Document:

Exhibit
10.15.2

 

Final

 

Exhibit B

 

Chase Corporation

 

Promissory Note

 

	
  $                              

  	
   

  	
   

  	
   

  	
   

  	
                         ,
  2009

  

 

For value received, the undersigned, Chase Corporation, a Massachusetts
corporation (“Chase”), promises to pay to                                   
of                                                             
(“Payee”), the principal amount of                               ,
in three consecutive annual installments of $                    
each, on each of the dates that is twelve, twenty-four and thirty six months
from the date hereof (each such date, a “Payment Date”), together with accrued
interest thereon. Interest shall accrue on the unpaid principal balance of this
note at a rate per annum equal to the applicable Federal rate established by
the Internal Revenue Service in accordance with Section 1274(d) of
the Internal Revenue Code.

 

Interest on this note shall be calculated on the basis of the actual
number of days elapsed and a 360-day year.

 

Principal and interest shall be payable, in lawful money of the United
States of America, by wire transfer of immediately available funds to such bank
or other financial institution account of the Payee as is set forth in Exhibit A
to the Agreement (as defined below), or to such other account with a bank or
other financial institution located within the United States as may hereafter
be designated by the Payee in writing to Chase (in which case Payee shall be
responsible for supplying accurate and timely wiring instructions for such
account to Chase); provided, that the Payee, at the Payee’s option, may, by
written notice to Chase, require Chase to make any or all of such payments by
certified check to the Payee’s principal residence as identified in such notice.

 

Notwithstanding the foregoing, one percent (1%) of the amount of any
principal, interest, and/or late charge payments made by Chase to the Payee
under this note shall be paid to Einhorn Associates, Inc. (“Einhorn”),
as provided in Section 2.3(e) of the Agreement.  Such payments shall be made to Einhorn by
wire transfer of immediately available funds to such bank or other financial
institution account as designated by Einhorn to Chase for payment of the
portion of Einhorn’s fee that is payable upon the closing of the Agreement, or
to such other account with a bank or other financial institution located within
the United States as may hereafter be designated by Einhorn in writing to
Chase.

 

Chase shall pay a late charge equal to six percent (6%) of the amount
of any principal or interest which is not paid within five (5) days of delivery
of written notice of nonpayment by either the Payee or a Shareholder
Representative (as defined in the Agreement).  The foregoing does not limit any other rights
the Payee may have under this note or at law by reason of any such late
payment.

 

This is one of a series of five (5) notes (the “Notes”)
issued in connection with the purchase by Chase of all of the outstanding
shares of stock of CIM Industries Inc., a New Hampshire corporation (“CIM”),
pursuant to a Stock Purchase Agreement dated August       ,
2009 entered into among Chase, CIM and the Payees of the Notes (the “Agreement”).
 Each of 

 

 

the Notes is identical except for the
identity of the Payees and the principal amount thereof.  Pursuant to Article 6 of the Agreement,
payments due under the Notes are subject to a right of set-off by Chase as
described in, and subject to the terms and conditions of, such Article (“Set-off
Right”), which Article’s terms and conditions are fully set forth in the
Agreement (a copy of which has been signed by and delivered to Chase and each
of the Payees).  The foregoing set-off
provisions are incorporated herein by reference as if set forth in their
entirety in this note.  Chase’s
nonpayment of principal and/or interest as and when due under this Note by
reason of its good faith exercise of its Set-off Right shall not trigger a late
payment fee.

 

At the option of the Payee, this note shall become immediately due and
payable without notice or demand upon the occurrence at any time of any of the
following events of default: (1) failure to pay in full and when due any
installment of principal or interest under this note or under any of the other Notes;
(2) the liquidation, termination or dissolution of Chase, or its ceasing
to actively carry on business, or the appointment of a receiver for its
property; (3) the institution by or against Chase of any proceedings under
the United States Bankruptcy Code or any other law in which the Chase is
alleged to be insolvent or unable to pay its debts as they mature, and in the
case of any such involuntary proceedings, if such proceedings are not dismissed
or terminated within sixty (60) days; or (4) the making by Chase of an
assignment for the benefit of creditors.

