-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TPdlgkB+3JBuqIrsRP/T6qzU+5sl+/xtDolo4kNDcrgTTHczgzLFZaBxaKc213g9 7qdCjBl/3jMkfa/csu451A== /in/edgar/work/20000816/0000912057-00-037986/0000912057-00-037986.txt : 20000922 0000912057-00-037986.hdr.sgml : 20000922 ACCESSION NUMBER: 0000912057-00-037986 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20000702 FILED AS OF DATE: 20000816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TETRA TECH INC CENTRAL INDEX KEY: 0000831641 STANDARD INDUSTRIAL CLASSIFICATION: [8711 ] IRS NUMBER: 954148514 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19655 FILM NUMBER: 704206 BUSINESS ADDRESS: STREET 1: 670 N ROSEMEAD BOULEVARD CITY: PASEDENA STATE: CA ZIP: 91107-2190 BUSINESS PHONE: 6263514664 MAIL ADDRESS: STREET 1: 670 N ROSEMEAD BLVD CITY: PASADENA STATE: CA ZIP: 91107 10-Q 1 a10-q.txt 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended JULY 2, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission File Number 0-19655 TETRA TECH, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 95-4148514 - ------------------------------- ------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) number) 670 N. ROSEMEAD BOULEVARD, PASADENA, CALIFORNIA 91107 - -------------------------------------------------------------------------------- (Address of principal executive offices) (626) 351-4664 --------------------------------------------------- (Registrant's telephone number, including area code) NOT APPLICABLE ----------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- As of August 7, 2000, the total number of outstanding shares of the Registrant's common stock was 39,688,925. TETRA TECH, INC. INDEX PAGE NO. PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Income 4 Condensed Consolidated Statements of Cash Flows 5 Notes to Condensed Consolidated Financial Statements 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 18 Item 3. Quantitative and Qualitative Disclosures About Market 23 Risks Risk Factors 24 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 30 Signatures 34 -2- PART I. FINANCIAL INFORMATION ITEM 1. Tetra Tech, Inc. Condensed Consolidated Balance Sheets
In thousands, except share data JULY 2, 2000 OCTOBER 3, 1999 ----------------- -------------------- (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents.......................................... $ 9,868 $ 8,189 Accounts receivable - net.......................................... 126,785 91,376 Unbilled receivables - net......................................... 107,900 85,072 Prepaid and other current assets................................... 14,108 7,174 Deferred income taxes.............................................. 3,259 3,259 ------------ ------------ Total Current Assets............................................ 261,920 195,070 ------------ ------------ PROPERTY AND EQUIPMENT: Leasehold improvements............................................. 3,111 3,343 Equipment, furniture and fixtures.................................. 57,298 39,488 ------------ ------------ Total........................................................... 60,409 42,831 Accumulated depreciation and amortization.......................... (27,880) (21,085) ------------ -------------- PROPERTY AND EQUIPMENT - NET........................................... 32,529 21,746 ------------ ------------ INTANGIBLE ASSETS - NET................................................ 191,566 160,686 OTHER ASSETS........................................................... 3,698 2,976 ------------ ------------ TOTAL ASSETS........................................................... $ 489,713 $ 380,478 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable................................................... $ 33,696 $ 32,570 Accrued compensation............................................... 26,106 21,900 Billings in excess of costs on uncompleted contracts............... 7,198 5,872 Other current liabilities.......................................... 16,417 14,606 Current portion of long-term obligations........................... 26,000 24,000 Income taxes payable............................................... 7,418 9,809 ------------ ------------ Total Current Liabilities....................................... 116,835 108,757 ------------ ------------ LONG-TERM OBLIGATIONS.................................................. 93,792 37,289 ------------ ------------ COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock - authorized, 2,000,000 shares of $.01 par value; issued and outstanding 0 shares at July 2, 2000 and October 3, 1999.............................................. -- -- Exchangeable stock of a subsidiary................................. 13,887 13,239 Common stock - authorized, 50,000,000 shares of $.01 par value; issued and outstanding 39,602,709 and 38,433,621 shares at July 2, 2000 and October 3, 1999, respectively................... 396 384 Additional paid-in capital......................................... 145,715 127,978 Accumulated other comprehensive income (loss)...................... (153) (802) Retained earnings.................................................. 119,241 93,633 ------------ ------------ TOTAL STOCKHOLDERS' EQUITY............................................. 279,086 234,432 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............................. $ 489,713 $ 380,478 ============ ============
See accompanying Notes to Condensed Consolidated Financial Statements. -3- Tetra Tech, Inc. Condensed Consolidated Statements of Income (Unaudited)
In thousands, except per share data THREE MONTHS ENDED NINE MONTHS ENDED ----------------------------- ---------------------------- July 2, July 4, July 2, July 4, 2000 1999 2000 1999 ----------- ----------- ----------- ----------- Gross Revenue...................................... $ 203,795 $ 157,091 $ 551,617 $ 399,147 Subcontractor costs.......................... 47,327 36,352 127,132 92,208 ----------- ----------- ----------- ----------- Net Revenue........................................ 156,468 120,739 424,485 306,939 Cost of Net Revenue................................ 116,266 88,189 326,245 232,778 ----------- ----------- ----------- ----------- Gross Profit....................................... 40,202 32,550 98,240 74,161 Selling, General and Administrative Expenses....... 18,810 15,598 43,361 33,120 Amortization of Intangibles........................ 1,719 1,353 4,492 3,386 ----------- ----------- ----------- ----------- Income from Operations............................. 19,673 15,599 50,387 37,655 Interest Expense................................... 2,077 649 4,868 2,143 Interest Income.................................... (119) (99) (209) (362) ----------- ----------- ----------- ----------- Income Before Income Tax Expense................... 17,715 15,049 45,728 35,874 Income Tax Expense................................. 7,795 6,546 20,120 15,482 ----------- ----------- ----------- ----------- Net Income......................................... $ 9,920 $ 8,503 $ 25,608 $ 20,392 =========== =========== =========== =========== Basic Earnings Per Share........................... $ 0.25 $ 0.22 $ 0.66 $ 0.55 =========== =========== =========== =========== Diluted Earnings Per Share......................... $ 0.24 $ 0.21 $ 0.62 $ 0.52 =========== =========== =========== =========== Weighted Average Common Shares Outstanding: Basic........................................ 39,287 37,801 38,768 36,805 =========== =========== =========== =========== Diluted...................................... 42,104 40,145 41,221 39,266 =========== =========== =========== ===========
See accompanying Notes to Condensed Consolidated Financial Statements. -4- Tetra Tech, Inc. Condensed Consolidated Statements of Cash Flow (Unaudited)
In thousands NINE MONTHS ENDED -------------------------------------- July 2, July 4, 2000 1999 ------------------ ------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income.................................................................. $ 25,608 $ 20,392 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization......................................... 11,287 8,745 Provision for losses on receivables................................... (1,074) (1,105) Changes in operating assets and liabilities, net of effects of acquisitions: Accounts receivable................................................... (25,728) 2,220 Unbilled receivables.................................................. (16,874) (3,446) Prepaid and other assets.............................................. (6,370) (3,906) Accounts payable...................................................... (3,607) (5,494) Accrued compensation.................................................. 3,501 26 Other current liabilities............................................. (900) 170 Income taxes payable.................................................. (3,142) (824) --------- ---------- Net Cash (Used In) Provided By Operating Activities............... (17,299) 16,778 --------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures........................................................ (12,025) (4,005) Payments for business acquisitions, net of cash acquired.................... (28,387) (33,963) Payments on loans to unconsolidated affiliate............................... -- (3,000) --------- ---------- Net Cash Used In Investing Activities............................. (40,412) (40,968) --------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Payments on long-term obligations........................................... (44,616) (45,000) Proceeds from issuance of long-term obligations............................. 97,000 48,359 Net proceeds from issuance of common stock.................................. 6,357 25,819 --------- ---------- Net Cash Provided By Financing Activities......................... 58,741 29,178 --------- ---------- EFFECT OF RATE CHANGES ON CASH.............................................. 649 (584) --------- ---------- NET INCREASE IN CASH AND CASH EQUIVALENTS................................... 1,679 4,404 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............................ 8,189 4,889 --------- ---------- CASH AND CASH EQUIVALENTS AT END OF PERIOD.................................. $ 9,868 $ 9,293 =========== =========== SUPPLIMENTAL CASH FLOW INFORMATION: Cash paid during the period for: Interest.............................................................. $ 4,810 $ 1,804 Income taxes.......................................................... $ 23,262 $ 12,452
(Continued) -5- Tetra Tech, Inc. Condensed Consolidated Statements of Cash Flow (Unaudited)
In thousands NINE MONTHS ENDED ------------------------------------- July 2, July 4, 2000 1999 ------------- ------------- SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES: In June 2000, the Company purchased all of the capital stock of Drake Contractors, Inc. In conjunction with this acquisition, liabilities were assumed as follows: Fair value of assets acquired....................................... $ 9,466 Cash paid........................................................... (4,923) Contingent consideration............................................ (1,000) Other acquisition costs............................................. (100) --------- Liabilities assumed.............................................. $ 3,443 ========= In May 2000, the Company purchased all of the capital stock of Rizzo Associates, Inc. In conjunction with this acquisition, liabilities were assumed as follows: Fair value of assets acquired....................................... $ 17,588 Issuance of common stock............................................ (1,785) Cash paid........................................................... (8,400) Other acquisition costs............................................. (120) --------- Liabilities assumed.............................................. $ 7,283 ========= In May 2000, the Company purchased all of the capital stock of FHC, Inc. In conjunction with this acquisition, liabilities were assumed as follows: Fair value of assets acquired....................................... $ 6,357 Issuance of common stock............................................ (833) Cash paid........................................................... (3,920) Other acquisition costs............................................. (100) --------- Liabilities assumed.............................................. $ 1,504 ========= In May 2000, the Company purchased, through its majority-owned subsidiary, Tetra Tech Canada Ltd., all of the capital stock of 1261248 Ontario, Inc., which does business as Engineered Communications. In conjunction with this acquisition, liabilities were assumed as follows: Fair value of assets acquired....................................... $ 1,521 Issuance of exchangeable stock...................................... (647) Cash paid........................................................... (762) Other acquisition costs............................................. (100) --------- Liabilities assumed.............................................. $ 12 =========
(Continued) -6- Tetra Tech, Inc. Condensed Consolidated Statements of Cash Flow (Unaudited)
In thousands NINE MONTHS ENDED -------------------------------------- July 2, July 4, 2000 1999 ------------------ ------------------ SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES: In April 2000, the Company purchased all of the capital stock of eXpert Wireless Solutions, Inc. In conjunction with this acquisition, liabilities were assumed as follows: Fair value of assets acquired....................................... $ 21,381 Issuance of common stock............................................ (8,585) Cash paid........................................................... (10,090) Other acquisition costs............................................. (100) --------- Liabilities assumed.............................................. $ 2,606 ========= In March 2000, concurrent with Tetra Tech Engineers, P.C.'s acquisition of certain assets of Edward A. Sears Associates, the Company's subsidiary, Cosentini Associates, Inc. acquired certain non-licensed assets of Edward A. Sears Associates from Tetra Tech Engineers, P.C. In conjunction with this acquisition, liabilities were assumed as follows: Fair value of assets acquired....................................... $ 505 Cash paid........................................................... (350) Other acquisition costs............................................. (80) --------- Liabilities assumed.............................................. $ 75 ========= In October 1999, the Company purchased all of the capital stock of LC of Illinois, Inc. and HFC Technologies, Inc. In conjunction with these acquisitions, liabilities were assumed as follows: Fair value of assets acquired....................................... $ 2,606 Cash paid........................................................... (1,513) Other acquisition costs............................................. (80) --------- Liabilities assumed.............................................. $ 1,013 ========= In June 1999, the Company purchased all of the capital stock of L.M.W. Associates, Inc., Cosentini Associates, Inc. and Cobin, Inc. and all of the limited liability partnership interests of Cosentini Associates IL LLP, Cosentini Associates MA LLP, Cosentini Associates DC LLP and Cosentini Associates FL LLP (collectively, CAA). In conjunction with these acquisitions, liabilities were assumed as follows: Fair value of assets acquired....................................... $ 15,577 Cash paid........................................................... (5,069) Other acquisition costs............................................. (250) ---------- Liabilities assumed.............................................. $ 10,258 ==========
(Continued) -7- Tetra Tech, Inc. Condensed Consolidated Statements of Cash Flow (Unaudited)
In thousands NINE MONTHS ENDED -------------------------------------- July 2, July 4, 2000 1999 ------------------ ------------------ SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES: In June 1999, the Company purchased all of the capital stock of ASL Consultants, Inc. In conjunction with this acquisition, liabilities were assumed as follows: Fair value of assets acquired....................................... $ 16,433 Cash paid........................................................... (10,000) Other acquisition costs............................................. (90) ---------- Liabilities assumed.............................................. $ 6,343 ========== In June 1999, the Company purchased all of the capital stock of Utilities & C.C., Inc. In conjunction with this acquisition, liabilities were assumed as follows: Fair value of assets acquired....................................... $ 2,568 Issuance of common stock............................................ (2,040) Other acquisition costs............................................. (70) ---------- Liabilities assumed.............................................. $ 458 ========== In May 1999, the Company purchased all of the capital stock of BAHA Communications, Inc. In conjunction with this acquisition, liabilities were assumed as follows: Fair value of assets acquired....................................... $ 3,355 Issuance of common stock............................................ (2,133) Common stock held in escrow......................................... (425) Other acquisition costs............................................. (70) ---------- Liabilities assumed.............................................. $ 727 ========== In May 1999, the Company purchased all of the capital stock of D.E.A. Construction Company. In conjunction with this acquisition, liabilities were assumed as follows: Fair value of assets acquired....................................... $ 19,532 Cash paid........................................................... (14,000) Covenant not to compete............................................. (250) Purchase price payable.............................................. (185) Other acquisition costs............................................. (80) ---------- Liabilities assumed.............................................. $ 5,017 ==========
(Continued) -8- Tetra Tech, Inc. Condensed Consolidated Statements of Cash Flow (Unaudited)
In thousands NINE MONTHS ENDED -------------------------------------- July 2, July 4, 2000 1999 ------------------ ------------------ SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES: In May 1999, the Company purchased all of the capital stock of Collins/Pina Consulting Engineers, Inc. In conjunction with this acquisition, liabilities were assumed as follows: Fair value of assets acquired....................................... $ 4,919 Cash paid........................................................... (2,501) Issuance of common stock............................................ (102) Other acquisition costs............................................. (70) ---------- Liabilities assumed.............................................. $ 2,246 ========== In February 1999, the Company purchased all of the capital stock of McCulley, Frick & Gilman, Inc. In conjunction with this acquisition, liabilities were assumed as follows: Fair value of assets acquired....................................... $ 9,907 Cash paid........................................................... (4,358) Issuance of common stock............................................ (3,705) Other acquisition costs............................................. (70) ---------- Liabilities assumed.............................................. $ 1,774 ==========
See accompanying Notes to Condensed Consolidated Financial Statements. (Concluded) -9- TETRA TECH, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION The accompanying condensed consolidated balance sheet as of July 2, 2000, the condensed consolidated statements of income for the three-month and nine-month periods ended July 2, 2000 and July 4, 1999 and the condensed consolidated statements of cash flows for the nine months ended July 2, 2000 and July 4, 1999 are unaudited, and in the opinion of management include all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the periods presented. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended October 3, 1999. The results of operations for the three and nine months ended July 2, 2000 are not necessarily indicative of the results to be expected for the fiscal year ending October 1, 2000. 2. EARNINGS PER SHARE Due to the Company's complex capital structure, the Company presents both basic and diluted Earnings Per Share (EPS). Basic EPS excludes dilution and is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed by dividing net income by the weighted average number of common shares outstanding and dilutive potential common shares. The Company includes as potential common shares the weighted average number shares of exchangeable stock of a subsidiary and the weighted average dilutive effects of outstanding stock options. The exchangeable stock of a subsidiary is non-voting and is exchangeable on a one to one basis, as adjusted for stock splits and stock dividends subsequent to the original issuance, for the Company's common stock. 3. CURRENT ASSETS The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. Cash and cash equivalents totaled $9.9 million and $8.2 million at July 2, 2000 and October 3, 1999, respectively. 4. MERGERS AND ACQUISITIONS On February 26, 1999, the Company acquired 100% of the capital stock of McCulley, Frick & Gilman, Inc. (MFG), a provider of professional environmental science and consulting services to commercial clients. The purchase was valued at approximately $8.1 million, as adjusted, consisting -10- of cash and 237,413 shares of Company common stock, of which 5,923 shares were issued in October 1999 pursuant to the purchase price adjustment clause in the related purchase agreement. On May 7, 1999, the Company acquired 100% of the capital stock of Collins/Pina Consulting Engineers, Inc. (CPC), a provider of consulting engineering and related services primarily in the state of Arizona. The purchase was valued at approximately $2.7 million, as adjusted, consisting of cash and 4,938 shares of Company common stock. On May 19, 1999, the Company acquired 100% of the capital stock of D.E.A. Construction Company (DCC), a provider of engineering and network infrastructure services for cable television and fiber optic telephone networks including design, construction and maintenance capabilities of communications and information transport systems. The purchase was valued at approximately $15.5 million, as adjusted, consisting of cash. On May 21, 1999, the Company acquired 100% of the capital stock of BAHA Communications, Inc. (BCI), a supplier of infrastructure installation and maintenance services to the wireless personal communications industry. The purchase was valued at approximately $2.6 million, consisting of 176,168 shares of Company common stock. Of the 176,168 shares of Company common stock, 29,272 shares are being held in escrow as contingent consideration until July 31, 2000 and will be released dependent upon BCI's operational performance, as specified in the related escrow agreement, during the previous twelve-month period. Additionally, concurrent with the acquisition, BCI assigned (without recourse) to its former shareholders accounts receivable valued at approximately $1.0 million. On June 18, 1999, the Company acquired 100% of the capital stock of Utilities & C.C., Inc. (UCC), a supplier of infrastructure installation and maintenance services to the wireless personal communications industry. The purchase was valued at approximately $2.2 million, as adjusted, consisting of 144,482 shares of Company common stock, of which 6,552 shares were issued in October 1999 pursuant to the purchase price adjustment clause in the related purchase agreement. On June 25, 1999, the Company acquired 100% of the capital stock of ASL Consultants, Inc. (ASL), a provider of water and wastewater treatment, transportation, and other engineering services. The purchase was valued at approximately $10.1 million, consisting of cash, and is subject to a purchase price adjustment based upon the final determination of ASL's net asset value as of July 2, 1999. On June 30, 1999, the Company acquired 100% of the capital stock of L.M.W. Associates, Inc., Cosentini Associates, Inc. and Cobin, Inc., and 100% of the limited liability partnership interests of Cosentini Associates IL LLP, Cosentini Associates MA LLP, Cosentini Associates DC LLP and Cosentini Associates FL LLP (collectively, CAA). The purchase was valued at approximately $5.3 million, consisting of cash, and is subject to a purchase price adjustment based upon the final determination of CAA's net asset value as of June 30, 1999. Additionally, concurrent with the acquisition, CAA assigned (without recourse) to its former owners accounts receivable valued at approximately $18.4 million. -11- On August 3, 1999, the Company merged its wholly owned subsidiaries, Simons Li & Associates, Inc., IWA Engineers, FLO Engineering, Inc. and C.D.C. Engineering, Inc. into a single operating division of the Company. The Company believes this combination provides synergy and cohesiveness for the combined group. On August 4, 1999, the Company merged its wholly owned subsidiary Integration Technologies, Inc. (IT) into its newly acquired wholly owned subsidiary, DCC. IT and DCC provide substantially similar services to the same clients in similar markets. The Company believes this combination provides a stronger market position. On September 3, 1999, the Company acquired 100% of the capital stock of PDR Engineers, Inc. (PDR), a provider of engineering consulting services to Federal, state and local government and commercial clients. The purchase was valued at approximately $6.6 million, consisting of cash and 236,525 shares of Company common stock, and is subject to a purchase price and purchase allocation adjustment based upon the final determination of PDR's net asset value as of September 3, 1999. On October 2, 1999, the Company acquired 100% of the capital stock of Evergreen Utility Contractors, Inc., Continental Utility Contractors, Inc. and Gig Harbor Construction, Inc. (collectively, EUC), a provider of engineering and network services for cable TV and fiber optic networks in the Pacific Northwest Region of the U.S. The purchase was valued at approximately $11.8 million, consisting of cash, and is subject to a purchase price and purchase allocation adjustment based upon the final determination of EUC's net asset value as of October 2, 1999. On October 25, 1999, the Company acquired 100% of the capital stock of LC of Illinois, Inc. and HFC Technologies, Inc. (collectively, LCI), a provider of engineering and network infrastructure services for cable television and fiber optic telephone networks including design, construction and maintenance capabilities for communications and information transport systems. The purchase was valued at approximately $1.6 million, consisting of cash. On March 30, 2000, Tetra Tech Engineers, P.C. acquired certain assets of Edward A. Sears Associates (ESA), a provider of engineering services to hospitals in New York. Concurrent with this transaction, the Company's subsidiary, Cosentini Associates, Inc., acquired certain non-licensed assets of ESA from Tetra Tech Engineers, P.C. The purchase was valued at approximately $0.4 million, consisting of cash, and is subject to a purchase price and purchase allocation adjustment based upon the final determination of ESA's net asset value as of March 30, 2000. On April 3, 2000, the Company acquired 100% of the capital stock of eXpert Wireless Solutions, Inc. (EWS), a provider of radio-frequency engineering and consulting services to the wireless communications industry. The purchase was valued at approximately $18.8 million, consisting of cash and 407,877 shares of Company common stock. Additionally, concurrently with the acquisition, EWS distributed to its former shareholders accounts receivable valued at approximately $1.8 million. -12- On May 3, 2000, the Company, through its majority-owned subsidiary, Tetra Tech Canada Ltd., acquired 100% of the capital stock of 1261248 Ontario, Inc., which does business as Engineered Communications (ENG), a provider of engineering and network services for the wired communications industry in Ontario, Canada. The purchase was valued at approximately $1.5 million, consisting of cash and 33,606 shares of exchangeable stock of the Company's majority-owned subsidiary and is subject to a purchase price and purchase allocation adjustment based upon the final determination of ENG's net asset value as of May 1, 2000. On May 17, 2000, the Company acquired 100% of the capital stock of FHC, Inc. (FHC), a provider of engineering consulting services primarily to state and local governments in Oklahoma. The purchase was valued at approximately $4.9 million, consisting of cash and 53,007 shares of Company common stock and is subject to a purchase price and purchase allocation adjustment based upon the final determination of FHC's net asset value as of May 17, 2000. On May 24, 2000, the Company acquired 100% of the capital stock of Rizzo Associates, Inc. (RAI), a provider of engineering consulting services to state and local governments and commercial clients in the upper Northeast region of the U.S. This purchase was valued at approximately $10.3 million, consisting of cash and 112,436 shares of Company common stock and is subject to a purchase price and purchase allocation adjustment based upon the final determination of RAI's net asset value as of May 24, 2000. On June 16, 2000, the Company acquired 100% of the capital stock of Drake Contractors, Inc. (DCI), a provider of infrastructure installation and maintenance services primarily in Colorado. The purchase was valued at approximately $6.0 million, consisting of cash (of which $1.0 million is contingent on operational performance) and is subject to a purchase price and purchase allocation adjustment based upon the final determination of DCI's net asset value as of June 1, 2000. Additionally, concurrent with the acquisition, DCI distributed to its former shareholders accounts receivable valued at approximately $2.1 million. All of the acquisitions above have been accounted for as purchases and, accordingly, the purchase prices of the businesses acquired have been allocated to the assets and liabilities acquired based upon their fair values. The excess of the purchase cost of the acquisitions over the fair value of the net assets acquired was recorded as goodwill and is included in Intangible Assets - Net in the accompanying condensed consolidated balance sheets. The Company values stock exchanged in acquisitions based on extended restriction periods, high volatility in the trading price of the Company's common stock and other economic factors specific to the Company's circumstances. During fiscal 1999 and fiscal 2000, stock exchanged in acquisitions was discounted by 15%. The results of operations of each of the companies acquired have been included in the Company's financial statements from the effective acquisition dates. -13- 5. ACCOUNTS RECEIVABLE Accounts receivable are presented net of a valuation allowance to provide for doubtful accounts and for the potential disallowance of billed and unbilled costs. The allowance for doubtful accounts as of July 2, 2000 and October 3, 1999 was $4.5 million and $4.1 million, respectively. The allowance for disallowed costs as of July 2, 2000 and October 3, 1999 was $2.9 million and $4.4 million, respectively. During the three and nine months ended July 4, 1999, the Company reversed $1.75 million of these reserves into income due to the collection of previously reserved accounts receivable. Disallowance of billed and unbilled costs is primarily associated with contracts with the Federal government which contain clauses that subject contractors to several levels of audit. The Company establishes reserves on those contract receivables, especially those acquired in acquisitions, where collectibility is not assured. Management believes that resolution of these matters will not have a material adverse impact on the Company's financial position or results of operations. 6. UNAUDITED PRO FORMA OPERATING RESULTS The table below presents summarized unaudited pro forma operating results assuming that the Company had acquired MFG, CPC, DCC, BCI, UCC, ASL, CAA, PDR, EUC, EWS, FHC and RAI on October 5, 1998. The effect of unaudited pro forma results of LCI, ENG, ESA, and DCI had they been acquired on October 5, 1998 is not material. These amounts are based on historical results and assumptions and estimates which the Company believes to be reasonable. The pro forma results do not reflect anticipated cost savings and do not necessarily represent results which would have occurred if these acquisitions had actually taken place on October 5, 1998.
