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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
x Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the fiscal year ended January 2, 2009.
OR
® Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the transition period from to .
EXPONENT, INC.
(Exact n am e of re gistran t as spe cifie d in its ch arte r)
Delaware 77-0218904
(State or oth e r jurisdiction of (I.R.S . Em ploye r
incorporation or organ iz ation) Ide n tification No.)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ® No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes ® No x
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 period 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 ®
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. ®
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ® Accelerated filer x Non-accelerated filer ® Smaller reporting company ®
(Do not check if a smaller
reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ® No x
The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant based on the closing sales price of the
Common Stock as reported on the NASDAQ National Market on June 27, 2008, the last business day of the registrant’s most recently
completed second quarter, was $385,723,423. Shares of the registrant’s common stock held by each executive officer and director and by each
entity or person that, to the registrant’s knowledge, owned 10% or more of registrant’s outstanding common stock as of June 27, 2008 have
been excluded in that such persons may be deemed to be affiliates of the registrant. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
The number of shares of the issuer’s Common Stock outstanding as of February 20, 2009 was 13,700,114.
Portions of the Registrant’s Definitive Proxy Statement for the Registrant’s 2009 Annual Meeting of Stockholders to be held on May 28, 2009,
are incorporated by reference into Part III of this Form 10-K.
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EXPONENT, INC.
FORM 10-K ANNUAL REPORT
FISCAL YEAR ENDED JANUARY 2, 2009
TABLE OF CONTENTS
Page
PART I
Item 1. Business 3
Item 1A. Risk Factors 13
Item 1B. Unresolved Staff Comments 14
Item 2. Properties 14
Item 3. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of Security Holders 14
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 15
Item 6. Selected Consolidated Financial Data 17
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 18
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 25
Item 8. Financial Statements and Supplementary Data 25
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 25
Item 9A. Controls and Procedures 26
Item 9B. Other Information 26
PART III
Item 10. Directors, Executive Officers of the Registrant and Corporate Governance 26
Item 11. Executive Compensation 26
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 26
Item 13. Certain Relationships and Related Transactions, and Director Independence 26
Item 14. Principal Accounting Fees and Services 26
PART IV
Item 15. Exhibits, Financial Statement Schedules 27
Signatures 53
Exhibit Index 55
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specific economic conditions, the timing of engagements for our Pricing and Terms of Engagements
services, the effects of competitive services and pricing, tort reform
and liabilities resulting from claims made against us. Additional risks We generally provide our services on either a fixed-price basis or on
and uncertainties are discussed in this Report under the heading a “time and material” basis, charging hourly rates for each staff
“Risk Factors” and elsewhere. The inclusion of such forward- member involved in a project, based on his or her skills and
looking information should not be regarded as a representation by experience. Our standard rates for professionals range from $95 to
the Company or any other person that the future events, plans, or $800 per hour. Our engagement agreements typically provide for
expectations contemplated by the Company will be achieved. The monthly billing, require payment of our invoices within 30 days of
Company undertakes no obligation to update or revise any such receipt and permit clients to terminate engagements at any time.
forward-looking statements. Clients normally agree to indemnify us and our personnel against
liabilities arising out of the use or application of the results of our
PART I work or recommendations.
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In 2008, Exponent’s Construction Consulting practice continued its Electrical & Semiconductors
efforts to expand in risk management and project oversight service Exponent continues to be a highly sought-after resource for
areas, relying on its unique blend of construction and engineering understanding current and potential risks involving electrical and
professionals to help clients cut costs, increase efficiencies, and electronic components. Exponent’s team of electrical engineers
steer clear of potential project crises. Exponent’s construction performs a wide array of investigations ranging from electric power
consultants integrate into their work advanced construction systems to semiconductor devices. We operate laboratories for
scheduling techniques, including probabilistic and four-dimensional testing both heavy equipment and light electronic equipment.
analysis, and conducted constructability reviews to help clients Computers and specialized software are used to analyze electric
mitigate risk around ambitious projects in an uncertain economic power systems, circuits, and other equipment configurations.
environment. In addition, Exponent advises clients on the
construction process by providing project monitoring expertise and In 2008, our engineers continued to expand the scope of their
implementing appropriate project controls that helped ensure timely intellectual property support services. This past year, the practice
execution and delivery of client goals within budget forecasts. worked on multiple high profile complex patent and trade secret
litigation cases in the district court system and the United States
Ecological & Biological Sciences International Trade Commission. Services provided by our
Exponent’s ecological scientists provide strategic support to clients engineers included software source code review, electrical testing,
on issues related to Natural Resources Damages (NRD), clean-up of over a million pages of technical document review, validity and
hazardous waste sites, restoration of wetlands and other natural infringement analysis, calculation of economic damages, and patent
resources, large development projects, resource utilization (mineral portfolio due-diligence analysis.
mining, oil and gas, and wood pulp), and the use of chemicals and
other products in commerce. The practice specializes on assessing Engineering Management Consulting
the fate and effects of chemical, biological, and physical stressors In late 2008, Exponent launched a new practice in Engineering
on aquatic and terrestrial ecosystems. The practice is comprised of Management Consulting. This practice provides multi-disciplinary
nationally-recognized experts that cover all disciplines related to the expertise and rapid response to assist clients with technical and
ecological implications and risks associated with these projects. management consulting services, often in extremely short time
frames. Our consultants provide services in the areas of asset
During 2008, Exponent continued to provide expertise on NRD and strategy and planning, project management, engineering,
remained one of the leading companies in the nation in this technical construction, maintenance, operations, environmental and risk
area. In addition, the Ecological and Biological Sciences practice, analysis. Staff have evaluated strategic options of generation assets
together with other practices, initiated several new efforts. These and performed organizational assessments, root cause analyses and
included a focus on the potential impacts of climate change on independent design reviews. Our consultants help organizations
natural resources and on businesses and communities. This multi- identify, map and improve their core business processes. We
disciplinary initiative draws upon the expertise within several perform risk analysis ranging from compliance to total business-
Exponent practices. Another multi-disciplinary initiative involves based approaches and address a number of issues critical to the
work for the utility industry on assessing the environmental and operation of a client’s facility.
economic risks associated with aging infrastructure. The practice
also introduced a new service related to Ecological Assets, a Exponent has been engaged by a large electric and gas utility to
methodology that enables businesses with large land holdings to develop a well defined, effective and efficient Quality Management
quantify the incremental benefits and value of those properties with System for several of its essential maintenance activities. This effort
respect to their ecological attributes. These “hidden values” can be includes the development of: a policy document clearly stating
used in credit systems such as wetland banks, carbon credits, management’s expectations with respect to the quality of the work
offsets for resource damages, and valued ecological services. performed and the controls necessary to insure in-process quality;
detailed process maps outlining both the key maintenance activities
and the organizational responsibility for each; associated work
procedures; and the identification and analysis of key in-process
metrics that allow management to determine what is working and
what is not working.
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Environmental and Earth Sciences continued their pesticides and biocides expansion with involvement
Exponent’s environmental scientists and engineers provide proven, in the listing of 5 active substances; services provided included full
cost-effective, scientifically defensible and realistic assessments dossier preparation, strategic and risk assessment. The United
and solutions to complex environmental issues. We offer technical, States foods related business was highlighted by food contact
regulatory and litigation support to industries that include mining notifications, generally recognized as safe submissions, nutritional
and minerals, petrochemicals, forest products, shipbuilding, assessments, and an array of contamination (microbiological,
railroads, aerospace, and defense and trade associations. Our chemical, and physical) cases. The growth of the foods business led
consultants also address hydrological issues related to new to the initiation of a foods offering group in the European Union.
housing and office complex developments around the country.
Center for Epidemiology, Biostatistics & Computational Biology
In 2008 our ecologists and resource economists expanded the Exponent health scientists apply epidemiologic methods to examine
services we provide companies and government agencies by and solve complex health issues in a variety of settings. Through
assisting with strategic support on implementing strategies for the principles of epidemiology, we analyze the interaction of host,
identifying, accounting for, and sustaining ecological assets. We agent, and environment to reach conclusions about the causes and
also provided engineering and environmental support related to occurrence of disease in human populations.
financial transactions, including project finance, corporate finance,
mergers and acquisitions, and structured finance. An area of Our scientists have successfully conducted numerous cancer
particular opportunity for the firm has been in Latin America where cluster investigations, literature reviews, meta-analyses, and
we provided technical due-diligence on a refinery acquisition in epidemiologic studies of various designs related to cancer concerns
Argentina and environmental and social due diligence services for or allegations. These studies often involve collaboration with
companies in Columbia, Panama and the Dominican Republic. toxicology, exposure assessment, computer science, and medical
personnel in other areas of the firm. Our epidemiologists’ expertise
Health Sciences includes such diverse exposures as TCE, benzene, asbestos,
Center for Chemical Registration & Food Safety radiation, chemotherapeutic agents, butadiene, ethylene oxide,
dioxins, beryllium, chromium, radio frequency, electromagnetic
Our Center for Chemical Registration and Food Safety includes fields, vinyl chloride, and others. Some of the cancers that we have
experienced staff of both technical and regulatory specialists who studied are brain cancer, leukemia, non-Hodgkins lymphoma, breast
are experienced in dealing with foods, and with pesticide and non- cancer, lung cancer, mesothelioma, testicular cancer, and pancreatic
pesticide products including conventional chemicals, biochemicals, cancer.
microbials, biocides, products of biotechnology, and industrial
chemicals. We provide practical, creative, scientific and regulatory Center for Exposure Assessment & Dose Reconstruction
support to assist global businesses at every stage of the product
cycle, from research & development to retail and beyond. Exposure assessment is the science of estimating human exposure
to chemical, physical, and biological agents, accounting for the
Highlights for 2008 include growth and expansion in current frequency, magnitude, and duration of the exposure
business sectors, as well as expansion into new areas. The United events. Exposure estimates can be compared to toxicity benchmarks
States pesticide service area continued to expand in 2008 with or guidelines to assess potential risks to human health, and are used
growth in product development and new United States product for many purposes, including in epidemiology, risk assessment, and
registration, due diligence, and data compensation areas, as well as regulatory compliance.
the inert ingredients tolerance re-assessment and new approvals
work. The European Union team
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COMPETITION EMPLOYEES
The marketplace for our services is fragmented and we face different As of January 2, 2009, we employed 937 full-time and part-time
sources of competition in providing various services. In addition, employees, including 643 engineering and scientific staff, 98
the services that we provide to some of our clients can be performed technical support staff and 196 administrative and support staff. Our
in-house by those clients. However, because of independence staff includes 550 employees with advanced degrees, of which 342
concerns, clients that have the capability to perform such services employees have achieved the level of Ph.D. or M.D.
themselves often retain Exponent or other independent consultants.
ADDITIONAL INFORMATION
In each of the foregoing practices, we believe that the principal
competitive factors are: technical capability and breadth of services, The address of our internet website is www.exponent.com. We make
ability to deliver services on a timely basis, professional reputation available, free of charge through our website, access to our Annual
and knowledge of the litigation and regulatory processes. Although Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current
we believe that we generally compete favorably in each of these Reports on Form 8-K and other periodic SEC reports, along with
areas, some of our competitors may be able to provide services amendments to all of those reports, as soon as reasonably
acceptable to our clients at lower prices. practicable after we file the reports with the SEC. The content of our
internet website is not incorporated into and is not part of this
We believe that the barriers to entry in particular areas of Annual Report on Form 10-K.
engineering expertise are low and that for many of our technical
disciplines, competition is increasing. In response to competitive
forces in the marketplace, we continue to explore new markets for
our various technical disciplines.
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EXECUTIVE OFFICERS
The executive officers of Exponent and their ages as of February 24, 2009 are as follows:
Executive officers of Exponent are appointed by the Board of Stanford University Graduate School of Business and a B.S.
Directors and serve at the discretion of the Board or until the (1968) in Electrical Engineering from Oregon State University.
appointment of their successors. There is no family relationship
between any of the directors and officers of the Company. Paul R. Johnston, Ph.D., joined the Company in 1981, was promoted
to Principal Engineer in 1987, and to Vice President in 1996. In 1997,
Michael R. Gaulke joined the Company in September 1992, as he assumed responsibility for the firm’s network of offices. In July
Executive Vice President and Chief Financial Officer. He was named 2003, he was appointed Chief Operating Officer and added
President in March 1993 and he was appointed as a member of the responsibility for the Health and Environmental Groups. In 2006, he
Board of Directors of the Company in January 1994. He assumed his assumed line responsibility for all of the firm’s consulting groups.
current role of Chief Executive Officer in June 1996, and was Dr. Johnston was named President in May 2007. He received his
appointed Chairman of the Board of Directors in May 2007. From Ph.D. (1981) in Civil Engineering and M.S. (1977) in Structural
November 1988 to September 1992, Mr. Gaulke served as Executive Engineering from Stanford University. He received his B.A.I.
Vice President and Chief Financial Officer at Raynet Corporation, a (1976) in Civil Engineering with First Class Honors from Trinity
subsidiary of Raychem Corporation. Prior to joining Raynet, College, University of Dublin, Ireland where he was elected a
Mr. Gaulke was Executive Vice President and Chief Financial Officer Foundation Scholar in 1975. Dr. Johnston is a Registered
of Spectra Physics, Inc., where he was employed from 1979 to 1988. Professional Civil Engineer in the State of California and a Chartered
From 1972 to 1979, Mr. Gaulke served as a consultant with Engineer in Ireland.
McKinsey & Company. Mr. Gaulke is a member of the Board of
Directors of Cymer, Inc. and serves on the Board of Trustees of the Elizabeth L. Anderson, Ph.D., joined the Company in June 2006 as a
Palo Alto Medical Foundation. Mr. Gaulke received an M.B.A. Group Vice President. Prior to joining Exponent, Dr. Anderson was
(1972) in Marketing and Operations from the President and CEO of Sciences International, a health and
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environmental consulting firm. Dr. Anderson received her Ph.D. Advisory Committee for Congressional Report on the Strategic
(1970) in Organic Chemistry from The American University, M.S. Highway Research Plan, SHRP-2 and a past member of the Board of
(1964) in Organic Chemistry from the University of Virginia and B.S. Directors of the National Safety Council. He was Chair of the
(1962) in Chemistry from the College of William and Mary. Society of Automotive Engineers’ Motor Vehicle Systems Board
Dr. Anderson is a Fellow of the Academy of Toxicological Sciences, from 2004 to 2008.
founder and past-President of the Society for Risk Analysis and
Editor-in-Chief of the journal, Risk Analysis: An International Subbaiah V. Malladi, Ph.D., joined the Company in 1982 as a Senior
Journal. Engineer, becoming a Senior Vice President in January 1988 and a
Corporate Vice President in September 1993. In October 1998,
Paul D. Boehm, Ph.D., joined the Company in April 2004 as a Group Dr. Malladi was appointed Chief Technical Officer of the Company.
Vice President. Prior to joining the Company, Dr. Boehm was Vice Dr. Malladi also served as a Director of the Company from March
President and Market Manager, Oil and Gas Sector, at Battelle 1991 through September 1993. He was re-appointed as a Director in
Memorial Institute from 2001 to 2004. From 1999 to 2001, Dr. Boehm April 1996 and served on the Board until May 2005. He received a
was Vice President and Managing Director, Environmental Health Ph.D. (1980) in Mechanical Engineering from the California Institute
and Safety Consulting at Arthur D. Little, Inc. Dr. Boehm received of Technology, M.Tech (1972) in Mechanical Engineering from the
his Ph.D. (1977) and M.S. (1973) in Oceanography from the Indian Institute of Technology, B.E. (1970) in Mechanical
University of Rhode Island and B.S. (1970) in Chemical Engineering Engineering from SRI Venkateswara University, India and B.S.
from the University of Rochester. Dr. Boehm has published more (1966) in Physics, Chemistry and Mathematics from Osmania
than 100 articles in peer-reviewed journals and authored numerous University, India. Dr. Malladi is a Registered Professional
reports on environmental forensics and impact assessments. Mechanical Engineer in the State of California.
Dr. Boehm has been chosen to serve on several National Research
Council panels. John E. Moalli, Sc.D., joined the Company in 1992. He was
promoted to Principal in 1997, served as an Office and Practice
Robert D. Caligiuri, Ph.D., joined the Company in 1987. He was Director and became Group Vice President in 2002. Dr. Moalli
promoted to Principal Engineer in 1990 and Group Vice President in received his Sc.D. (1992) in Polymers from the Massachusetts
1999. Dr. Caligiuri received his Ph.D. (1977) and M.S. (1974) in Institute of Technology and B.S. (1987) in Civil Engineering from
Materials Science and Engineering from Stanford University and Northeastern University. Dr. Moalli is a nationally recognized expert
B.S. (1973) in Mechanical Engineering from the University of in polymetric materials and is a member of the faculty at Stanford
California, Davis. Prior to joining the Company he was a Program University.