 

No delay or omission on the part of the Payee in exercising any right
hereunder shall operate as a waiver of such right or of any other right of the
Payee, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion.  Chase, regardless of the time, order or place
of signing, waives presentment, demand, protest and notices of every kind and
assents to any extension or postponement of the time of payment or any other
indulgence, to any substitution, exchange or release of collateral, and to the
addition or release of any other party or person primarily or secondarily
liable.

 

Chase agrees to pay, upon demand, costs of collection of the principal
of and interest on this note, including without limitation reasonable attorneys’
fees.

 

This note shall be binding upon Chase and upon its respective
successors, assigns and legal representatives, and shall inure to the benefit
of the Payee and the Payee’s heirs, successors, endorsees and assigns.

 

This note shall be governed by the laws of the Commonwealth of
Massachusetts, and shall take effect as a sealed instrument.

 

Executed as an instrument under seal as of the date set forth at the
beginning of this note.

 

	
  Witness

  	
   

  	
  Chase Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Peter R. Chase, Chairman and CEO

  

 

2

 

Schedule of Promissory Note Holders and Total Dollar
Amount of Promissory Note:

 

	
  Promissory
  Note Holders

  	
   

  	
  Total Dollar Amount of Promissory Note

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Thomas A. Palmer

  	
   

  	
  $

  	
  278,520

  	
   

  
	
  Robert E. Scribner

  	
   

  	
  $

  	
  1,395,660

  	
   

  
	
  Scott S. Scribner

  	
   

  	
  $

  	
  834,780

  	
   

  
	
  Richard H. Stephens

  	
   

  	
  $

  	
  245,520

  	
   

  
	
  Paul W. Sullivan

  	
   

  	
  $

  	
  245,520

  	
   

  

 

3EXHIBIT 10.18

 

 

 

 

	
   

  EXECUTIVE COMPENSATION POLICY

   

  

 

 

 

	
  Approved
  as amended

  	
  November 13,
  2009

  	
  Board
  of Directors

  
	
   

  	
   

  	
   

  
	
  Document
  Owner:

  	
   

  	
  Board
  of Directors

  

 

 

 

Page 1 of 14

 

Tetra
Tech Confidential

 

 

 

 

TABLE OF CONTENTS

 

 

Section

 

 

	
  1.0

  	
  PURPOSE

  
	
  2.0

  	
  PHILOSOPHY

  
	
  3.0

  	
  SCOPE

  
	
  4.0

  	
  ROLES
  AND RESPONSIBILITIES

  
	
  5.0

  	
  EXECUTIVE
  COMPENSATION COMPONENTS AND PLAN

  
	
  6.0

  	
  PROCESS
  FLOW/SCHEDULE

  
	
  7.0

  	
  APPENDIX
  I – EXAMPLES OF ANNUAL INCENTIVE BONUS

  
	
  8.0

  	
  APPENDIX
  II – RESTRICTED STOCK PLAN SUMMARY AND EXAMPLES

  
	
  9.0

  	
  APPENDIX
  III – TIMING OF EXECUTIVE EQUITY AWARDS

  
	
  10.0

  	
  APPENDIX
  IV – DETERMINATION OF NET INCOME

  

 

 

 

 

Page 2 of 14

 

Tetra
Tech Confidential

 

 

 

1.0                              PURPOSE

The
purpose of this document is to define the executive compensation policy for
Tetra Tech, Inc. “Tetra Tech” or the “Company”.