In thousands, except per share data PRO FORMA NINE MONTHS ENDED ----------------------------------- JULY 2, 2000 JULY 4, 1999 -------------- -------------- Gross revenue $ 577,563 $ 506,456 Income from operations 51,566 46,013 Net income 25,510 21,620 Basic earnings per share 0.65 0.58 Diluted earnings per share 0.61 0.54 Weighted average shares outstanding: Basic 39,068 37,575 Diluted 41,521 40,036
7. OPERATING SEGMENTS The Company's management has organized its operations into three operating segments: Resource Management, Infrastructure, and Communications. The Resource Management operating segment provides specialized environmental engineering and consulting services primarily relating to water quality and water availability to both public and private organizations. The Infrastructure operating segment provides engineering services to provide additional development, as well as upgrading and replacement of existing infrastructure to both public and -14- private organizations. The Communications operating segment provides a comprehensive set of services including engineering, consulting and operational services to communications companies, wireless service providers and cable operators. Management has established these operating segments based upon the services provided, the different marketing strategies, and the specialized needs of the clients. The Company accounts for inter-segment sales and transfers as if the sales and transfers were to third parties; that is, by applying a negotiated fee onto the cost of the services performed. Management evaluates the performance of these operating segments based upon their respective income from operations before the effect of any acquisition related amortization and any fee from inter-segment sales and transfers. The following tables set forth (in thousands) summarized financial information on the Company's reportable segments: REPORTABLE SEGMENTS:
RESOURCE Three months ended July 2, 2000 MANAGEMENT INFRASTRUCTURE COMMUNICATIONS TOTAL -------------- --------------- -------------- ------------- Gross Revenue........................ $ 91,000 $ 63,647 $ 54,824 $ 209,471 Net Revenue.......................... 62,227 50,955 41,469 154,651 Income from Operations............... 7,930 5,789 7,878 21,597 Depreciation Expense................. 517 839 776 2,132 RESOURCE Nine months ended July 2, 2000 MANAGEMENT INFRASTRUCTURE COMMUNICATIONS TOTAL -------------- --------------- -------------- ------------- Gross Revenue........................ $ 264,906 $ 170,196 $ 130,204 $ 565,306 Net Revenue.......................... 178,805 136,961 102,591 418,357 Income from Operations............... 21,888 15,223 18,129 55,240 Depreciation Expense................. 1,715 2,779 2,123 6,617 RESOURCE Three months ended July 4, 1999 MANAGEMENT INFRASTRUCTURE COMMUNICATIONS TOTAL -------------- -------------- -------------- ------------- Gross Revenue........................ $ 87,983 $ 43,919 $ 27,722 $ 159,624 Net Revenue.......................... 59,360 37,610 22,612 119,582 Income from Operations............... 8,603 4,814 3,724 17,141 Depreciation Expense................. 644 1,283 987 2,914 RESOURCE Nine months ended July 4, 1999 MANAGEMENT INFRASTRUCTURE COMMUNICATIONS TOTAL -------------- -------------- -------------- ------------- Gross Revenue........................ $ 242,167 $ 89,852 $ 74,843 $ 406,862 Net Revenue.......................... 166,120 74,507 64,194 304,821 Income from Operations............... 19,940 9,967 11,492 41,399 Depreciation Expense................. 2,007 1,920 1,285 5,212
-15-
RECONCILIATIONS: THREE MONTHS ENDED ---------------------------------- JULY 2, 2000 JULY 4, 1999 ------------ ------------ GROSS REVENUE Gross revenue from reportable segments............................... $ 209,471 $ 159,624 Elimination of inter-segment revenue................................. (7,493) (3,418) Other revenue........................................................ 1,817 885 ------------ ------------ Total consolidated gross revenue................................. $ 203,795 $ 157,091 ============ ============ NET REVENUE Net revenue from reportable segments................................. $ 154,651 $ 119,582 Other revenue........................................................ 1,817 1,156 ------------ ------------ Total consolidated net revenue................................... $ 156,468 $ 120,738 ============ ============ INCOME FROM OPERATIONS Income from operations of reportable segments........................ $ 21,597 $ 17,141 Elimination of inter-segment income.................................. (536) (227) Other income......................................................... 331 38 Amortization of intangibles.......................................... (1,719) (1,353) ------------ ------------ Total consolidated income from operations........................ $ 19,673 $ 15,599 ============ ============
NINE MONTHS ENDED ---------------------------------- JULY 2, 2000 JULY 4, 1999 ------------ ------------ GROSS REVENUE Gross revenue from reportable segments............................... $ 565,306 $ 406,862 Elimination of inter-segment revenue................................. (19,817) (10,142) Other revenue........................................................ 6,128 2,427 ------------ ------------ Total consolidated gross revenue................................. $ 551,617 $ 399,147 ============ ============ NET REVENUE Net revenue from reportable segments................................. $ 418,357 $ 304,821 Other revenue........................................................ 6,128 2,118 ------------ ------------ Total consolidated net revenue................................... $ 424,485 $ 306,939 ============ ============ INCOME FROM OPERATIONS Income from operations of reportable segments........................ $ 55,240 $ 41,399 Elimination of inter-segment income.................................. (1,337) (617) Other income......................................................... 976 259 Amortization of intangibles.......................................... (4,492) (3,386) ------------ ------------ Total consolidated income from operations........................ $ 50,387 $ 37,655 ============ ============
MAJOR CLIENTS The Company's net revenue attributable to the U.S. Federal government was approximately $41.8 million and $43.6 million for the three months ended July 2, 2000 and July 4, 1999, respectively. Net revenue attributable to the U.S. Federal government was approximately $122.9 million and $121.2 million for the nine months ended July 2, 2000 and July 4, 1999, respectively. Both the Resource Management and Infrastructure operating segments realize net revenue from the U.S. government. -16- 8. COMPREHENSIVE INCOME Comprehensive income is the change in equity of a business enterprise during a period from transactions and other events and circumstances from non owner sources. These sources include net income and other revenues, expenses, gains and losses incurred. The Company includes as other comprehensive income translation gains and losses from subsidiaries with functional currencies different than that of the Company. Comprehensive income was approximately $9.6 million and $8.7 million for the three months ended July 2, 2000 and July 4, 1999, respectively. For the nine months ended July 2, 2000 and July 4, 1999, comprehensive income was $26.3 million and $19.8 million, respectively. For the three months ended July 2, 2000, the Company incurred net translation losses of $0.3 million. For the nine months ended July 2, 2000, the Company realized net translation gains of $0.6 million. For the three months ended July 4, 1999, the Company realized net translation gains of $0.2 million. For the nine months ended July 4, 1999, the Company incurred net translation losses of $0.6 million. -17- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED BELOW, THE MATTERS DISCUSSED IN THIS SECTION ARE FORWARD-LOOKING STATEMENTS THAT INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES. OUR ACTUAL LIQUIDITY NEEDS, CAPITAL RESOURCES AND OPERATING RESULTS MAY DIFFER MATERIALLY FROM THE DISCUSSION SET FORTH BELOW IN THESE FORWARD-LOOKING STATEMENTS. FOR ADDITIONAL INFORMATION, REFER TO THE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS INCLUDED ELSEWHERE IN THIS FILING. OVERVIEW Tetra Tech, Inc. is a leading provider of specialized management consulting and technical services in three principal business areas: resource management, infrastructure and communications. As a specialized management consultant, we assist our clients in defining problems and developing innovative and costeffective solutions. Our management consulting services are complemented by our technical services. These technical services, which implement solutions, include research and development, applied science, engineering and architectural design, construction management, and operations and maintenance. Our clients include a diverse base of public and private organizations located in the United States and internationally. Since our initial public offering in December 1991, we have increased the size and scope of our business and have expanded our service offerings through a series of strategic acquisitions and internal growth. We derive our revenue from fees from professional services. Our services are billed under various types of contracts with our clients, including: - Fixed-price; - Fixed-rate time and materials; - Cost-reimbursement plus fixed fee; and - Cost-reimbursement plus fixed and award fee. In the course of providing our services, we routinely subcontract services. These subcontractor costs are passed through to clients and, in accordance with industry practice, are included in gross revenue. Because subcontractor services can change significantly from project to project, we believe net revenue, which is gross revenue less the cost of subcontractor services, is a more appropriate measure of our performance. Our cost of net revenue includes professional compensation and certain direct and indirect overhead costs such as rents, utilities and travel. Professional compensation represents the majority of these costs. Our selling, general and administrative (SG&A) expenses are comprised primarily of our corporate headquarters' costs related to our executive offices, corporate finance and accounting, information technology, marketing, and bid and proposal costs. These costs are generally unrelated to specific client projects and can vary as expenses are -18- incurred supporting corporate activities and initiatives. In addition, we include amortization of certain intangible assets resulting from acquisitions in SG&A expenses. We provide our services to a diverse base of Federal, state and local government agencies, and commercial sector and international clients. The following table presents, for the periods indicated, the approximate percentage of net revenue attributable to these client sectors:
PERCENTAGE OF NET REVENUE ----------------------------------------------------------------------------- THREE MONTHS ENDED NINE MONTHS ENDED --------------------------------- --------------------------------- CLIENT SECTOR JULY 2, 2000 JULY 4, 1999 JULY 2, 2000 JULY 4, 1999 - ------------- ------------ ------------ ------------ ------------ Federal government 26.7% 36.1% 28.9% 39.6% State & local government 18.5 17.4 17.5 15.6 Commercial sector 51.7 44.1 50.8 41.0 International 3.1 2.4 2.8 3.8
We manage our business in three operating segments: Resource Management, Infrastructure and Communications. The following table presents, for the periods indicated, the approximate percentage of net revenue attributable to the operating segments:
PERCENTAGE OF NET REVENUE ----------------------------------------------------------------------------- THREE MONTHS ENDED NINE MONTHS ENDED --------------------------------- --------------------------------- OPERATING SEGMENT JULY 2, 2000 JULY 4, 1999 JULY 2, 2000 JULY 4, 1999 - ----------------- ------------ ------------ ------------ ------------ Resource Management 39.8% 49.2% 42.1% 54.1% Infrastructure 32.5 31.1 32.3 24.3 Communications 26.5 18.7 24.2 20.9 Other revenue 1.2 1.0 1.4 0.7
RECENT ACQUISITIONS As a part of our growth strategy, we expect to pursue complementary acquisitions to expand our geographical reach and the breadth and depth of our service offerings. During the third quarter of fiscal 2000, we made the following acquisitions: EXPERT WIRELESS SOLUTIONS, INC. -- In April 2000, the Company acquired 100% of the capital stock of eXpert Wireless Solutions, Inc. (EWS), a provider of radio-frequency engineering and consulting services to the wireless communications industry. The purchase was valued at approximately $18.8 million, consisting of cash and 407,877 shares of Company common stock. Additionally, concurrent with the acquisition, EWS distributed to its former shareholders accounts receivable valued at approximately $1.8 million. ENGINEERED COMMUNICATIONS -- In May 2000, the Company, through its majority-owned subsidiary, Tetra Tech Canada Ltd., acquired 100% of the capital stock of 1261248 Ontario, Inc., which does business as Engineered Communications (ENG), a provider of engineering and network services for the wired communications industry in Ontario, Canada. The purchase was valued at approximately $1.5 million, consisting of cash and 33,606 shares of exchangeable stock of Tetra Tech Canada Ltd., and is subject to a purchase price and allocation adjustment based upon the final determination of ENG's net asset value as of May 1, 2000. -19- FHC, INC. -- In May 2000, the Company acquired 100% of the capital stock of FHC, Inc. (FHC), a provider of engineering consulting services primarily to state and local governments in Oklahoma. The purchase was valued at approximately $4.9 million, consisting of cash and 53,007 shares of Company common stock, and is subject to a purchase price and purchase allocation adjustment based upon the final determination of FHC's net asset value as of May 17, 2000. RIZZO ASSOCIATES, INC. -- In May 2000, the Company acquired 100% of the capital stock of Rizzo Associates, Inc. (RAI). The purchase was valued at approximately $10.3 million, consisting of cash and 112,436 shares of Company common stock, and is subject to a purchase price and purchase allocation adjustment based upon the final determination of RAI's net asset value as of May 24, 2000. DRAKE CONTRACTORS, INC. -- In June 2000, the Company acquired 100% of the capital stock of Drake Contractors, Inc. (DCI). The purchase was valued at approximately $6.0 million, consisting of cash (of which $1.0 million is contingent on operational performance) and is subject to a purchase price and purchase allocation adjustment based upon the final determination of DCI's net asset value as of June 1, 2000. Additionally, concurrent with the acquisition, DCI distributed to its former shareholders accounts receivable valued at approximately $2.1 million. RESULTS OF OPERATIONS The following table presents the percentage relationship of selected items to net revenue in our condensed consolidated statements of income:
% RELATIONSHIP TO NET REVENUE % RELATIONSHIP TO NET REVENUE THREE MONTHS ENDED NINE MONTHS ENDED ------------------------------ ------------------------------ JULY 2, 2000 JULY 4, 1999 JULY 2, 2000 JULY 4, 1999 ------------ -------------- ------------ -------------- Net revenue 100.0% 100.0% 100.0% 100.0% Cost of net revenue 74.3 73.0 76.9 75.8 ------- ------- ------- ------- Gross profit 25.7 27.0 23.1 24.2 Selling, general and administrative expenses 12.0 12.9 10.2 10.8 Acquisition amortization 1.1 1.2 1.1 1.1 ------- ------- ------- ------- Income from operations 12.6 12.9 11.9 12.3 Net interest expense (1.3) (0.4) (1.1) (0.6) ------- ------- ------- ------- Income before income tax expense 11.3 12.5 10.8 11.7 Income tax expense 5.0 5.5 4.7 5.0 ------- ------- ------- ------- Net income 6.3% 7.0% 6.0% 6.6% ======= ======= ======= =======
NET REVENUE. Net revenue increased $35.7 million, or 29.6%, to $156.5 million for the three months ended July 2, 2000 from $120.7 million for the comparable period last year. For the nine months ended July 2, 2000, net revenue increased $117.5 million, or 38.3%, to $424.5 million from $306.9 million for the comparable period last year. Included in net revenue for the three months and nine months ended July 4, 1999 was $1.75 million relating to the over accrual of an allowance for disallowed costs (See Note 5. of Notes to Condensed Consolidated Financial Statements). This allowance relates to amounts previously not recognized as revenue as they -20- were deemed to be unallowable. These amounts were subsequently collected and therefore included as revenue (the "Adjustment"). Excluding the Adjustment, net revenue increased 31.5% and 39.1% for the three and nine months ended July 2, 2000, respectively. The commercial, state and local and international sectors continued to show net revenue increases in actual dollars and as a percentage of net revenue. As a percentage of net revenue, reductions were realized in the Federal government client sector. These reductions were due to growth in revenue from commercial clients and revenue contributed by acquired companies. Acquisitions provided increases in our revenue from both commercial clients and state and local governments. For the three months ended July 2, 2000, net revenue provided by companies acquired in the past twelve months totaled $21.5 million. Excluding this net revenue, we recognized 11.8% growth in our net revenue. For the nine months ended July 2, 2000, net revenue provided by companies acquired in the past twelve months totaled $94.2 million. Excluding this net revenue, we recognized 7.6% growth in our net revenue. Gross revenue increased $46.7 million, or 29.7%, to $203.8 million for the three months ended July 2, 2000 from $157.1 million for the comparable period last year. For the nine months ended July 2, 2000, gross revenue increased $152.5 million, or 38.2%, to $551.6 million from $399.1 million for the comparable period last year. Excluding the Adjustment in the three months ended July 4, 1999, gross revenue increased 31.2% and 38.8% for the three and nine months ended July 2, 2000, respectively. COST OF NET REVENUE. Cost of net revenue increased $28.1 million, or 31.8%, to $116.3 million for the three months ended July 2, 2000 from $88.2 million for the comparable period last year. As a percentage of net revenue, cost of net revenue for the three months ended July 2, 2000 was 74.3% compared to 73.0% (74.1% pre Adjustment) for the comparable period last year. For the nine months ended July 2, 2000, cost of net revenue increased $93.5 million, or 40.2%, to $326.2 million from $232.8 million for the comparable period last year. As a percentage of net revenue, cost of net revenue for the nine months ended July 2, 2000 was 76.9% compared to 75.8% (76.2% pre Adjustment) for the comparable period last year. These increases were primarily due to the reversal of reserves in the three and nine months ended July 4, 1999, as well as the higher cost of net revenue for the acquired companies. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses, excluding amortization of intangibles, increased $3.2 million, or 20.6%, to $18.8 million for the three months ended July 2, 2000 from $15.6 million for the comparable period last year. As a percent of net revenue, SG&A expenses, excluding amortization of intangibles, decreased to 12.0% for the three months ended July 2, 2000 from 12.9% (13.1% pre Adjustment) for the comparable period last year. For the nine months ended July 2, 2000, SG&A expenses, excluding amortization of intangibles, increased $10.2 million, or 30.9%, to $43.4 million from $33.1 million for the comparable period last year. As a percentage of net revenue, SG&A expenses, excluding amortization of intangibles, decreased to 10.2% for the nine months ended July 2, 2000 from 10.8% (10.9% pre Adjustment) for the comparable period last year. Amortization expense relating to acquisitions remained at 1.1% of net revenue for both the three months and nine months ended July 2, 2000 and for the comparable periods last year. As a percentage of net revenue, the decrease in SG&A expenses, including amortization of intangibles, for the three months ended July 2, 2000 was primarily related to timing of expenses relating to the automation of our corporate business systems and processes and business development activities. -21- NET INTEREST EXPENSE. Net interest expense increased $1.4 million or 256.0% to $2.0 million for the three months ended July 2, 2000 from less than $1.0 million for the comparable period last year. For the nine months ended July 2, 2000, net interest expense increased $2.9 million, or 161.6%, to $4.7 million from $1.8 million for the comparable period last year. This increase was primarily attributable to borrowings on our line of credit to facilitate acquisitions and working capital needs. Our average indebtedness for the three and nine months ended July 2, 2000 was $105.4 million and $88.7 million, respectively, as compared to $33.7 million and $8.6 million for the comparable periods last year. In addition, fiscal 1999 was favorably impacted by proceeds from our secondary offering. INCOME TAX EXPENSE. Income tax expense increased $1.2 million, or 19.1%, to $7.8 million for the three months ended July 2, 2000 from $6.5 million for the comparable period last year. For the nine months ended July 2, 2000, income tax expense increased $4.6 million, or 30.0%, to $20.1 million from $15.5 million for the comparable period last year. Certain expenses, primarily amortization of non-deductible goodwill, create permanent differences that impact our effective tax rate. Our current effective tax rate is 44.0% compared to 43.5% in fiscal 1999. LIQUIDITY AND CAPITAL RESOURCES As of July 2, 2000, our working capital was $145.1 million, an increase of $58.8 million from October 3, 1999, of which cash and cash equivalents totaled $9.9 million. In addition, we have a credit agreement (the "Credit Agreement") with a bank which provides for a revolving credit facility (the "Facility") of $150.0 million. Under our Credit Agreement, we may also request standby letters of credit up to the aggregate sum of $25.0 million outstanding at any given time. Our Facility matures on March 17, 2005 or earlier at our discretion upon payment in full of loans and other obligations. As of July 2, 2000, borrowings and standby letters of credit on the Facility totaled $118.0 million and $1.1 million, respectively. In the nine months ended July 2, 2000, we used $17.3 million from operating activities compared to $16.8 million provided in the comparable period last year. This increase was in part attributable to our cash payments of $8.1 million to former shareholders of acquired companies for accounts receivable not acquired in the purchase transactions. In the nine months ended July 2, 2000, cash used in investing activities was $40.4 million compared to $41.0 million for the comparable period last year. This increase primarily was the result of replaced equipment in our wired communications business and other capital expenditures. In the nine months ended July 2, 2000, cash provided by financing activities was $58.7 million compared to $29.2 million for the comparable period last year. This change was attributable to the working capital needs of acquired entities and funds needed to support acquisitions. The nine months ended July 4, 1999 was also favorably impacted by the proceeds from our secondary offering. We expect that internally generated funds, our existing cash balances and availability under the Credit Agreement will be sufficient to meet our capital requirements through the end of fiscal 2000. -22- We continuously evaluate the marketplace for strategic opportunities. Once an opportunity is identified, we examine the effect an acquisition may have on the business environment, as well as on our results of operations. We proceed with an acquisition if we determine that the acquisition is anticipated to have an accretive effect on future operations. However, as successful integration and implementation are essential to achieve favorable results, no assurances can be given that all acquisitions will provide accretive results. Our strategy is to position ourselves to address existing and emerging markets. We view acquisitions as a key component of our growth strategy, and we intend to use both cash and our securities, as we deem appropriate, to fund such acquisitions. We believe our operations have not been and, in the foreseeable future, do not expect to be materially adversely affected by inflation or changing prices. MARKET RISKS We currently utilize no material derivative financial instruments which expose us to significant market risk. We are exposed to cash flow risk due to interest rate fluctuations with respect to our long-term obligations. At our option, we borrow on our Facility (a) at a base rate (the greater of the federal funds rate plus 0.50% or the bank's reference rate) or (b) at a eurodollar rate plus a margin which ranges from 0.75% to 1.25%. Borrowings at the base rate have no designated term and may be repaid without penalty anytime prior to the Facility's maturity date. Borrowings at a eurodollar rate have a term no less than 30 days and no greater than 90 days. Typically, at the end of such term, such borrowings may be rolled over at our discretion upon payment in full of loans and other obligations. Accordingly, we classify total outstanding obligations between current liabilities and long-term obligations based on anticipated payments within and beyond one year's period of time. We currently anticipate repaying $26.0 million of our outstanding indebtedness in the next twelve months. Assuming we repay $26.0 million ratably during the next twelve months, and our average interest rate increases or decreases by one percentage point, our interest expense could increase or decrease by approximately $1.1 million during the next twelve months. However, there can be no assurance that we will, or will be able to repay our long-term obligations in the manner described. We could incur additional debt under the Facility or our operating results could be worse than currently anticipated. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Please refer to the information we have included under the heading "Market Risks" in ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. -23- RISK FACTORS SOME OF THE INFORMATION IN THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE SUBSTANTIAL RISKS AND UNCERTAINTIES. YOU CAN IDENTIFY THESE STATEMENTS BY FORWARDLOOKING WORDS SUCH AS "MAY," "WILL," "EXPECT," "ANTICIPATE," "BELIEVE," "ESTIMATE" AND "CONTINUE" OR SIMILAR WORDS. YOU SHOULD READ STATEMENTS THAT CONTAIN THESE WORDS CAREFULLY BECAUSE THEY: (1) DISCUSS OUR FUTURE EXPECTATIONS; (2) CONTAIN PROJECTIONS OF OUR FUTURE OPERATING RESULTS OR OF OUR FUTURE FINANCIAL CONDITION; OR (3) STATE OTHER "FORWARD-LOOKING" INFORMATION. WE BELIEVE IT IS IMPORTANT TO COMMUNICATE OUR EXPECTATIONS TO OUR INVESTORS. THERE MAY BE EVENTS IN THE FUTURE, HOWEVER, THAT WE ARE NOT ACCURATELY ABLE TO PREDICT OR OVER WHICH WE HAVE NO CONTROL. THE RISK FACTORS LISTED IN THIS SECTION, AS WELL AS ANY CAUTIONARY LANGUAGE IN THIS QUARTERLY REPORT ON FORM 10-Q, PROVIDE EXAMPLES OF RISKS, UNCERTAINTIES AND EVENTS THAT MAY CAUSE OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM EXPECTATIONS DESCRIBED IN FORWARD-LOOKING STATEMENTS. THE OCCURRENCE OF ANY OF THE EVENTS DESCRIBED IN THESE RISK FACTORS AND ELSEWHERE IN THIS QUARTERLY REPORT ON FORM 10-Q COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION AND OPERATING RESULTS. UPON THE OCCURRENCE OF ANY OF THESE EVENTS, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE. THERE ARE RISKS ASSOCIATED WITH OUR ACQUISITION STRATEGY THAT COULD ADVERSELY IMPACT OUR BUSINESS AND OPERATING RESULTS A significant part of our growth strategy is to acquire other companies that complement our lines of business or that broaden our geographic presence. During fiscal 1999, we purchased eleven companies in nine separate transactions. During the nine months ended July 2, 2000, we purchased eight companies in seven transactions. We expect to continue to acquire companies as an element of our growth strategy. Acquisitions involve certain risks that could cause our actual growth or operating results to differ from our expectations or the expectations of security analysts. For example: - We may not be able to identify suitable acquisition candidates or to acquire additional companies on favorable terms; - We compete with others to acquire companies. Competition may increase and may result in decreased availability or increased price for suitable acquisition candidates; - We may not be able to obtain the necessary financing, on favorable terms or at all, to finance any potential acquisitions; - We may ultimately fail to consummate an acquisition even if announced that we plan to acquire a company; - We may fail to successfully integrate or manage these acquired companies due to differences in business backgrounds or corporate cultures; - These acquired companies may not perform as we expect; - We may find it difficult to provide a consistent quality of service across our geographically diverse operations; and - If we fail to successfully integrate any acquired company, our reputation could be damaged. This could make it more difficult to market our services or to acquire additional companies in the future. -24- In addition, our acquisition strategy may divert management's attention away from our primary service offerings, result in the loss of key clients or personnel and expose us to unanticipated liabilities. Finally, acquired companies that derive a significant portion of their revenues from the Federal government and that do not follow the same cost accounting policies and billing procedures as we do may be subject to larger cost disallowances for greater periods than we typically encounter. If we fail to determine the existence of unallowable costs and establish appropriate reserves in advance of an acquisition we may be exposed to material unanticipated liabilities, which could have a material adverse effect on our business. OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY, WHICH COULD HAVE A NEGATIVE EFFECT ON THE PRICE OF OUR COMMON STOCK Our quarterly revenues, expenses and operating results may fluctuate significantly because of a number of factors, including: - The seasonality of the spending cycle of public sector clients, notably the Federal government; - Employee hiring and utilization rates; - The number and significance of client engagements commenced and completed during a quarter; - Delays incurred in connection with an engagement; - The ability of clients to terminate engagements without penalties; - The size and scope of engagements; - The timing of expenses incurred for corporate initiatives; - The timing and size of the return on investment capital; and - General economic and political conditions. Variations in any of these factors could cause significant fluctuations in our operating results from quarter to quarter and could result in net losses. THE VALUE OF OUR COMMON STOCK COULD CONTINUE TO BE VOLATILE The trading price of our common stock has fluctuated widely. In addition, in recent years the stock market has experienced extreme price and volume fluctuations. The overall market and the price of our common stock may continue to fluctuate greatly. The trading price of our common stock may be significantly affected by various factors, including: - Quarter to quarter variations in our operating results; - Changes in environmental legislation; - Changes in investors' and analysts' perception of the business risks and conditions of our business; - Broader market fluctuations; and - General economic or political conditions. -25- IF WE ARE NOT ABLE TO SUCCESSFULLY MANAGE OUR GROWTH STRATEGY, OUR BUSINESS AND RESULTS OF OPERATIONS MAY BE ADVERSELY AFFECTED We are growing rapidly. Our growth presents numerous managerial, administrative, operational and other challenges. Our ability to manage the growth of our operations will require us to continue to improve our operational, financial and human resource management information systems and our other internal systems and controls. In addition, our growth will increase our need to attract, develop, motivate and retain both our management and professional employees. The inability of our management to manage our growth effectively or the inability of our employees to achieve anticipated performance or utilization levels, could have a material adverse effect on our business. THE LOSS OF KEY PERSONNEL OR OUR INABILITY TO ATTRACT AND RETAIN QUALIFIED PERSONNEL COULD SIGNIFICANTLY DISRUPT OUR BUSINESS We depend upon the efforts and skills of our executive officers, senior managers and consultants. With limited exceptions, we do not have employment agreements with any of these individuals. The loss of the services of any of these key personnel could adversely affect our business. Although we have obtained noncompete agreements from certain principals and stockholders of companies we have acquired, we generally do not have noncompete or employment agreements with key employees who were not once equity shareholders of these companies. We do not maintain keyman life insurance policies on any of our executive officers or senior managers. Our future growth and success depends on our ability to attract and retain qualified scientists and engineers. The market for these professionals is competitive and we may not be able to attract and retain such professionals. CHANGES IN EXISTING LAWS AND REGULATIONS COULD REDUCE THE DEMAND FOR OUR SERVICES A significant amount of our resource management business is generated either directly or indirectly as a result of existing Federal and state governmental laws, regulations and programs. Any changes in these laws or regulations that reduce funding or affect the sponsorship of these programs could reduce the demand for our services and could have a material adverse effect on our business. OUR REVENUES FROM AGENCIES OF THE FEDERAL GOVERNMENT ARE CONCENTRATED, AND A REDUCTION IN SPENDING BY THESE AGENCIES COULD ADVERSELY AFFECT OUR BUSINESS AND OPERATING RESULTS Agencies of the Federal government are among our most significant clients. During the nine months ended July 2, 2000, approximately 28.9% of our net revenue was derived from Federal agencies, of which 15.3% was derived from the Department of Defense (DOD), 9.4% from the Environmental Protection Agency (EPA), 2.2% from the Department of Energy (DOE), and 2.0% from various other Federal government agencies. Some contracts with Federal government agencies require annual funding approval and may be terminated at their discretion. A reduction in spending by Federal government agencies could limit the continued funding of -26- existing contracts with them and could limit our ability to obtain additional contracts. These limitations, if significant, could have a material adverse effect on our business. Additionally, the failure of clients to pay significant amounts due us for our services could adversely affect our business. For example, we recently received notification from a Federal government agency that we are entitled to payments in excess of our billings. However, the agency involved must obtain specific funding approval for amounts owed to us and there can be no assurance this funding approval will be obtained. OUR CONTRACTS WITH GOVERNMENTAL AGENCIES ARE SUBJECT TO AUDIT, WHICH COULD RESULT IN THE DISALLOWANCE OF CERTAIN COSTS Contracts with the Federal government and other governmental agencies are subject to audit. Most of these audits are conducted by the Defense Contract Audit Agency (DCAA), which reviews our overhead rates, operating systems and cost proposals. The DCAA may disallow costs if it determines that we accounted for these costs incorrectly or in a manner inconsistent with Cost Accounting Standards. A disallowance of costs by the DCAA, or other governmental auditors, could have a material adverse effect on our business. In September 1995, we acquired PRC Environmental Management, Inc. (EMI). EMI also contracts with Federal government agencies and such contracts are also subject to the same governmental audits. At the time of acquisition, audits had not yet been completed or finalized. Accordingly, reserves were established for potential disallowances. Since then, the DCAA has completed audits of EMI's contracts for the fiscal years 1987 through 1995. As a result of these audits and negotiations with the DCAA, the DCAA has disallowed to date approximately $4.4 million in costs which have been applied against the established reserves. OUR BUSINESS AND OPERATING RESULTS COULD BE ADVERSELY AFFECTED BY LOSSES UNDER FIXED-PRICE CONTRACTS OR TERMINATION OF CONTRACTS AT THE CLIENT'S DISCRETION We contract with Federal and state governments as well as with the private sector. These contracts are often subject to termination at the discretion of the client with or without cause. Additionally, we enter into various types of contracts with our clients, including fixedprice contracts. Fixedprice contracts protect clients and expose us to a number of risks. These risks include underestimation of costs, problems with new technologies, unforeseen costs or difficulties, delays beyond our control and economic and other changes that may occur during the contract period. Losses under fixedprice contracts or termination of contracts at the discretion of the client could have a material adverse effect on our business. In fiscal 1999, we had a contract change with Tele-Communications, Inc. (currently known as AT&T Broadband) involving three turnkey contracts. This change was due in part to Tele-Communications, Inc.'s change in strategy from the use of turnkey contracts to the use of direct service contracts in the upgrading of its network systems. -27- OUR INABILITY TO FIND QUALIFIED SUBCONTRACTORS COULD ADVERSELY AFFECT THE QUALITY OF OUR SERVICE AND OUR ABILITY TO PERFORM UNDER CERTAIN CONTRACTS Under some of our contracts, we depend on the efforts and skills of subcontractors for the performance of certain tasks. Reliance on subcontractors varies from project to project. In the nine months ended July 2, 2000, subcontractor costs comprised 23.0% of our gross revenue. The absence of qualified subcontractors with whom we have a satisfactory relationship could adversely affect the quality of our service and our ability to perform under some of our contracts. OUR INDUSTRY IS HIGHLY COMPETITIVE AND WE MAY BE UNABLE TO COMPETE EFFECTIVELY We provide specialized management consulting and technical services to a broad range of public and private sector clients. The market for our services is highly competitive and we compete with many other firms. These firms range from small regional firms to large national firms which may have greater financial and marketing resources than ours. We focus primarily on the resource management, infrastructure and communications business areas. We provide services to our clients which include Federal, state and local agencies, and organizations in the private sector. We compete for projects and engagements with a number of competitors which can vary from 10 to 100 firms. Historically, clients have chosen among competing firms based on the quality and timeliness of the firm's service. We believe, however, that price has become an increasingly important factor. We believe that our principal competitors include, in alphabetical order, Black & Veatch LLP; Brown & Caldwell; Castle Tower Corporation; Camp, Dresser & McKee; CH2M Hill Companies Ltd.; EA Engineering, Science & Technology, Inc.; Earth Tech, Inc.; ICF Kaiser International, Inc.; IT Group Inc.; Mastec, Inc.; Montgomery Watson; Quanta Service, Inc.; Roy F. Weston, Inc.; URS Greiner Corporation; and Wireless Facilities, Inc. OUR SERVICES EXPOSE US TO SIGNIFICANT RISKS OF LIABILITY AND OUR INSURANCE POLICIES MAY NOT PROVIDE ADEQUATE COVERAGE Our services involve significant risks of professional and other liabilities which may substantially exceed the fees we derive from our services. Our business activities could expose us to potential liability under various environmental laws such as the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA). In addition, we sometimes contractually assume liability under indemnification agreements. We cannot predict the magnitude of such potential liabilities. We currently maintain comprehensive general liability, umbrella and professional liability insurance policies. We believe that our insurance policies are adequate for our business operations. Professional liability policies are "claims made" policies; thus, only claims made during the term of the policy are covered. Should we terminate our professional liability policy and not obtain retroactive coverage, we would be uninsured for claims made after termination -28- even if these claims are based on events or acts that occurred during the term of the policy. Additionally, our insurance policies may not protect us against potential liability due to various exclusions and retentions. Should we expand into new markets, we may not be able to obtain insurance coverage for such activities or, if insurance is obtained, the dollar amount of any liabilities incurred could exceed our insurance coverage. Partially or completely uninsured claims, if successful and of significant magnitude, could have a material adverse affect on our business. WE MAY BE PRECLUDED FROM PROVIDING CERTAIN SERVICES DUE TO CONFLICT OF INTEREST ISSUES Many of our clients are concerned about potential or actual conflicts of interest in retaining management consultants. Federal government agencies have formal policies against continuing or awarding contracts that would create actual or potential conflicts of interest with other activities of a contractor. These policies, among other things, may prevent us from bidding for or performing contracts resulting from or relating to certain work we have performed for the government. In addition, services performed for a private client may create a conflict of interest that precludes or limits our ability to obtain work from other public or private organizations. We have, on occasion, declined to bid on projects because of these conflicts of interest issues. OUR INTERNATIONAL OPERATIONS EXPOSE US TO RISKS SUCH AS FOREIGN CURRENCY FLUCTUATIONS In the nine months ended July 2, 2000, approximately 2.8% of our net revenue was derived from the international marketplace. Some contracts with our international clients are denominated in foreign currencies. As such, these contracts contain inherent risks including foreign currency exchange risk and the risk associated with expatriating funds from foreign countries. If our international revenue increases, our exposure to foreign currency fluctuations will also increase. We periodically enter into forward exchange contracts to address foreign currency fluctuations. -29- PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS 3.1 Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended October 1, 1995). 3.2 Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended October 1, 1995). 3.3 Bylaws of the Company as amended to date (incorporated herein by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-1, No. 33-43723). 3.4 Certificate of Amendment of Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.4 to the Company's Annual Report on Form 10-K for the fiscal year ended October 4, 1998). 10.1 Credit Agreement dated as of March 17, 2000 among the Company and the financial institutions named therein (incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended April 2, 2000). 10.2 1989 Stock Option Plan dated as of February 1, 1989 (incorporated herein by reference to Exhibit 10.13 to the Company's Registration Statement on Form S-1, No. 33-43723). 10.3 Form of Incentive Stock Option Agreement executed by the Company and certain individuals in connection with the Company's 1989 Stock Option Plan (incorporated herein by reference to Exhibit 10.14 to the Company's Registration Statement on Form S-1, No. 33-43723). 10.4 Executive Medical Reimbursement Plan (incorporated herein by reference to Exhibit 10.16 to the Company's Registration Statement on Form S-1, No. 33-43723). 10.5 1992 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.18 to the Company's Annual Report on Form 10-K for the fiscal year ended October 3, 1993). 10.6 Form of Incentive Stock Option Agreement used by the Company in connection with the Company's 1992 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.19 to the Company's
-30- Annual Report on Form 10-K for the fiscal year ended October 3, 1993). 10.7 1992 Stock Option Plan for Nonemployee Directors (incorporated herein by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K for the fiscal year ended October 3, 1993). 10.8 Form of Nonqualified Stock Option Agreement used by the Company in connection with the Company's 1992 Stock Option Plan for Nonemployee Directors (incorporated herein by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K for the fiscal year ended October 3, 1993). 10.9 1994 Employee Stock Purchase Plan (incorporated herein by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K for the fiscal year ended October 2, 1994). 10.10 Form of Stock Purchase Agreement used by the Company in connection with the Company's 1994 Employee Stock Purchase Plan (incorporated herein by reference to Exhibit 10.23 to the Company's Annual Report on Form 10-K for the fiscal year ended October 2, 1994). 10.11 Employment Agreement dated as of June 11, 1997 between the Company and Daniel A. Whalen (incorporated herein by reference to Exhibit 10.16 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 29, 1997). 10.12 Registration Rights Agreement dated as of June 11, 1997 among the Company and the parties listed on Schedule A attached thereto (incorporated herein by reference to Exhibit 10.17 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 29, 1997). 10.13 Registration Rights Agreement dated as of July 11, 1997 among the Company and the parties listed on Schedule A attached thereto (incorporated herein by reference to Exhibit 10.18 to the Company's Annual Report on Form 10-K for the fiscal year ended September 28, 1997). 10.14 Registration Rights Agreement dated as of March 26, 1998 among the Company and the parties listed on Schedule A attached thereto (incorporated herein by reference to Exhibit 10.20 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 1998). 10.15 Registration Rights Agreement dated as of July 9, 1998 among the Company and the parties listed on Schedule A attached thereto (incorporated herein by reference to Exhibit 10.22 to the Company's
-31- Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 1998). 10.16 Registration Rights Agreement dated as of September 22, 1998 among the Company and the parties listed on Schedule A attached thereto (incorporated herein by reference to Exhibit 10.23 to the Company's Annual Report on Form 10-K for the fiscal year ended October 4, 1998). 10.17 Registration Rights Agreement dated as of February 26, 1999 among the Company and the parties listed on Schedule A attached thereto (incorporated herein by reference to Exhibit 10.24 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended April 4, 1999). 10.18 Registration Rights Agreement dated as of May 7, 1999 among the Company and the parties listed on Schedule A attached thereto (incorporated herein by reference to Exhibit 10.26 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 4, 1999). 10.19 Registration Rights Agreement dated as of May 21, 1999 among the Company and the parties listed on Schedule A attached thereto (incorporated herein by reference to Exhibit 10.27 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 4, 1999). 10.20 Registration Rights Agreement dated as of June 18, 1999 among the Company and the parties listed on Schedule A attached thereto (incorporated herein by reference to Exhibit 10.28 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 4, 1999). 10.21 Registration Rights Agreement dated as of September 3, 1999 among the Company and the parties listed on Schedule A attached thereto. (incorporated herein by reference to Exhibit 10.30 to the Company's Annual Report on Form 10-K for the fiscal year ended October 3, 1999). 10.22 Registration Rights Agreement dated as of March 31, 2000 among the Company and the parties listed on Schedule A attached thereto. 10.23 Registration Rights Agreement dated as of May 3, 2000 among the Company and the parties listed on Schedule A attached thereto. 10.24 Registration Rights Agreement dated as of May 17, 2000 among the Company and the parties listed on Schedule A attached thereto. 10.25 Registration Rights Agreement dated as of May 24, 2000 among the Company and the parties listed on Schedule A attached thereto.