Manager and Materials Scientist for SRI International. He is a
Registered Professional Metallurgical Engineer in the State of John D. Osteraas, Ph.D., worked for the Company from 1982 to 1985
California, a Licensed Professional Engineer in the State of Utah and as a Senior Engineer. He rejoined the Company in 1990 as a
is a Fellow of the American Society for Materials. Managing Engineer. He was promoted to Principal Engineer in 1992
and Group Vice President in 2006. Dr. Osteraas received his Ph.D.
Robert C. Lange worked for the Company from 1982 to 1994. During (1990) in Civil Engineering and M.S. (1977) in Civil Engineering:
this period, he was promoted to Principal Engineer and Vice Structural Engineering from Stanford University and B.S. (1976) in
President in 1985. Mr. Lange rejoined Exponent in November 2008 as Civil and Environmental Engineering from the University of
Group Vice President and Principal Engineer. From 1994 to 2008, Wisconsin. Dr. Osteraas is a Registered Professional Engineer in
Mr. Lange was Executive-In-Charge, Engineering Director, and nine states and is a Fellow of the American Society of Civil
Executive Director Vehicle Structure and Safety Integration at Engineers.
General Motors Corporation. Mr. Lange received his M.S. (1975) and
B.S. (1969) in Mechanical Engineering from the University of Richard L. Schlenker, Jr. joined the Company in 1990.
Michigan. Mr. Lange is a past Director of the National Safety Mr. Schlenker is the Chief Financial Officer and Corporate Secretary
Council. Mr. Lange is a member of the Transportation Research of the Company. He was appointed Chief Financial Officer in July
Board 1999 and was appointed Secretary of the Company in November
1997. Mr. Schlenker was the Director of Human Resources from 1998
until his appointment as
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CFO. He was the Manager of Corporate Development from 1996 Competition could reduce our pricing and adversely affect our
until 1998. From 1993 to 1996, Mr. Schlenker was a Business business.
Manager, where he managed the business activities for multiple The markets for our services are highly competitive. In addition,
consulting practices within the Company. Prior to 1993, he held there are relatively low barriers to entry into our markets and we
several different positions in finance and accounting within the have faced, and expect to continue to face, additional competition
Company. Mr. Schlenker holds a B.S. in Finance from the University from new entrants into our markets. Competitive pressure could
of Southern California. reduce the market acceptance of our services and result in price
reductions that could have a material adverse effect on our
Item 1A. Risk Factors business, financial condition or results of operations.
Exponent operates in a rapidly changing environment that involves
a number of uncertainties, some of which are beyond our control. The loss of a large client could adversely affect our business.
These uncertainties include, but are not limited to, those mentioned We currently derive and believe that we will continue to derive a
elsewhere in this report and the following: significant portion of our revenues from clients, organizations and
insurers related to the transportation industry and the government
Lack of sizable backlog may lead to less predictable, and perhaps sector. For the fiscal year ended January 2, 2009, transportation
lower, future revenues. industry related engagements accounted for approximately 14% of
Revenues are primarily derived from services provided in response our revenues and government sector related engagements
to client requests or events that occur without notice, and accounted for approximately 15% of our revenues. The loss of any
engagements, generally billed as services are performed, are large client, organization or insurer related to the transportation
terminable or subject to postponement or delay at any time by industry or the government sector could have a material adverse
clients. As a result, backlog at any particular time is small in relation effect on our business, financial condition or results of operations.
to our quarterly or annual revenues and is not a reliable indicator of
revenues for any future periods. Revenues and operating margins Our business can be adversely affected by downturns in the overall
for any particular quarter are generally affected by staffing mix, economy.
resource requirements and timing and size of engagements. The markets that we serve are cyclical and subject to general
economic conditions. The direction and relative strength of the
Failure to attract and retain key employees may adversely affect global economy has recently been increasingly uncertain. If the
our business. economy in the United States, where we primarily operate, were to
Exponent’s business involves the delivery of professional services experience a prolonged slowdown, demand for our services could be
and is labor-intensive. Our success depends in large part upon our reduced considerably and our clients may consolidate or go out of
ability to attract, retain and motivate highly qualified technical and business.
managerial personnel. Qualified personnel are in great demand and
are likely to remain a limited resource for the foreseeable future. We We hold substantial investments that could present liquidity risks.
cannot provide any assurance that we can continue to attract Our cash equivalent and investment portfolio as of January 2, 2009
sufficient numbers of highly qualified technical and managerial consisted primarily of obligations of state and local government
personnel and to retain existing employees. The loss of key agencies. We follow an established investment policy to monitor,
managerial employees or any significant number of employees could manage and limit our exposure to interest rate and credit risk. The
have a material adverse impact on our business, including our ability policy sets forth credit quality standards and limits our exposure to
to secure and complete engagements. any one issuer, as well as our maximum exposure to various asset
classes.
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As a result of current adverse financial market conditions, engagements commenced and completed during a quarter, the
investments in some financial instruments may pose risks arising timing of engagements, the number of working days in a quarter,
from liquidity and credit concerns. As of January 2, 2009, we had no employee hiring and utilization rates, and integration of companies
impairment charge associated with our investment portfolio relating acquired. Because a high percentage of our expenses, particularly
to such adverse financial market conditions. Although we believe personnel and facilities related expenses, are relatively fixed in
our current investment portfolio has a low risk of impairment, we advance of any particular quarter, a variation in the timing of the
cannot predict future market conditions or market liquidity and can initiation or the completion of our client assignments can cause
provide no assurance that our investment portfolio will remain significant variations in operating results from quarter to quarter.
unimpaired.
Item 1B. Unresolved Staff Comments
Our business is dependent on our professional reputation. None.
The professional reputation of Exponent and its consultants is
critical to our ability to successfully compete for new client Item 2. Properties
engagements and attract or retain professionals. Any factors that
Our Silicon Valley office facilities consist of a 153,738 square foot
damage our professional reputation could have a material adverse
building, with office and laboratory space located on a 6.3-acre tract
effect on our business.
of land we own in Menlo Park, California and an adjacent 27,000
square feet of leased warehouse storage space.
Our business can be adversely impacted by deregulation or reduced
regulatory enforcement. Our Test and Engineering Center (TEC) occupies 147 acres in
Public concern over health, safety and preservation of the Phoenix, Arizona. We lease this land from the state of Arizona under
environment has resulted in the enactment of a broad range of a 30-year lease agreement that expires in January 2028 and have
environmental and/or other laws and regulations by local, state and options to renew for two fifteen-year periods. We constructed an
federal lawmakers and agencies. These laws and the implementing of indoor test facility as well as an engineering and test preparation
new regulations affect nearly every industry, as well as the agencies building at the TEC.
of federal, state and local governments charged with their
In addition, we lease office, warehouse and laboratory space in 21
enforcement. To the extent changes in such laws, regulations and
other locations in 13 states and the District of Columbia, as well as
enforcement or other factors significantly reduce the exposures of
in Germany, China, Switzerland and the United Kingdom. Leases for
manufacturers, owners, service providers and others to liability, the
these offices, warehouse and laboratory facilities have terms
demand for our services may be significantly reduced.
generally ranging between one and ten years. Aggregate lease
expense in fiscal 2008 for all leased properties was $5,110,000.
Tort reform can reduce demand for our services.
Several of our practices have a significant concentration in litigation Item 3. Legal Proceedings
support consulting services. To the extent tort reform reduces the
Exponent is not engaged in any material legal proceedings.
exposure of manufacturers, owners, service providers and others to
liability, the demand for our litigation support consulting services
may be significantly reduced. Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the
Our quarterly results may vary. fourth quarter of fiscal 2008.
Variations in our revenues and operating results occur from time to
time, as a result of a number of factors, such as the significance of
client
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PART II As of February 20, 2009, there were 425 holders of record of our
Item 5. Market for Registrant’s Common Equity, Related common stock. Because many of the shares of our common stock
Stockholder Matters and Issuer Purchases of Equity Securities are held by brokers and other institutions on behalf of stockholders,
we believe that there are considerably more beneficial holders of our
Exponent’s common stock is traded on the NASDAQ Global Select common stock than record holders.
Market, which up until July 1, 2006 was the NASDAQ National
Market, under the symbol “EXPO”. The following table sets forth We have never paid cash dividends on our common stock. See
for the fiscal periods indicated the high and low sales prices for our Item 7 of Part II “Management’s Discussion and Analysis of
common stock. Financial Condition and Results of Operations – Liquidity and
Capital Resources.”
S tock price s by qu arte r High Low
Fiscal Year Ended December 28, 2007:
First Quarter $20.03 $17.24
Second Quarter $23.47 $19.61
Third Quarter $26.79 $20.22
Fourth Quarter $30.81 $24.43
Fiscal Year Ended January 2, 2009:
First Quarter $35.26 $26.25
Second Quarter $38.80 $30.63
Third Quarter $34.99 $27.51
Fourth Quarter $33.98 $23.01
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The following table provides information on the Company’s share repurchases (of Company common stock) for the quarter ended January 2,
2009 (in thousands, except price per share):
LOGO
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Fiscal Ye ar
(In thou san ds, e xce pt pe r sh are data) 2008 2007 2006 2005 2004
Consolidated Statements of Income Data:
Revenues before reimbursements $206,194 $183,139 $156,742 $142,861 $138,718
Revenues $228,838 $205,148 $168,496 $155,196 $151,509
Operating income $ 36,722 $ 29,944 $ 20,189 $ 20,380 $ 19,324
Net income $ 23,160 $ 20,341 $ 14,194 $ 14,186 $ 12,040
Net income per share:
Basic $ 1.57 $ 1.36 $ 0.89 $ 0.88 $ 0.78
Diluted $ 1.47 $ 1.25 $ 0.83 $ 0.81 $ 0.71
Consolidated Balance Sheet Data:
Cash and cash equivalents $ 32,598 $ 10,700 $ 5,238 $ 13,216 $ 4,680
Short-term investments $ 24,772 $ 53,034 $ 52,844 $ 55,682 $ 55,366
Working capital $ 82,073 $ 88,794 $ 81,280 $ 93,755 $ 78,972
Total assets $183,090 $182,391 $161,216 $164,241 $144,132
Long-term liabilities $ 6,761 $ 6,509 $ 6,185 $ 4,631 $ 2,571
Total stockholders’ equity $128,094 $131,919 $124,305 $133,200 $117,022
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Item 7. Management’s Discussion and Analysis of Financial Substantially all of our engagements are performed under time and
Condition and Results of Operations material or fixed-price billing arrangements. On time and material and
Overview fixed-price projects, revenue is generally recognized as the services
are performed. For substantially all of our fixed-price engagements
Exponent, Inc. is a science and engineering consulting firm that we recognize revenue based on the relationship of incurred labor
provides solutions to complex problems. Our multidisciplinary team hours at standard rates to our estimate of the total labor hours at
of scientists, physicians, engineers, business and regulatory standard rates we expect to incur over the term of the contract. Our
consultants brings together more than 90 different technical estimate of total labor hours we expect to incur over the term of the
disciplines to solve complicated issues facing industry and contract is based on the nature of the project and our past
government today. Our services include analysis of products, experience on similar projects. We believe this methodology
people, property, processes and finances related to litigation, achieves a reliable measure of the revenue from the consulting
product recall, regulatory compliance, research, development and services we provide to our customers under fixed-price contracts.
design.
Significant management judgments and estimates must be made and
CRITICAL ACCOUNTING ESTIMATES used in connection with the revenues recognized in any accounting
period. These judgments and estimates include an assessment of
In preparing our consolidated financial statements, we make
collectibility and, for fixed-price engagements, an estimate as to the
assumptions, judgments and estimates that can have a significant
total effort required to complete the project. If we made different
impact on our revenue, operating income and net income, as well as
judgments or utilized different estimates, the amount and timing of
on the value of certain assets and liabilities on our consolidated
our revenue for any period could be materially different.
balance sheet. We base our assumptions, judgments and estimates
on historical experience and various other factors that we believe to All contracts are subject to review by management, which requires a
be reasonable under the circumstances. Actual results could differ positive assessment of the collectibility of contract amounts. If,
materially from these estimates under different assumptions or during the course of the contract, we determine that collection of
conditions. On a regular basis we evaluate our assumptions, revenue is not reasonably assured, we do not recognize the revenue
judgments and estimates and make changes accordingly. We until its collection becomes reasonably assured, which in those
believe that the assumptions, judgments and estimates involved in situations would generally be upon receipt of cash. We assess
the accounting for revenue recognition and estimating the collectibility based on a number of factors, including past
allowance for doubtful accounts have the greatest potential impact transaction history with the client, as well as the credit-worthiness
on our consolidated financial statements, so we consider these to be of the client. Losses on fixed-price contracts are recognized during
our critical accounting policies. We discuss below the assumptions, the period in which the loss first becomes evident. Contract losses
judgments and estimates associated with these policies. Historically, are determined to be the amount by which the estimated total costs
our assumptions, judgments and estimates relative to our critical of the contract exceeds the total fixed price of the contract.
accounting policies have not differed materially from actual results.
For further information on our critical accounting policies, see Estimating the allowance for doubtful accounts. We must make
Note 1 of our Notes to Consolidated Financial Statements. estimates of our ability to collect accounts receivable and our
unbilled work-in-process. In circumstances where we are aware of a
Revenue recognition. We derive our revenues primarily from specific customer’s inability to meet its financial obligations to us,
professional fees earned on consulting engagements, product sales we record a specific allowance to reduce the net recognized
in our technology development practice, fees earned for the use of receivable to the amount we reasonably believe will be collected. For
our equipment and facilities, as well as reimbursements for outside all other customers we recognize allowances for doubtful accounts
direct expenses associated with the services that are billed to our based upon historical bad debts, customer concentration, customer
clients. credit-worthiness, current economic conditions, aging of amounts
due and changes in customer payment terms. As of January 2, 2009,
our accounts receivable balance was $62.2 million, net of an
allowance for doubtful accounts of $2.4 million.
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The following table sets forth, for the periods indicated, the percentage of revenues of certain items in our consolidated statements of income
and the percentage increase (decrease) in the dollar amount of such items year to year:
OVERVIEW OF THE YEAR ENDED JANUARY 2, 2009 and product design consulting work for consumer electronics
Our revenues consist of professional fees earned on consulting companies. Our technology development practice had a strong year
engagements, product sales in our technology development as we continued to support the United States Army’s efforts in
practice, fees for use of our equipment and facilities, as well as Afghanistan and Iraq. In our center for chemical registration & food
reimbursements for outside direct expenses associated with the safety, we continued to assist clients with the registration,
services performed that are billed to our clients. evaluation and authorization of chemicals regulation that was
implemented in the European Union.
We operate on a 52-53 week fiscal year with each year ending on the
Friday closest to December 31st. The fiscal year ended January 2, Our revenue growth was driven primarily by an increase in billable
2009 included 53 weeks of activity. The fiscal years ended hours, higher billing rates and an increase in product sales in our
December 28, 2007 and December 29, 2006 included 52 weeks of
activity. technology development practice. Total billable hours increased
7.6% to 888,000 during fiscal 2008 as compared to 825,000 during
During fiscal 2008, we had an 11.5% increase in revenues as fiscal 2007. The increase in billable hours was due to an increase in
compared to fiscal 2007. This growth was driven by a broad set of technical full-time equivalent employees and fiscal 2008 having one
practices including mechanical engineering & materials science, additional week of activity than fiscal 2007. Total billable hours
technology development, biomechanics, electrical & during the 53rd week of fiscal 2008 were 7,791, which contributed
semiconductors and our center for chemical registration & food approximately $1.8 million to the increase in revenue. Utilization
safety. Our mechanical engineering & materials science practice decreased to 67% for fiscal 2008 as compared to 68% for fiscal 2007.
continued to expand our portfolio of projects in the energy sector Technical full-time equivalent employees increased by 7.3% to 624
during fiscal 2008 as compared to 581 during fiscal 2007. This
increase in technical full time equivalent employees was due to our
continued recruiting and retention efforts. Product sales in our
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technology development practice increased 18% to $14.1 million for Utilization for this segment decreased to 65% for fiscal 2008 as
fiscal 2008 as compared to $11.9 million for fiscal 2007. This increase compared to 67% for fiscal 2007. Technical full-time equivalent
in product sales was primarily due to an increase in sales of employees for this segment increased by 8.1% to 161 during fiscal
surveillance systems to the United States Army. 2008 as compared to 149 during fiscal 2007.