 

 

2.0                              PHILOSOPHY

Tetra
Tech’s executive compensation program is designed to

 

           Align the interests of
executive officers with those of the stockholders;

           Attract, motivate, reward
and retain top level executives upon whom, in large part, the success of the
Company depends;

           Be competitive with
compensation programs for companies of similar size and complexity with whom
the Company competes for executive talent, including direct competitors;

           Provide compensation based
upon the short-term and long-term performance of both the individual executive
and the Company; and

           Strengthen the relationship
between pay and performance by emphasizing variable, at-risk compensation that
is dependent upon the successful achievement of specified corporate and
individual goals.

 

 

We
believe a significant portion of executive officer pay should be at risk, and
based upon performance.  Therefore, base
salaries are targeted for approximately the median of the peer group.   Conversely, compensation at risk,
specifically bonuses and equity grants, are targeted to provide compensation
that is above the median of our peers when above average business results are
attained.

 

 

3.0                              SCOPE

This
policy applies to all executive officers of Tetra Tech.

 

 

4.0                              ROLES AND RESPONSIBILITIES

 

 

Board of
Directors

 

           Approves this Executive
Compensation Policy;

           Delegates authority as
specified in this policy to the Compensation Committee; and

           Approves positions to be
covered by this policy as recommended by the Chairman/CEO.

 

Compensation
Committee

 

           Under delegated authority
from the Board of Directors, develops, administers and monitors executive
compensation in the long-term interests of the Company and its stockholders;

           Evaluates the performance
and establishes the compensation of the Chairman/CEO;

 

 

 

Page 3 of 14

 

Tetra
Tech Confidential

 

 

 

           Establishes the compensation
of all other executive officers of the Company based, in part, on the
Chairman/CEO’s recommendations;

           Determines that performance
goals have been attained before payment; and

           Reserves the right to
approve exceptions to this policy as recommended by the Chairman/CEO (subject
to the terms of the Executive Compensation Plan described in Section 5.2).

 

 

Audit
Committee

 

           Jointly with the
Compensation Committee determines the individual performance factor for the CFO
position.

 

 

Chairman/CEO

 

           Reviews the performance of
all other officers of the Company and makes specific recommendations to the
Compensation Committee in regard to their compensation; and

           Develops performance targets
for all other executive officers and recommends those targets to the
Compensation Committee.

 

 

Human
Resources

 

           Acquires information
regarding peer group and other competitor pay practices, and provides analysis
of this information to the Chairman/CEO and the Compensation Committee; and

           Provides compensation
practice trend data to the Chairman/CEO, and the Compensation Committee.

 

 

Finance
and Accounting

 

           Provides Corporate
performance data for use in determining the degree to which certain performance
objectives have been met; and

           Assures payments have been
properly accrued and reported.

 

 

5.0                              EXECUTIVE COMPENSATION COMPONENTS AND PLAN

The
primary components of compensation for executive officers are base salary,
annual performance bonuses and long-term incentive compensation.

 

 

5.1        Base Salary

Base
salaries for executive officers are reviewed on an annual basis to ensure
internal equity and external competitiveness. 
Salaries are reviewed to determine whether the base compensation is
within a reasonable range of executive pay levels at other companies that
potentially compete with the Company for business and executive talent.  Total compensation is considered during this
analysis.  Consideration is given to
individual performance, experience and time in the

 

 

Page 4 of 14

 

Tetra
Tech Confidential

 

 

 

position,
initiative, contribution to overall corporate performance, and salaries paid to
other executives in the Company.  The
review and determination occur as shown in Section 6.0.

 

 

5.2        Annual Performance Bonuses

Executive
officer bonuses shall be subject to the terms of the Company’s Executive
Compensation Plan as adopted by the Board on November 10, 2008 (the
“Plan”).  Specifically, no bonus may
exceed the applicable percentage of the Company’s Net Income set forth in Section 5
of the Plan.  Unless otherwise specified
by the Compensation Committee within 90 days after the beginning of a Plan Year
under the Plan, the term “Net Income” shall be as defined in Appendix IV of
this Policy.  Notwithstanding any term or
provision set forth in this Policy, in the event of any inconsistency between
this Policy and the Plan, or the exercise of any discretion on the part of the
Compensation Committee pursuant to this Policy, the terms of the Plan shall
control and supersede the inconsistent term or provision of this Policy or the
exercise of discretion hereunder.