-32- 11 Computation of Net Income Per Common Share. 27 Financial Data Schedule.
(b) REPORTS ON FORM 8-K None -33- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: August 16, 2000 TETRA TECH, INC. By: /s/ Li-San Hwang ------------------------------------ Li-San Hwang Chairman of the Board of Directors, President and Chief Executive Officer (Principal Executive Officer) By: /s/ James M. Jaska ------------------------------------- James M. Jaska Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) -34- EX-10.22 2 ex-10_22.txt EXHIBIT 10.22 EXHIBIT 10.22 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (the "Agreement") is entered into as of March 31, 2000 by and among Tetra Tech, Inc., a Delaware corporation ("Tetra Tech"), and the parties listed on SCHEDULE A attached hereto (each, a "Holder" and collectively, the "Holders"). R E C I T A L S A. Tetra Tech and the Holders are parties to the Agreement and Plan of Reorganization of even date (the "Reorganization Agreement"), pursuant to which eXpert Wireless Solutions, Inc., a New Jersey corporation ("EWS"), will merge with and into Tetra Tech EWS Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of Tetra Tech. B. Pursuant to the Reorganization Agreement, the shareholders of EWS will receive shares of the common stock, $.01 par value, of Tetra Tech ("Tetra Tech Common Stock"); and C. This Agreement is the Registration Rights Agreement referred to in SECTION 6.2 of the Reorganization Agreement and, pursuant thereto, must be entered into by the parties in connection with the consummation of the transactions contemplated by the Reorganization Agreement. A G R E E M E N T NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall have the following respective meanings: "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended from time to time. "FORM S-3" shall mean such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by Tetra Tech with the SEC. "PROSPECTUS" shall mean the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such Prospectus. "REGISTER", "REGISTERED" and "REGISTRATION" shall mean and refer to a registration effected by preparing and filing a Registration Statement and taking all other actions that are necessary or appropriate in connection therewith, and the declaration or ordering of effectiveness of such Registration Statement by the SEC. "REGISTRATION EXPENSES" shall have the meaning set forth in SECTION 4. "REGISTRABLE SECURITIES" shall mean the shares of Tetra Tech Common Stock (i) issued pursuant to the Reorganization Agreement, and (ii) issued as a dividend or other distribution with respect to or in exchange for or in replacement of the shares referenced in (i) above; PROVIDED, HOWEVER, that Registrable Securities shall not include any shares of Tetra Tech Common Stock that have previously been registered or sold to the public or have been sold pursuant to Rule 144 ( or similar successor Rule). "REGISTRATION STATEMENT" shall mean any registration statement of Tetra Tech in compliance with the Securities Act that covers Registrable Securities pursuant to the provisions of this Agreement, including, without limitation, the Prospectus, all amendments and supplements to such Registration Statement, including all post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement. "RULE 144" shall mean Rule 144 promulgated under the Securities Act or any similar successor rule, as the same shall be in effect from time to time. "RULE 144A" shall mean Rule 144A promulgated under the Securities Act or any similar successor rule, as the same shall be in effect from time to time. "RULE 415" shall mean Rule 415 promulgated under the Securities Act, or any similar successor rule, as the same shall be in effect from time to time. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended from time to time. "SEC" shall mean the Securities and Exchange Commission. "UNDERWRITTEN OFFERING" shall mean a registration in which securities of Tetra Tech are sold to an underwriter or through an underwriter as agent for reoffering to the public. 2 2. TETRA TECH REGISTRATION. If Tetra Tech shall determine to register any shares of Tetra Tech Common Stock, or any securities convertible into or exchangeable or exercisable for shares of Tetra Tech Common Stock, for its own account or for the account of any stockholder (other than a registration relating to the sale of securities to employees of Tetra Tech pursuant to an employee benefit plan or pursuant to a transaction of the type described in Rule 145 under the Securities Act), the Holders shall be entitled to include Registrable Securities in such registration (and related underwritten offering, if any) on the following terms and conditions: (a) Tetra Tech shall promptly give written notice of such determination to each Holder and each such Holder shall have the right to request, by written notice given to Tetra Tech within 30 days of the receipt by such Holder of such notice, that a specific number of Registrable Securities held by such Holder be included in such Registration Statement; (b) If the Registration Statement relates to an underwritten offering, the notice called for by SECTION 2(a) shall specify the name of the managing underwriter for such offering and the number of securities to be registered for the account of Tetra Tech and for the account of any other stockholder of Tetra Tech; (c) If the Registration Statement relates to an underwritten offering, each Holder to be included therein must (i) sell such person's Registrable Securities on the same basis provided in the underwriting arrangements approved by Tetra Tech and (ii) complete and execute all questionnaires, powers of attorney, indemnities, hold-back agreements, underwriting agreements and other documents required under the terms of such underwriting arrangements or by the SEC; (d) If the managing underwriter for the underwritten offering under the Registration Statement to be filed by Tetra Tech determines that inclusion of all or any portion of the Registrable Securities in such offering would adversely affect the ability of the underwriter for such offering to sell all of the securities requested to be included for sale or the price per share in such offering, the number of shares that may be included in such registration in such offering shall be allocated as follows: (i) first, Tetra Tech shall be permitted to include all shares of capital stock to be registered thereby; and (ii) second, the Holders, and any other selling stockholder exercising piggyback registration rights granted by Tetra Tech shall be allowed to include securities on a pro rata basis in such amounts as may be deemed appropriate by such managing underwriter; (e) Holders shall have the right to withdraw their Registrable Securities from the Registration Statement at any time prior to the effective date thereof, but if the same relates to an underwritten offering, they may only do so during the time period and on terms deemed appropriate by the underwriters for such underwritten offering; and 3 (f) Tetra Tech shall have the right to terminate or withdraw any registration initiated by it under this SECTION 2 prior to the effective date of such registration for any reason without liability to any Holder as a result thereof, whether or not any Holder has elected to include such securities in such registration. 3. REGISTRATION FOR HOLDERS. (a) Tetra Tech shall file a Registration Statement on Form S-3, providing for the sale by the Holders, pursuant to Rule 415, and/or any similar rule that may be adopted by the SEC, of the Registrable Securities. Tetra Tech shall use commercially reasonable efforts to (i) cause such Registration Statement to become effective on or before July 31, 2000, and (ii) keep such Registration Statement continuously effective for a period ending on the date on which all such Holders are eligible to sell all Registrable Securities under Rule 144 (or similar successor rule) without any volume or other limitation. If, at the time Tetra Tech is required to file a Registration Statement pursuant to this SECTION 3(a), Tetra Tech is not eligible to file a Registration Statement on Form S-3 to register resales by stockholders, Tetra Tech shall initially file a Registration Statement on Form S-1 and shall comply with the provisions of the immediately preceding sentence. Upon becoming eligible to use the Registration Statement on Form S-3 to register resales by stockholders (whether pursuant to a ruling or waiver from the SEC or otherwise), Tetra Tech shall promptly file a Registration Statement on Form S-3 or convert the existing Registration Statement to Form S-3 relating to the offer and sale of Registrable Securities by the Holders from time to time. Thereafter, Tetra Tech shall use commercially reasonable efforts to cause such new or amended Registration Statement to be declared effective by the SEC as promptly as practicable. (b) Each Holder shall reasonably cooperate in providing and/or confirming in writing prior to or after the filing of the Registration Statement such information (including, without limitation, information as to the number of Registrable Securities that such Holder has sold pursuant to any such Registration Statement from time to time) as is customarily provided in connection with such Registration Statement. (c) Notwithstanding the foregoing, for a period not to exceed 90 days, Tetra Tech shall not be obligated to prepare and file the Registration Statement required hereunder if Tetra Tech, in its good faith judgment, reasonably believes that the filing of such Registration Statement would require the disclosure of material non-public information regarding Tetra Tech and, accordingly, that the filing thereof, at the time requested, or the offering of Tetra Tech Common Stock pursuant thereto, would materially and adversely affect (i) a pending or scheduled public offering or private placement of securities of Tetra Tech, (ii) an acquisition, merger, consolidation or similar transaction by or of Tetra Tech, (iii) preexisting and continuing negotiations, discussions or pending proposals with respect to any of the foregoing transactions, or (iv) the financial condition of Tetra Tech in view of the disclosure of any pending or 4 threatened litigation, claim, assessment or governmental investigation which might be required thereby. In the event that Tetra Tech, in good faith, reasonably believes that such conditions are continuing after such 90-day period, it may, with the consent of all the Holders, which consent shall not be unreasonably withheld, extend such 90-day period for an additional 30 days. Any further delay shall require the consent of the Holders of all such shares. 4. RESTRICTIONS ON PUBLIC SALE BY HOLDERS OF REGISTRABLE SECURITIES. Each Holder whose Registrable Securities are included (in whole or in part) in a Registration Statement filed by Tetra Tech under SECTION 2 for sale in an underwritten offering agrees, if requested by the managing underwriter of such offering, not to sell, make any short sale of, loan, grant any option for the purchase of, dispose of or effect any public sale or distribution of securities of the same series and class as (or securities exchangeable or exercisable for or convertible into securities of the same series and class as) the Registrable Securities included in the Registration Statement, including a sale pursuant to Rule 144 (except as part of such underwritten registration), during the ten day period prior to, and during the 180 day period (or shorter period requested by the underwriter) beginning on the closing date of such underwritten offering, to the extent timely notified in writing by Tetra Tech or the managing underwriter. 5. REGISTRATION PROCEDURES. In connection with Tetra Tech's registration obligations pursuant to SECTIONS 2 OR 3 hereof, Tetra Tech will use reasonable best efforts to effect such registration to permit the sale of the Registrable Securities covered thereby in accordance with the intended method or methods of disposition thereof, and pursuant thereto Tetra Tech will: (a) prepare and file with the SEC a Registration Statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such Registration Statement to become effective; PROVIDED that, before filing any Registration Statement or Prospectus or any amendments or supplements thereto, Tetra Tech will furnish to the Holders of the Registrable Securities covered by such Registration Statement and their counsel, copies of all such documents proposed to be filed at least ten days prior thereto, and Tetra Tech will not file any such Registration Statement or amendment thereto or any Prospectus or any supplement thereto to which any such Holder shall reasonably object within such ten day period; PROVIDED, FURTHER, that Tetra Tech will not name or otherwise provide any information with respect to any Holder in any Registration Statement or Prospectus without the express written consent of such Holder, unless required to do so by the Securities Act and the rules and regulations thereunder; (b) prepare and file with the SEC such amendments, post-effective amendments and supplements to the Registration Statement and the Prospectus as may be necessary to comply with the provisions of the Securities Act and the rules and regulations 5 thereunder with respect to the disposition of all securities covered by such Registration Statement and as may be required to permit continuous sales pursuant to the Prospectus; (c) notify the selling Holders (i) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC for amendments or supplements to the Registration Statement or the Prospectus or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, (iv) of the receipt by Tetra Tech of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose and (v) of the happening of any event which makes any statement made in the Registration Statement, the Prospectus or any document incorporated therein by reference untrue or which requires the making of any changes in the Registration Statement, the Prospectus or any document incorporated therein by reference in order to make the statements therein not misleading in light of the circumstances then existing; (d) use reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of the Registration Statement at the earliest possible moment; (e) deliver to each selling Holder, without charge, such reasonable number of conformed copies of the Registration Statement (and any post-effective amendment thereto) and such number of copies of the current, effective Prospectus (including each preliminary prospectus) and any amendment or supplement thereto (and any documents incorporated by reference therein) as such Holder may reasonably request. Tetra Tech consents to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders in connection with the offer and sale of the Registrable Securities covered by the Prospectus or any amendment or supplement thereto; (f) prior to any offering of Registrable Securities covered by a Registration Statement, register or qualify such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions as any such selling Holder reasonably requests, and use commercially reasonable efforts to keep each such registration or qualification effective, including through new filings, or amendments or renewals, during the period such Registration Statement is required to be kept effective pursuant to the terms of this Agreement; and do any and all other acts or things necessary or advisable to enable the disposition in all such jurisdictions reasonably requested by the Holders of the Registrable Securities covered by such Registration Statement, PROVIDED that under no circumstances shall Tetra Tech be required in connection therewith or as a condition thereof to qualify to do business or to file a general consent to service of process in any such states or jurisdictions; 6 (g) facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold, free of any and all restrictive legends, such certificates to be in such denominations and registered in such names as the Holders may request; (h) upon the occurrence of any event contemplated by SECTION 5(c)(v) above, promptly prepare a supplement or post-effective amendment to the Registration Statement or the Prospectus or any document incorporated therein by reference or file any other required 7 document so that, as thereafter delivered to the purchasers of the Registrable Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (i) make generally available to the holders of Tetra Tech's outstanding securities earnings statements satisfying the provisions of Section 11(a) of the Securities Act, no later than 60 days after the end of any 12 month period (or 90 days, if such period is a fiscal year) beginning with the first month of Tetra Tech's first fiscal quarter commencing after the effective date of the Registration Statement, which statements shall cover said 12 month period; (j) provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by each Registration Statement from and after a date not later than the effective date of such Registration Statement; (k) use its best efforts to cause all Registrable Securities covered by each Registration Statement to be listed, subject to notice of issuance, prior to the date of the first sale of such Registrable Securities pursuant to such Registration Statement, on each securities exchange on which the Tetra Tech Common Stock is then listed, and admitted to trading on the Nasdaq Stock Market, if the Tetra Tech Common Stock is then admitted to trading on the Nasdaq Stock Market; and (l) enter into such agreements (including underwriting agreements in customary form containing, among other things, reasonable and customary indemnities) and take such other actions as a majority of the Holders shall reasonably request in order to expedite or facilitate the disposition of such Registrable Securities; and (m) cooperate with the selling Holders and the managing underwriter or underwriters in their marketing efforts with respect to the sale of the Registrable Securities, including participation by Tetra Tech management in "road show" presentations. Each Holder agrees that, upon receipt of any notice from Tetra Tech of the happening of any event of the kind described in SECTION 5(c)(v) hereof, such Holder will forthwith discontinue disposition of Registrable Securities under the Prospectus related to the applicable Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by SECTION 5(h) hereof, or until it is advised in writing by Tetra Tech that the use of the Prospectus may be resumed. Tetra Tech agrees that the period during which such Holder must discontinue disposition of Registrable Securities under the Prospectus ("suspension period") will not exceed the suspension period under other Registration Statements filed by Tetra Tech for the benefit of selling stockholders. It shall be a condition precedent to the obligations of Tetra Tech to take any action pursuant to this SECTION 5 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to Tetra Tech such information regarding itself and the Registrable Securities held by it as shall be required by the Securities Act to effect the registration of such Holder's Registrable Securities. 8 6. REGISTRATION EXPENSES. All expenses incident to any registration to be effected hereunder and incident to Tetra Tech's performance of or compliance with this Agreement, including without limitation all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, National Association of Securities Dealers, Inc., stock exchange and qualification fees, fees and disbursements of Tetra Tech's counsel and of independent certified public accountants of Tetra Tech (including the expenses of any special audit required by or incident to such performance), the fees and disbursements of one counsel and one accountant representing the Holders in such offering, expenses of the underwriters that are customarily requested in similar circumstances by such underwriters (excluding discounts, commissions or fees of underwriters, selling brokers, dealer managers or similar securities industry professionals relating to the distribution of the Registrable Securities, which will be borne by the Holders), all such expenses being herein called "Registration Expenses," will be borne by Tetra Tech. Tetra Tech will also pay its internal expenses, the expense of any annual audit and the fees and expenses of any person retained by Tetra Tech. 7. INDEMNIFICATION. (a) INDEMNIFICATION BY TETRA TECH. Tetra Tech agrees to indemnify and hold harmless each Holder of Registrable Securities, its officers, directors, partners, agents and employees and each person who controls such Holder (within the meaning of Section 15 of the Securities Act) from and against any and all losses, claims, damages and liabilities (including any investigation, legal or other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted) (collectively, "Damages") to which such Holder may become subject under the Securities Act, the Exchange Act or other federal or state securities law or regulation, at common law or otherwise, insofar as such Damages arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus or preliminary prospectus or any amendment or supplement thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and (iii) any violation or alleged violation by Tetra Tech of the Securities Act, the Exchange Act or any state securities or blue sky laws in connection with the Registration Statement, Prospectus or preliminary prospectus or any amendment or supplement thereto, PROVIDED that Tetra Tech will not be liable to any Holder to the extent that such Damages arise from or are based upon any untrue statement or omission (x) based upon written information furnished to Tetra Tech by such Holder expressly for the inclusion in such Registration Statement, (y) made in any preliminary prospectus if such Holder failed to deliver a copy of the Prospectus with or prior to the delivery of written confirmation of the sale by such Holder to the party asserting the claim underlying such Damages and such Prospectus would have corrected such untrue statement or omission and (z) made in any Prospectus if such untrue statement or omission was corrected in an amendment or supplement to such Prospectus delivered to Holder and identified as the current Prospectus and such Holder failed to deliver such amendment or supplement prior to or concurrently with the sale of Registrable Securities to the party asserting the claim underlying such Damages. 