The increase in billable hours, product sales and the management of Revenues are primarily derived from services provided in response
our operating expenses, allowed us to leverage this revenue growth to client requests or events that occur without notice and
to improve operating income by 22.6% and net income by 13.9%. engagements are generally terminable or subject to postponement or
delay at any time by our clients. As a result, backlog at any
FISCAL YEARS ENDED JANUARY 2, 2009, AND DECEMBER 28, particular time is small in relation to our quarterly or annual revenues
2007 and is not a reliable indicator of revenues for any future periods.
Revenues
Compensation and Related Expenses
(In thou san ds e xce pt Fiscal Ye ars Pe rce n t
pe rce n tage s) 2008 2007 C h an ge (In thou san ds e xce pt Fiscal Ye ars Pe rce n t
pe rce n tage s) 2008 2007 C h an ge
Engineering and other
scientific $176,879 $157,987 12.0% Compensation and
Percentage of total related expenses $133,469 $119,496 11.7%
revenues 77.3% 77.0% Percentage of total
Environmental and health 51,959 47,161 10.2% revenues 58.3% 58.2%
Percentage of total The net increase in compensation and related expenses during fiscal
revenues 22.7% 23.0% 2008 was due to an increase in wages, fringe benefits and bonus
Total revenues $228,838 $205,148 11.5% expense partially offset by the change in value of assets associated
with our deferred compensation plan. Wages increased by $11.0
The increase in revenues for our engineering and other scientific million and fringe benefits increased by $2.5 million due to an
segment during fiscal 2008 was the result of an increase in billable increase in technical full-time equivalent employees, the impact of
hours, higher billing rates and an increase in product sales in our our annual salary increase and fiscal 2008 having one additional
technology development practice. During fiscal 2008, billable hours week of activity than fiscal 2007. The additional week of activity
for this segment increased by 7.9% to 666,000 as compared to during fiscal 2008 contributed approximately $1.3 million to the
617,000 during fiscal 2007. The increase in billable hours was due to increase in wages. Bonus expense increased by $1.7 million due to a
an increase in technical full-time equivalent employees and fiscal corresponding increase in profitability. During fiscal 2008, we
2008 having one additional week of activity than fiscal 2007. recorded a decrease to compensation expense of $2.1 million and a
Utilization for this segment decreased to 68% for fiscal 2008 as corresponding decrease to other income of $2.1 million associated
compared to 69% for fiscal 2007. Technical full-time equivalent with a decline in the value of assets associated with our deferred
employees for this segment increased by 7.2% to 463 during fiscal compensation plan. During fiscal 2007 we recorded an increase in
2008 as compared to 432 during fiscal 2007. Product sales in our compensation expense of $356,000 and a corresponding increase to
technology development practice increased 18.0% to $14.1 million other income of $356,000 associated with a gain in the value of plan
for fiscal 2008 as compared to $11.9 million for fiscal 2007. assets during fiscal 2007. We expect compensation and related
expenses, excluding the change in value of assets associated with
The increase in revenues for our environmental and health segment our deferred compensation plan, to increase due to the anticipated
during fiscal 2008 was the result of an increase in billable hours and hiring of additional staff and the impact of future annual salary
higher billing rates. During fiscal 2008 billable hours for this segment increases.
increased by 6.7% to 222,000 as compared to 208,000 during fiscal
2007. This increase in billable hours was due to an increase in
technical full-time equivalent employees and fiscal 2008 having one
additional week of activity than fiscal 2007.
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(In thou san ds e xce pt Fiscal Ye ars Pe rce n t (In thou san ds e xce pt Fiscal Ye ars Pe rce n t
pe rce n tage s) 2008 2007 C h an ge pe rce n tage s) 2008 2007 C h an ge
Other operating Other income and
expenses $22,614 $21,662 4.4% expense, net $1,772 $3,681 (51.9)%
Percentage of total Percentage of total
revenues 9.9% 10.6% revenues 0.8% 1.8%
Other operating expenses primarily include facilities-related costs, Other income and expense, net, consists primarily of investment
technical materials, computer-related expenses and depreciation and income earned on available cash, cash equivalents and short-term
amortization of property, equipment and leasehold improvements. investments, rental income from leasing excess space in our Silicon
The net increase in other operating expenses was primarily due to an Valley facility, and changes in the value of assets associated with
increase of $732,000 in occupancy expense and an increase of our deferred compensation plan.
$285,000 in depreciation and amortization. The increase in
occupancy expense and depreciation and amortization were due to The decrease in other income and expense, net, during fiscal 2008
expansion in certain offices to support our increase in technical-full was primarily due to a decrease in the fair value of deferred
time equivalent employees. compensation assets of $2.1 million with a corresponding decrease
of $2.1 million to compensation and related expenses during fiscal
Reimbursable Expenses 2008 as compared to an increase in the fair value of deferred
compensation assets of $356,000 with a corresponding increase of
(In thou san ds e xce pt Fiscal Ye ars Pe rce n t $356,000 to compensation and related expenses during fiscal 2007.
pe rce n tage s) 2008 2007 C h an ge The decrease in valuation of deferred compensation investments
Reimbursable was partially offset by an increase in rental income of $404,000 and
expenses $22,644 $22,009 2.9% an increase in gain on foreign exchange of $347,000. Rental income
Percentage of total increased due to the addition of a new tenant in our Silicon Valley
revenues 9.9% 10.7% facility in mid 2007.
The increase in reimbursable expenses during fiscal 2008 was due to Income Taxes
a corresponding increase in revenues. The amount of reimbursable
expenses will vary from year to year depending on the nature of our (In thou san ds e xce pt Fiscal Ye ars Pe rce n t
projects. pe rce n tage s) 2008 2007 C h an ge
Income taxes $15,334 $13,284 15.4%
General and Administrative Expenses Percentage of total
revenues 6.7% 6.5%
(In thou san ds e xce pt Fiscal Ye ars Pe rce n t Effective tax rate 39.8% 39.5%
pe rce n tage s) 2008 2007 C h an ge
General and The increase in income tax expense was due to a corresponding
administrative increase in pre-tax income.
expenses $13,389 $12,037 11.2%
Percentage of total
revenues 5.9% 5.9%
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FISCAL YEARS ENDED DECEMBER 28, 2007, AND DECEMBER Compensation and Related Expenses
29, 2006
(In thou san ds e xce pt Fiscal Ye ars Pe rce n t
Revenues pe rce n tage s) 2007 2006 C h an ge
Compensation and
(In thou san ds e xce pt Fiscal Ye ars Pe rce n t
pe rce n tage s) 2007 2006 C h an ge
related expenses $119,496 $105,860 12.9%
Engineering and other Percentage of total
scientific $157,987 $130,960 20.6% revenues 58.2% 62.8%
Percentage of total The increase in compensation and related expenses during fiscal
revenues 77.0% 77.7% 2007 was due to an increase in wages, bonus expense and stock-
Environmental and health 47,161 37,536 25.6% based compensation. Wages increased by $6.8 million due to an
Percentage of total increase in technical full-time equivalent employees and the impact
revenues 23.0% 22.3% of our annual salary increase. Bonus expense increased by $6.2
Total revenues $205,148 $168,496 21.8% million due to a corresponding increase in profitability. Stock-based
compensation increased by $401,000 due to additional restricted
The increase in revenues for our engineering and other scientific stock unit grants during 2007.
segment during fiscal 2007 was the result of an increase in billable
hours, higher billing rates and an increase in product sales in our Other Operating Expenses
technology development practice. During fiscal 2007, billable hours
for this segment increased by 6.0% to 617,000 as compared to (In thou san ds e xce pt Fiscal Ye ars Pe rce n t
582,000 during fiscal 2006. The increase in billable hours was pe rce n tage s) 2007 2006 C h an ge
supported by an increase in utilization and technical full-time Other operating
equivalent employees. Utilization for this segment increased to 69% expenses $21,662 $19,886 8.9%
for fiscal 2007 as compared to 67% for fiscal 2006. Technical full-time Percentage of total
equivalents for this segment increased by 3.1% to 432 during fiscal revenues 10.6% 11.8%
2007, as compared to 419 during fiscal 2006. Product sales in our
technology development practice increased 272% to $11.9 million for Other operating expenses primarily include facilities- related costs,
fiscal 2007 as compared to $3.2 million for fiscal 2006. technical materials, computer-related expenses and depreciation and
amortization of property, equipment and leasehold improvements.
The increase in revenues for our environmental and health segment The increase in other operating expenses was primarily due to an
during fiscal 2007 was the result of an increase in billable hours and increase of $961,000 in occupancy expense, an increase of $273,000
higher billing rates. During fiscal 2007, billable hours for this in computer-related expenses and a $236,000 increase in depreciation
segment increased by 18.9% to 208,000 as compared to 175,000 and amortization. The increase in occupancy expense, computer-
during fiscal 2006. This increase in billable hours was supported by related expenses, and depreciation and amortization were due to
an increase in utilization. Utilization for this segment increased to expansion in certain offices to support our increase in technical-full
67% for fiscal 2007 as compared to 57% for fiscal 2006. Technical time equivalent employees.
full-time equivalents for this segment were 149 for fiscal 2007 and
2006. Reimbursable Expenses
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LIQUIDITY AND CAPITAL RESOURCES During fiscal 2008, 2007, and 2006, net cash used in investing
activities primarily related to the purchase and sale or maturity of
Fiscal Ye ars short-term investments.
(In thou san ds) 2008 2007 2006
Net cash provided by The increase in net cash used in financing activities during fiscal
(used in): 2008, as compared to fiscal 2007, was due to an increase in
Operating activities $ 36,368 $ 26,950 $ 19,582 repurchases of our common stock under our stock repurchase
Investing activities $ 21,063 $ (3,915) $ (795) programs. The decrease in net cash used in financing activities
Financing activities $(34,063) $(17,633) $(26,974) during fiscal 2007, as compared to fiscal 2006, was due to a decrease
in repurchases of our common stock under our stock repurchase
We financed our business in fiscal 2008 principally through programs partially offset by an increase in proceeds from the
available cash and cash flows from operating activities. We invest issuance of common stock. Proceeds from the issuance of common
our excess cash in cash equivalents and short-term investments. At stock are primarily related to the exercise of employee stock options
the end of fiscal 2008, we had $57.4 million in cash, cash equivalents and the purchase of common stock under our employee stock
and short-term investments compared to $63.7 million at the end of purchase plan.
the prior year.
We expect to continue our investing activities, including purchases
The increase in cash provided by operating activities during fiscal of short-term investments and capital expenditures. Furthermore,
2008 as compared to fiscal 2007 was due to an increase in net income cash reserves may be used to repurchase common stock under our
and a smaller increase in accounts receivable partially offset by a stock repurchase programs or strategically acquire professional
decrease in deferred revenues. During fiscal 2008, accounts services firms that are complementary to our business.
receivable increased by $5.1 million as compared to an increase of
$14.1 million during fiscal 2007. The smaller increase in accounts The following schedule summarizes our principal contractual
receivable was due to slower revenue growth. During fiscal 2008, commitments as of January 2, 2009 (in thousands):
revenue increased by 11.5% as compared to an increase of 21.8%
during fiscal 2007. Days sales outstanding increased to 97 days at O pe ratin g
the end of fiscal 2008 as compared to 88 days at the end of fiscal le ase C apital Purchase
Fiscal ye ar com m itm e n ts le ase s obligation s Total
2007. During fiscal 2008, deferred revenues decreased by $287,000 as
2009 $ 5,741 $ 26 $ 1,481 $ 7,248
compared to an increase of $2.4 million during fiscal 2007. The large
2010 4,267 6 — 4,273
increase during fiscal 2007 was due to an increase in pre-billed
2011 3,560 6 — 3,566
projects.
2012 3,335 3 — 3,338
The increase in cash provided by operating activities during fiscal 2013 1,552 2 — 1,554
2007 as compared to fiscal 2006 was due to an increase in net Thereafter 4,015 — — 4,015
income, a larger increase in accrued payroll and employee benefits, a $ 22,470 $ 43 $ 1,481 $23,994
larger increase in accounts payable and accrued liabilities, and an
increase in stock-based compensation partially offset by a larger The above table does not reflect unrecognized tax benefits of
increase in accounts receivable. The larger increase in accrued $315,000, the timing of which is uncertain. Refer to Note 7 of the
payroll and employee benefits was primarily due to an increase in Notes to Consolidated Financial Statements for additional
accrued bonuses driven by a corresponding increase in profitability. discussion on unrecognized tax benefits.
The larger increase in accounts payable and accrued liabilities was
due to the timing of payments to our vendors. The increase in stock-
based compensation was due to additional restricted stock unit
grants during fiscal 2007 and an increase in the accrued bonus that
we expect to settle with fully vested restricted stock units. The
larger increase in accounts receivable was due to an increase in
revenues. Days sales outstanding decreased to 88 days at the end
of fiscal 2007 as compared to 94 days at the end of fiscal 2006.
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We maintain a nonqualified deferred compensation plan for the We are exposed to liquidity and credit risk associated with a student
benefit of a select group of highly compensated employees. Vested loan secured auction rate security. Included within our investment
amounts due under the plan of $4.4 million were recorded as a long- portfolio and classified as a long-term asset on our balance sheet at
term liability on our consolidated balance sheet at January 2, 2009. January 2, 2009 is one AA rated student loan secured auction rate
Company assets that are earmarked to pay benefits under the plan security with a par value of $1.0 million. During the second quarter
are held in a rabbi trust and are subject to the claims of our creditors. of 2008, the auction for this security failed. The issuer has expressed
As of January 2, 2009, invested amounts under the plan of $4.4 its intent to restructure this security, and the next scheduled auction
million were recorded as a long-term asset on our consolidated is in May of 2009. We will not have access to these funds until the
balance sheet. security is restructured or a future auction is successful. If the
issuer is unable to restructure this security or successfully close
As permitted under Delaware law, we have agreements whereby we future auctions and its credit ratings deteriorate, we may be required
indemnify our officers and directors for certain events or to adjust the carrying value of this investment through an
occurrences while the officer or director is, or was serving, at our impairment charge. During the fourth quarter of 2008, we recorded
request in such capacity. The indemnification period covers all an unrealized loss on our auction rate security of $125,000, which is
pertinent events and occurrences during the officer’s or director’s reflected in other comprehensive income in our consolidated
lifetime. The maximum potential amount of future payments we could balance sheet. Based on our ability to access our cash and short-
be required to make under these indemnification agreements is term investments, our expected operating cash flows, and our other
unlimited; however, we have director and officer insurance coverage sources of cash we do not expect any lack of liquidity related to this
that reduces our exposure and enables us to recover a portion of investment to negatively impact our ability to operate our business
any future amounts paid. We believe the estimated fair value of as usual.
these indemnification agreements in excess of applicable insurance
coverage is minimal. We are exposed to some foreign currency exchange rate risk
associated with our foreign operations. Given the limited nature of
Off-Balance Sheet Arrangements these operations, we believe that any exposure would be minimal.
As part of our ongoing business, we do not engage in transactions
that generate relationships with unconsolidated entities or financial Item 8. Financial Statements and Supplementary Data
partnerships, such as entities often referred to as structured finance See Item 15 of this Form 10-K for required financial statements and
or special purpose entities. supplementary data.
Item 7A. Quantitative and Qualitative Disclosure About Market Item 9. Changes in and Disagreements with Accountants on
Risk Accounting and Financial Disclosure
Exponent is exposed to interest rate risk associated with our None.
balances of cash, cash equivalents and investments. We manage
our interest rate risk by maintaining an investment portfolio primarily
consisting of debt instruments with high credit quality and relatively
short average effective maturities (auction rate maturity set at date
of next auction) in accordance with the Company’s investment
policy. The maximum effective maturity of any issue in our portfolio
of cash equivalents and investments is 3 years and the maximum
average effective maturity of the portfolio cannot exceed 12 months.
Our exposure to market rate risk for changes in interest rates relates
primarily to our investments. We do not use derivative financial
instruments in our investment portfolio. The average effective
maturity of our investment portfolio and cash equivalents at
January 2, 2009 was 0.51 years. Notwithstanding our efforts to
manage interest rate risk, there can be no assurances that we will be
adequately protected against the risks associated with interest rate
fluctuations.
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PART IV
Item 15. Exhibits, Financial Statement Schedules
(a) The following documents are filed as part of this Annual Report on Form 10-K.
