Exhibit 10.2
CHANGE
OF CONTROL AGREEMENT
AGREEMENT by and
between Tetra Tech, Inc. , a Delaware corporation (the
“Company”), and
(the “Executive”), dated as of { Date }.
WHEREAS the
Executive is an officer and key member of the Company’s
management;
WHEREAS the Board
of Directors of the Company (the “Board”), has
determined that it is in the best interests of the Company and its
shareholders to assure the continued dedication of the Executive to
the Company, notwithstanding the possibility, threat or occurrence
of a Change of Control (as defined below);
WHEREAS the Board
believes it is imperative to (a) diminish the inevitable
distraction of the Executive by virtue of the personal
uncertainties and risks created by a threatened or pending Change
of Control, (b) encourage the Executive’s full attention
and dedication to the Company currently and in the event of any
threatened or pending Change of Control, and (c) preserve the
Executive’s impartial judgment in the event of any threatened
or pending Change of Control;
WHEREAS this
Agreement is not intended to alter materially the compensation,
benefits or terms of employment that the Executive could reasonably
expect in the absence of a Change of Control, but is intended to
encourage and reward the Executive’s compliance with the
wishes of the Board whatever they may be in the event that a Change
of Control occurs or is threatened.
NOW, THEREFORE, in
order to accomplish these objectives and in consideration of the
mutual agreements, provisions, and covenants contained herein, and
intending to be legally bound hereby, the Board has authorized the
Company to enter into this Agreement as follows:
1.
Term.
This Agreement shall
terminate on { Insert date: five years from effective date
}. Notwithstanding the foregoing, in no event shall the Term expire
before the second anniversary of a Change of Control that occurs
during the Term. The initial term of this Agreement, as it may be
extended as provided for under this Section 1, is herein
referred to as the “Term.”
2.
Duties
. The Executive agrees
that, subject to the Executive’s fiduciary duties to the
Company and its shareholders, the Executive will exercise the
Executive’s best efforts to bring about whatever result the
Board determines to be in the best interests of the Company and its
shareholders relative to any impending Change of Control (
i.e. , to help resist any such impending Change of Control
if the Board determines that to be in the best interests of the
Company and its shareholders, and to bring about such Change of
Control if the Board determines that to be the preferable
alternative). The Executive agrees to use the Executive’s
best efforts at and after the occurrence of a Change of Control to
effect an orderly and beneficial transfer of control to the party
or parties comprising the new control group.
3.
Change of Control as a
Condition Precedent . No amount or benefit shall be payable under
the terms of this Agreement unless there shall have been a Change
of Control that is actually consummated. A “Change of
Control” shall mean the first of the following to
occur:
(a)
The purchase or other
acquisition by any Person (as defined below), directly or
indirectly, of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of the
Company’s securities not including the securities
beneficially owned by such Person or any securities acquired
directly from the Company or its Affiliates representing 50 percent
or more on a single date or during any 12 month period of the
combined voting power of the Company’s then outstanding
voting securities entitled to vote generally in the election of the
Board; provided, however, that if any Person has satisfied this
requirement, the acquisition of additional Company securities by
the same Person shall be construed as not triggering a Change of
Control; and provided further, however, that an increase in the
percentage of voting securities owned by any Person as a result of
a transaction in which the Company acquires its voting securities
in exchange for property shall not be treated as an acquisition of
the Company’s voting securities for purposes of this
Section 3(a);
(b)
The consummation of a
reorganization, merger, or consolidation of the Company, if the
Company’s shareholders, in combination with any trustee or
other fiduciary acquiring voting securities under an employee
benefit plan of the Company or an Affiliate as part of such
transaction, do not, immediately thereafter, own more than 50
percent of the combined voting power of the reorganized, merged or
consolidated Company’s then outstanding securities that is
entitled to vote generally in the election of the directors;
provided, however, that a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no Person acquires more than 50 percent of
the combined voting power of the Company’s then outstanding
securities shall not be a Change of Control under this
Section 3(b);
(c)
During any period of two
consecutive years, individuals who, as of the beginning of such
period, constitute the Board (the “Incumbent Board”)
cease to constitute at least a majority of the Board (unless
the reason for no longer constituting a majority of the Board is
because one or more directors is not re-elected because of a
failure to satisfy majority voting requirements in the
Company’s charter, bylaws or applicable policy); provided,
that any person becoming a director of the Company subsequent to
the beginning of such period whose election, or nomination for
election by the Company’s shareholders, was approved by a
vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were
a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest,
including, but not limited to, a consent solicitation relating to
the election of directors of the Company and whose appointment or
election was not approved by at least a majority of the directors
of the Company in office immediately before any such contest;
or
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(d)
The consummation of the
sale or disposition by the Company of all or substantially all of
the Company’s assets, other than a sale or disposition by the
Company of all or substantially all of the Company’s assets
to an entity where the outstanding securities generally entitled to
vote in the election of directors of the Company immediately prior
to the transaction continue to represent (either by remaining
outstanding or by being converted into such securities of the
surviving entity or any parent thereof) 50 percent or more of the
combined voting power of the outstanding voting securities of such
entity generally entitled to vote in such entity’s election
of directors immediately after such sale.