9 (b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. Each Holder of Registrable Securities whose Registrable Securities are sold under a Prospectus which is a part of a Registration Statement agrees to indemnify and hold harmless Tetra Tech, its directors and each officer who signed such Registration Statement and each person who controls Tetra Tech (within the meaning of Section 15 of the Securities Act), and each other Holder of Registrable Securities whose Registrable Securities are sold under the Prospectus which is a part of such Registration Statement (and such Holder's officers, directors and employees and each person who controls such Holder within the meaning of Section 15 of the Securities Act), under the same circumstances as the foregoing indemnity from Tetra Tech to each Holder of Registrable Securities to the extent that such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement of a material fact or omission of a material fact that was made in the Prospectus, the Registration Statement, or any amendment or supplement thereto, in reliance upon and in conformity with information relating to such Holder furnished in writing to Tetra Tech by such Holder expressly for use therein, PROVIDED that in no event shall the aggregate liability of any selling Holder of Registrable Securities exceed the amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. Tetra Tech and the selling Holders shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, to the same extent as customarily furnished by such persons in similar circumstances. (c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person entitled to indemnification hereunder will (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; PROVIDED, HOWEVER, that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person and not of the indemnifying party unless (A) the indemnifying party has agreed to pay such fees or expenses, (B) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person or (C) in the reasonable judgment of such person and the indemnifying party, based upon advice of their respective counsel, a conflict of interest may exist between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person). If such defense is not assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its consent (but such consent will not be unreasonably withheld). No indemnified party will be required to consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by all claimants or plaintiffs to such indemnified party of a release from all liability in respect to such claim or litigation. Any indemnifying party who is not entitled to, or elects not to, assume the defense of 10 a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim. As used in this SECTION 7(c), the terms "indemnifying party", "indemnified party" and other terms of similar import are intended to include only Tetra Tech (and its officers, directors and control persons as set forth above) on the one hand, and the Holders (and their officers, directors, partners, employees, attorneys and control persons as set forth above) on the other hand, as applicable. (d) CONTRIBUTION. If for any reason the foregoing indemnity is unavailable, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities or expenses (i) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or by such indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties acknowledge and agree that it would not be just and equitable if contribution pursuant to this SECTION 7(d) were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in this SECTION 7(d). Notwithstanding the foregoing, no Holder shall be required to contribute any amount in excess of the amount such Holder would have been required to pay to an indemnified party if the indemnity under SECTION 7(b) hereof was available. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligation of any person to contribute pursuant to this SECTION 7(d) shall be several and not joint. (e) TIMING OF PAYMENTS. An indemnifying party shall make payments of all amounts required to be made pursuant to the foregoing provisions of this SECTION 7 to or for the account of the indemnified party from time to time promptly upon receipt of bills or invoices relating thereto or when otherwise due or payable. (f) SURVIVAL. The indemnity and contribution agreements contained in this SECTION 7 shall remain in full force and effect, regardless of any investigation made by or on behalf of Tetra Tech, a participating Holder, its officers, directors, partners, attorneys, agents or any person, if any, who controls Tetra Tech or such Holder as aforesaid, and shall survive the transfer of such Registrable Securities by such Holder. 8. PREPARATION; REASONABLE INVESTIGATION. In connection with the preparation and filing of a Registration Statement pursuant to the terms of this Agreement: 11 (a) Tetra Tech shall, with respect to a Registration Statement filed pursuant to SECTION 3, give the Holders of such Registrable Securities so registered, their underwriters, if any, and their respective counsel and accountants the opportunity to participate in the preparation of such Registration Statement (other than reports and proxy statements incorporated therein by reference and properly filed with the SEC) and each Prospectus included therein or filed with the SEC, and each amendment thereof or supplement thereto; and (b) Tetra Tech shall give the Holders of such Registrable Securities so registered, their underwriters, if any, and their respective counsel and accountants such reasonable access to its books and records and such opportunities to discuss the business of Tetra Tech with its officers and the independent public accountants who have certified its financial statements as shall be necessary, in the opinion of such Holders or such underwriters, to conduct a reasonable investigation within the meaning of Section 11(b)(3) of the Securities Act. 9. RULE 144. Tetra Tech covenants that it will use reasonable best efforts to file, on a timely basis, the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder, and it will take such further action as any Holder may reasonably request (including, without limitation, compliance with the current public information requirements of Rule 144(c) and Rule 144A), all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the conditions provided by Rule 144, Rule 144A or any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Holder, Tetra Tech will promptly deliver to such Holder a written statement verifying that it has complied with such information and requirements. 10. SPECIFIC PERFORMANCE. Each Holder, in addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. Tetra Tech agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. 11. NOTICES. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by United States first-class mail, postage prepaid, sent by facsimile or delivered personally by hand or nationally recognized courier addressed (a) if to a Holder, as indicated on the list of Holders attached hereto as SCHEDULE A, or at such other address as such Holder or permitted assignee shall have furnished to Tetra Tech in writing, or (b) if to Tetra Tech, at such address or facsimile number as Tetra Tech shall have furnished to each Holder in writing. All such notices and other written communications shall be effective on the date of mailing, facsimile transfer or delivery. 12 12. SUCCESSORS AND ASSIGNS: ASSIGNMENT OF RIGHTS. The rights and benefits of a Holder hereunder may not be assigned to a transferee or assignee without the consent of Tetra Tech; PROVIDED, HOWEVER, that, no later than the 10th day prior to the filing of the Registration Statement under SECTION 3 hereof, the rights and benefits of a Holder hereunder may be transferred in connection with a transfer or assignment of any Registrable Securities held by such Holder (i) by gift to immediate family members of such Holder, or trusts or other entities for the sole benefit thereof, or (ii) by gift to any entity in which such Holder, his or her immediate family members, or trusts or other entities for the sole benefit thereof beneficially own all of the voting securities; PROVIDED, HOWEVER, that in each case, the transferee executes an instrument pursuant to which the transferee agrees to be bound by the terms and conditions hereof as a Holder, and such other documents as Tetra Tech or its counsel may reasonably require, after which, such transferee shall be deemed a "Holder" hereunder. Any transfer of Registrable Securities, and rights hereunder, shall be subject to compliance with applicable securities laws and the restrictions contained in the Investment Letter executed by each Holder pursuant to the Reorganization Agreement. 13. SEVERABILITY. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. 14. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement, the Reorganization Agreement and the other agreements contemplated thereby constitute the full and entire understanding and agreement among the parties with regard to the subjects hereof and thereof. Without limiting the foregoing, the rights of the Holders to registration pursuant to the terms of this Agreement shall be subject to the limitations on resale contained in the Investment Letter (as defined in the Reorganization Agreement). Neither this Agreement nor any term hereof may be amended, waived, discharged or terminated, except by a written instrument signed by Tetra Tech and the holders of at least 51% of the Registrable Securities and any such amendment, waiver, discharge or termination shall be binding upon all the parties hereto, but in no event shall the obligation of any party hereto be materially increased, except upon the written consent of such party. 15. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be original, and all of which together shall constitute one instrument. 16. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware without giving effect to principles of conflicts of laws thereof. 17. NO THIRD PARTY BENEFICIARIES. The covenants and agreements set forth herein are for the sole and exclusive benefit of the parties hereto and their respective successors and assigns 13 and such covenants and agreements shall not be construed as conferring, and are not intended to confer, any rights or benefits upon any other persons. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. TETRA TECH, INC. By: /s/ Li-San Hwang ---------------------------------- Li-San Hwang Chairman, Chief Executive Officer and President /s/ Kamran Mahbobi ---------------------------------------- Kamran Mahbobi /s/ Phillippe Dorante ---------------------------------------- Phillippe Dorante /s/ Abdolreza Ziglari ---------------------------------------- Abdolreza Ziglari /s/ Behzad Ghahramani ---------------------------------------- Behzad Ghahramani /s/ Behnam Adelzadeh ---------------------------------------- Behnam Adelzadeh 14
SCHEDULE A SCHEDULE OF HOLDERS Number of Shares of Tetra Tech Common Stock Issued Pursuant Holder's Name/Address/Facsimile No. to the Reorganization Agreement - ------------------------------------------------------- ---------------------------------------------------- Kamran Mahbobi 89,733 1518 8th Street Fort Lee, New Jersey 07024 Behzad Ghahramani 89,733 300 Gorge Road, Apt. #36 Cliffside, New Jersey 07010 Phillippe Dorante 89,733 317 West 95th Street, Apt. 3E New York, New York 10025 Behnam Adelzadeh 48,945 200 Old Palisade Road, Apt. 29D Fort Lee, New Jersey 07024 Abdolreza Ziglari 89,733 14315 Cervantes Avenue Darnestown, Maryland 20874
EX-10.23 3 ex-10_23.txt EXHIBIT 10.23 EXHIBIT 10.23 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (the "Agreement") is entered into as of May 3, 2000 by and among Tetra Tech, Inc., a Delaware corporation ("Tetra Tech"), and the parties listed on SCHEDULE A attached hereto (each, a "Holder" and collectively, the "Holders"). R E C I T A L S A. Tetra Tech, Tetra Tech Canada Ltd., an Ontario corporation ("TTC"), and the Holders are parties to a Stock Purchase Agreement dated as of the date hereof (the "Stock Purchase Agreement"); and B. Pursuant to the Stock Purchase Agreement, the Holders will receive shares of TTC which are exchangeable for shares of the common stock, $.01 par value, of Tetra Tech ("Tetra Tech Common Stock"); and C. This Agreement is the Registration Rights Agreement referred to in SECTION 6.2 of the Stock Purchase Agreement and, pursuant thereto, must be entered into by the parties in connection with the transactions contemplated by the Stock Purchase Agreement. A G R E E M E N T NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall have the following respective meanings: "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended from time to time. "FORM S-3" shall mean such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by Tetra Tech with the SEC. "PROSPECTUS" shall mean the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such Prospectus. "REGISTER", "REGISTERED" and "REGISTRATION" shall mean and refer to a registration effected by preparing and filing a Registration Statement and taking all other actions that are necessary or appropriate in connection therewith, and the declaration or ordering of effectiveness of such Registration Statement by the SEC. "REGISTRATION EXPENSES" shall have the meaning set forth in SECTION 6. "REGISTRABLE SECURITIES" shall mean the shares of Tetra Tech Common Stock (i) issued upon exchange for the shares of TTC held by the Holders pursuant to the Stock Purchase Agreement and the exhibits thereto, and (ii) issued as a dividend or other distribution with respect to or in exchange for or in replacement of the shares referenced in (i) above; PROVIDED, HOWEVER, that Registrable Securities shall not include any shares of Tetra Tech Common Stock that have previously been registered or sold to the public or have been sold in a private transaction (excluding the issuance of the Tetra Tech Common Stock pursuant to the Stock Purchase Agreement). "REGISTRATION STATEMENT" shall mean any registration statement of Tetra Tech in compliance with the Securities Act that covers Registrable Securities pursuant to the provisions of this Agreement, including, without limitation, the Prospectus, all amendments and supplements to such Registration Statement, including all post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement. "RULE 144" shall mean Rule 144 promulgated under the Securities Act or any similar successor rule, as the same shall be in effect from time to time. "RULE 144A" shall mean Rule 144A promulgated under the Securities Act or any similar successor rule, as the same shall be in effect from time to time. "RULE 145" shall mean Rule 145 promulgated under the Securities Act, or any similar successor rule, as the same shall be in effect from time to time. 2 "RULE 415" shall mean Rule 415 promulgated under the Securities Act, or any similar successor rule, as the same shall be in effect from time to time. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended from time to time. "SEC" shall mean the Securities and Exchange Commission. "UNDERWRITTEN OFFERING" shall mean a registration in which securities of Tetra Tech are sold to an underwriter or through an underwriter as agent for reoffering to the public. 2. REGISTRATION. (a) Tetra Tech shall use all commercially reasonable efforts to file a Registration Statement on Form S-1, Form S-2 or Form S-3, whichever Tetra Tech shall be eligible to use, providing for the sale by the Holders, pursuant to Rule 415, and/or any similar rule that may be adopted by the SEC, of the Registrable Securities, to cause such Registration Statement to become effective not later than November 3, 2000, and to keep such Registration Statement continuously effective for a period ending on the date on which all Holders are eligible to sell Registrable Securities under Rule 144 without any volume limitation (or similar successor Rule). (b) No Holder shall have the right to register securities under this Agreement unless such Holder provides and/or confirms in writing prior to or after the filing of the Registration Statement such information (including, without limitation, information as to the number of Registrable Securities that such Holder has sold pursuant to any such Registration Statement from time to time) as Tetra Tech may reasonably request in connection with such Registration Statement. (c) Notwithstanding the foregoing, for a period not to exceed 90 days, Tetra Tech shall not be obligated to prepare and file the Registration Statement required hereunder if Tetra Tech, in its good faith judgment, reasonably believes that the filing of such Registration Statement would require the disclosure of material non-public information regarding Tetra Tech and, accordingly, that the filing thereof, at the time requested, or the offering of Tetra Tech Common Stock pursuant thereto, would materially and adversely affect (i) a pending or scheduled public offering or private placement of securities of Tetra Tech, (ii) an acquisition, merger, consolidation or similar transaction by or of Tetra Tech, (iii) preexisting and continuing negotiations, discussions or pending proposals with respect to any of the foregoing transactions, or (iv) the financial condition of Tetra Tech in view of the disclosure of any pending or threatened litigation, claim, assessment or governmental investigation which might be required thereby. 3 In the event that Tetra Tech, in good faith, reasonably believes that such conditions are continuing after such 90-day period, it may, with the consent of the Holders of a majority of the Registrable Securities subject (or to be subject) to the Registration Statement, which consent shall not be unreasonably withheld, extend such 90-day period for an additional 30 days. Any further delay shall require the consent of the Holders of a majority of such shares. 3. REGISTRATION PROCEDURES. In connection with Tetra Tech's registration obligations pursuant to SECTION 2 hereof, Tetra Tech will use its commercially reasonable efforts to effect such registration to permit the sale of the Registrable Securities covered thereby in accordance with the intended method or methods of disposition thereof, and pursuant thereto Tetra Tech will: (a) prepare and file with the SEC a Registration Statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such Registration Statement to become effective; PROVIDED that, before filing any Registration Statement or Prospectus or any amendments or supplements thereto, Tetra Tech will furnish to the Holders of the Registrable Securities covered by such Registration Statement and their counsel, copies of all such documents proposed to be filed at least ten days prior thereto, and Tetra Tech will not file any such Registration Statement or amendment thereto or any Prospectus or any supplement thereto to which any such Holder shall reasonably object within such ten day period; PROVIDED, FURTHER, that Tetra Tech will not name or otherwise provide any information with respect to any Holder in any Registration Statement or Prospectus without the express written consent of such Holder, unless required to do so by the Securities Act and the rules and regulations thereunder; (b) prepare and file with the SEC such amendments, post-effective amendments and supplements to the Registration Statement and the Prospectus as may be necessary to comply with the provisions of the Securities Act and the rules and regulations thereunder with respect to the disposition of all securities covered by such Registration Statement; (c) promptly notify the selling Holders (i) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC for amendments or supplements to the Registration Statement or the Prospectus or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, (iv) of the receipt by Tetra Tech of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose and (v) of the happening of any event which makes any statement made in the Registration Statement, the Prospectus or any 4 document incorporated therein by reference untrue or which requires the making of any changes in the Registration Statement, the Prospectus or any document incorporated therein by reference in order to make the statements therein not misleading in light of the circumstances then existing; (d) make every commercially reasonable effort to obtain the withdrawal of any order suspending the effectiveness of the Registration Statement at the earliest possible moment; (e) furnish to each selling Holder, without charge, at least one signed copy of the Registration Statement and any post-effective amendment thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference); (f) deliver to each selling Holder, without charge, such reasonable number of conformed copies of the Registration Statement (and any post-effective amendment thereto) and such number of copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto (and any documents incorporated by reference therein) as such Holder may reasonably request; Tetra Tech consents to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders in connection with the offer and sale of the Registrable Securities covered by the Prospectus or any amendment or supplement thereto; (g) prior to any offering of Registrable Securities covered by a Registration Statement, register or qualify or cooperate with the selling Holders in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions as any such selling Holder reasonably requests, and use its reasonable efforts to keep each such registration or qualification effective, including through new filings, or amendments or renewals, during the period such Registration Statement is required to be kept effective pursuant to the terms of this Agreement; and do any and all other acts or things necessary or advisable to enable the disposition in all such jurisdictions reasonably requested by the Holders of the Registrable Securities covered by such Registration Statement, PROVIDED that under no circumstances shall Tetra Tech be required in connection therewith or as a condition thereof to qualify to do business or to file a general consent to service of process in any such states or jurisdictions; (h) cooperate with the selling Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold, free of any and all restrictive legends, such certificates to be in such denominations and registered in such names as the Holders may request; (i) upon the occurrence of any event contemplated by SECTION 3(c)(v) above, prepare a supplement or post-effective amendment to the Registration Statement or the 5 Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (j) make generally available to the holders of Tetra Tech's outstanding securities earnings statements satisfying the provisions of Section 11(a) of the Securities Act, no later than 60 days after the end of any 12 month period (or 90 days, if such period is a fiscal year) beginning with the first month of Tetra Tech's first fiscal quarter commencing after the effective date of the Registration Statement, which statements shall cover said 12 month period; (k) provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by each Registration Statement from and after a date not later than the effective date of such Registration Statement; (l) use its commercially reasonable efforts to cause all Registrable Securities covered by each Registration Statement to be listed, subject to notice of issuance, prior to the date of the first sale of such Registrable Securities pursuant to such Registration Statement, on each securities exchange on which the Tetra Tech Common Stock is then listed, and admitted to trading on the Nasdaq Stock Market, if the Tetra Tech Common Stock is then admitted to trading on the Nasdaq Stock Market; and (m) enter into such agreements (including underwriting agreements in customary form containing, among other things, reasonable and customary indemnities) and take such other actions as a majority of the Holders shall reasonably request in order to expedite or facilitate the disposition of such Registrable Securities. Each Holder agrees that, upon receipt of any notice from Tetra Tech of the happening of any event of the kind described in SECTION 3(c)(v) hereof, such Holder will forthwith discontinue disposition of Registrable Securities under the Prospectus related to the applicable Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by SECTION 3(i) hereof, or until it is advised in writing by Tetra Tech that the use of the Prospectus may be resumed. It shall be a condition precedent to the obligations of Tetra Tech to take any action pursuant to this SECTION 3 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to Tetra Tech such information regarding itself and the Registrable Securities held by it as shall be required by the Securities Act to effect the registration of such Holder's Registrable Securities. 