1. Financial Statements
The following consolidated financial statements of Exponent, Inc. and subsidiaries and the Report of Independent Registered
Public Accounting Firm are included herewith:
Page
Report of Independent Registered Public Accounting Firm 28
Consolidated Statements of Income for the years ended January 2, 2009, December 28, 2007 and December 29,
2006 29
Consolidated Balance Sheets as of January 2, 2009 and December 28, 2007 30
Consolidated Statements of Comprehensive Income for the years ended January 2, 2009, December 28, 2007
and December 29, 2006 31
Consolidated Statements of Stockholders’ Equity for the years ended January 2, 2009, December 28, 2007 and
December 29, 2006 32
Consolidated Statements of Cash Flows for the years ended January 2, 2009, December 28, 2007 and
December 29, 2006 34
Notes to Consolidated Financial Statements 35
Page
Schedule II - Valuation and Qualifying accounts 54
Schedules other than those listed above have been omitted since they are either not required, not applicable, or the information is
otherwise included elsewhere in the report.
3. Exhibits
Page
(a) Exhibit Index 55
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We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of
material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the
consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Exponent,
Inc. and subsidiaries as of January 2, 2009 and December 28, 2007, and the results of its operations and its cash flows for each of the years in
the three-year period ended January 2, 2009, in conformity with accounting principles generally accepted in the United States of America. Also
in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein. Also in our opinion, Exponent, Inc. and subsidiaries maintained, in all
material respects, effective internal control over financial reporting as of January 2, 2009, based on the criteria established in Internal Control
– Integrated Framework issued by COSO.
KPMG LLP
San Francisco, California
February 24, 2009
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Fiscal Ye ars
(In thou san ds, e xce pt pe r sh are data) 2008 2007 2006
Revenues:
Revenues before reimbursements $206,194 $183,139 $156,742
Reimbursements 22,644 22,009 11,754
Revenues 228,838 205,148 168,496
Operating expenses:
Compensation and related expenses 133,469 119,496 105,860
Other operating expenses 22,614 21,662 19,886
Reimbursable expenses 22,644 22,009 11,754
General and administrative expenses 13,389 12,037 10,807
192,116 175,204 148,307
Operating income 36,722 29,944 20,189
Other income:
Interest income, net 1,707 1,821 1,927
Miscellaneous income, net 65 1,860 1,462
Income before income taxes 38,494 33,625 23,578
Provision for income taxes 15,334 13,284 9,384
Net income $ 23,160 $ 20,341 $ 14,194
Net income per share:
Basic $ 1.57 $ 1.36 $ 0.89
Diluted $ 1.47 $ 1.25 $ 0.83
Shares used in per share computations:
Basic 14,710 15,007 15,883
Diluted 15,724 16,322 17,196
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Fiscal Ye ars
(In thou san ds, e xce pt pe r sh are data) 2008 2007
Assets
Current assets:
Cash and cash equivalents $ 32,598 $ 10,700
Short-term investments 24,772 53,034
Accounts receivable, net of allowance for doubtful accounts of $2,449 and $2,177, respectively 62,208 59,819
Prepaid expenses and other assets 6,275 5,754
Deferred income taxes 4,455 3,450
Total current assets 130,308 132,757
Property, equipment and leasehold improvements, net 31,371 29,409
Goodwill 8,607 8,607
Deferred income taxes 6,893 5,969
Other assets 5,911 5,649
$183,090 $182,391
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities $ 6,536 $ 7,139
Accrued payroll and employee benefits 35,528 30,366
Deferred revenues 6,171 6,458
Total current liabilities 48,235 43,963
Other liabilities 567 89
Deferred compensation 4,401 4,665
Deferred rent 1,793 1,755
Total liabilities 54,996 50,472
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.001 par value; 5,000 shares authorized; no shares outstanding — —
Common stock, $.001 par value; 100,000 shares authorized; 16,427 shares issued 16 16
Additional paid-in capital 72,734 59,772
Accumulated other comprehensive (loss) income (345) 347
Retained earnings 127,127 113,018
Treasury stock, at cost: 2,737 and 2,068 shares held, respectively (71,438) (41,234)
Total stockholders’ equity 128,094 131,919
$183,090 $182,391
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Fiscal Ye ars
(In thou san ds) 2008 2007 2006
Net income $23,160 $20,341 $14,194
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of tax (554) 150 154
Unrealized (loss) gain arising during the period on investments, net of tax (138) 104 32
Comprehensive income $22,468 $20,595 $14,380
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Accum u late d
Addition al othe r
C om m on S tock Tre asu ry S tock
paid-in com pre h e n sive Re tain e d
(In thou san ds) S h are s Am ou n t capital incom e (loss) e arn ings S h are s Am ou n t Total
Balance at December 30, 2005 16,192 $ 16 $ 44,955 $ (93) $ 88,322 — $ — $133,200
Employee stock purchase plan 14 — 231 — (10) (35) 566 787
Exercise of stock options, net of swaps 221 — 1,097 — (1,280) (104) 1,695 1,512
Tax benefit for stock option plans — — 869 — — — — 869
Amortization of unrecognized stock-based
compensation — — 2,197 — — — — 2,197
Purchase of treasury shares — — — — — 1,853 (30,090) (30,090)
Foreign currency translation adjustments — — — 154 — — — 154
Grant of restricted stock units to settle accrued
bonus — — 1,450 — — — — 1,450
Unrealized gain on investments — — — 32 — — — 32
Net income — — — — 14,194 — — 14,194
Balance at December 29, 2006 16,427 16 50,799 93 101,226 1,714 (27,829) 124,305
Employee stock purchase plan — — 198 — 23 (35) 555 776
Exercise of stock options, net of swaps — — (132) — (8,382) (641) 10,036 1,522
Tax benefit for stock option plans — — 3,989 — — — — 3,989
Amortization of unrecognized stock-based
compensation — — 2,630 — — — — 2,630
Purchase of treasury shares — — — — — 1,042 (24,186) (24,186)
Foreign currency translation adjustments — — — 150 — — — 150
Grant of restricted stock units to settle accrued
bonus — — 2,288 — — — — 2,288
Settlement of restricted stock units — — — — (190) (12) 190 —
Unrealized gain on investments — — — 104 — — — 104
Net income — — — — 20,341 — — 20,341
Balance at December 28, 2007 16,427 16 59,772 347 113,018 2,068 (41,234) 131,919
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Accum u late d
Addition al othe r
C om m on S tock Tre asu ry S tock
paid-in com pre h e n sive Re tain e d
(In thou san ds) S h are s Am ou n t capital incom e (loss) e arn ings S h are s Am ou n t Total
Balance at December 28, 2007 16,427 16 59,772 347 113,018 2,068 (41,234) 131,919
Employee stock purchase plan — — 409 — (33) 576 985
Exercise of stock options, net of swaps — — (397) — (6,249) (581) 9,269 2,623
Tax benefit for stock option plans — — 5,551 — — — — 5,551
Amortization of unrecognized stock-based
compensation — — 3,762 — — — — 3,762
Purchase of treasury shares — — — — — 1,409 (41,273) (41,273)
Foreign currency translation adjustments — — — (554) — — — (554)
Grant of restricted stock units to settle accrued
bonus — — 3,637 — — — — 3,637
Settlement of restricted stock units — — — — (2,802) (126) 1,224 (1,578)
Unrealized gain (loss) on investments — — — (138) — — — (138)
Net income — — — — 23,160 — — 23,160
Balance at January 2, 2009 16,427 $ 16 $ 72,734 $ (345) $127,127 2,737 $(71,438) $128,094
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Fiscal Ye ars
(In thou san ds) 2008 2007 2006
Cash flows from operating activities:
Net income $ 23,160 $ 20,341 $ 14,194
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property, equipment and leasehold improvements 4,109 3,845 3,628
Amortization of premiums and accretion of discounts of short-term investments 451 309 532
Contribution to deferred compensation plan — — (1,000)
Amortization of deferred compensation contribution 181 632 314
Deferred rent expense 38 658 (47)
Provision for doubtful accounts 2,750 2,486 1,634
Stock-based compensation 7,828 6,195 4,414
Deferred income tax provision (1,344) (2,652) (3,158)
Tax benefit for stock option plans (5,549) (3,989) (869)
Changes in operating assets and liabilities:
Accounts receivable (5,139) (14,097) (3,631)
Prepaid expenses and other assets (655) (1,126) (791)
Accounts payable and accrued liabilities 5,368 5,484 1,564
Accrued payroll and employee benefits 5,457 6,472 1,096
Deferred revenues (287) 2,392 1,702
Net cash provided by operating activities 36,368 26,950 19,582
Cash flows from investing activities:
Capital expenditures (5,646) (3,677) (3,205)
Other assets — 90 57
Purchase of short-term investments (77,911) (99,371) (117,569)
Sale/maturity of short-term investments 104,620 99,043 119,922
Net cash provided by (used in) investing activities 21,063 (3,915) (795)
Cash flows from financing activities:
Repayments of borrowings (56) (51) (52)
Tax benefit for stock option plans 5,549 3,989 869
Repurchase of common stock (41,638) (24,647) (30,090)
Issuance of treasury stock 2,082 3,076 986
Issuance of common stock — — 1,313
Net cash used in financing activities (34,063) (17,633) (26,974)
Effect of foreign currency exchange rates on cash and cash equivalents (1,470) 60 209
Net increase (decrease) in cash and cash equivalents 21,898 5,462 (7,978)
Cash and cash equivalents at beginning of year 10,700 5,238 13,216
Cash and cash equivalents at end of year $ 32,598 $ 10,700 $ 5,238
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Exponent, Inc. and Subsidiaries The Company reports service revenues net of subcontractor fees.
Notes to Consolidated Financial Statements The Company has determined that it is not the primary obligor with
Note 1: Summary of Significant Accounting Policies respect to these subcontractors because:
• its clients are directly involved in the subcontractor selection
Basis of Presentation
process;
Exponent, Inc. together with its subsidiaries (collectively referred to
• the subcontractor is responsible for fulfilling the scope of
as the “Company”) is a science and engineering consulting firm that
work; and
provides solutions to complex problems. The accompanying
consolidated financial statements include the accounts of the • the Company passes through the costs of subcontractor
Company and its wholly owned subsidiaries. All significant inter- agreements with only a minimal fixed percentage mark-up to
company transactions and balances have been eliminated in compensate it for processing the transactions.
consolidation. Reimbursements, including those related to travel and other out-of-
The Company operates on a 52-53 week fiscal year with each year pocket expenses, and other similar third party costs such as the cost
ending on the Friday closest to December 31st. Fiscal period 2008 of materials, are included in revenues, and an equivalent amount of
included 53 weeks of activity and ended on January 2, 2009. Fiscal reimbursable expenses are included in operating expenses. Any
periods 2007 and 2006 included 52 weeks of activity and ended on
December 28, 2007 and December 29, 2006, respectively. mark-up on reimbursable expenses is included in revenues.
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• the Company does not recognize revenue for award fees or All contracts are subject to review by management, which requires a
bonuses until specific contractual criteria are met; positive assessment of the collectibility of contract amounts. If,
• the Company does not include revenue for unpriced change during the course of the contract, the Company determines that
orders until the customer agrees with the changes; collection of revenue is not reasonably assured, it does not
recognize the revenue until its collection becomes reasonably
• historically the Company has not had significant accounts
assured, which in those situations would generally be upon receipt
receivable write-offs or cost overruns; and
of cash. The Company assesses collectibility based on a number of
• its contracts are typically progress billed on a monthly basis. factors, including past transaction history with the client, as well as
Product revenue is recognized, when both title and risk of loss the credit-worthiness of the client. Losses on fixed-price contracts
transfer to the customer and customer acceptance has occurred, are recognized during the period in which the loss first becomes
provided that no significant obligations remain. Revenue from evident. Contract losses are determined to be the amount by which
multiple-element arrangements is allocated based on the relative fair the estimated total costs of the contract exceeds the total fixed price
value of each element, which is generally based on the relative sales of the contract.
price for each element when sold separately. If the fair value of one
or more delivered elements cannot be determined revenue is Use of Estimates
allocated based on the residual method. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
Gross revenues and reimbursements for the fiscal years ended America requires management to make estimates and assumptions
January 2, 2009, December 28, 2007 and December 29, 2006, that affect the reported amounts of assets and liabilities and
respectively, were: disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
Fiscal Ye ars
(In thou san ds)
expenses during the period. Actual results could differ from those
2008 2007 2006
estimates.
Gross revenues $235,040 $210,253 $ 173,084
Less: Subcontractor fees 6,202 5,105 4,588
Foreign Currency Translation
Revenues 228,838 205,148 168,496
Reimbursements: The Company translates the assets and liabilities of foreign
Out-of-pocket subsidiaries, whose functional currency is the local currency, at
reimbursements 5,182 4,525 4,548 exchange rates in effect at the balance sheet date. Revenues and
Other outside direct expenses are translated at the average rates of exchange prevailing
expenses 17,462 17,484 7,206 during the year. The adjustment resulting from translating the
financial statements of such foreign subsidiaries is included in
22,644 22,009 11,754
accumulated other comprehensive income, which is reflected as a
Revenues before reimbursements $206,194 $183,139 $ 156,742 separate component of stockholders’ equity.
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The amortized cost of securities is adjusted for amortization of Impairment of Long-Lived Assets
premiums and accretion of discounts to maturity. Such amortization The Company evaluates long-lived assets for impairment whenever
is included in interest income. Realized gains or losses are events or changes in circumstances indicate that the carrying
determined on the specific identification method and are reflected in amount of an asset may not be recoverable. Recoverability of assets
other income. Net unrealized gains and losses are recorded directly to be held and used is measured by a comparison of the carrying
in accumulated other comprehensive income except for unrealized amount of the assets to future cash flows to be generated by the
losses that are deemed to be other-than-temporary, which are asset. If such assets are considered to be impaired, the impairment
reflected in net income. to be recognized is measured as the amount by which the carrying
Investments are reviewed on a regular basis to evaluate whether or amount of the assets exceeds the fair value of the assets. The
not any security has experienced an other-than temporary decline in Company has not recognized impairment losses on any long-lived
fair value. When assessing investments for other-than-temporary assets in fiscal 2008, 2007 or 2006.
declines in fair value, the Company considers the significance of the
decline in value as a percentage of the original cost, how long the Goodwill
market value of the investment has been less than its original cost, The Company assesses the impairment of goodwill annually and
and any news that has been released specific to the investee. whenever events or changes in circumstances indicate that the
carrying amount may be impaired. The Company’s annual goodwill
impairment review is completed at the end of the 47th week of each
Allowances for Doubtful Accounts fiscal year. Factors that the Company considers when evaluating for
possible impairment include the following:
The Company maintains allowances for doubtful accounts for
estimated losses resulting from the inability of customers to meet • significant under-performance relative to expected historical or
their financial obligations. In circumstances where the Company is projected future operating results;
aware of a specific customer’s inability to meet its financial • significant changes in the manner of use of the acquired assets
obligations a specific allowance is recorded to reduce the net or the strategy for overall business; and
recognized receivable to the amount the Company reasonably • significant negative economic trends.
believes will be collected. For all other customers the Company
recognizes allowances for doubtful accounts based upon historical When evaluating the Company’s goodwill for impairment, based
bad debts, customer concentration, customer credit-worthiness, upon the existence of one or more of the above factors, the
current economic conditions, aging of amounts due and changes in Company determines the existence of an impairment by assessing
customer payment terms. the fair value of the applicable reporting unit, including goodwill,
using expected future cash flows to be generated by the reporting
Property, Equipment and Leasehold Improvements unit. If the carrying amount of a reporting unit exceeds its fair value,
an impairment loss is recognized for any excess of the carrying
Property, equipment and leasehold improvements are stated at cost amount of the reporting unit’s goodwill over the implied fair value of
less accumulated depreciation and amortization. Depreciation and that goodwill. The implied fair value of goodwill is determined by
amortization are recognized using the straight-line method. allocating the fair value of the reporting unit in a manner similar to a
Buildings are depreciated over their estimated useful lives ranging purchase price allocation, in accordance with FASB Statement
from thirty to forty years. Equipment is depreciated over its No. 141, Business Combinations. The residual fair value after this
estimated useful life, which generally ranges from two to seven allocation is the implied value of the reporting unit goodwill. The
years. Leasehold improvements are amortized over the shorter of Company did not recognize any goodwill impairment losses in fiscal
their estimated useful lives, generally seven years, or the term of the 2008, 2007 or 2006.
related lease.
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Cash, cash equivalents and short-term investments consisted of the following as of December 28, 2007:
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The following table summarizes the fair value and gross unrealized losses related to available-for-sale securities, aggregated by investment
category and length of time that individual securities have been in a continuous unrealized loss position, at January 2, 2009:
Market values were determined for each individual security in the investment portfolio. The declines in value of these investments are
primarily related to changes in interest rates and are considered to be temporary in nature. All cash equivalents and short-term investments
had effective maturities of three years or less, with an average effective maturity of 0.51 years as of January 2, 2009.
