include, but not to be limited to.


 


12.6                           No Trust or Fund Created.  Neither the Plan nor any Award
Agreement shall create or be construed to create a trust or separate fund of
any kind or a fiduciary relationship between the Company and a Participant or
any other person.  To the extent that any
person acquires a right to receive payments from the Company pursuant to an
Award, such right shall be no more secure than the right of any unsecured
general creditor of the Company.


 


12.7                           Headings.  Headings are given to the sections and
subsections of the Plan solely as a convenience to facilitate reference.  Such headings shall not be deemed in any way
material or relevant to the construction or interpretation of the Plan or any
provision thereof.


 


12.8                           Complete Statement of Plan.  This
document is a complete statement of the Plan.


 


15





















 


APPENDIX


 


As
used in the Plan, the following terms shall have the following meanings:


 


“10% Stockholder”
has the meaning set forth in Section 6.3(e).


 


“2002 Plan” has
the meaning set forth in Section 1.1.


 


“Acquired Company”
has the meaning set forth in Section 2.1(e).


 


“Applicable Laws”
means the requirements relating to, connected with, or otherwise implicated by
the administration of long-term incentive plans under applicable state corporation
laws, United States federal and state securities laws, the Code, any stock
exchange or quotation system on which the Shares are listed or quoted, and the
applicable laws of any foreign country or jurisdiction where Awards are, or
will be, granted under the Plan.


 


“Award” means,
individually or collectively, a grant under the Plan of Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units, or other
equity-based awards.


 


“Award Agreement”
means a written agreement setting forth the terms and provisions applicable to
an Award granted under the Plan.  Each
Award Agreement shall be subject to the terms and conditions of the Plan.


 


“Beneficiary”
means the personal representative of the Participant’s estate or the person(s)
to whom an Award is transferred pursuant to the Participant’s will or in
accordance with the laws of descent or distribution.


 


“Board” means
the board of directors of the Company.


 


“Code” means the
Internal Revenue Code of 1986, as amended. 
Any reference to a section of the Code herein shall be a reference
to any regulations or other guidance of general applicability promulgated under
such section, and shall further be a reference to any successor or amended section of
such section of the Code that is so referred to and any regulations
thereunder.


 


“Committee”
means the Compensation Committee of the Board, which has been constituted by
the Board to comply with the requirements of Rule 16b-3 promulgated under
the Exchange Act, Section 162(m) of the Code, and/or other Applicable
Laws.


 


“Company” means Tetra
Tech, Inc., a Delaware corporation, or any successor thereto.


 


“Consultant”
means any natural person, including an advisor, engaged by the Company to
render services to the Company.


 


“Director” means
a member of the Board.


 


“Disability”
means total and permanent disability as defined in Section 22(e)(3) of
the Code.


 


“Effective Date” means November 14, 2005; provided
that the Plan and any Awards granted hereunder shall be null and void if the
Plan is not approved by the Company’s stockholders before any compensation
under the Plan is paid.


 


16





















 


“Employee” means
any person who is an employee, as defined in Section 3401(c) of the
Code, of the Company or any other entity the employees of which are permitted
to receive Incentive Stock Options under the Code.  Neither service as a Director nor payment of
a director’s fee by the Company shall be sufficient to constitute “employment”
by the Company.


 


“Exchange Act”
means the Securities Exchange Act of 1934, as amended.


 


“Executive Officer”
means an individual who is an “executive officer” of the Company (as defined by
Rule 3b-7 under the Exchange Act) or a “covered employee” under Section 162(m)
of the Code.


 


“Fair Market Value”
means, with respect to Shares as of any date the closing sale price per share
of such Shares (or the closing bid, if no sales were reported) as reported in The Wall Street Journal (Northeast edition) or, if not
reported therein, such other source as the Committee deems reliable.


 


“Full-Value Awards”
has the meaning set forth in Section 2.1(d).


 


“Incentive Stock Option”
means an Option intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code.


 


“Nonqualified Stock Option”
means an Option not intended to qualify as an Incentive Stock Option.


 


“Option” means
an option to purchase Shares that is granted pursuant to Article VI
of the Plan.  An Option may be an
Incentive Stock Option or a Nonqualified Stock Option.


 


“Participant” has
the meaning set forth in Section 4.1.


 


“Performance Objective”
means a performance objective or goal that must be achieved before an Award, or
a feature of an Award, becomes nonforfeitable, as described in Section 5.3
of the Plan.


 


“Period of Restriction”
means the period during which Restricted Stock, the remuneration underlying
Restricted Stock Units or any other feature of an Award is subject to a
substantial risk of forfeiture.  A Period
of Restriction shall be deemed to end when the applicable Award ceases to be
subject to a substantial risk of forfeiture.


 


“Plan” has the
meaning set forth in Section 1.1.


 


“Reporting Person”
means an officer or director of the Company or greater than ten percent
stockholder of the Company within the meaning of Rule 16a-2 under the
Exchange Act, who is required to file reports pursuant to Rule 16a-3 under
the Exchange Act.


 


“Restricted Stock”
means Shares that, during a Period of Restriction, are subject to restrictions
as described in Article VIII of the Plan.


 


“Restricted Stock Unit”
means an Award that entitles the recipient to receive Shares or cash after a
Period of Restriction, as described in Article IX of the Plan.


 


“Service Provider”
means an Employee, Director or Consultant.


 


“Share” means a
share of the Company’s common stock.


 


“Stock Appreciation Right”
means an Award that entitles the recipient to receive, upon exercise, the
excess of (i) the Fair Market Value of a Share on the date the Award is


 


17





















 


exercised, over (ii) a base amount
specified by the Committee which shall not be less than the Fair Market Value
of a Share on the date the Award is granted, as described in Article VII
of the Plan.


 


“Tax Year” means
the Company’s taxable year.


 


“Termination of Service”
means the date an individual ceases to be a Service Provider.  Unless the Committee or a Company policy
provides otherwise, a leave of absence authorized by the Company or the
Committee (including sick leave or military leave) from which return to service
is not guaranteed by statute or contract shall be characterized as a
Termination of Service if the individual does not return to service within
three months; such Termination of Service shall be effective as of the first
day that is more than three months after the beginning of the period of
leave.  If the ability to return to
service upon the expiration of such leave is guaranteed by statute or contract,
but the individual does not return, the leave shall be characterized as a
Termination of Service as of a date established by the Committee or Company
policy.


 


18