6 4. REGISTRATION EXPENSES. All expenses incident to any registration to be effected hereunder and incident to Tetra Tech's performance of or compliance with this Agreement, including without limitation all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, National Association of Securities Dealers, Inc., stock exchange and qualification fees, fees and disbursements of Tetra Tech's counsel and of independent certified public accountants of Tetra Tech (including the expenses of any special audit required by or incident to such performance), the fees of one counsel and one accountant representing the Holders in such offering, expenses of the underwriters that are customarily requested in similar circumstances by such underwriters (excluding discounts, commissions or fees of underwriters, selling brokers, dealer managers or similar securities industry professionals relating to the distribution of the Registrable Securities, which will be borne by the Holders), all such expenses being herein called "Registration Expenses," will be borne by Tetra Tech. Tetra Tech will also pay its internal expenses, the expense of any annual audit and the fees and expenses of any person retained by Tetra Tech. 5. INDEMNIFICATION. (a) INDEMNIFICATION BY TETRA TECH. Tetra Tech agrees to indemnify and hold harmless each Holder of Registrable Securities, its officers, directors, partners and employees and each person who controls such Holder (within the meaning of Section 15 of the Securities Act) from and against any and all losses, claims, damages and liabilities (including any investigation, legal or other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted) (collectively, "Damages") to which such Holder may become subject under the Securities Act, the Exchange Act or other federal or state securities law or regulation, at common law or otherwise, insofar as such Damages arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus or preliminary prospectus or any amendment or supplement thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and (iii) any violation or alleged violation by Tetra Tech of the Securities Act, the Exchange Act or any state securities or blue sky laws in connection with the Registration Statement, Prospectus or preliminary prospectus or any amendment or supplement thereto, PROVIDED that Tetra Tech will not be liable to any Holder to the extent that such Damages arise from or are based upon any untrue statement or omission (y) based upon written information furnished to Tetra Tech by such Holder expressly for the inclusion in such Registration Statement, and (z) made in any Prospectus if such untrue statement or omission was corrected in an amendment or supplement to such Prospectus and such Holder failed to deliver such amendment or supplement prior to or concurrently with the sale of Registrable Securities to the party asserting the claim underlying such Damages. (b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. Each Holder of Registrable Securities whose Registrable Securities are sold under a Prospectus which is a part 7 of a Registration Statement agrees to indemnify and hold harmless Tetra Tech, its directors and each officer who signed such Registration Statement and each person who controls Tetra Tech (within the meaning of Section 15 of the Securities Act), and each other Holder of Registrable Securities whose Registrable Securities are sold under the Prospectus which is a part of such Registration Statement (and such Holder's officers, directors and employees and each person who controls such Holder within the meaning of Section 15 of the Securities Act), under the same circumstances as the foregoing indemnity from Tetra Tech to each Holder of Registrable Securities to the extent that such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement of a material fact or omission of a material fact that was made in the Prospectus, the Registration Statement, or any amendment or supplement thereto, in reliance upon and in conformity with information relating to such Holder furnished in writing to Tetra Tech by such Holder expressly for use therein, PROVIDED that in no event shall the aggregate liability of any selling Holder of Registrable Securities exceed the amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. Tetra Tech and the selling Holders shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, to the same extent as customarily furnished by such persons in similar circumstances. (c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person entitled to indemnification hereunder will (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; PROVIDED, HOWEVER, that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person and not of the indemnifying party unless (A) the indemnifying party has agreed to pay such fees or expenses, (B) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person or (C) in the reasonable judgment of such person and the indemnifying party, based upon advice of their respective counsel, a conflict of interest may exist between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person). If such defense is not assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its consent (but such consent will not be unreasonably withheld). No indemnified party will be required to consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by all claimants or plaintiffs to such indemnified party of a release from all liability in respect to such claim or litigation. Any indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim. As used in this SECTION 5(c), 8 the terms "indemnifying party", "indemnified party" and other terms of similar import are intended to include only Tetra Tech (and its officers, directors and control persons as set forth above) on the one hand, and the Holders (and their officers, directors, partners, employees, attorneys and control persons as set forth above) on the other hand, as applicable. (d) CONTRIBUTION. If for any reason the foregoing indemnity is unavailable, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities or expenses (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other, or (ii) if the allocation provided by CLAUSE (i) above is not permitted by applicable law or provides a lesser sum to the indemnified party than the amount hereinafter calculated, in such proportion as is appropriate to reflect not only the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other but also the relative fault of the indemnifying party and the indemnified party as well as any other relevant equitable considerations. Notwithstanding the foregoing, no Holder shall be required to contribute any amount in excess of the amount such Holder would have been required to pay to an indemnified party if the indemnity under SECTION 5(b) hereof was available. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligation of any person to contribute pursuant to this SECTION 5(d) shall be several and not joint. (e) TIMING OF PAYMENTS. An indemnifying party shall make payments of all amounts required to be made pursuant to the foregoing provisions of this SECTION 5 to or for the account of the indemnified party from time to time promptly upon receipt of bills or invoices relating thereto or when otherwise due or payable. (f) SURVIVAL. The indemnity and contribution agreements contained in this SECTION 7 shall remain in full force and effect, regardless of any investigation made by or on behalf of a participating Holder, its officers, directors, partners, attorneys, agents or any person, if any, who controls such Holder as aforesaid, and shall survive the transfer of such Registrable Securities by such Holder. 6. PREPARATION; REASONABLE INVESTIGATION. In connection with the preparation and filing of a Registration Statement pursuant to the terms of this Agreement: (a) Tetra Tech shall, with respect to a Registration Statement filed pursuant to SECTION 2, give the Holders of such Registrable Securities so registered, their underwriters, if any, and their respective counsel and accountants the opportunity to participate in the preparation of such Registration Statement (other than reports and proxy statements incorporated therein by reference and lawfully and properly filed with the SEC) and each 9 Prospectus included therein or filed with the SEC, and each amendment thereof or supplement thereto; and (b) Tetra Tech shall give the Holders of such Registrable Securities so registered, their underwriters, if any, and their respective counsel and accountants such reasonable access to its books and records and such opportunities to discuss the business of Tetra Tech with its officers and the independent public accountants who have certified its financial statements as shall be necessary, in the opinion of such Holders or such underwriters, to conduct a reasonable investigation within the meaning of Section 11(b)(3) of the Securities Act. 7. RULE 144. Tetra Tech covenants that it will use its best efforts to file, on a timely basis, the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder, and it will take such further action as any Holder may reasonably request (including, without limitation, compliance with the current public information requirements of Rule 144(c) and Rule 144A), all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the conditions provided by Rule 144, Rule 144A or any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Holder, Tetra Tech will deliver to such holder a written statement verifying that it has complied with such information and requirements. 8. SPECIFIC PERFORMANCE. Each Holder, in addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. Tetra Tech agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. 9. NOTICES. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by United States first-class mail, postage prepaid, sent by facsimile or delivered personally by hand or nationally recognized courier addressed (a) if to a Holder, as indicated on the list of Holders attached hereto as SCHEDULE A, or at such other address as such Holder or permitted assignee shall have furnished to Tetra Tech in writing, or (b) if to Tetra Tech, at such address or facsimile number as Tetra Tech shall have furnished to each Holder in writing. All such notices and other written communications shall be effective on the date of mailing, facsimile transfer or delivery. 10. SUCCESSORS AND ASSIGNS: ASSIGNMENT OF RIGHTS. The rights and benefits of a Holder hereunder may not be assigned to a transferee or assignee, without the consent of Tetra Tech; PROVIDED, HOWEVER, that, no later than the 10th day prior to the filing of the Registration Statement under SECTION 2 hereof, the rights and benefits of a Holder hereunder may be transferred in connection with a transfer or assignment of any Registrable Securities held by such 10 Holder (i) by gift to immediate family members of such Holder, or trusts or other entities for the sole benefit thereof, or (ii) by gift to any entity in which such Holder, his or her immediate family members, or trusts or other entities for the sole benefit thereof beneficially own all of the voting securities; PROVIDED, HOWEVER, that in each case, the transferee executes an instrument pursuant to which the transferee agrees to be bound by the terms and conditions hereof as a Holder, and such other documents as Tetra Tech or its counsel may reasonably require, after which, such transferee shall be deemed a "Holder" hereunder. Any transfer of Registrable Securities, and rights hereunder, shall be subject to compliance with applicable securities laws and the restrictions contained in the Investment Letter executed by each Holder pursuant to the Stock Purchase Agreement. 11. SEVERABILITY. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. 12. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement, the Stock Purchase Agreement and the other agreements contemplated thereby constitute the full and entire understanding and agreement among the parties with regard to the subjects hereof and thereof. Without limiting the foregoing, the rights of the Holders to registration pursuant to the terms of this Agreement shall be subject to the limitations on resale contained in the Investment Letter (as defined in the Stock Purchase Agreement). Neither this Agreement nor any term hereof may be amended, waived, discharged or terminated, except by a written instrument signed by Tetra Tech and the holders of at least 51% of the Registrable Securities and any such amendment, waiver, discharge or termination shall be binding upon all the parties hereto, but in no event shall the obligation of any party hereto be materially increased, except upon the written consent of such party. 13. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be original, and all of which together shall constitute one instrument. 14. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California without giving effect to principles of conflicts of laws thereof. 11 15. NO THIRD PARTY BENEFICIARIES. The covenants and agreements set forth herein are for the sole and exclusive benefit of the parties hereto and their respective successors and assigns and such covenants and agreements shall not be construed as conferring, and are not intended to confer, any rights or benefits upon any other persons. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. TETRA TECH, INC. By: /s/ Li-San Hwang --------------------------------- Li-San Hwang Chairman, Chief Executive Officer and President /s/ Emanuele Di Lecce ----------------------------------------- Emanuele Di Lecce /s/ Brenda Di Lecce ----------------------------------------- Brenda Di Lecce 12
SCHEDULE A SCHEDULE OF HOLDERS Number of Shares of Tetra Tech Common Stock Issuable Upon Exchange Pursuant Holder's Name/Address/Facsimile No. to the Stock Purchase Agreement - ------------------------------------------------------- ---------------------------------------------------- Emanuele Di Lecce 18,303 Brenda Di Lecce 15,303
EX-10.24 4 ex-10_24.txt EXHIBIT 10.24 EXHIBIT 10.24 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (the "Agreement") is entered into as of May 17, 2000 by and among Tetra Tech, Inc., a Delaware corporation ("Tetra Tech"), and the parties listed on SCHEDULE A attached hereto (each, a "Holder" and collectively, the "Holders"). R E C I T A L S A. Tetra Tech and the Holders are parties to a Stock Purchase Agreement dated as of the date hereof (the "Stock Purchase Agreement"); and B. Pursuant to the Stock Purchase Agreement, the Holders will receive shares of the common stock, $.01 par value, of Tetra Tech ("Tetra Tech Common Stock"); and C. This Agreement is the Registration Rights Agreement referred to in SECTION 6.2 of the Stock Purchase Agreement and, pursuant thereto, must be entered into by the parties in connection with the transactions contemplated by the Stock Purchase Agreement. A G R E E M E N T NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall have the following respective meanings: "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended from time to time. "FORM S-3" shall mean such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by Tetra Tech with the SEC. "PROSPECTUS" shall mean the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such Prospectus. "REGISTER", "REGISTERED" and "REGISTRATION" shall mean and refer to a registration effected by preparing and filing a Registration Statement and taking all other actions that are necessary or appropriate in connection therewith, and the declaration or ordering of effectiveness of such Registration Statement by the SEC. "REGISTRATION EXPENSES" shall have the meaning set forth in SECTION 6. "REGISTRABLE SECURITIES" shall mean the shares of Tetra Tech Common Stock (i) issued pursuant to the Stock Purchase Agreement and the exhibits thereto, and (ii) issued as a dividend or other distribution with respect to or in exchange for or in replacement of the shares referenced in (i) above; PROVIDED, HOWEVER, that Registrable Securities shall not include any shares of Tetra Tech Common Stock that have previously been registered or sold to the public or have been sold in a private transaction (excluding the issuance of the Tetra Tech Common Stock pursuant to the Stock Purchase Agreement). "REGISTRATION STATEMENT" shall mean any registration statement of Tetra Tech in compliance with the Securities Act that covers Registrable Securities pursuant to the provisions of this Agreement, including, without limitation, the Prospectus, all amendments and supplements to such Registration Statement, including all post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement. "RULE 144" shall mean Rule 144 promulgated under the Securities Act or any similar successor rule, as the same shall be in effect from time to time. "RULE 144A" shall mean Rule 144A promulgated under the Securities Act or any similar successor rule, as the same shall be in effect from time to time. "RULE 145" shall mean Rule 145 promulgated under the Securities Act, or any similar successor rule, as the same shall be in effect from time to time. "RULE 415" shall mean Rule 415 promulgated under the Securities Act, or any similar successor rule, as the same shall be in effect from time to time. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended from time to time. "SEC" shall mean the Securities and Exchange Commission. "UNDERWRITTEN OFFERING" shall mean a registration in which securities of Tetra Tech are sold to an underwriter or through an underwriter as agent for reoffering to the public. 2 2. REGISTRATION. (a) Tetra Tech shall file a Registration Statement on Form S-1, Form S-2 or Form S-3, whichever Tetra Tech shall be eligible to use, providing for the sale by the Holders, pursuant to Rule 415, and/or any similar rule that may be adopted by the SEC, of the Registrable Securities; to use its reasonable best efforts to cause such Registration Statement to become effective not later than November 17, 2000; and to use its reasonable best efforts to keep such Registration Statement continuously effective for a period ending on the date on which all Holders are eligible to sell Registrable Securities under Rule 144 without any volume limitation (or similar successor Rule). (b) No Holder shall have the right to register securities under this Agreement unless such Holder provides and/or confirms in writing prior to or after the filing of the Registration Statement such information (including, without limitation, information as to the number of Registrable Securities that such Holder has sold pursuant to any such Registration Statement from time to time) as Tetra Tech may reasonably request in connection with such Registration Statement. (c) Notwithstanding the foregoing, for a period not to exceed 90 days, Tetra Tech shall not be obligated to prepare and file the Registration Statement required hereunder if Tetra Tech, in its good faith judgment, reasonably believes that the filing of such Registration Statement would require the disclosure of material non-public information regarding Tetra Tech and, accordingly, that the filing thereof, at the time requested, or the offering of Tetra Tech Common Stock pursuant thereto, would materially and adversely affect (i) a pending or scheduled public offering or private placement of securities of Tetra Tech, (ii) an acquisition, merger, consolidation or similar transaction by or of Tetra Tech, (iii) preexisting and continuing negotiations, discussions or pending proposals with respect to any of the foregoing transactions, or (iv) the financial condition of Tetra Tech in view of the disclosure of any pending or threatened litigation, claim, assessment or governmental investigation which might be required thereby. In the event that Tetra Tech, in good faith, reasonably believes that such conditions are continuing after such 90-day period, it may, with the consent of the Holders of a majority of the Registrable Securities subject (or to be subject) to the Registration Statement, which consent shall not be unreasonably withheld, extend such 90-day period for an additional 30 days. Any further delay shall require the consent of the Holders of a majority of such shares. 3. REGISTRATION PROCEDURES. In connection with Tetra Tech's registration obligations pursuant to SECTION 2 hereof, Tetra Tech will use its commercially reasonable efforts to effect such registration to permit the sale of the Registrable Securities covered thereby in accordance with the intended method or methods of disposition thereof, and pursuant thereto Tetra Tech will: 3 (a) prepare and file with the SEC a Registration Statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such Registration Statement to become effective; PROVIDED that, before filing any Registration Statement or Prospectus or any amendments or supplements thereto, Tetra Tech will furnish to the Holders of the Registrable Securities covered by such Registration Statement and their counsel, copies of all such documents proposed to be filed at least ten days prior thereto, and Tetra Tech will not file any such Registration Statement or amendment thereto or any Prospectus or any supplement thereto to which any such Holder shall reasonably object within such ten day period; PROVIDED, FURTHER, that Tetra Tech will not name or otherwise provide any information with respect to any Holder in any Registration Statement or Prospectus without the express written consent of such Holder, unless required to do so by the Securities Act and the rules and regulations thereunder; (b) prepare and file with the SEC such amendments, post-effective amendments and supplements to the Registration Statement and the Prospectus as may be necessary to comply with the provisions of the Securities Act and the rules and regulations thereunder with respect to the disposition of all securities covered by such Registration Statement; (c) promptly notify the selling Holders (i) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC for amendments or supplements to the Registration Statement or the Prospectus or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, (iv) of the receipt by Tetra Tech of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose and (v) of the happening of any event which makes any statement made in the Registration Statement, the Prospectus or any document incorporated therein by reference untrue or which requires the making of any changes in the Registration Statement, the Prospectus or any document incorporated therein by reference in order to make the statements therein not misleading in light of the circumstances then existing; (d) make every commercially reasonable effort to obtain the withdrawal of any order suspending the effectiveness of the Registration Statement at the earliest possible moment; (e) furnish to each selling Holder, without charge, at least one signed copy of the Registration Statement and any post-effective amendment thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference); 4 (f) deliver to each selling Holder, without charge, such reasonable number of conformed copies of the Registration Statement (and any post-effective amendment thereto) and such number of copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto (and any documents incorporated by reference therein) as such Holder may reasonably request; Tetra Tech consents to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders in connection with the offer and sale of the Registrable Securities covered by the Prospectus or any amendment or supplement thereto; (g) prior to any offering of Registrable Securities covered by a Registration Statement, register or qualify or cooperate with the selling Holders in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions as any such selling Holder reasonably requests, and use its reasonable efforts to keep each such registration or qualification effective, including through new filings, or amendments or renewals, during the period such Registration Statement is required to be kept effective pursuant to the terms of this Agreement; and do any and all other acts or things necessary or advisable to enable the disposition in all such jurisdictions reasonably requested by the Holders of the Registrable Securities covered by such Registration Statement, PROVIDED that under no circumstances shall Tetra Tech be required in connection therewith or as a condition thereof to qualify to do business or to file a general consent to service of process in any such states or jurisdictions; (h) cooperate with the selling Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold, free of any and all restrictive legends, such certificates to be in such denominations and registered in such names as the Holders may request; (i) upon the occurrence of any event contemplated by SECTION 3(c)(v) above, prepare a supplement or post-effective amendment to the Registration Statement or the Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (j) make generally available to the holders of Tetra Tech's outstanding securities earnings statements satisfying the provisions of Section 11(a) of the Securities Act, no later than 60 days after the end of any 12 month period (or 90 days, if such period is a fiscal year) beginning with the first month of Tetra Tech's first fiscal quarter commencing after the effective date of the Registration Statement, which statements shall cover said 12 month period; (k) provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by each Registration Statement from and after a date not later than the effective date of such Registration Statement; 5 (l) use its commercially reasonable efforts to cause all Registrable Securities covered by each Registration Statement to be listed, subject to notice of issuance, prior to the date of the first sale of such Registrable Securities pursuant to such Registration Statement, on each securities exchange on which the Tetra Tech Common Stock is then listed, and admitted to trading on the Nasdaq Stock Market, if the Tetra Tech Common Stock is then admitted to trading on the Nasdaq Stock Market; and (m) enter into such agreements (including underwriting agreements in customary form containing, among other things, reasonable and customary indemnities) and take such other actions as a majority of the Holders shall reasonably request in order to expedite or facilitate the disposition of such Registrable Securities. Each Holder agrees that, upon receipt of any notice from Tetra Tech of the happening of any event of the kind described in SECTION 3(c)(v) hereof, such Holder will forthwith discontinue disposition of Registrable Securities under the Prospectus related to the applicable Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by SECTION 3(i) hereof, or until it is advised in writing by Tetra Tech that the use of the Prospectus may be resumed. It shall be a condition precedent to the obligations of Tetra Tech to take any action pursuant to this SECTION 3 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to Tetra Tech such information regarding itself and the Registrable Securities held by it as shall be required by the Securities Act to effect the registration of such Holder's Registrable Securities. 