Fixed income available-for-sale securities represent primarily obligations of state and local government agencies. Included in fixed income
available-for-sale securities is approximately $20,428,000 of money market securities classified as cash equivalents. Fixed income and equity
trading securities represent mutual funds held in the Company’s deferred compensation plan. See Note 11 for additional information about the
Company’s deferred compensation plan.
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Included within the Company’s investment portfolio and classified as a long-term asset on its balance sheet is one AA rated student loan
secured auction rate security purchased for $1 million. During the second quarter of 2008, the auction for this security failed. Due to the failed
auction, the Company concluded that this auction rate security represents a Level 3 valuation within the SFAS No. 157 hierarchy. The auction
rate security was valued based on a discounted cash flow analysis and the Company recorded an unrealized loss on the auction rate security
of $125,000, which is reflected in other comprehensive income in the consolidated balance sheet. The Company intends to hold this security
until a future auction is successful or the security is restructured.
Fiscal Ye ars
(In thou san ds) 2008 2007
Property:
Land $ 4,450 $ 4,450
Buildings 33,248 32,791
Construction in progress 262 419
Equipment:
Machinery and equipment 26,470 23,602
Office furniture and equipment 6,491 6,061
Leasehold improvements 8,201 6,885
79,122 74,208
Less accumulated depreciation and amortization 47,751 44,799
Property, equipment and leasehold improvements, net $31,371 $29,409
Depreciation and amortization for the fiscal years ended January 2, 2009, December 28, 2007 and December 29, 2006, was $4,109,000, $3,845,000
and $3,614,000, respectively.
Note 5: Goodwill
Below is a breakdown of goodwill, reported by segment as of January 2, 2009:
There were no changes in the carrying amount of goodwill for the fiscal year ended January 2, 2009. There were no goodwill impairments or
gains or losses on disposals for any portion of the Company’s reporting units during the fiscal year ended January 2, 2009.
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Note 6: Other Significant Balance Sheet Components Total income tax expense for the fiscal years ended January 2,
Account receivable, net 2009, December 28, 2007 and December 29, 2006 consisted of the
following:
Fiscal Ye ars
(In thou san ds) 2008 2007 Fiscal Ye ars
(In thou san ds) 2008 2007 2006
Billed accounts receivable $43,561 $42,967
Unbilled accounts receivable 21,096 19,029 Current
Allowance for doubtful accounts (2,449) (2,177) Federal $12,728 $12,170 $ 9,883
Foreign 755 684 271
Total accounts receivable, net $62,208 $59,819
State 3,195 3,072 2,387
16,678 15,926 12,541
Accounts payable and accrued liabilities Deferred
Federal (1,090) (2,152) (2,567)
Fiscal Ye ars State (254) (490) (590)
(In thou san ds) 2008 2007
(1,344) (2,642) (3,157)
Accounts payable $3,747 $4,117
Accrued liabilities 2,789 3,022 Total $15,334 $13,284 $ 9,384
Total accounts payable and other
accrued liabilities $6,536 $7,139 The Company’s effective tax rate differs from the statutory federal
tax rate of 35% as shown in the following schedule:
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The tax effects of temporary differences that give rise to significant The Company adopted the provisions of FASB Interpretation
portions of the deferred tax assets and deferred tax liabilities at No. 48, “Accounting for Uncertainty in Income Taxes”, on
January 2, 2009 and December 28, 2007 are presented in the December 30, 2006. At December 30, 2006, the Company had
following schedule: unrecognized tax benefits of $258,000, which primarily related to
uncertainty regarding the sustainability of certain deductions taken
Fiscal Ye ars on the Company’s federal and state income tax returns. A
(In thou san ds) 2008 2007 reconciliation of the beginning and ending amount of unrecognized
Deferred tax assets: tax benefits is as follows:
Accrued liabilities and
allowances $ 8,892 $ 7,101 Balance at December 30, 2006 $ 258,000
Deferred compensation 5,280 4,308 Additions based on tax positions related to the
Property, equipment and current year 54,000
leasehold improvements — 546 Additions for tax positions of prior years 3,000
Other 435 — Reductions due to lapse of statute of limitations (45,000)
Total deferred tax assets 14,607 11,955 Settlements (5,000)
Deferred tax liabilities: Balance at December 28, 2007 265,000
State taxes (711) (622) Additions based on tax positions related to the
Deductible goodwill (1,947) (1,679) current year 83,000
Property, equipment and Additions for tax positions of prior years 5,000
leasehold improvements (591) — Reductions due to lapse of statute of limitations (38,000)
Other (10) (235) Settlements —
Total deferred tax liabilities (3,259) (2,536) Balance at January 2, 2009 $ 315,000
Net deferred tax assets $11,348 $ 9,419
Unrecognized tax benefits are included in other liabilities in the
Management believes it is more likely than not that the results of accompanying balance sheet. To the extent these unrecognized tax
future operations will generate sufficient taxable income to realize benefits are ultimately recognized, they will impact the effective tax
the net deferred tax assets. rate in a future period. There are no uncertain tax positions whose
resolution in the next 12 months is expected to materially affect
The Company is entitled to a deduction for federal and state tax operating results. The Company’s policy is to recognize interest and
purposes with respect to employees’ stock award activity. The net penalties related to unrecognized tax benefits as income tax expense.
deduction in taxes otherwise payable arising from that deduction Accrued interest and penalties are insignificant at January 2, 2009.
has been credited to additional paid-in capital. For the fiscal years
ended January 2, 2009, December 28, 2007 and December 29, 2006, Deferred income taxes have not been provided on the undistributed
the net deduction in tax payable arising from employees’ stock earnings of foreign subsidiaries. The amount of such earnings at
option activity was $5,551,000, $3,989,000 and $869,000 respectively. January 2, 2009 was $1,232,000. These earnings have been
permanently reinvested and the Company does not plan to initiate
The Company and its subsidiaries file income tax returns in the any action that would precipitate the payment of income taxes
United States federal jurisdiction, California and various other state thereon. It is not practicable to estimate the amount of additional tax
and foreign jurisdictions. The Company is no longer subject to that might be payable on the undistributed foreign earnings.
United States federal income tax examination for years prior to 2005.
The Company is no longer subject to California franchise tax
examinations for years prior to 2004. With few exceptions, the
Company is no longer subject to state and local or non-United
States income tax examination by tax authorities for years prior to
2004.
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Note 8: Stockholders’ Equity The 2008 Equity Incentive Plan allows for the award of stock
Preferred Stock options, stock awards (including stock units, stock grants and stock
appreciation rights or other similar equity awards) and cash awards
The Company has authorized 5,000,000 shares of undesignated to officers, employees, consultants and non-employee members of
preferred stock with a par value of $0.001 per share. The Company the Board of Directors. The total number of shares available for
committed to stockholders in a letter dated May 23, 2006 to limit its issuance under the 2008 Equity Incentive Plan is 1,200,000 shares of
use to 2,000,000 preferred shares, unless the approval of the common stock, subject to adjustment resulting from a stock split or
Company’s stockholders is obtained subsequently, such as through the payment of a stock dividend or any other increase or decrease in
a further amendment to the Company’s authorized capital stock. the number of issued shares of the Company’s stock effected
None of the preferred shares were issued and outstanding at without receipt of consideration by the Company. For the fiscal year
January 2, 2009 and December 28, 2007. ended January 2, 2009, 8,020 restricted stock unit awards were
granted under the plan, leaving 1,191,980 shares available for grant.
Accumulated Other Comprehensive Income
The ESPP allows for officers and employees to purchase common
Accumulated other comprehensive income consists of cumulative
stock through payroll deductions of up to 15% of a participant’s
foreign currency translation adjustments and unrealized gains or
eligible compensation. Shares of common stock are purchased under
losses on investments.
the ESPP at 95% of the fair market value of the Company’s common
stock on each purchase date. Subject to adjustment resulting from a
Treasury Stock stock split or the payment of a stock dividend or any other increase
Net losses related to the re-issuance of treasury stock of $9,051,000, or decrease in the number of issued shares of the Company’s stock
$8,549,000 and $1,290,000 were recorded as a reduction to retained effected without receipt of consideration by the Company, the total
earnings during fiscal 2008, 2007 and 2006, respectively. number of shares available for issuance under the ESPP is 200,000
shares of common stock. For the period ending January 2, 2009,
Repurchase of Common Stock 17,518 shares were purchased under the plan, leaving a balance of
182,482 shares available for purchase. Weighted average purchase
The Company repurchased 1,409,000 shares of its common stock for
prices for shares sold under all ESPP plans in fiscal 2008, 2007 and
$41.3 million during the fiscal year ended January 2, 2009. The
2006 were $29.97, $22.33 and $16.06, respectively.
Company repurchased 1,042,000 shares of its common stock for
$24.2 million during the fiscal year ended December 28, 2007. The
Company repurchased 1,853,000 shares of its common stock for
$30.1 million during the fiscal year ended December 29, 2006. As of
January 2, 2009, the Company had remaining authorization under its
stock repurchase plan of $9.9 million to repurchase shares of
common stock.
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The number of restricted stock unit awards outstanding as of January 2, 2009 is as follows1:
Nu m be r of W e ighte d-
awards ave rage
ou tstan ding fair valu e
Balance as of December 30, 2005 224,838 $ 11.93
Awards granted 205,068 15.63
Awards vested (100,146) 15.31
Awards cancelled (7,642) 12.26
Balance as of December 29, 2006 322,118 $ 13.22
Awards granted 271,763 18.83
Awards vested (132,128) 18.26
Awards cancelled (9,380) 13.12
Balance as of December 28, 2007 452,373 $ 15.12
Awards granted 240,692 31.58
Awards vested (200,983) 23.35
Awards cancelled (2,982) 24.20
Balance as of January 2, 2009 489,100 $ 19.78
1
Does not include employee stock purchase or stock option plans.
1
Does not include restricted stock or employee stock purchase plans
The total intrinsic value of options exercised during the fiscal years the total pre-tax intrinsic value (the difference between the
ended January 2, 2009, December 28, 2007 and December 29, 2006 Company’s closing stock price on the last trading day of the fiscal
was $14,979,000, $12,980,000 and $3,785,000, respectively. The year ended January 2, 2009, and the exercise price, multiplied by the
aggregate intrinsic value in the table above represents number of in-the-money options) that would have been received by
the option holders had all option holders exercised their options on
January 2, 2009. This amount changes based on the fair-value of the
Company’s stock.
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Restricted Stock Units years ended January 2, 2009, December 28, 2007 and December 29,
The Company grants restricted stock units to employees and 2006, the Company recorded stock-based compensation expense
outside directors. These restricted stock unit grants are designed to associated with accrued bonus awards of $4,066,000, $3,565,000 and
attract and retain employees, and to better align employee interests $2,217,000, respectively.
with those of the Company’s stockholders. For a select group of
employees, up to 40% of their annual bonus is settled with fully
vested restricted stock unit awards. Under these fully vested The Company recorded stock-based compensation expense
restricted stock unit awards, the holder of each award has the right associated with the unvested restricted stock unit awards of
to receive one share of the Company’s common stock for each fully $3,032,000, $1,887,000 and $1,223,000 during the fiscal years ended
vested restricted stock unit four years from the date of grant. Each
individual who received a fully vested restricted stock unit award is January 2, 2009, December 28, 2007 and December 29, 2006,
also granted a matching number of unvested restricted stock unit respectively.
awards. These unvested restricted stock unit awards cliff vest four
years from the date of grant, at which time the holder of each award
will have the right to receive one share of the Company’s common Stock Options
stock for each restricted stock unit award provided the holder of
each award has met certain employment conditions. In the case of The Company currently grants stock options under the 2008 Equity
retirement at 59 1/2 years or older, all unvested restricted stock unit Incentive Plan. Options are granted for terms of ten years and
awards will continue to vest provided the holder of each award does generally vest ratably over a four-year period from the grant date.
all consulting work through the company and does not become an
employee for a past or present client, beneficial party or competitor The Company grants options at exercise prices equal to the fair
of the company. value of the Company’s common stock on the date of grant. During
the fiscal years ended January 2, 2009, December 28, 2007 and
The value of these restricted stock unit awards is determined based December 29, 2006, respectively, the Company recorded stock-based
on the market price of the Company’s common stock on the date of compensation expense of $231,000, $447,000 and $862,000
grant. The value of fully vested restricted stock unit awards issued associated with stock options granted prior to, but not yet vested as
is recorded as a reduction to accrued bonuses. The portion of of December 30, 2005. During the fiscal years ended January 2,
bonus expense that the Company expects to settle with fully vested 2009, December 28, 2007 and December 29, 2006, respectively, the
restricted stock unit awards is recorded as stock-based Company recorded stock-based compensation expense of $499,000,
compensation during the period the bonus is earned. For the fiscal $296,000 and $112,000 associated with stock options granted after
December 30, 2005.
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Stock-Based Compensation The risk-free interest rate used in the option-pricing model was
The Company uses the Black-Scholes option-pricing model to based on United States Treasury zero coupon issues with remaining
determine the fair value of options granted. The determination of the terms similar to the expected term on the options. The Company
fair value of stock-based payment awards on the date of grant using does not anticipate paying any cash dividends in the foreseeable
an option-pricing model is affected by the Company’s stock price as future and therefore used an expected dividend yield of zero in the
well as assumptions regarding a number of complex and subjective option-pricing model. The Company is required to estimate
variables. These variables include expected stock price volatility forfeitures at the time of grant and revise those estimates in
over the term of the award, actual and projected employee stock subsequent periods if actual forfeitures differ from those estimates.
option exercise behaviors, the risk-free interest rate and expected Historical data was used to estimate pre-vesting option forfeitures
dividends. and stock-based compensation expense was recorded only for those
awards that are expected to vest. All share based payment awards
The Company used historical exercise and post-vesting forfeiture are recognized on a straight-line basis over the requisite service
and expiration data to estimate the expected term of options granted. periods of the awards.
The historical volatility of the Company’s common stock over a
period of time equal to the expected term of the options granted was
used to estimate expected volatility.
The assumptions used to value option grants for the fiscal years ended January 2, 2009, December 28, 2007 and December 29, 2006 are as
follows:
The weighted-average fair value of options granted during the fiscal years ended January 2, 2009, December 28, 2007 and December 29, 2006
were $12.82, $8.48 and $7.47, respectively.
The amount of stock-based compensation expense recognized in the Company’s consolidated statements of income for the fiscal years ended
January 2, 2009, December 28, 2007 and December 29, 2006 is as follows:
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Un ve ste d W e ighte d-
options ave rage
ou tstan ding fair valu e
Balance of unvested stock options as of December 30, 2005 609,038 $ 4.58
Options granted 75,000 7.47
Options vested (326,788) 4.37
Options forfeited (1,500) 3.83
Balance of unvested stock options as of December 29, 2006 355,750 $ 5.38
Options granted 100,000 8.48
Options vested (187,750) 4.74
Options forfeited — —
Balance of unvested stock options as of December 28, 2007 268,000 $ 6.99
Options granted 60,000 12.82
Options vested (104,000) 6.68
Options forfeited — —
Balance of unvested stock options as of January 2, 2009 224,000 $ 8.70
Note 10: Retirement Plans December 28, 2007, vested amounts due under the plan totaled $5.0
The Company provides a 401(k) plan for its employees whereby the million and $5.9 million, respectively. Changes in the liability are
Company contributes to each eligible employee’s 401(k) account 7% recorded as adjustments to compensation expense. During the fiscal
of the employee’s eligible base salary plus overtime. The employee years 2008, 2007, and 2006, the Company recognized compensation
does not need to make a contribution to the plan to be eligible for expense of $(2,053,000), $270,000, and $479,000, respectively, as a
the Company’s 7% contribution. To be eligible under the plan, an result of a (decrease) increase in the market value of the trust assets,
employee must be at least 21 years of age and be either a full-time or with a corresponding amount being recorded as other income.
part-time salaried employee. The 7% Company contribution will vest
20% per year for the first 5 years of employment and then Note 12: Inventory
immediately thereafter. The Company’s expenses related to this plan At January 2, 2009, the Company had $213,000 of raw materials
were $5,662,000, $4,587,000, and $4,673,000 in fiscal 2008, 2007, and inventory included in prepaid expenses and other current assets in
2006, respectively. the accompanying balance sheet. At December 28, 2007, the
Company had $181,000 and $1,620,000 of raw materials and finished
Note 11: Deferred Compensation Plan goods inventory, respectively, included in prepaid expenses and
The Company maintains a nonqualified deferred compensation plan other current assets in the accompanying balance sheet. Inventory
for the benefit of a select group of highly compensated employees. is stated at the lower of cost or market using the specific
Under this plan participants may elect to defer up to 100% of their identification method.
compensation. Net employee deferrals were $824,000, $66,000, and
$720,000 during fiscal years 2008, 2007, and 2006, respectively.