 

This
component is intended to promote the interests of the Company by providing both
an incentive and a financial reward for key employees who contribute most to
the operating results and growth of the Company.  Each year the Company identifies a target
amount of incentive compensation for each executive officer.  This target is expressed as a percentage of
base salary.

 

Bonuses
are paid based upon meeting pre-determined performance criteria.  These criteria fall into two categories:  (1) overall corporate performance,
designated the Corporate Performance Factor (CPF), based on an assessment of
how Company did on an overall basis in achieving its key objectives and (2) individual
contribution, designated the Individual Factor (IF), based on individual
performance.  The CPF, determined by the
Compensation Committee, will have a range of 0 to 1.4 with a target of 1.0
based on the achievement of key objectives. 
The CPF for group presidents will be determined by the Chairman/CEO
based on the contribution of the specific group to the Company.  The IF will have a range of 0 to 1.2 with a
target of 1.0 for expected contribution level for each covered position.  The IF will be recommended by the Chairman/CEO
and approved by the Compensation Committee, with the exception of the
Chairman/CEO and CFO positions.  The IF
for the Chairman/CEO will be determined by the Compensation Committee.   The IF for the CFO will be recommended by
the Chairman/CEO and determined jointly by the Audit Committee and Compensation
Committee, giving strong consideration to the Audit Committee’s assessment of
the strength of the Company’s internal financial controls and the accuracy and
appropriateness of its financial reporting.

 

Target
bonus amounts as a percentage of base salary are as follows:

	
  TARGET BONUS AMOUNTS

  
	
  POSITION

  	
  PERCENTAGE (%)

  
	
  Chairman/CEO/President

  	
  120

  
	
  Chief
  Financial Officer

  	
  70

  
	
  Group
  Presidents

  	
  70

  
	
  Other
  Executive Officers

  	
  50

  

 

 

 

Page 5 of 14

 

Tetra
Tech Confidential

 

 

 

Each
Officer  is eligible to receive an annual
bonus in the range of 0% to 168% of target, i.e., CPF (1.4) x IF (1.2) = 1.68
(168%) x target.

	
  MINIMUM/MAXIMUM OF BASE

  
	
  POSITION

  	
  TARGET PERCENTAGE

  (%)

  	
  MINIMUM (%)

  	
  MAXIMUM (%)

  
	
  Chairman/CEO/President

  	
  120

  	
  0

  	
  202

  
	
  Chief
  Financial Officer

  	
  70

  	
  0

  	
  118

  
	
  Group
  Presidents

  	
  70

  	
  0

  	
  118

  
	
  Other
  Executive Officers

  	
  50

  	
  0

  	
  84.0

  

 

The
Compensation Committee reserves the right to “zero” the CPF if results are
significantly below expected targets or a manageable event negatively and
severely impacts stockholder value.  The
minimum performance threshold is .6; achievement of less than 60% in either the
CPF or IF will result in the elimination of the bonus paid.  Notwithstanding the above, the Compensation
Committee, in consultation with the Chairman/CEO, reserves the discretion to
adjust specific performance bonus amounts when deemed to be in the interests of
the stockholders.  Bonus payments are
made by December 15 of each year, based upon performance in the recently
concluded fiscal year.

 

5.3        Long-Term Incentive Compensation

Long-term
incentive awards are designed to:

 

           Reward financial performance
and encourage recipients to achieve long term sustained growth of stockholder
value.  The long-term incentive
compensation program encourages executives to maintain a long-term financial
perspective by linking a substantial portion of their compensation to
stockholder returns and the Company’s long-term financial success;

           Aid in the retention of key
executives;

           Balance the effect of market
dynamics on equity compensation;

           Take into consideration the
effect of equity award expense on Company performance; and

           Foster executive officer
stock ownership.