4. REGISTRATION EXPENSES. All expenses incident to any registration to be effected hereunder and incident to Tetra Tech's performance of or compliance with this Agreement, including without limitation all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, National Association of Securities Dealers, Inc., stock exchange and qualification fees, fees and disbursements of Tetra Tech's counsel and of independent certified public accountants of Tetra Tech (including the expenses of any special audit required by or incident to such performance), the fees of one counsel and one accountant representing the Holders in such offering, expenses of the underwriters that are customarily requested in similar circumstances by such underwriters (excluding discounts, commissions or fees of underwriters, selling brokers, dealer managers or similar securities industry professionals relating to the distribution of the Registrable Securities, which will be borne by the Holders), all such expenses being herein called "Registration Expenses," will be borne by Tetra Tech. Tetra Tech will also pay its internal expenses, the expense of any annual audit and the fees and expenses of any person retained by Tetra Tech. 6 5. INDEMNIFICATION. (a) INDEMNIFICATION BY TETRA TECH. Tetra Tech agrees to indemnify and hold harmless each Holder of Registrable Securities, its officers, directors, partners and employees and each person who controls such Holder (within the meaning of Section 15 of the Securities Act) from and against any and all losses, claims, damages and liabilities (including any investigation, legal or other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted) (collectively, "Damages") to which such Holder may become subject under the Securities Act, the Exchange Act or other federal or state securities law or regulation, at common law or otherwise, insofar as such Damages arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus or preliminary prospectus or any amendment or supplement thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and (iii) any violation or alleged violation by Tetra Tech of the Securities Act, the Exchange Act or any state securities or blue sky laws in connection with the Registration Statement, Prospectus or preliminary prospectus or any amendment or supplement thereto, PROVIDED that Tetra Tech will not be liable to any Holder to the extent that such Damages arise from or are based upon any untrue statement or omission (y) based upon written information furnished to Tetra Tech by such Holder expressly for the inclusion in such Registration Statement, and (z) made in any Prospectus if such untrue statement or omission was corrected in an amendment or supplement to such Prospectus and such Holder failed to deliver such amendment or supplement prior to or concurrently with the sale of Registrable Securities to the party asserting the claim underlying such Damages. (b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. Each Holder of Registrable Securities whose Registrable Securities are sold under a Prospectus which is a part of a Registration Statement agrees to indemnify and hold harmless Tetra Tech, its directors and each officer who signed such Registration Statement and each person who controls Tetra Tech (within the meaning of Section 15 of the Securities Act), and each other Holder of Registrable Securities whose Registrable Securities are sold under the Prospectus which is a part of such Registration Statement (and such Holder's officers, directors and employees and each person who controls such Holder within the meaning of Section 15 of the Securities Act), under the same circumstances as the foregoing indemnity from Tetra Tech to each Holder of Registrable Securities to the extent that such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement of a material fact or omission of a material fact that was made in the Prospectus, the Registration Statement, or any amendment or supplement thereto, in reliance upon and in conformity with information relating to such Holder furnished in writing to Tetra Tech by such Holder expressly for use therein, PROVIDED that in no event shall the aggregate liability of any selling Holder of Registrable Securities exceed the amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. Tetra Tech and the selling Holders shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, to the same extent as customarily furnished by such persons in similar circumstances. 7 (c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person entitled to indemnification hereunder will (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; PROVIDED, HOWEVER, that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person and not of the indemnifying party unless (A) the indemnifying party has agreed to pay such fees or expenses, (B) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person or (C) in the reasonable judgment of such person and the indemnifying party, based upon advice of their respective counsel, a conflict of interest may exist between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person). If such defense is not assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its consent (but such consent will not be unreasonably withheld). No indemnified party will be required to consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by all claimants or plaintiffs to such indemnified party of a release from all liability in respect to such claim or litigation. Any indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim. As used in this SECTION 5(c), the terms "indemnifying party", "indemnified party" and other terms of similar import are intended to include only Tetra Tech (and its officers, directors and control persons as set forth above) on the one hand, and the Holders (and their officers, directors, partners, employees, attorneys and control persons as set forth above) on the other hand, as applicable. (d) CONTRIBUTION. If for any reason the foregoing indemnity is unavailable, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities or expenses (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other, or (ii) if the allocation provided by CLAUSE (i) above is not permitted by applicable law or provides a lesser sum to the indemnified party than the amount hereinafter calculated, in such proportion as is appropriate to reflect not only the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other but also the relative fault of the indemnifying party and the indemnified party as well as any other relevant equitable considerations. Notwithstanding the foregoing, no Holder shall be required to contribute any amount in excess of the amount such Holder would have been required to pay to an indemnified party if the indemnity under SECTION 5(b) hereof was available. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such 8 fraudulent misrepresentation. The obligation of any person to contribute pursuant to this SECTION 5(d) shall be several and not joint. (e) TIMING OF PAYMENTS. An indemnifying party shall make payments of all amounts required to be made pursuant to the foregoing provisions of this SECTION 5 to or for the account of the indemnified party from time to time promptly upon receipt of bills or invoices relating thereto or when otherwise due or payable. (f) SURVIVAL. The indemnity and contribution agreements contained in this SECTION 5 shall remain in full force and effect, regardless of any investigation made by or on behalf of a participating Holder, its officers, directors, partners, attorneys, agents or any person, if any, who controls such Holder as aforesaid, and shall survive the transfer of such Registrable Securities by such Holder. 6. PREPARATION; REASONABLE INVESTIGATION. In connection with the preparation and filing of a Registration Statement pursuant to the terms of this Agreement: (a) Tetra Tech shall, with respect to a Registration Statement filed pursuant to SECTION 2, give the Holders of such Registrable Securities so registered, their underwriters, if any, and their respective counsel and accountants the opportunity to participate in the preparation of such Registration Statement (other than reports and proxy statements incorporated therein by reference and lawfully and properly filed with the SEC) and each Prospectus included therein or filed with the SEC, and each amendment thereof or supplement thereto; and (b) Tetra Tech shall give the Holders of such Registrable Securities so registered, their underwriters, if any, and their respective counsel and accountants such reasonable access to its books and records and such opportunities to discuss the business of Tetra Tech with its officers and the independent public accountants who have certified its financial statements as shall be necessary, in the opinion of such Holders or such underwriters, to conduct a reasonable investigation within the meaning of Section 11(b)(3) of the Securities Act. 7. RULE 144. Tetra Tech covenants that it will use its best efforts to file, on a timely basis, the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder, and it will take such further action as any Holder may reasonably request (including, without limitation, compliance with the current public information requirements of Rule 144(c) and Rule 144A), all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the conditions provided by Rule 144, Rule 144A or any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Holder, Tetra Tech will deliver to such holder a written statement verifying that it has complied with such information and requirements. 9 8. SPECIFIC PERFORMANCE. Each Holder, in addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. Tetra Tech agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. 9. NOTICES. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by United States first-class mail, postage prepaid, sent by facsimile or delivered personally by hand or nationally recognized courier addressed (a) if to a Holder, as indicated on the list of Holders attached hereto as SCHEDULE A, or at such other address as such Holder or permitted assignee shall have furnished to Tetra Tech in writing, or (b) if to Tetra Tech, at such address or facsimile number as Tetra Tech shall have furnished to each Holder in writing. All such notices and other written communications shall be effective on the date of mailing, facsimile transfer or delivery. 10. SUCCESSORS AND ASSIGNS: ASSIGNMENT OF RIGHTS. The rights and benefits of a Holder hereunder may not be assigned to a transferee or assignee, without the consent of Tetra Tech; PROVIDED, HOWEVER, that, no later than the 10th day prior to the filing of the Registration Statement under SECTION 2 hereof, the rights and benefits of a Holder hereunder may be transferred in connection with a transfer or assignment of any Registrable Securities held by such Holder (i) by gift to immediate family members of such Holder, or trusts or other entities for the sole benefit thereof, or (ii) by gift to any entity in which such Holder, his or her immediate family members, or trusts or other entities for the sole benefit thereof beneficially own all of the voting securities; PROVIDED, HOWEVER, that in each case, the transferee executes an instrument pursuant to which the transferee agrees to be bound by the terms and conditions hereof as a Holder, and such other documents as Tetra Tech or its counsel may reasonably require, after which, such transferee shall be deemed a "Holder" hereunder. Any transfer of Registrable Securities, and rights hereunder, shall be subject to compliance with applicable securities laws and the restrictions contained in the Investment Letter executed by each Holder pursuant to the Stock Purchase Agreement. 11. SEVERABILITY. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. 12. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement, the Stock Purchase Agreement and the other agreements contemplated thereby constitute the full and entire understanding and agreement among the parties with regard to the subjects hereof and thereof. Without limiting the foregoing, the rights of the Holders to registration pursuant to the terms of this Agreement shall be subject to the limitations on resale contained in the Investment Letter (as defined in the Stock Purchase Agreement). Neither this Agreement nor any term hereof may be 10 amended, waived, discharged or terminated, except by a written instrument signed by Tetra Tech and the holders of at least 51% of the Registrable Securities and any such amendment, waiver, discharge or termination shall be binding upon all the parties hereto, but in no event shall the obligation of any party hereto be materially increased, except upon the written consent of such party. 13. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be original, and all of which together shall constitute one instrument. 14. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California without giving effect to principles of conflicts of laws thereof. 11 15. NO THIRD PARTY BENEFICIARIES. The covenants and agreements set forth herein are for the sole and exclusive benefit of the parties hereto and their respective successors and assigns and such covenants and agreements shall not be construed as conferring, and are not intended to confer, any rights or benefits upon any other persons. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. TETRA TECH, INC. By: /s/ Li-San Hwang --------------------------------- Li-San Hwang Chairman, Chief Executive Officer and President /s/ Anthony R. Dark ----------------------------------------- Anthony R. Dark /s/ Barry L. Burks ----------------------------------------- Barry L. Burks /s/ Jon D. Nelson ----------------------------------------- Jon D. Nelson 12
SCHEDULE A SCHEDULE OF HOLDERS Number of Shares of Tetra Tech Common Stock Issuable Pursuant Holder's Name/Address/Facsimile No. to the Stock Purchase Agreement - -------------------------------------------------- -------------------------------------------------- Anthony R. Dark 17,669 c/o FHC, Inc. 5416 South Yale Avenue Tulsa, Oklahoma 74135 Barry L. Burks 17,669 c/o FHC, Inc. 5416 South Yale Avenue Tulsa, Oklahoma 74135 Jon D. Nelson 17,669 c/o FHC, Inc. 5416 South Yale Avenue Tulsa, Oklahoma 74135
EX-10.25 5 ex-10_25.txt EXHIBIT 10.25 EXHIBIT 10.25 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (the "Agreement") is entered into as of May 24, 2000 by and among Tetra Tech, Inc., a Delaware corporation ("Tetra Tech"), and the parties listed on SCHEDULE A attached hereto (each, a "Holder" and collectively, the "Holders"). R E C I T A L S A. Tetra Tech and the Holders are parties to a Stock Purchase Agreement dated as of the date hereof (the "Stock Purchase Agreement"); and B. Pursuant to the Stock Purchase Agreement, the Holders will receive shares of the common stock, $.01 par value, of Tetra Tech ("Tetra Tech Common Stock"); and C. This Agreement is the Registration Rights Agreement referred to in SECTION 6.2 of the Stock Purchase Agreement and, pursuant thereto, must be entered into by the parties in connection with the transactions contemplated by the Stock Purchase Agreement. A G R E E M E N T NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall have the following respective meanings: "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended from time to time. "FORM S-3" shall mean such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by Tetra Tech with the SEC. "PROSPECTUS" shall mean the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such Prospectus. "REGISTER", "REGISTERED" and "REGISTRATION" shall mean and refer to a registration effected by preparing and filing a Registration Statement and taking all other actions that are necessary or appropriate in connection therewith, and the declaration or ordering of effectiveness of such Registration Statement by the SEC. "REGISTRATION EXPENSES" shall have the meaning set forth in SECTION 4. "REGISTRABLE SECURITIES" shall mean the shares of Tetra Tech Common Stock (i) issued pursuant to the Stock Purchase Agreement and the exhibits thereto, and (ii) issued as a dividend or other distribution with respect to or in exchange for or in replacement of the shares referenced in (i) above; PROVIDED, HOWEVER, that Registrable Securities shall not include any shares of Tetra Tech Common Stock that have previously been registered or sold to the public or have been sold in a private transaction (excluding the issuance of the Tetra Tech Common Stock pursuant to the Stock Purchase Agreement). "REGISTRATION STATEMENT" shall mean any registration statement of Tetra Tech in compliance with the Securities Act that covers Registrable Securities pursuant to the provisions of this Agreement, including, without limitation, the Prospectus, all amendments and supplements to such Registration Statement, including all post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement. "RULE 144" shall mean Rule 144 promulgated under the Securities Act or any similar successor rule, as the same shall be in effect from time to time. "RULE 144A" shall mean Rule 144A promulgated under the Securities Act or any similar successor rule, as the same shall be in effect from time to time. "RULE 145" shall mean Rule 145 promulgated under the Securities Act, or any similar successor rule, as the same shall be in effect from time to time. "RULE 415" shall mean Rule 415 promulgated under the Securities Act, or any similar successor rule, as the same shall be in effect from time to time. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended from time to time. "SEC" shall mean the Securities and Exchange Commission. 2 "UNDERWRITTEN OFFERING" shall mean a registration in which securities of Tetra Tech are sold to an underwriter or through an underwriter as agent for reoffering to the public. 2. REGISTRATION. (a) Tetra Tech shall use all reasonable best efforts to file a Registration Statement on Form S-1, Form S-2 or Form S-3, whichever Tetra Tech shall be eligible to use, providing for the sale by the Holders, pursuant to Rule 415, and/or any similar rule that may be adopted by the SEC, of the Registrable Securities, to cause such Registration Statement to become effective not later than November 24, 2000, and to keep such Registration Statement continuously effective for a period ending on the date on which all Holders are eligible to sell Registrable Securities under Rule 144 without any volume limitation (or similar successor Rule). (b) No Holder shall have the right to register securities under this Agreement unless such Holder provides and/or confirms in writing prior to or after the filing of the Registration Statement such information (including, without limitation, information as to the number of Registrable Securities that such Holder has sold pursuant to any such Registration Statement from time to time) as Tetra Tech may reasonably request in connection with such Registration Statement. (c) Notwithstanding the foregoing, for a period not to exceed 90 days, Tetra Tech shall not be obligated to prepare and file the Registration Statement required hereunder if Tetra Tech, in its good faith judgment, reasonably believes that the filing of such Registration Statement would require the disclosure of material non-public information regarding Tetra Tech and, accordingly, that the filing thereof, at the time requested, or the offering of Tetra Tech Common Stock pursuant thereto, would materially and adversely affect (i) a pending or scheduled public offering or private placement of securities of Tetra Tech, (ii) an acquisition, merger, consolidation or similar transaction by or of Tetra Tech, (iii) preexisting and continuing negotiations, discussions or pending proposals with respect to any of the foregoing transactions, or (iv) the financial condition of Tetra Tech in view of the disclosure of any pending or threatened litigation, claim, assessment or governmental investigation which might be required thereby. In the event that Tetra Tech, in good faith, reasonably believes that such conditions are continuing after such 90-day period, it may, with the consent of the Holders of a majority of the Registrable Securities subject (or to be subject) to the Registration Statement, which consent shall not be unreasonably withheld, extend such 90-day period for an additional 30 days. Any further delay shall require the consent of the Holders of a majority of such shares. 