Company assets that are earmarked to pay benefits under the plan
are held in a rabbi trust and are subject to the claims of the
Company’s creditors. As of January 2, 2009 and December 28, 2007,
the invested amounts under the plan totaled $5.0 million and $6.2
million, respectively. These assets are classified as trading securities
and are recorded at fair market value with changes recorded as
adjustments to other income and expense. As of January 2, 2009 and
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Note 13: Commitments and Contingencies Note 14: Other Income, Net
The following is a summary of the future minimum payments, net of Interest and other income, net, consisted of the following:
sub-lease income, required under non-cancelable operating leases,
with terms in excess of one year, as of January 2, 2009: Fiscal Ye ars
(In thou san ds) 2008 2007 2006
(In thou san ds) Le ase S u b-le ase Interest income $ 1,718 $1,835 $1,942
Fiscal ye ar com m itm e n ts incom e Total
Interest expense (11) (14) (15)
2009 $ 5,741 $ (106) $ 5,635
Rental income 1,544 1,140 719
2010 4,267 — 4,267
Gain (loss) on deferred
2011 3,560 — 3,560
compensation
2012 3,335 — 3,335
investments (2,053) 356 581
2013 1,552 — 1,552
Gain on foreign exchange 465 118 68
Thereafter 4,015 — 4,015
Other 109 246 94
$ 22,470 $ (106) $22,364
Total $ 1,772 $3,681 $3,389
Total rent expense from property leases in 2008, 2007, and 2006 was
$5,110,000, $4,996,000, and $4,804,000, respectively. Total expense Note 15: Industry and Client Credit Risk
from other operating leases and commitments in 2008, 2007, and 2006 The Company serves clients in various segments of the economy.
was $1,477,000, $1,016,000, and $938,000, respectively. During 2008, 2007, and 2006, the Company provided services
representing approximately 14%, 14%, and 17%, respectively, of
In July, 2008, the Company was served with a writ by a former
revenues to clients and to organizations and insurers acting on
client. The writ did not articulate a claim. The Company met with the
behalf of clients in the transportation industry. During 2008, 2007,
former client in November of 2008 and again in January of 2009 and
and 2006 the Company derived approximately 15%, 14%, and 10%,
learned in those discussions of potential claims against the
respectively, of revenues from government agencies and
Company related to an adverse verdict against the former client. The
contractors.
adverse verdict is currently under appeal. The former client claims
that this adverse verdict was due to the testimony delivered by one The Company derived 13% and 12% of revenues from agencies of
of the Company’s employees. Given the uncertainty as to whether the United States federal government for the years ended January 2,
the claimant will incur a loss (it may prevail on appeal), whether it 2009 and December 28, 2007, respectively. No single customer
will choose to pursue one or more claims against the Company and comprised more than 10% of the Company’s revenues for the year
the nature of the potential claims against the Company, an estimated ended December 29, 2006. Agencies of the United States federal
loss cannot be determined at this time. The Company believes it has government comprised 11% and 10% of the Company’s accounts
a strong defense against all such potential claims and intends to receivable at January 2, 2009 and December 28, 2007, respectively.
vigorously defend itself. Further, the Company believes that some
of the potential claims would be covered by insurance. Although
the Company’s ultimate liability in this matter (if any) cannot be
determined, based upon information currently available, the
Company believes the ultimate resolution of these potential claims
will not have a material adverse effect on its financial condition,
results of operations or liquidity.
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Revenues
Fiscal Ye ars
(In thou san ds) 2008 2007 2006
Engineering and other
scientific $176,879 $157,987 $ 130,960
Environmental and
health 51,959 47,161 37,536
Total revenues $228,838 $205,148 $ 168,496
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Information regarding the Company’s operations in different Note 18: Mortgage Note
geographical areas: The Company had a revolving reducing mortgage note secured by
its Silicon Valley headquarters building. As of January 2, 2009, the
Property, Equipment and Leasehold Improvements, net Company had $0 outstanding and available borrowings of $15.4
million. The mortgage note expired on January 31, 2009 and was not
Fiscal Ye ars
renewed by the Company.
(In thou san ds) 2008 2007
United States $31,123 $29,081
Note 19: Subsequent Event
Foreign Countries 248 328
Total $31,371 $29,409 On February 19, 2009, the Company’s Board of Directors authorized
an additional $25.1 million for the repurchase of the Company’s
common stock.
Revenues (1)
Fiscal Ye ars
(In thou san ds) 2008 2007 2006
United States $213,417 $193,260 $ 155,947
Foreign Countries 15,421 11,888 12,549
Total $228,838 $205,148 $ 168,496
(1)
Geographic revenues are allocated based on the location of the
client.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
EXPONENT, INC.
(Registrant)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated:
/s/ Michael R. Gaulke Chief Executive Officer and February 24, 2009
Michael R. Gaulke Chairman of the Board of Directors
/s/ Richard L. Schlenker, Jr. Chief Financial Officer and Corporate Secretary February 24, 2009
Richard L. Schlenker, Jr. (Principal Financial and Accounting Officer)
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Schedule II
Valuation and Qualifying Accounts
Recoveries of accounts receivable were $63,000, $14,000, and $58,000 for the years ended January 2, 2009, December 28, 2007, and
December 29, 2006, respectively.
Schedules other than above have been omitted since they are either not required, not applicable, or the information is otherwise included in
the Report.
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EXHIBIT INDEX
The following exhibits are filed as part of, or incorporated by reference into (as indicated parenthetically), the Annual Report on
Form 10-K:
3.1(i) Restated Certificate of Incorporation of the Company (incorporated by reference from the Company’s Registration Statement on
Form S-1 as filed on June 25, 1990, registration number 33-35562).
3.1(ii) Certificate of Amendment of Restated Certificate of Incorporation of the Company (incorporated by reference from the Company’s
Current Report on Form 8-K filed on May 24, 2006).
3.2 Amended and Restated Bylaws of the Company (incorporated by reference from the Company’s Registration statement on Form S-
1 as filed on June 25, 1990, registration number 33-35562).
4.1 Specimen copy of Common Stock Certificate of the Company (incorporated by reference from the Company’s Registration
Statement on Forms S-1 as filed on June 25, 1990, registration number 33-35562).
*10.1 1990 Stock Option and Rights Plan, as amended through March 31, 1993 (incorporated by reference from the Company’s Annual
Report on Form 10-K for the fiscal year ended May 28, 1993).
*10.2 Form of Incentive Stock Option Agreement under the 1990 Stock Option and Rights Plan (incorporated by reference from the
Company’s Registration Statement on Form S-1 as filed on June 25, 1990, registration number 33-35562).
*10.3 Form of Nonqualified Stock Option Agreement under the 1990 Stock Option and Rights Plan (incorporated by reference from the
Company’s Registration Statement on Form S-1 as filed on June 25, 1990, registration number 33-35562).
10.5 Zarnowicka Elektrownia Gazowa, joint venture, dated September 8, 1994 (incorporated by reference from the Company’s Annual
Report on Form 10-K for the fiscal year ended December 30, 1994).
*10.6 Exponent, Inc. 1998 Non Statutory Stock Option Plan dated October 24, 1998 (incorporated by reference from the Company’s
Annual Report on Form 10-K for the fiscal year ended January 1, 1999).
10.7 Revolving reducing note with Wells Fargo Bank dated January 27, 1999 (incorporated by reference from the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31, 1999).
10.8 Exponent, Inc. 401(k) Savings Plan dated March 1, 1998 and restated effective January 2, 1999 (incorporated by reference from the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999).
10.10 Exponent, Inc. 1999 Stock Option Plan (incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 1999).
*10.11 Exponent, Inc. 1999 Restricted Stock Plan (incorporated by reference from the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 1999).
10.12 First Amendment to Exponent, Inc. 401(k) Savings Plan dated March 1, 1998 and restated effective January 2, 1999 (incorporated by
reference from the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2001).
10.13 Second Amendment to Exponent, Inc. 401(k) Savings Plan dated March 1, 1998 and restated effective January 2, 1999 (incorporated
by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2001).
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10.14 Third Amendment to Exponent, Inc. 401(k) Savings Plan dated March 1, 1998 and restated effective January 2, 1999 (incorporated
by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2003).
10.15 Commercial Lease No. 03-53542 between the Company and the Arizona State Land Department, effective January 17, 1998
(incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2003).
10.16 Fourth Amendment to Exponent, Inc. 401(k) Savings Plan dated March 1, 1998 and restated effective January 2, 1999 (incorporated
by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended January 2, 2004).
*10.17 Exponent Nonqualified Deferred Compensation Plan (incorporated by reference from the Company’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2004).
10.18 Fifth Amendment to Exponent, Inc. 401(k) Savings Plan dated March 1, 1998 and restated effective January 2, 1999 (incorporated by
reference from the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2005).
*10.19 Form of Indemnification Agreement entered into or proposed to be entered into between the Company and its officers and
directors (incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
2006).
10.20 Services Agreement between the Company and Exponent Engineering P.C. (incorporated by reference from the Company’s
Quarterly Report on Form 10-Q for the fiscal period ended March 31, 2006).
*10.21 Employment Offer Letter between the Company and Dr. Elizabeth Anderson (incorporated by reference from the Company’s
Current Report on Form 8-K filed on August 9, 2006).
*10.22 Employment Agreement between the Company and Roger L. McCarthy (incorporated by reference from the Company’s Current
Report on Form 8-K filed on January 16, 2007).
10.23 Sixth Amendment to Exponent, Inc. 401(k) Savings Plan dated March 1, 1998 and restated effective January 2, 1999 (incorporated
by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2006).
10.24 Amendment No. 1 to Exponent, Inc. 1998 Nonstatutory Stock Option Plan dated January 29, 2007 (incorporated by reference from
the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2006).
10.25 Amendment No. 1 to Exponent, Inc. 1999 Stock Option Plan dated January 29, 2007 (incorporated by reference from the Company’s
Annual Report on Form 10-K for the fiscal year ended December 29, 2006).
10.26 Amendment No. 1 to Exponent, Inc. 1999 Restricted Stock Plan dated January 29, 2007 (incorporated by reference from the
Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2006).
10.27 Seventh Amendment to Exponent, Inc. 401(k) Savings Plan dated March 1, 1998 and restated effective January 2, 1999
(incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2007).
10.28 2008 Employee Stock Purchase Plan.
*10.29 2008 Equity Incentive Plan.
*10.30 Form of Stock Option Agreement under the 2008 Equity Incentive Plan.
*10.31 Form of Restricted Stock Unit Employee Bonus Grant Agreement under the 2008 Equity Incentive Plan.
*10.32 Form of Restricted Stock Unit Employee Matching Grant Agreement under the 2008 Equity Incentive Plan.
*10.33 Form of Restricted Stock Unit Director Grant Agreement under the 2008 Equity Incentive Plan.
*10.34 Amended and Restated Restricted Stock Unit Bonus Grant Agreement under the 1999 Restricted Stock Plan.
*10.35 Amended and Restated Restricted Stock Unit Matching Grant Agreement under the 1999 Restricted Stock Plan.
*10.36 Amended and Restated Restricted Stock Unit Director Grant Agreement under the 1999 Restricted Stock Plan.
21.1 List of subsidiaries.
23.1 Consent of Independent Registered Public Accounting Firm.
31.1 Certification of Chief Executive Officer as required by Rule 13a – 14(a) of the Securities Exchange Act of 1934.
31.2 Certification of Chief Financial Officer as required by Rule 13a – 14(a) of the Securities Exchange Act of 1934.
32.1 Certification of Chief Executive Officer as required by Rule 13a – 14(b) of the Securities Exchange Act of 1934.
32.2 Certification of Chief Financial Officer as required by Rule 13a – 14(b) of the Securities Exchange Act of 1934.
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Exhibit 10.28
EXPONENT, INC.
2008 EMPLOYEE STOCK PURCHASE PLAN
1. ESTABLISHMENT OF PLAN
Exponent, Inc. (the “Company”) adopted this plan in 2008 to grant options for the purchase of shares (“Shares”) of the Company’s
Common Stock to eligible employees of the Company and Subsidiaries (as hereinafter defined) pursuant to this Employee Stock Purchase Plan
(the “Plan”). For purposes of this Plan, “parent corporation” and “Subsidiary” (collectively, “Subsidiaries”) shall have the same meanings as
“parent corporation” and “subsidiary corporation” in Section 424, of the Internal Revenue Code of 1986, as amended (the “Code”). The
Company intends that the Plan shall qualify as an “employee stock purchase plan” under Section 423 of the Code (including any amendments
or replacements of such section), and the Plan shall be so construed. Any term not expressly defined in the Plan but defined for purposes of
Section 423 of the Code shall have the same definition in this Plan. A total of 200,000 Shares of Common Stock may be issued under the Plan.
Such number shall be subject to adjustments effected in accordance with Section 14 of the Plan.
2. PURPOSES
The purpose of the Plan is to provide employees of the Company and any Subsidiary designated by the Company’s Board of Directors
(the “Board”) as one whose employees are eligible to participate in the Plan with a convenient means to acquire an equity interest in the
Company through payroll deductions, to enhance such employees’ sense of participation in the affairs of the Company and Subsidiaries, and
to provide an incentive for continued employment.
3. ADMINISTRATION
(a) The Plan is administered by the Board or by a committee designated by the Board (in which event all references herein to the Board
shall be to the committee). Subject to the provisions of the Plan and the limitations of Section 423 of the Code or any successor provision in
the Code, all questions of interpretation or application of the Plan shall be determined by the Board and its decisions shall be final and binding
upon all participants. Members of the Board shall receive no compensation for their services in connection with the administration of the Plan,
other than standard fees as established from time to time by the Board of Directors of the Company for services rendered by Board members
serving on Board committees. All expenses incurred in connection with the administration of the Plan shall be paid by the Company.
(b) The Board (or the committee) shall have the power, subject to, and within the limitations of, the express provisions of the Plan:
(i) To determine when and how options to purchase Shares shall be granted and the provisions of each Offering Period (which
need not be identical);
(ii) To designate from time to time a Subsidiary as one whose employees shall be eligible to participate in the Plan (any such
designated Subsidiary, a “Designated Corporation”);
(iii) To construe and interpret the Plan and rights to purchase (options on) Shares, and to establish, amend and revoke rules and
procedures for its administration, including that the Board, in the exercise of this power, may correct any defect, omission or inconsistency in
the Plan, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective;
(v) To adopt rules and procedures (including sub-plans and/or special provisions) relating to the operation and administration of
the Plan to permit participation in the Plan by employees who are foreign nationals or employed outside the United States; and
(vi) Generally, to exercise such powers and to perform such acts it deems necessary, desirable, convenient or expedient to promote
the best interests of the Company and its Subsidiaries and to carry out that intent that the Plan be treated as an “employee stock purchase
plan” under Section 423 of the Code.
4. ELIGIBILITY
Any employee of the Company or any of its Subsidiaries whom the Board designates as a participating Subsidiary (a “Designated
Subsidiary”) is eligible to participate in an Offering Period (as hereinafter defined) under the Plan except the following:
(a) employees who are not employed by the Company or a Designated Subsidiary on a date specified by the Board before the beginning
of such Offering Period;
(b) employees who are customarily employed for less than 20 hours per week;
(c) employees who are customarily employed for less than 5 months in a calendar year;
(d) employees who, together with any other person whose stock would be attributed to such employee pursuant to Section 425(d) of the
Code, own stock or hold options to purchase stock or who, as a result of being granted an option under the Plan with respect to such Offering
Period, would own stock or hold options to purchase stock possessing 5 percent or more of the total combined voting power or value of all
classes of stock of the Company or any of its Subsidiaries; and
(e) individuals who provide services to the Company or a Designated Subsidiary as independent contractors who are reclassified as
common law employees for any reason except for federal income and employment tax purposes.
(b) Subject to Section 5(c) below, each Offering Period shall be of three months’ duration commencing on the first business day of each
fiscal quarter and ending on the last business day of the fiscal quarter, and shall have a single Purchase Date.
(c) Notwithstanding 5(b) above and the other provisions of the Plan, the Board of Directors may, but need not, vary the terms and
structure of the Offering Periods under this Plan, on such basis as it shall determine in its sole discretion (including without limitation, the
length of each Offering Period and Offering Periods during which more than one Purchase Date shall occur; provided however that no Offering
Period may have a duration in excess of twenty-seven (27) months (or such longer period as may be permitted under Code Section 423).