 

Long-term
incentives are generally provided in the form of equity compensation, such as
stock options and/or other equity related awards.  However, the Compensation Committee reserves
the right to utilize deferred cash incentives if beneficial to the interests of
the Company and its stockholders. 
Long-term incentive awards may have certain restrictions, such as
mandatory vesting periods, which encourage participating executives to continue
in the Company’s employ and thereby act as a retention incentive.

 

All
grants of equity compensation shall be in accordance with the provisions and
limitations of the equity incentive plan periodically adopted by the Board of
Directors and approved by the stockholders. 
The schedule for distribution of long term-incentives is shown in Section 6.

 

 

 

Page 6 of 14

 

Tetra
Tech Confidential

 

 

 

In
addition to the above, the following guidelines will apply to the long-term
incentive plan:

 

           A maximum of 2% of
outstanding shares of stock and/or options will be distributed in any one year
period.  The Compensation Committee
retains the discretion to increase this amount due to special circumstances,
such as an acquisition;

           A reserve of at least 10% of
the shares available for distribution each year will be held outside the normal
distribution for special needs (i.e., hiring, retention) that occur during the
year; and

           All restricted stock grants
shall be approved by the Compensation Committee.  Restricted stock will typically not be
granted to executives who are not Section 16B officers.  Restricted stock grants will generally vest
over a minimum of a three-year period. 
Vesting will primarily be performance-based.  The mix of awards will generally be
approximately 2/3 stock options and 1/3 restricted stock.  Each share of restricted stock will be
considered equivalent to 2.5 stock options.

 

 

Example:  The normal grant is 15,000 stock
options.  On a converted basis, using the
ratio of 2/3 options and 1/3 restricted stock, the award would be approximately
10,000 options and 2,000 shares of restricted stock.

 

 

           No more than 0.9% of the
outstanding shares of stock and/or options can be distributed to executive
officers in one year;

           The plan shall target 5-15%
of the non-officer population for inclusion in the long-term incentive program;

           Minimum stock option grants
to non-officers will typically be 500 shares and maximum grants to non-officers
will typically be 10,000 shares; and

           Executive officers will be
eligible to receive restricted stock grants during the first restricted stock
approval cycle following their date of hire, or date of appointment as an
executive officer.

 

 

5.4        Other Section 16B Officer
Provisions

Certain
additional consideration will be provided to Section 16B officers as
approved by the Compensation Committee. 
These provisions recognize and reward the officers for the additional
responsibilities, liabilities and contributions that accompany officer
status.  Specifically, the Chairman/CEO
is provided with a country club membership that is made available primarily for
use in entertaining clients and other business associates.  Section 16B officers receive a $900 per
month automobile allowance, as well as limited reimbursement for club
memberships, estate/financial planning and annual physical examinations.  Also, Section 16B officers are eligible
to defer compensation via participation in the Deferred Compensation Program.

 

 

 

Page 7 of 14

 

Tetra
Tech Confidential

 

 

 

6.0                              PROCESS FLOW/SCHEDULE

 

 

Page 8 of 14

 

Tetra
Tech Confidential

 

 

 

7.0                              APPENDIX I – EXAMPLES OF ANNUAL INCENTIVE
BONUSES

 

 

Subject
to the limitations of the Executive Compensation Plan:

 

 

Example
1

	
  Narrative:

  	
  The
  Company significantly exceeds each of its keys objectives and the CEO
  significantly exceeds all individual contribution expectations, maximizing
  the bonus payment.

  
	
   

  	
   

  
	
   

  	
   

  
	
  Position:

  	
  CEO

  	
  Base
  Salary:  $100,000

  	
  CPF:  1.4

  	
  IF:  1.2

  

Bonus
to be paid:  $100,000 X 1.20 X 1.4 X 1.2
= $201,600

 

 

Example
2

	
  Narrative:

  	
  The
  Company achieves all and exceeds some of its key objectives, and the CFO
  meets all individual contribution expectations.