3 3. REGISTRATION PROCEDURES. In connection with Tetra Tech's registration obligations pursuant to SECTION 2 hereof, Tetra Tech will use reasonable best efforts to effect such registration to permit the sale of the Registrable Securities covered thereby in accordance with the intended method or methods of disposition thereof, and pursuant thereto Tetra Tech will: (a) prepare and file with the SEC a Registration Statement with respect to such Registrable Securities and use its reasonable best efforts to cause such Registration Statement to become effective; PROVIDED that, before filing any Registration Statement or Prospectus or any amendments or supplements thereto, Tetra Tech will furnish to the Holders of the Registrable Securities covered by such Registration Statement and their counsel, copies of all such documents proposed to be filed at least ten days prior thereto, and Tetra Tech will not file any such Registration Statement or amendment thereto or any Prospectus or any supplement thereto to which any such Holder shall reasonably object within such ten day period; PROVIDED, FURTHER, that Tetra Tech will not name or otherwise provide any information with respect to any Holder in any Registration Statement or Prospectus without the express written consent of such Holder, unless required to do so by the Securities Act and the rules and regulations thereunder; (b) prepare and file with the SEC such amendments, post-effective amendments and supplements to the Registration Statement and the Prospectus as may be necessary to comply with the provisions of the Securities Act and the rules and regulations thereunder with respect to the disposition of all securities covered by such Registration Statement; (c) promptly notify the selling Holders (i) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC for amendments or supplements to the Registration Statement or the Prospectus or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, (iv) of the receipt by Tetra Tech of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose and (v) of the happening of any event which makes any statement made in the Registration Statement, the Prospectus or any document incorporated therein by reference untrue or which requires the making of any changes in the Registration Statement, the Prospectus or any document incorporated therein by reference in order to make the statements therein not misleading in light of the circumstances then existing; (d) make every reasonable best effort to obtain the withdrawal of any order suspending the effectiveness of the Registration Statement at the earliest possible moment; 4 (e) furnish to each selling Holder, without charge, at least one signed copy of the Registration Statement and any post-effective amendment thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference); (f) deliver to each selling Holder, without charge, such reasonable number of conformed copies of the Registration Statement (and any post-effective amendment thereto) and such number of copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto (and any documents incorporated by reference therein) as such Holder may reasonably request; Tetra Tech consents to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders in connection with the offer and sale of the Registrable Securities covered by the Prospectus or any amendment or supplement thereto; (g) prior to any offering of Registrable Securities covered by a Registration Statement, register or qualify or cooperate with the selling Holders in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions as any such selling Holder reasonably requests, and use its reasonable efforts to keep each such registration or qualification effective, including through new filings, or amendments or renewals, during the period such Registration Statement is required to be kept effective pursuant to the terms of this Agreement; and do any and all other acts or things necessary or advisable to enable the disposition in all such jurisdictions reasonably requested by the Holders of the Registrable Securities covered by such Registration Statement, PROVIDED that under no circumstances shall Tetra Tech be required in connection therewith or as a condition thereof to qualify to do business or to file a general consent to service of process in any such states or jurisdictions; (h) cooperate with the selling Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold, free of any and all restrictive legends, such certificates to be in such denominations and registered in such names as the Holders may request; (i) upon the occurrence of any event contemplated by SECTION 3(c)(v) above, prepare a supplement or post-effective amendment to the Registration Statement or the Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; 5 (j) make generally available to the holders of Tetra Tech's outstanding securities earnings statements satisfying the provisions of Section 11(a) of the Securities Act, no later than 60 days after the end of any 12 month period (or 90 days, if such period is a fiscal year) beginning with the first month of Tetra Tech's first fiscal quarter commencing after the effective date of the Registration Statement, which statements shall cover said 12 month period; (k) provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by each Registration Statement from and after a date not later than the effective date of such Registration Statement; (l) use its reasonable best efforts to cause all Registrable Securities covered by each Registration Statement to be listed, subject to notice of issuance, prior to the date of the first sale of such Registrable Securities pursuant to such Registration Statement, on each securities exchange on which the Tetra Tech Common Stock is then listed, and admitted to trading on the Nasdaq Stock Market, if the Tetra Tech Common Stock is then admitted to trading on the Nasdaq Stock Market; and (m) enter into such agreements (including underwriting agreements in customary form containing, among other things, reasonable and customary indemnities) and take such other actions as a majority of the Holders shall reasonably request in order to expedite or facilitate the disposition of such Registrable Securities. Each Holder agrees that, upon receipt of any notice from Tetra Tech of the happening of any event of the kind described in SECTION 3(c)(v) hereof, such Holder will forthwith discontinue disposition of Registrable Securities under the Prospectus related to the applicable Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by SECTION 3(i) hereof, or until it is advised in writing by Tetra Tech that the use of the Prospectus may be resumed. It shall be a condition precedent to the obligations of Tetra Tech to take any action pursuant to this SECTION 3 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to Tetra Tech such information regarding itself and the Registrable Securities held by it as shall be required by the Securities Act to effect the registration of such Holder's Registrable Securities. 4. REGISTRATION EXPENSES. All expenses incident to any registration to be effected hereunder and incident to Tetra Tech's performance of or compliance with this Agreement, including without limitation all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, National Association of Securities Dealers, Inc., stock exchange and qualification fees, fees and disbursements of Tetra Tech's counsel and of independent certified public accountants of Tetra 6 Tech (including the expenses of any special audit required by or incident to such performance), the fees of one counsel and one accountant representing the Holders in such offering, expenses of the underwriters that are customarily requested in similar circumstances by such underwriters (excluding discounts, commissions or fees of underwriters, selling brokers, dealer managers or similar securities industry professionals relating to the distribution of the Registrable Securities, which will be borne by the Holders), all such expenses being herein called "Registration Expenses," will be borne by Tetra Tech. Tetra Tech will also pay its internal expenses, the expense of any annual audit and the fees and expenses of any person retained by Tetra Tech. 5. INDEMNIFICATION. (a) INDEMNIFICATION BY TETRA TECH. Tetra Tech agrees to indemnify and hold harmless each Holder of Registrable Securities, its officers, directors, partners and employees and each person who controls such Holder (within the meaning of Section 15 of the Securities Act) from and against any and all losses, claims, damages and liabilities (including any investigation, legal or other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted) (collectively, "Damages") to which such Holder may become subject under the Securities Act, the Exchange Act or other federal or state securities law or regulation, at common law or otherwise, insofar as such Damages arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus or preliminary prospectus or any amendment or supplement thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and (iii) any violation or alleged violation by Tetra Tech of the Securities Act, the Exchange Act or any state securities or blue sky laws in connection with the Registration Statement, Prospectus or preliminary prospectus or any amendment or supplement thereto, PROVIDED that Tetra Tech will not be liable to any Holder to the extent that such Damages arise from or are based upon any untrue statement or omission (y) based upon written information furnished to Tetra Tech by such Holder expressly for the inclusion in such Registration Statement, and (z) made in any Prospectus if such untrue statement or omission was corrected in an amendment or supplement to such Prospectus and such Holder failed to deliver such amendment or supplement prior to or concurrently with the sale of Registrable Securities to the party asserting the claim underlying such Damages. (b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. Each Holder of Registrable Securities whose Registrable Securities are sold under a Prospectus which is a part of a Registration Statement agrees to indemnify and hold harmless Tetra Tech, its directors and each officer who signed such Registration Statement and each person who controls Tetra Tech (within the meaning of Section 15 of the Securities Act), and each other Holder of Registrable Securities whose Registrable Securities are sold under the Prospectus which is a part of such Registration Statement (and such Holder's officers, directors and employees and each person who controls such Holder within the meaning of Section 15 of the Securities Act), under the same 7 circumstances as the foregoing indemnity from Tetra Tech to each Holder of Registrable Securities to the extent that such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement of a material fact or omission of a material fact that was made in the Prospectus, the Registration Statement, or any amendment or supplement thereto, in reliance upon and in conformity with information relating to such Holder furnished in writing to Tetra Tech by such Holder expressly for use therein, PROVIDED that in no event shall the aggregate liability of any selling Holder of Registrable Securities exceed the amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. Tetra Tech and the selling Holders shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, to the same extent as customarily furnished by such persons in similar circumstances. (c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person entitled to indemnification hereunder will (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; PROVIDED, HOWEVER, that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person and not of the indemnifying party unless (A) the indemnifying party has agreed to pay such fees or expenses, (B) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person or (C) in the reasonable judgment of such person and the indemnifying party, based upon advice of their respective counsel, a conflict of interest may exist between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person). If such defense is not assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its consent (but such consent will not be unreasonably withheld). No indemnified party will be required to consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by all claimants or plaintiffs to such indemnified party of a release from all liability in respect to such claim or litigation. Any indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim. As used in this SECTION 5(c), the terms "indemnifying party", "indemnified party" and other terms of similar import are intended to include only Tetra Tech (and its officers, directors and control persons as set forth above) on the one hand, and the Holders (and their officers, directors, partners, employees, attorneys and control persons as set forth above) on the other hand, as applicable. 8 (d) CONTRIBUTION. If for any reason the foregoing indemnity is unavailable, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities or expenses (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other, or (ii) if the allocation provided by CLAUSE (i) above is not permitted by applicable law or provides a lesser sum to the indemnified party than the amount hereinafter calculated, in such proportion as is appropriate to reflect not only the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other but also the relative fault of the indemnifying party and the indemnified party as well as any other relevant equitable considerations. Notwithstanding the foregoing, no Holder shall be required to contribute any amount in excess of the amount such Holder would have been required to pay to an indemnified party if the indemnity under SECTION 5(b) hereof was available. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligation of any person to contribute pursuant to this SECTION 5(d) shall be several and not joint. (e) TIMING OF PAYMENTS. An indemnifying party shall make payments of all amounts required to be made pursuant to the foregoing provisions of this SECTION 5 to or for the account of the indemnified party from time to time promptly upon receipt of bills or invoices relating thereto or when otherwise due or payable. (f) SURVIVAL. The indemnity and contribution agreements contained in this SECTION 5 shall remain in full force and effect, regardless of any investigation made by or on behalf of a participating Holder, its officers, directors, partners, attorneys, agents or any person, if any, who controls such Holder as aforesaid, and shall survive the transfer of such Registrable Securities by such Holder. 6. PREPARATION; REASONABLE INVESTIGATION. In connection with the preparation and filing of a Registration Statement pursuant to the terms of this Agreement: (a) Tetra Tech shall, with respect to a Registration Statement filed pursuant to SECTION 2, give the Holders of such Registrable Securities so registered, their underwriters, if any, and their respective counsel and accountants the opportunity to participate in the preparation of such Registration Statement (other than reports and proxy statements incorporated therein by reference and lawfully and properly filed with the SEC) and each Prospectus included therein or filed with the SEC, and each amendment thereof or supplement thereto; and (b) Tetra Tech shall give the Holders of such Registrable Securities so registered, their underwriters, if any, and their respective counsel and accountants such 9 reasonable access to its books and records and such opportunities to discuss the business of Tetra Tech with its officers and the independent public accountants who have certified its financial statements as shall be necessary, in the opinion of such Holders or such underwriters, to conduct a reasonable investigation within the meaning of Section 11(b)(3) of the Securities Act. 7. RULE 144. Tetra Tech covenants that it will use its reasonable best efforts to file, on a timely basis, the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder, and it will take such further action as any Holder may reasonably request (including, without limitation, compliance with the current public information requirements of Rule 144(c) and Rule 144A), all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the conditions provided by Rule 144, Rule 144A or any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Holder, Tetra Tech will deliver to such holder a written statement verifying that it has complied with such information and requirements. 8. SPECIFIC PERFORMANCE. Each Holder, in addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. Tetra Tech agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. 9. NOTICES. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by United States first-class mail, postage prepaid, sent by facsimile or delivered personally by hand or nationally recognized courier addressed (a) if to a Holder, as indicated on the list of Holders attached hereto as SCHEDULE A, or at such other address as such Holder or permitted assignee shall have furnished to Tetra Tech in writing, or (b) if to Tetra Tech, at such address or facsimile number as Tetra Tech shall have furnished to each Holder in writing. All such notices and other written communications shall be effective on the date of mailing, facsimile transfer or delivery. 10. SUCCESSORS AND ASSIGNS: ASSIGNMENT OF RIGHTS. The rights and benefits of a Holder hereunder may not be assigned to a transferee or assignee, without the consent of Tetra Tech; PROVIDED, HOWEVER, that, no later than the 10th day prior to the filing of the Registration Statement under SECTION 2 hereof, the rights and benefits of a Holder hereunder may be transferred in connection with a transfer or assignment of any Registrable Securities held by such Holder (i) by gift to immediate family members of such Holder, or trusts or other entities for the sole benefit thereof, or (ii) by gift to any entity in which such Holder, his or her immediate family members, or trusts or other entities for the sole benefit thereof beneficially own all of the voting securities; PROVIDED, HOWEVER, that in each case, the transferee executes an instrument 10 pursuant to which the transferee agrees to be bound by the terms and conditions hereof as a Holder, and such other documents as Tetra Tech or its counsel may reasonably require, after which, such transferee shall be deemed a "Holder" hereunder. Any transfer of Registrable Securities, and rights hereunder, shall be subject to compliance with applicable securities laws and the restrictions contained in the Investment Letter executed by each Holder pursuant to the Stock Purchase Agreement. 11. SEVERABILITY. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. 12. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement, the Stock Purchase Agreement and the other agreements contemplated thereby constitute the full and entire understanding and agreement among the parties with regard to the subjects hereof and thereof. Without limiting the foregoing, the rights of the Holders to registration pursuant to the terms of this Agreement shall be subject to the limitations on resale contained in the Investment Letter (as defined in the Stock Purchase Agreement). Neither this Agreement nor any term hereof may be amended, waived, discharged or terminated, except by a written instrument signed by Tetra Tech and the holders of at least 51% of the Registrable Securities and any such amendment, waiver, discharge or termination shall be binding upon all the parties hereto, but in no event shall the obligation of any party hereto be materially increased, except upon the written consent of such party. 13. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be original, and all of which together shall constitute one instrument. 14. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California without giving effect to principles of conflicts of laws thereof. 11 15. NO THIRD PARTY BENEFICIARIES. The covenants and agreements set forth herein are for the sole and exclusive benefit of the parties hereto and their respective successors and assigns and such covenants and agreements shall not be construed as conferring, and are not intended to confer, any rights or benefits upon any other persons. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. TETRA TECH, INC. By: /s/ Li-San Hwang ------------------------------- Li-San Hwang Chairman, Chief Executive Officer and President /s/ John E. Adams --------------------------------------- John E. Adams /s/ Harold E. Fitzgerald --------------------------------------- Harold E. Fitzgerald /s/ Raymond C. Johnson --------------------------------------- Raymond C. Johnson /s/ Brian P. Sullivan --------------------------------------- Brian P. Sullivan /s/ Richard S. Bryant --------------------------------------- Richard S. Bryant /s/ Amy M. Green --------------------------------------- Amy M. Green 12 /s/ Kelly M. Amrhein --------------------------------------- Kelly M. Amrhein /s/ Wayne E. Bates --------------------------------------- Wayne E. Bates /s/ Daniel D. Breuer --------------------------------------- Daniel D. Breuer /s/ Robert J. Davis --------------------------------------- Robert J. Davis /s/ Edward W. Ionata --------------------------------------- Edward W. Ionata /s/ Michael E. Billa --------------------------------------- Michael E. Billa /s/ Francis X. Dougherty --------------------------------------- Francis X. Dougherty /s/ George E. Gurney --------------------------------------- George E. Gurney /s/ Anthony Omobono --------------------------------------- Anthony Omobono /s/ Joseph E. Beggan --------------------------------------- Joseph E. Beggan /s/ Domenic J. Ciavarro --------------------------------------- Domenic J. Ciavarro 13 /s/ Colleen P. Hansen --------------------------------------- Colleen P. Hansen /s/ Kevin F. Biernacki --------------------------------------- Kevin F. Biernacki 14 SCHEDULE A SCHEDULE OF HOLDERS
Number of Shares of Tetra Tech Common Stock Issuable Pursuant Holder's Name/Address/Facsimile No. to the Stock Purchase Agreement - ------------------------------------------------------- ---------------------------------------------------- William J. Rizzo, Jr. 48,709 38 Sandy Pond Road Lincoln Center, MA 01773 James F. Carlin 22,578 619 Washington Street, Unit D Wellesley, MA 02482 Richard A. Moore 9,203 85 East India Row #30 Boston, MA 02110 Elizabeth K. Levin 8,700 48 Appleton Street Boston, MA 02106 Samuel E. Park 8,342 845 North Street Walpole, MA 02081 Richard J. Hughto 6,850 7 Cornell Road Wellesley, MA 02482 Charles Button 1,429 92 Vermont Street West Roxbury, MA 02132 John E. Adams 1,305 3 Westview Drive Granby, CT 06035
Number of Shares of Tetra Tech Common Stock Issuable Pursuant Holder's Name/Address/Facsimile No. to the Stock Purchase Agreement - ------------------------------------------------------- ---------------------------------------------------- Harold E. Fitzgerald 1,148 12 Willard Terrace Randolph, MA 02368 Raymond C. Johnson 860 130 Nourse Street Westborough, MA 01581 Brian P. Sullivan 845 28 Lincoln Drive Acton, MA 01720 Richard S. Bryant 373 3 Washbrook Road Sudbury, MA 01776 Amy M. Green 206 26 Captain Brown's Lane Acton, MA 01720 Kelly M. Amrhein 181 20 Pheasant Hollow Road Natick, MA 01760 Wayne E. Bates 221 17 Riverview Drive Ashland, MA 01721 Daniel D. Breuer 214 115 Cobleigh Road Boxborough, MA 01719 Robert J. Davis 213 75 Wheeler Circle, #114 Stoughton, MA 02072 Edward W. Ionata 209
Number of Shares of Tetra Tech Common Stock Issuable Pursuant Holder's Name/Address/Facsimile No. to the Stock Purchase Agreement - ------------------------------------------------------- ---------------------------------------------------- 26 First Street Barrington, RI 02806 Michael E. Billa 169 8 Service Drive Wellesley, MA 02482 Francis X. Dougherty 166 237 Robert Road Marlborough, MA 01752 George E. Gurney 163 75 Brainard Road West Hartford, CT 06117 Anthony Omobono 160 6 Longmeadow Road Chelmsford, MA 01824 Joseph E. Beggan 48 2 Sunday Drive Beverly, MA 01915 Domenic J. Ciavarro 48 11 Belmont Court Bedford, NH 03110 Colleen P. Hansen 48 74 Hartford Avenue, South Upton, MA 01568 Kevin F. Biernacki 48 129 Birch Grove Drive Pittsfield, MA 01201
EX-11 6 ex-11.txt EXHIBIT 11 Exhibit 11 Tetra Tech, Inc. Computation of Net Income Per Common Share (Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED --------------------------------- --------------------------------- July 2, July 4, July 2, July 4, 2000 1999 2000 1999 --------------- ---------------- --------------- ---------------- Basic: Common stock outstanding, beginning of period............................ 38,663,000 37,578,000 38,434,000 35,788,000 Exchanged stock........................ -- 6,000 -- 143,000 Stock options exercised................ 201,000 73,000 418,000 244,000 Stock purchase plan issuance........... 166,000 156,000 166,000 156,000 Issuance of common stock............... 573,000 364,000 585,000 1,846,000 Payment of fractional shares........... -- (45,000) -- (45,000) -------------- --------------- --------------- ---------------- Common stock outstanding, end of period............................ 39,603,000 38,132,000 39,603,000 38,132,000 ============== =============== =============== ================ Weighted average common stock outstanding during the period........ 39,287,000 37,801,000 38,768,000 36,805,000 ============== =============== =============== ================ Net income as reported in condensed consolidated financial statements.... $ 9,920,000 $ 8,503,000 $ 25,608,000 $ 20,392,000 ============== ============== =============== ================ Basic Earnings Per Share............... $ 0.25 $ 0.22 $ 0.66 $ 0.55 ============== ============== =============== ================ Diluted: Weighted average common stock outstanding during the period........ 39,287,000 37,801,000 38,768,000 36,805,000 Potential common shares under the treasury stock method assuming the exercise of options and warrants and the conversion of preferred stock and exchangeable stock of a subsidiary........................... 2,817,000 2,344,000 2,453,000 2,461,000 -------------- --------------- --------------- ---------------- Total............................ 42,104,000 40,145,000 41,221,000 39,266,000 ============== ============== =============== ================ Net income as reported in condensed consolidated financial statements.... $ 9,920,000 $ 8,503,000 $ 25,608,000 $ 20,392,000 ============== ============== =============== ================ Diluted Earnings Per Share............. $ 0.24 $ 0.21 $ 0.62 $ 0.52 ============== ============== =============== ================
See accompanying Notes to the Condensed Consolidated Financial Statements. EX-27 7 ex-27.txt EXHIBIT 27
5 9-MOS OCT-01-2000 JUL-02-2000 9,868 0 242,140 7,455 0 261,920 60,409 27,880 489,713 116,835 0 0 0 396 279,086 489,713 203,795 203,795 163,593 163,593 0 0 2,077 17,715 7,795 9,920 0 0 0 9,920 0.25 0.24
-----END PRIVACY-ENHANCED MESSAGE-----