Notwithstanding the
foregoing, in no event may there by more than one transaction or
occurrence treated as a “Change of Control” for
purposes of this Agreement. For purposes of Section 3, the
following terms shall have the following meanings:
“Affiliate”
means 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.
“Exchange
Act” means the Securities Exchange Act of 1934, as
amended.
“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.
4.
Employment
Period. In
the event of a Change of Control, the Company agrees to continue
the Executive in its employ, and the Executive agrees to remain in
the employ of the Company, in each case subject to the terms and
conditions of this Agreement, for the period commencing on the
Change of Control and ending on the second anniversary of such date
(the “Employment Period”). Nothing in this Agreement
shall be deemed to prevent the Executive from remaining in the
employ of the Company or any successor beyond the Employment Period
either on the terms and conditions set forth herein or on others
that may be mutually agreed upon.
5.
Stock Options and Restricted
Stock Awards. Upon the occurrence of a Change of Control,
subject to the Executive remaining employed by the Company on such
date, all outstanding stock option awards shall vest in full and
any restrictions or forfeiture provisions applicable to restricted
stock awards shall lapse; provided, however, that if the
Executive’s employment is terminated Other Than For Cause
under the circumstances described in Section 6(d)(ii), any
stock option and restricted stock awards held by the Executive that
were unvested at the time of such termination shall become fully
vested upon the occurrence of a Change of Control and shall be
terminated in exchange for a payment determined under the
procedures set forth in Section 2.3(b) of the Tetra
Tech, Inc. 2005 Equity Incentive Plan. The
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lapse of such vesting,
forfeiture, or other restrictions described in this Section 5
shall take place regardless of the satisfaction of any performance
criteria. The Change of Control shall not extend the term or
exercise period of any stock option. In the event of any conflict
between the terms of this Agreement and the terms of any equity
plan or individual agreement evidencing an equity award, the terms
of this Agreement (including, but not limited to, the definition of
“Change of Control”) shall govern. For avoidance of
doubt, the unvested portion of any stock option or restricted stock
awards held by the Executive prior to a Change of Control shall not
be forfeited solely due to the Executive’s termination of
employment Other Than For Cause to the extent required to provide
the Executive with the benefits set forth in this
Section 5.
6.
Termination of
Employment .
(a)
Death/Disability
. The Executive’s
employment shall terminate automatically upon the Executive’s
death and may be terminated by the Company due to the
Executive’s Disability. For purposes of this Agreement,
“Disability” shall mean either that (i) the
Executive is unable to engage in substantial gainful activity
hereunder by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months
or (ii) the Executive is, by reason of any medically
determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period
of not less than 12 months, receiving income replacement benefits
for a period of not less than three months under an accident and
health plan covering employees of the Company. The Company shall
determine in good faith whether the Executive has become Disabled.
In no event shall the Company be obligated to terminate the
Executive’s employment if the Executive suffers a
Disability.
(b)
Cause
. The Company may
terminate the Executive’s employment during the Employment
Period for Cause. For purposes of this Agreement,
“Cause” shall mean:
(i)
The willful and continued
failure of the Executive to perform substantially the
Executive’s duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board or the
Company’s chief executive officer that specifically
identifies the manner in which the Board or chief executive officer
believes that the Executive has not substantially performed the
Executive’s duties, or
(ii)
The willful engaging by
the Executive in illegal conduct or gross misconduct that is
materially and demonstrably injurious to the Company.
(iii)
For purposes of this
provision, no act or failure to act, on the part of the Executive,
shall be considered “willful” unless it is done, or
omitted to be done, by the Executive in bad faith or without
reasonable belief that the Executive’s action or omission was
in the best interests of the Company. Any act, or failure to act,
based upon authority given pursuant to a resolution duly adopted by
the Board or upon the instructions of the Company’s chief
executive officer or a senior officer of the Company or based upon
the
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advice of legal counsel
for the Company shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best
interests of the Company.
(c)
Good Reason
. The Executive may terminate employment
during the Employment Period for Good Reason. For purposes of this Agreement,
“Good Reason” shall mean:
(i)
A material diminution of
the Executive’s base salary, annual bonus opportunity, or
both; or
(ii)
A material diminution in
the Executive’s authority, duties, or responsibilities;
or
(iii)
A material diminution in
the authority, duties, or responsibilities of the supervisor to
whom the Executive is required to report; or
(iv)
A material diminution in
the budget over which the Executive retains authority;
or
(v)
A material change in the
geographic location at which the Executive must perform the
services.