  
	
   

  	
   

  
	
   

  	
   

  
	
  Position:

  	
  CFO

  	
  Base
  Salary: $100,000

  	
  CPF:
  1.2

  	
  IF:
  1.0

  

Bonus
to be paid:  $100,000 X 0.7 X 1.2 X 1.0 =
$84,000

 

 

Example
3

	
  Narrative:

  	
  The
  Company meets its key objectives, and the General Counsel meets individual
  contribution expectations.

  
	
   

  	
   

  
	
   

  	
   

  
	
  Position:

  	
  General
  Counsel

  	
  Base
  Salary: $100,000

  	
  CPF:
  1.0

  	
  IF:
  1.0

  

Bonus
to be paid: $100,000 X 0.50 X 1.0 X 1.0 =
$50,000

 

Example
4

	
  Narrative:

  	
  The
  Company meets most of its key objectives, and the Corporate Controller
  significantly exceeds individual contribution expectations.

  
	
   

  	
   

  
	
   

  	
   

  
	
  Position:

  	
  Corporate
  Controller

  	
  Base
  Salary: $100,000

  	
  CPF:
  0.8

  	
  IF:
  1.2

  

Bonus
to be paid:  $100,000 X 0.50 X 0.8 X 1.2
= $48,000

 

 

 

 

Page 9 of 14

 

Tetra
Tech Confidential

 

 

 

8.0        APPENDIX II – RESTRICTED STOCK PLAN
SUMMARY AND EXAMPLES

 

Overview

Tetra
Tech’s baseline equity compensation plan provides for a mix of stock options
and restricted stock grants to be awarded to Section 16B officers.  Restricted stock will typically not be
granted to individuals who are not Section 16B officers.

 

 

Restricted
stock awards will be eligible for vesting in equal installments annually over a
three-year period.  Vesting will be
performance-based, based on GAAP EPS growth, as follows:

 

	
  Annual
  Award Vesting %

  	
   

  	
           EPS
  Growth

  
	
  0%

  	
   

  	
  EPS < 5% year-over-year growth

  
	
  60%

  	
   

  	
  EPS 5-9% year-over-year growth

  
	
  100%

  	
   

  	
  EPS 10-14% year-over-year growth

  
	
  120%

  	
   

  	
  EPS 15-20% year-over-year growth

  
	
  140%

  	
   

  	
  EPS
  > 20% year-over-year growth

  

 

 

Evaluation
of performance for vesting purposes and the award of restricted stock will occur
annually as part of the normal compensation cycle as shown in Section 6.0.

 

 

For
the purpose of this Plan, “GAAP EPS” is the fully diluted earnings per share
from continuing operations, as defined by Statement of Financial Accounting
Standards (SFAS) 128, and related interpretations, adjusted as follows:

 

 

           The impact of goodwill
impairment will be excluded;

           The impact of impairment on
long-lived assets will be excluded;

           The impact of accounting
changes requiring current and prior period adjustments due to materiality under
relevant SEC Staff Accounting Bulletins and related accounting pronouncements
will be excluded;

           The impact of any changes in
newly issued or existing accounting principles and related interpretations will
be excluded;

           The financial statement
impact from the settlement of tax audits more or less than amounts previously
recorded will be excluded;

           Gains and losses from the
sales of subsidiaries and significant lines of businesses will be excluded; and

           The impact of shares issued
and costs incurred in connection with acquisitions, mergers or debt
restructurings will be excluded.

 

 

 

Page 10 of 14

 

Tetra
Tech Confidential

 

 

 

For
each fiscal year, the Company’s CFO shall certify the amount of “GAAP EPS”,
adjusted as set forth above.

 

 

Executive
officer restricted stock grants shall be subject to the terms of the Company’s
2005 Equity Incentive Plan, as amended by the Board on November 10, 2008
(the “2005 Plan”).  Notwithstanding any term
or provision set forth in this Policy, in the event of any inconsistency
between this Policy and the 2005 Plan, or the exercise of any discretion on the
part of the Compensation Committee pursuant to this Policy, the terms of the
2005 Plan shall control and supersede the inconsistent term or provision of
this Policy or the exercise of discretion hereunder.