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(b) prior to such Offering Date (at such time and in such manner as may be specified with respect to such Offering Period) he or she delivers to
the Company or its authorized representative a subscription agreement indicating his or her desire to enroll in the Offering Period and
authorizing payroll deductions in a manner consistent with Section 9 below. An eligible employee who does not timely deliver a subscription
agreement by the date specified in advance of the applicable Offering Date shall not participate in that Offering Period and shall not participate
in any subsequent Offering Period unless such employee enrolls in the Plan by timely delivering a subscription agreement to the Company or
its representative prior the Offering Date of the applicable, subsequent Offering Period. Once an employee becomes a participant in an Offering
Period, such employee will automatically participate in the Offering Period commencing immediately following the last day of that Offering
Period unless the employee withdraws from the Plan or terminates further participation in the Offering Period as set forth in Section 11 below.
Such participant is not required to file any additional subscription agreements in order to continue participation in the Plan with respect to
subsequent Offering Periods. Any participant who has not withdrawn from the Plan pursuant to Section 11 below will automatically be re-
enrolled in the Plan and granted a new option on the Offering Date of the next Offering Period.
7. GRANT OF OPTION
(a) Each employee enrolled in an Offering Period will be granted on the Offering Date an option to purchase on each Purchase Date up to
that number of Shares determined by dividing the amount accumulated in such employee’s payroll deduction account during such Offering
Period by the Purchase Price (as defined in Section 8 below) applicable to that Offering Period.
(b) In no event, however, shall the number of Shares of the Company’s Common Stock subject to any option granted pursuant to this
Plan exceed the limitations set forth in Section 10 below. The Purchase Price and fair market value of a Share shall be determined as provided in
Section 8 hereof.
8. PURCHASE PRICE
The “Purchase Price” per Share at which a Share will be sold in any Offering Period shall be ninety-five percent (95%) of the fair market
value on the applicable Purchase Date. For purposes of the Plan, the term “fair market value” on a given date shall mean: (a) the closing price
on the Purchase Date of a Share as reported on the Nasdaq Stock Market (or any other exchange or market quotation system that is then the
primary exchange or market on which the Common Stock trades), (b) if the relevant date does not fall on a trading day, the closing price of a
Share as of the last preceding day on which the Common Stock traded, or (c) such other value as the Board determines in its good faith
judgment to be a reasonable valuation for a Share as of such date.
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(b) Except pursuant to a withdrawal from the Plan under Section 11 below (in which case all payroll deductions shall cease), a participant
may not change his or her rate of payroll deductions during an Offering Period. A participant may increase or decrease the rate of payroll
deductions for any subsequent Offering Period by filing with the Administrator a new authorization for payroll deductions on a date specified
by the Board prior to the beginning of such Offering Period.
(c) All payroll deductions made for a participant are credited to his or her account under the Plan and are deposited with the general
funds of the Company. No interest accrues on the payroll deductions. All payroll deductions received or held by the Company may be used
by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions.
(d) On each Purchase Date, so long as the Plan remains in effect and provided that the participant has not withdrawn from that Offering
Period under the Plan in accordance with the provisions of Section 11 below before that date, the Company shall apply the funds then in the
participant’s account to the purchase of whole Shares reserved under the option granted to such participant with respect to the Offering
Period to the extent that such option is exercisable on the Purchase Date. The Purchase Price per Share shall be as specified in Section 8 of the
Plan. Any cash remaining in a participant’s account after such purchase of Shares shall be refunded (without interest) to such participant in
cash; provided, however, that any amount remaining in such participant’s account on a Purchase Date which is less than the amount
necessary to purchase a full Share of Common Stock of the Company shall be carried forward, without interest, into the next Offering Period (or
in the event of an Offering Period during which multiple purchase will occur, into the next applicable purchase period within the Offering
Period). In the event that the Plan has been oversubscribed as provided in Section 10(c), all funds not used to purchase Shares on the
Purchase Date shall be returned to the participant (without interest). No Shares shall be purchased on a Purchase Date on behalf of any
employee whose participation in the Plan has terminated prior to such Purchase Date.
(e) As promptly as practicable after the Purchase Date, the Company shall arrange the delivery to each participant, as appropriate, of a
certificate representing the Shares purchased upon exercise of his option; provided that the Company may deliver certificates to a broker or
brokers that hold such certificate in street name for the benefit of each such participant.
(f) During a participant’s lifetime, such participant’s option to purchase Shares hereunder is exercisable only by him or her. The
participant will have no interest or voting right in Shares covered by his or her option until such option has been exercised. Shares to be
delivered to a participant under the Plan will be registered in the name of the participant or in the name of the participant and his or her spouse
provided that shares may be registered to a broker or brokers that hold such shares in street name for the benefit of each participant.
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(b) Subject to Sections 9(a), 10(a) and 14(a) of the Plan, the maximum number of Shares that a participant may purchase on any single
Purchase Date shall not exceed 2,500 Shares (the “Maximum Share Amount”); provided that prior to the commencement of any Offering Period,
the Board may, in its sole discretion and without stockholder approval, change the Maximum Share Amount with respect to that Offering
Period. If a new Maximum Share Amount is set, then all participants must be notified of such Maximum Share Amount prior to the
commencement of the next Offering Period. Once a Maximum Share Amount is set, it shall continue to apply in respect of all succeeding
Purchase Dates and Offering Periods unless revised by the Board as set forth above.
(c) If the number of Shares to be purchased on a Purchase Date by all employees participating in the Plan exceeds the number of Shares
then available for issuance under the Plan, the Company will make a pro rata allocation of the remaining Shares in as uniform a manner as shall
be practicable and as the Board shall determine to be equitable. In such event, the Company shall give written notice of such reduction of the
number of Shares to be purchased under a participant’s option to each employee affected thereby.
(d) Any payroll deductions accumulated in a participant’s account which are not used to purchase stock due to the limitations in this
Section 10 shall be returned to the participant (without interest) as soon as practicable after the end of the Offering Period in the manner set
forth in Section 9(d).
11. WITHDRAWAL
(a) Each participant may withdraw from an Offering Period under the Plan by signing and delivering to the Administrator notice on a form
provided for such purpose. Such withdrawal may be elected at any time prior to the end of an Offering Period at such time and in such manner
as the Board specifies.
(b) Upon withdrawal from the Plan, the accumulated payroll deductions shall be returned (without interest) to the withdrawn employee
and his or her interest in the Plan shall terminate. In the event an employee voluntarily elects to withdraw from the Plan, he or she may not
resume his or her participation in the Plan during the same Offering Period, but he or she may participate in any Offering Period under the Plan
which commences on a date subsequent to such withdrawal by filing a new authorization for payroll deductions in the same manner as set
forth in Section 6 above for initial participation in the Plan.
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In the event of the proposed dissolution or liquidation of the Company, each Offering Period will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the Board. In such event, the Board may, in the exercise of its sole
discretion in such instances, declare that the options under the Plan shall terminate as of a date fixed by the Board and give each participant
the right to exercise his or her option as to all of the optioned stock. In the event of a proposed sale of all or substantially all of the assets of
the Company, or the merger of the Company with or into another corporation, each option under the Plan shall be assumed or an equivalent
option shall be substituted by such successor corporation or a parent or subsidiary of such successor corporation, unless the Board
determines, in the exercise of its sole discretion and in lieu of such assumption or substitution, that the participant shall have the right to
exercise the option as to all of the optioned Shares. If the Board makes an option exercisable in lieu of assumption or substitution in the event
of a merger or sale of assets, the Board shall notify the participant that the option shall be fully exercisable on a date specified in such notice,
and the option will terminate upon the expiration of such period.
The Board may, if it so determines in the exercise of its sole discretion, also make provision for adjusting the Reserves, as well as the
price per Share covered by each outstanding option, in the event that the Company effects one or more reorganizations, recapitalizations,
rights offerings or other increases or reductions of Shares of its outstanding Common Stock, and in the event of the Company being
consolidated with or merged into any other corporation.
15. NONASSIGNABILITY
Neither payroll deductions credited to a participant’s account nor any rights with regard to the exercise of an option or to receive Shares
under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 22 hereof) by the participant. Any such attempt at assignment, transfer, pledge or other disposition shall
be without effect.
16. REPORTS
Individual accounts will be maintained for each participant in the Plan. Each participant shall receive any reports required to be delivered
by applicable law as well as, after the end of each Offering Period, a report of his account setting forth the total payroll deductions
accumulated, the number of Shares purchased, the per Share price thereof and the remaining cash balance, if any, carried forward to the next
Offering Period or Offering Period, as the case may be.
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representing such Shares in his or her name (and not in the name of a nominee) during the Notice Period. The Company may, at any time
during the Notice Period, place a legend or legends on any certificate representing Shares acquired pursuant to the Plan requesting the
Company’s transfer agent to notify the Company of any transfer of the Shares. The obligation of the participant to provide such notice shall
continue notwithstanding the placement of any such legend on certificates.
20. NOTICES
All notices or other communications by a participant to the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt
thereof.
(b) Such designation of beneficiary may be changed by the participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such participant’s death, the
Company shall deliver such Shares or cash to the executor or administrator of the estate of the participant, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such Shares or cash to the
spouse or to any one or more dependents or relatives of the participant, or if no spouse, dependent or relative is known to the Company, then
to such other person as the Company may designate.
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(a) Increase the number of Shares that may be issued under the Plan; or
(b) Expand the designation of the employees (or class of employees) eligible for participation in the Plan.
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Exhibit 10.29
EXPONENT, INC.
2. Definitions.
As used herein, the following definitions shall apply:
(a) “Administrator” means the Committee or delegate as shall be administering the Plan in accordance with Section 4 of the Plan.
(b) “Affiliate” means any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a
significant ownership interest as determined by the Administrator.
(c) “Applicable Laws” means the requirements relating to the administration of stock option and stock award plans under U.S.
federal and state laws, any stock exchange or quotation system on which the Company has listed or submitted for quotation the
Common Stock to the extent provided under the terms of the Company’s agreement with such exchange or quotation system and, with
respect to Awards subject to the laws of any foreign jurisdiction where Awards are, or will be, granted under the Plan, the laws of such
jurisdiction.
(d) “Award” means a Cash Award, Stock Award or Option granted in accordance with the terms of the Plan.
(e) “Awardee” means an Employee, Consultant or Director of the Company or any Affiliate who has been granted an Award under
the Plan.
(f) “Award Agreement” means a Cash Award Agreement, Stock Award Agreement and/or Option Agreement, which may be in
written or electronic format, in such form and with such terms and conditions as may be specified by the Administrator, evidencing the
terms and conditions of an individual Award. Each Award Agreement is subject to the terms and conditions of the Plan.
(g) “Board” means the Board of Directors of the Company.
(h) “Cash Award” means a bonus opportunity awarded under Section 12 pursuant to which an Awardee may become entitled to
receive an amount based on the satisfaction of such performance criteria as are specified in the agreement or other documents
evidencing the Award (the “Cash Award Agreement”).
(i) “Cause” means, unless such term or an equivalent term is otherwise defined with respect to an Award by the Participant’s Cash
Award Agreement, Option Agreement, Stock Award Agreement or written contract of employment or service, any of the following: (i) the
Participant’s theft, dishonesty, willful misconduct, breach of fiduciary duty for personal profit, or falsification of any Company or
Affiliate documents or records; (ii) the Participant’s material failure to abide by a Company’s or Affiliate’s code of conduct or other
policies (including without limitation, policies relating to confidentiality and reasonable workplace conduct); (iii) the Participant’s
unauthorized use, misappropriation, destruction or diversion of any tangible or intangible asset or corporate opportunity of the
Company or an Affiliate (including, without limitation, the Participant’s improper use or disclosure of confidential or proprietary
information); (iv) the Participant’s violation of any noncompetition
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agreement with the Company or an Affiliate; (v) any intentional act by the Participant which has a material detrimental effect on the
Company or an Affiliate’s reputation or business; (vi) the Participant’s repeated failure or inability to perform any reasonable assigned
duties after written notice from the Company or an Affiliate, and a reasonable opportunity to cure, such failure or inability; (vii) any
material breach by the Participant of any employment or service agreement between the Participant and the Company or an Affiliate,
which breach is not cured pursuant to the terms of such agreement; or (vii) the Participant’s conviction (including any plea of guilty or
nolo contendere) of any criminal act involving fraud, dishonesty, misappropriation or moral turpitude, or which impairs the Participant’s
ability to perform his or her duties with the Company or an Affiliate.
(j) “Change in Control” means, unless such term or an equivalent term is otherwise defined with respect to an Award by the
Participant’s Cash Award Agreement, Option Agreement, Stock Award Agreement or written contract of employment or service, the
occurrence of any of the following:
i. an Ownership Change Event or a series of related Ownership Change Events (collectively, a “Transaction”) in which the
stockholders of the Company immediately before the Transaction do not retain immediately after the Transaction, in
substantially the same proportions as their ownership of shares of the Company’s voting stock immediately before the
Transaction, direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of
the outstanding voting securities of the Company or such surviving entity immediately outstanding after the Transaction,
or, in the case of an Ownership Change Event described in Section 2(ee)(iii), the entity to which the assets of the Company
were transferred (the “Transferee”), as the case may be; or
ii. the liquidation or dissolution of the Company.
For purposes of the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resulting
from ownership of the voting securities of one or more corporations or other business entities which own the Company or
the Transferee, as the case may be, either directly or through one or more subsidiary corporations or other business entities.
The Board shall have the right to determine whether multiple sales or exchanges of the voting securities in the Company or
multiple Ownership Change Events are related, and its determination shall be final, binding and conclusive.
(k) “Code” means the United States Internal Revenue Code of 1986, as amended.
(l) “Committee” mean the Human Resources Committee of the Board or a committee of Directors appointed by the Board in
accordance with Section 4 of the Plan.
(m) “Common Stock” means the common stock of the Company.
(n) “Company” means Exponent, Inc., a Delaware corporation, or its successor.
(o) “Consultant” means any person engaged by the Company or any Affiliate to render services to such entity as an advisor or
consultant.
(p) “Conversion Award” has the meaning set forth in Section 4(b)(xi) of the Plan.
(q) “Director” means a member of the Board.
(r) “Effective Date” means the date of approval of the Plan by the stockholders of the Company in the manner and to the extent
required by Applicable Laws.
(s) “Employee” means a regular, active employee of the Company or any Affiliate, including an Officer and/or Inside Director. The
Administrator shall determine whether or not the Chairman of the Board qualifies as an “Employee.” Within the limitations of Applicable
Law, the Administrator shall have the discretion to determine the effect upon an Award and upon an individual’s status as an Employee
in the case of (i) any individual who is classified by the Company or its Affiliate as leased from or otherwise employed by a third
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party or as intermittent or temporary, even if any such classification is changed retroactively as a result of an audit, litigation or
otherwise, (ii) any leave of absence approved by the Company or an Affiliate, (iii) any transfer between locations of employment with the
Company or an Affiliate or between the Company and any Affiliate or between any Affiliates, (iv) any change in the Awardee’s status
from an Employee to a Consultant or Director, and (v) at the request of the Company or an Affiliate an Employee becomes employed by
any partnership, joint venture or corporation not meeting the requirements of an Affiliate in which the Company or an Affiliate is a party.
(t) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(u) “Fair Market Value” means, as of any date, the value of a share of Common Stock determined as follows:
i. If the Common Stock is listed on any established stock exchange or a national market system, including without limitation
the Nasdaq Global Market or The Nasdaq Global Select Market, its Fair Market Value shall be the closing price for the
Common Stock as quoted on such exchange or system on the date of determination, or if the Shares are not trading on such
date, then the closing price for the Common Stock on the last preceding trading day on which sales of the Shares are
reported as having occurred, as reported in The Wall Street Journal or such other source as the Administrator deems
reliable;
ii. If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the closing high bid and low asked prices for the
Common Stock on the date of determination, or if no prices are quoted for such date, then the mean between the closing
high bid and low asked prices on the last preceding trading day on which any bid and asked prices were quoted, as reported
in The Wall Street Journal or such other source as the Administrator deems reliable; or
iii. In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith
by the Administrator.
(v) “Grant Date” means, for all purposes, the date on which the Administrator approves the grant of an Award, or such later date
as is determined by the Administrator, provided that in the case of any Incentive Stock Option, the grant date shall be the later of the
date on which the Administrator makes the determination granting such Incentive Stock Option or the date of commencement of the
Awardee’s employment relationship with the Company.
(w) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422
of the Code and the regulations promulgated thereunder.
(x) “Insider Director” means a Director who is an Employee.
(y) “Nasdaq” means the Nasdaq Global Market or its successor.
(z) “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option.
(aa) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder.
(bb) “Option” means a right granted under Section 8 to purchase a number of Shares at such exercise price, at such times, and on
such other terms and conditions as are specified in the agreement or other documents evidencing the Option (the “Option Agreement”).