For the avoidance of
doubt, the term “supervisor” for purposes of
Section 6(c)(iii) refers to the position that the
Executive reports to, as opposed to any specific individual; a
change in the individual serving in the position as a
“supervisor” shall not, by itself, constitute
“Good Reason.”
The Executive may not
terminate employment for Good Reason unless: (x) the Executive
has provided the Company with notice of the occurrence of the Good
Reason condition described in subsection (i)-(v) within sixty
(60) days of the initial existence thereof; and (y) the
Company has been provided with thirty (30) days to remedy such Good
Reason condition and has failed to remedy such condition. The
Executive’s employment shall be deemed to have been
terminated following a Change of Control by the Executive for Good
Reason if the Executive terminates the Executive’s employment
prior to a Change of Control with Good Reason if a Good Reason
condition occurs at the direction of a person or entity who has
entered into an agreement with the Company the consummation of
which will constitute a Change of Control.
(d)
Other Than For
Cause . The
Company shall have the right to terminate the Executive’s
employment during the Employment Period for any reason not
described in Section 6(a) or (b) above upon thirty
(30) days’ prior written notice to the Executive and such
termination shall be referred to herein as a termination
“Other Than For Cause.” The Executive’s
employment shall be deemed to have been terminated following a
Change of Control by the Company Other Than For Cause if
(i) the Executive resigns following a request by the Company
to terminate the Executive’s employment on or after a Change
of Control, or (ii) the Company terminates the Executive’s employment
Other Than For Cause within the
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ninety (90) day period
immediately prior to the execution of a definitive agreement the
consummation of which actually results in such Change of
Control.
(e)
Notice of
Termination . Any termination by the Company for Cause or
for Other Than For Cause, or by the Executive for Good Reason,
shall be communicated by Notice of Termination to the other party
hereto in accordance with Section 17(b) of this
Agreement. For purposes of this Agreement, a “Notice of
Termination” means a written notice that: (i) indicates
the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision
so indicated and (iii) if the Date of Termination (as defined
below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than thirty (30)
days after the giving of such notice). The failure by the Executive
or the Company to set forth in the Notice of Termination any fact
or circumstance that contributes to a showing of Good Reason or
Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing
the Executive’s or the Company’s rights
hereunder.
(f)
Date of
Termination . “Date of Termination” means
(i) if the Executive’s employment is terminated by
reason of death or Disability, the date of the Executive’s
death or the date the Company terminates the Executive as a result
of the Executive’s Disability, as the case may be,
(ii) if the Executive’s employment is terminated by the
Company for Cause, or by the Executive for Good Reason, the date of
receipt of the Notice of Termination or any later date specified
therein, as the case may be, and (iii) if the
Executive’s employment is terminated by the Company Other
Than For Cause, the Date of Termination shall be thirty (30) days
after the date on which the Company notifies the Executive of such
termination, or if the Company chooses to pay the Executive thirty
(30) days of base salary in lieu of providing such 30-day notice,
the date on which the Company notifies the Executive of such
termination.
7.
Obligations of the Company
Upon Termination .
(a)
Good Reason, Other Than for
Cause . If,
during the Employment Period, the Company terminates the
Executive’s employment Other Than For Cause or the Executive
terminates employment for Good Reason under
Section 6(c) above, the Company shall pay to the
Executive the following amounts:
(i)
A cash lump sum payment
equal to one times the sum of (x) the Executive’s annual
base salary and (y) the Executive’s target bonus for the
year of termination (without regard to any reduction that gave rise
to Good Reason), regardless of actual performance;
(ii)
A cash lump sum payment
equal to the product of (x) the Executive’s target bonus
for the year of termination (without regard to any reduction that
gave rise to Good Reason), regardless of actual performance, and
(y) a fraction, the numerator of which is
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the number of days in
the current fiscal year through the Date of Termination, and the
denominator of which is 365; and
(iii)
For the one year period
immediately following the Date of Termination, the Company shall
arrange to provide the Executive and his dependents medical
benefits substantially similar to those provided to the Executive
and his dependents immediately prior to the Date of Termination at
no greater cost to the Executive than the cost to the Executive
immediately prior to such date or occurrence. To the extent COBRA continuation coverage
eligibility expires before the end of the medical benefit
continuation period under this Section 7(a)(iii), the
Executive will receive payment, on an after-tax basis (based on the
highest applicable marginal rate of federal, state and local income
and employment taxes) of an amount equal to the premium the Company
would have otherwise contributed to COBRA coverage under this
Section 7(a)(iii). Benefits otherwise receivable by the Executive
pursuant to this Section 7(a)(iii) shall be reduced to
the extent benefits of the same type are received by or made
available by a subseq
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