 

Plan Summary

In
the November/December Compensation Committee meeting the Committee will
authorize a specific number of shares of restricted stock to be used for the
three-year Restricted Stock (RS) Plan that starts in the current fiscal
year.  For example, in December, 2006 the
“2007, 2008 and 2009 Restricted Stock Plan” was authorized and funded.  The Compensation Committee will also approve
the number of shares to be allocated to 16B officers.

 

 

As
stated, the restricted stock will vest in 1/3 increments over three years based
on GAAP EPS achieved during the Performance Period.  For a specific three year RS plan, the prior
year GAAP EPS is the measurement control point (see examples).   Once established for a three year RS Plan,
the EPS control point cannot be modified.

 

 

At
the end of each fiscal year, EPS will be determined and compared to EPS for the
immediately preceding fiscal year so that the year-over-year growth rate may be
calculated.  For each Section 16B
officer, the EPS growth rate will be used to determine the vesting percentage
of each installment.  Each installment of
stock eligible for vesting in a given year will be scored based upon EPS growth
since the year in which that installment was granted.

 

 

In
the event the duties of a restricted stock holder are reduced, such shares may
continue to vest at the discretion of the Compensation Committee.

 

 

Assuming
a new RS Plan is authorized each year, by the third year, three individual
plans, each with its own period and control point will be running concurrently
(see below).

 

 

	
  DATE

  	
  PLAN AUTHORIZED

  	
  CONTROL POINT

  	
  PLAN PERIOD

  
	
  12/06

  	
  2007 RS Plan

  	
  FY 06 GAAP EPS

  	
  07,08,09

  
	
  12/07

  	
  2008 RS Plan

  	
  FY 07 GAAP EPS

  	
  08,09,10

  
	
  12/08

  	
  2009 RS Plan

  	
  FY 08 GAAP EPS

  	
  09,10,11

  

 

 

 

Page 11 of 14

 

Tetra
Tech Confidential

 

 

 

Example 1

A
Section 16B officer is allocated 3,000 shares of restricted stock at the
end of fiscal year 2006 to vest in equal amounts at the end of fiscal years
2007, 2008 and 2009, designated the “07 RS Plan.”  For fiscal year 2007, the EPS growth rate is
determined to be an 8% improvement over fiscal year 2006.  Accordingly, 600 of the 1,000 (i.e., .6 x
1,000) eligible shares will vest in 2007.

 

Example 2

This
example provides vesting results under a series of scenarios involving vesting
award amounts and hypothetical EPS growth.

 

 

	
  Date

  	
  Restrictive

  Stock Awarded

  	
  Earnings Per

  Share (EPS)

  	
  Growth %

  	
   

  	
  Vesting Schedule Through

  11/09

  	
  Vesting Schedule Effective

  12/09

  
	
  12/06

  	
  1200

  	
  .65

  	
  0%

  	
   

  	
  Year-over-Year

  	
  %

  	
  Year-over-Year

  	
  %

  
	
  12/07

  	
  1500

  	
  .79

  	
  21.5%

  	
   

  	
  EPS < 5%

  	
  0%

  	
  EPS < 5%

  	
  0%

  
	
  12/08

  	
  1800

  	
  1.02

  	
  29.1%

  	
   

  	
  EPS 5% - 9%

  	
  60%

  	
  EPS 5% - 9%

  	
  60%

  
	
  12/09

  	
  2100

  	
  1.21

  	
  18.6%

  	
   

  	
  EPS 10% - 14%

  	
  100%

  	
  EPS 10% - 14%

  	
  100%

  
	
  12/10

  	
  2400

  	
  .85

  	
  <29.8%>

  	
   

  	
  EPS > 14%

  	
  120%

  	
  EPS 15% - 20%

  	
  120%

  
	
  12/11

  	
  2700

  	
  1.45

  	
  71.0%

  	
   

  	
   

  	
   

  	
  EPS > 20%

  	
  140%

  

 

Sample Vesting

 

	
  Eligible
  for Vesting (1/3 of Annual RS Award)

   

  
	
  12/07

  	
  12/08

  	
  12/09

  	
  12/10

  	
  12/11

  
	
  400 Shares

  	
  900 Shares

  	
  1,500 Shares

  	
  1,800 Shares

  	
  2,100 Shares

  
	
  (from ’06 award)

  	
  (400 of ’06
  award,

  500 of ’07 award)

  	
  (400 from ’06 award, 500 from

  ’07 award, 600 from ’08

  award)

  	
  (500 from ’07
  award, 600 from ’08

  award, 700 from ’09 award)

  	
  (600 from ’08
  award, 700 from ’09

  award, 800 from ’10 award)

  
	
  Actual
  Vesting

   

  
	
  400 x 1.2 =

  	
  400 x 1.2 =
  480

  	
  400 x 1.2 =
  480

  	
  500 x .6 =
  300

  	
  600 x .6 =
  360

  
	
  480 Shares

  	
  500 x 1.2 = 600

  	
  500 x 1.2 = 600

  	
  600 x 0 = 0

  	
  700 x .6 = 420

  
	
   

  	
  1,080 Shares

  	
  600 x 1.2 = 720

  	
  700 x 0 = 0

  	
  800 x 1.4 = 1120

  
	
   

  	
   

  	
  1,800 Shares

  	
  300 Shares

  	
  1,900 Shares

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

 

 

Page 12 of 14

 

Tetra
Tech Confidential

 

 

 

9.0        APPENDIX III – TIMING OF EXECUTIVE
EQUITY AWARDS

 

 

The
effective date of the grant for all stock options and restricted stock awards
is the date of approval by the Compensation Committee.

 

 

Equity
compensation recommendations for executive officers in accordance with this
policy, including both stock options and restricted stock, will be presented to
the Compensation Committee at the November/December meeting.   The Compensation Committee will also
consider salary increase and annual performance bonus recommendations at the
November/December meeting.

 

 

Actual
approval of stock option and restricted stock awards to executive officers will
be made by the Compensation Committee at its November/December meeting,
consistent with the annual stock option grants to all stock option recipients.

 

 

The
Compensation Committee approves grants for new hires as recommended by the
Chairman/CEO.  The effective date of the
grant is the date of approval by the Compensation Committee.

 

 

 

 

Page 13 of 14

 

Tetra
Tech Confidential

 

 

 

10.0      APPENDIX IV – DETERMINATION OF NET INCOME

 

 

For
the purpose of this Policy, “net income” is defined as the Company’s net income
as set forth in its audited financial statements, adjusted as follows:

 

·                  The impact of goodwill impairment will be
excluded;

 

·                  The impact of impairment on long-lived assets
will be excluded;

 

·                  The impact of accounting changes requiring
current and prior adjustments due to materiality under relevant SEC Staff
Accounting Bulletins and related accounting pronouncements will be excluded;

 

·                  The impact of any changes in newly issued or
existing accounting principles and related interpretations will be excluded;

 

·                  The financial statement impact from the
settlement of tax audits more or less than amounts previously recorded will be
excluded;

 

·                  Gains and losses from the sales of
subsidiaries and significant lines of businesses will be excluded;

 

·                  The costs incurred in connection with
acquisitions, mergers or debt restructurings will be excluded; and

 

·                  The impact of bonuses, net of tax, accrued
for individuals subject to the Executive Compensation Plan will be excluded.

 

 

For
each fiscal year, the Company’s CFO shall certify the amount of “net income”,
adjusted as set forth above.

 

 

 

 

Page 14 of 14

 

Tetra
Tech Confidential

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