Both Options intended to qualify as Incentive Stock Options and Nonstatutory Stock Options may be granted under the Plan.
(cc) “Outside Director” means a Director who is not an Employee.
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(dd) “Ownership Change Event” means the occurrence of any of the following with respect to the Company: (i) the direct or
indirect sale or exchange in a single or series of related transactions by the stockholders of the Company of more than fifty percent
(50%) of the voting stock of the Company; (ii) a merger or consolidation in which the Company is a party; or (iii) the sale, exchange, or
transfer of all or substantially all of the assets of the Company.
(ee) “Participant” means the Awardee or any person (including any estate) to whom an Award has been assigned or transferred as
permitted hereunder.
(ff) “Plan” means this Exponent, Inc. 2008 Equity Incentive Plan.
(gg) “Qualifying Performance Criteria” shall have the meaning set forth in Section 12(b) of the Plan.
(hh) “Share” means a share of the Common Stock, as adjusted in accordance with Section 14 of the Plan.
(ii) “Stock Appreciation Right” means a right to receive cash and/or shares of Common Stock based on a change in the Fair
Market Value of a specific number of shares of Common Stock between the grant date and the exercise date granted under Section 11.
(jj) “Stock Award” means an award or issuance of Shares, Stock Units, Stock Appreciation Rights or other similar awards made
under Section 11 of the Plan, the grant, issuance, retention, vesting, settlement, and/or transferability of which is subject during specified
periods of time to such conditions (including continued employment or performance conditions) and terms as are expressed in the
agreement or other documents evidencing the Award (the “Stock Award Agreement”).
(kk) “Stock Unit” means a bookkeeping entry representing an amount equivalent to the Fair Market Value of one Share (or a
fraction or multiple of such value), payable in cash, property or Shares. Stock Units represent an unfunded and unsecured obligation of
the Company, except as otherwise provided for by the Administrator.
(ll) “Subsidiary” means any company (other than the Company) in an unbroken chain of companies beginning with the Company,
provided each company in the unbroken chain (other than the Company) owns, at the time of determination, stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the other companies in such chain.
(mm) “Termination of Employment” shall mean ceasing to be an Employee, Consultant or Director, as determined in the sole
discretion of the Administrator. However, for Incentive Stock Option purposes, Termination of Employment will occur when the Awardee
ceases to be an employee (as determined in accordance with Section 3401(c) of the Code and the regulations promulgated thereunder) of
the Company or one of its Subsidiaries. The Administrator shall determine whether any corporate transaction, such as a sale or spin-off
of a division or business unit, or a joint venture, shall be deemed to result in a Termination of Employment.
(nn) “Total and Permanent Disability” shall have the meaning set forth in Section 22(e)(3) of the Code.
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(b) Code Section 162(m) Share Limits. Subject to the provisions of Section 14 of the Plan, the aggregate number of Shares subject
to non-cash Awards granted under this Plan during any calendar year to any one Awardee shall not exceed 200,000 Shares, except that in
connection with his or her first commencing service with the Company or an Affiliate, an Awardee may be granted Awards covering up
to an additional 400,000 Shares during the year in which such service commences. Notwithstanding anything to the contrary in the Plan,
the limitations set forth in this Section 3(b) shall be subject to adjustment under Section 14(a) of the Plan only to the extent that such
adjustment will not affect the status of any Award intended to qualify as “performance based compensation” under Code Section 162(m).
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iii. to determine the type of Award to be granted to the selected Employees, Consultants and Directors;
iv. to approve forms of Award Agreements for use under the Plan;
v. to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such
terms and conditions include, but are not limited to, the exercise and/or purchase price (if applicable), the time or times when
an Award may be exercised (which may or may not be based on performance criteria), the vesting schedule, any vesting
and/or exercisability acceleration or waiver of forfeiture restrictions, the acceptable forms of consideration, the term, and any
restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine and may be established at the time an Award is granted or thereafter;
vi. to correct administrative errors;
vii. to construe and interpret the terms of the Plan (including sub-plans and Plan addenda) and Awards granted pursuant to
the Plan;
viii. to adopt rules and procedures relating to the operation and administration of the Plan to accommodate the specific
requirements of local laws and procedures. Without limiting the generality of the foregoing, the Administrator is specifically
authorized (A) to adopt the rules and procedures regarding the conversion of local currency, withholding procedures and
handling of stock certificates which vary with local requirements and (B) to adopt sub-plans and Plan addenda as the
Administrator deems desirable, to accommodate foreign laws, regulations and practice;
ix. to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-
plans and Plan addenda;
x. to modify or amend each Award, including, but not limited to, the acceleration of vesting and/or exercisability, provided,
however, that any such amendment is subject to Section 15 of the Plan and except as set forth in that Section, may not
impair any outstanding Award unless agreed to in writing by the Participant;
xi. to allow Participants to satisfy withholding tax amounts by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option or vesting of a Stock Award that number of Shares having a Fair Market Value equal to
the amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined in such manner
and on such date that the Administrator shall determine or, in the absence of provision otherwise, on the date that the
amount of tax to be withheld is to be determined. All elections by a Participant to have Shares withheld for this purpose
shall be made in such form and under such conditions as the Administrator may provide;
xii. to authorize conversion or substitution under the Plan of any or all stock options, stock appreciation rights or other
stock awards held by service providers of an entity acquired by the Company (the “Conversion Awards”). Any conversion
or substitution shall be effective as of the close of the merger, acquisition or other transaction. The Conversion Awards
may be Nonstatutory Stock Options or Incentive Stock Options, as determined by the Administrator, with respect to
options granted by the acquired entity; provided, however, that with respect to the conversion of stock appreciation rights
in the acquired entity, the Conversion Awards shall be Nonstatutory Stock Options. Unless otherwise determined by the
Administrator at the time of conversion or substitution, all Conversion Awards shall have the same terms and conditions as
Awards generally granted by the Company under the Plan;
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xiii. to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award
previously granted by the Administrator;
xiv. to impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any
resales by a Participant or other subsequent transfers by the Participant of any Shares issued as a result of or under an
Award, including without limitation, (A) restrictions under an insider trading policy or under any other Company policy
relating to Company stock and stock ownership and (B) restrictions as to the use of a specified brokerage firm for such
resales or other transfers;
xv. to provide, either at the time an Award is granted or by subsequent action, that an Award shall contain as a term thereof,
a right, either in tandem with the other rights under the Award or as an alternative thereto, of the Participant to receive,
without payment to the Company, a number of Shares, cash or a combination thereof, the amount of which is determined by
reference to the value of the Award; and
xvi. to make all other determinations deemed necessary or advisable for administering the Plan and any Award granted
hereunder.
(c) Effect of Administrator’s Decision. All decisions, determinations and interpretations by the Administrator regarding the Plan,
any rules and regulations under the Plan and the terms and conditions of any Award granted hereunder, shall be final and binding on all
Participants and on all other persons. The Administrator shall consider such factors as it deems relevant, in its sole and absolute
discretion, to making such decisions, determinations and interpretations including, without limitation, the recommendations or advice of
any officer or other employee of the Company and such attorneys, consultants and accountants as it may select.
5. Eligibility.
Awards may be granted to Employees, Consultants and Directors of the Company or any of its Affiliates; provided that Incentive
Stock Options may be granted only to Employees of the Company or of a Subsidiary of the Company.
6. Term of Plan.
The Plan shall become effective on the Effective Date. It shall continue in effect for a term of ten (10) years from the later of the
Effective Date or the date any amendment to add shares to the Plan is approved by stockholders of the Company unless terminated earlier
under Section 15 of the Plan.
7. Term of Award.
The term of each Award shall be determined by the Administrator and stated in the Award Agreement. In the case of an Option, the
term shall be ten (10) years from the Grant Date or such shorter term as may be provided in the Award Agreement; provided that an Incentive
Stock Option granted to an Employee who on the Grant Date owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Subsidiary shall have a term of no more than five (5) years from the Grant Date; and provided further
that the term may be ten and one-half (101/2) years (or a shorter period) in the case of Options granted to Employees in certain jurisdictions
outside the United States as determined by the Administrator.
8. Options.
The Administrator may grant an Option or provide for the grant of an Option, either from time to time in the discretion of the
Administrator or automatically upon the occurrence of specified events, including, without limitation, the achievement of performance goals,
the satisfaction of an event or condition within the control of the Awardee or within the control of others.
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(a) Option Agreement. Each Option Agreement shall contain provisions regarding (i) the number of Shares that may be issued upon
exercise of the Option, (ii) the type of Option, (iii) the exercise price of the Shares and the means of payment for the Shares, (iv) the term
of the Option, (v) such terms and conditions on the vesting and/or exercisability of an Option as may be determined from time to time by
the Administrator, (vi) restrictions on the transfer of the Option or the Shares issued upon exercise of the Option and forfeiture
provisions, and (vii) such further terms and conditions, in each case not inconsistent with this Plan as may be determined from time to
time by the Administrator.
(b) Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by
the Administrator, subject to the following:
i. In the case of an Incentive Stock Option, the per Share exercise price shall be no less than one hundred percent (100%) of
the Fair Market Value per Share on the Grant Date; provided however, that in the case of an Incentive Stock Option granted
to an Employee who on the Grant Date owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Subsidiary, the per Share exercise price shall be no less than one hundred ten
percent (110%) of the Fair Market Value per Share on the Grant Date.
ii. In the case of a Nonstatutory Stock Option, the per Share exercise price shall be no less than one hundred percent
(100%) of the Fair Market Value per Share on the Grant Date.
iii. Notwithstanding the foregoing, at the Administrator’s discretion, Conversion Awards may be granted in substitution
and/or conversion of options of an acquired entity, with a per Share exercise price of less than 100% of the Fair Market
Value per Share on the date of such substitution and/or conversion.
(c) Vesting Period and Exercise Dates. Options granted under this Plan shall vest and/or be exercisable at such time and in such
installments during the period prior to the expiration of the Option’s term as determined by the Administrator. The Administrator shall
have the right to make the timing of the ability to exercise any Option granted under this Plan subject to continued employment, the
passage of time and/or such performance requirements as deemed appropriate by the Administrator, or to grant fully vested Options. At
any time after the grant of an Option, the Administrator may reduce or eliminate any restrictions surrounding any Participant’s right to
exercise all or part of the Option.
(d) Form of Consideration. The Administrator shall determine the acceptable form of consideration for exercising an Option,
including the method of payment, either through the terms of the Option Agreement or at the time of exercise of an Option. Acceptable
forms of consideration may include:
i. cash;
ii. check or wire transfer (denominated in U.S. Dollars);
iii. subject to the Company’s discretion to refuse for any reason and at any time to accept such consideration and subject to
any conditions or limitations established by the Administrator, other Shares held by the Participant which have a Fair
Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be
exercised;
iv. consideration received by the Company under a broker-assisted sale and remittance program acceptable to the
Administrator;
v. cashless “net exercise” arrangement pursuant to which the Company will reduce the number of Shares issued upon
exercise by the largest whole number of Shares having an aggregate Fair Market Value that does not exceed the aggregate
exercise price; provided that the Company shall accept a cash or other payment from the Participant to the extent of any
remaining balance of the exercise price not satisfied by such reduction in the number of whole Shares to be issued;
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vi. such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws;
or
vii. any combination of the foregoing methods of payment.
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v. Other Terminations of Employment. The Administrator may provide in the applicable Option Agreement for different
treatment of Options upon Termination of Employment of the Awardee than that specified above.
vi. Extension of Exercise Period. The Administrator shall have full power and authority to extend the period of time for
which an Option is to remain exercisable following an Awardee’s Termination of Employment from the periods set forth in
Sections 8(f)(i), (ii) and (iii) above or in the Option Agreement to such greater time as the Board shall deem appropriate,
provided that in no event shall such Option be exercisable later than the date of expiration of the term of such Option as set
forth in the Option Agreement.
vii. Extension if Exercise Prevented by Law. Notwithstanding the foregoing, other than a termination for Cause, if a sale
within the applicable time periods set forth in Section 8(f) above or in the Option Agreement is prevented by Section 18
below, the Option shall remain exercisable until thirty (30) days after the date the Awardee is notified by the Company that
the Option is exercisable, but in any event no later than the Option expiration date.
viii. Extension if Subject to Section 16(b). Notwithstanding the foregoing, other than a termination for Cause, if a sale
within the applicable time periods set forth in Section 8(f) above or in the Option Agreement would subject the Awardee to
a suit under Section 16(b) of the Exchange Act, the Option shall remain exercisable until the earliest to occur of (i) the tenth
(10th) day following the date on which a sale of shares by the Awardee would no longer be subject to suit, (ii) the one
hundred ninetieth (190th) day after Awardee’s Termination of Employment, or (iii) the Option expiration date.
(f) Leave of Absence. The Administrator shall have the discretion to determine whether and to what extent the vesting of Options
shall be tolled during any unpaid leave of absence; provided, however, that in the absence of such determination, vesting of Options
shall be tolled during any leave that is not a leave required to be provided to the Awardee under Applicable Law. In the event of military
leave, vesting shall toll during any unpaid portion of such leave, provided that, upon an Awardee’s returning from military leave (under
conditions that would entitle him or her to protection upon such return under the Uniform Services Employment and Reemployment
Rights Act), he or she shall be given vesting credit with respect to Options to the same extent as would have applied had the Awardee
continued to provide services to the Company throughout the leave on the same terms as he or she was providing services immediately
prior to such leave.
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(d) Exercise Price. The per Share exercise price of an Incentive Stock Option shall be determined by the Administrator in
accordance with Section 8(b)(i) of the Plan.
(e) Other Terms. Option Agreements evidencing Incentive Stock Options shall contain such other terms and conditions as may be
necessary to qualify, to the extent determined desirable by the Administrator, with the applicable provisions of Section 422 of the Code.
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(c) Forfeiture. Unless otherwise provided for by the Administrator, upon the Awardee’s Termination of Employment, the Stock
Award and the Shares subject thereto shall be forfeited, provided that to the extent that the Participant purchased or earned any Shares,
the Company shall have a right to repurchase the unvested Shares at such price and on such terms and conditions as the Administrator
determines.
(d) Rights as a Stockholder. Unless otherwise provided by the Administrator in the Award Agreement, the Participant shall have
the rights equivalent to those of a stockholder and shall be a stockholder only after Shares are issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the Company) to the Participant. Unless otherwise provided
by the Administrator, a Participant holding Stock Units shall not be entitled to receive dividend payments or any credit therefor as if he
or she was an actual stockholder.
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(b) Performance Criteria. The Administrator shall establish the performance criteria and level of achievement versus these criteria
which shall determine the target and the minimum and maximum amount payable under a Cash Award, which criteria may be based on
financial performance and/or personal performance evaluations. The Committee may specify the percentage of the target Cash Award
that is intended to satisfy the requirements for “performance-based compensation” under Section 162(m) of the Code. Notwithstanding
anything to the contrary herein, the performance criteria for any portion of a Cash Award that is intended to satisfy the requirements for
“performance-based compensation” under Section 162(m) of the Code shall be a measure established by the Committee based on one or
more Qualifying Performance Criteria selected by the Committee and specified in writing not later than the earlier of (a) the date ninety
(90) days after the commencement of the applicable performance period, or (b) the date on which 25% of the performance period has
elapsed, and in any event at a time when the achievement of the applicable Qualifying Performance Criteria remains substantially
uncertain.
(c) Timing and Form of Payment. The Administrator shall determine the timing of payment of any Cash Award. The Administrator
may provide for or, subject to such terms and conditions as the Administrator may specify, may permit an Awardee to elect for the
payment of any Cash Award to be deferred to a specified date or event. The Administrator may specify the form of payment of Cash
Awards, which may be cash or other property, or may provide for an Awardee to have the option for his or her Cash Award, or such
portion thereof as the Administrator may specify, to be paid in whole or in part in cash or other property.
(d) Termination of Employment. The Administrator shall have the discretion to determine the effect a Termination of Employment
due to (i) disability, (ii) death or (iii) otherwise shall have on any Cash Award.
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(c) Certification. Prior to the payment of any compensation under an Award intended to qualify as “performance-based compensation”
under Section 162(m) of the Code, the Committee shall certify the extent to which any Qualifying Performance Criteria and any other
material terms under such Award have been satisfied (other than in cases where such relate solely to the increase in the value of the
Common Stock).
(d) Discretionary Adjustments Pursuant to Section 162(m). Notwithstanding satisfaction of any completion of any Qualifying
Performance Criteria, to the extent specified at the time of grant of an Award to “covered employees” within the meaning of
Section 162(m) of the Code, the number of Shares, Options or other benefits granted, issued, retainable and/or vested under an Award on
account of satisfaction of such Qualifying Performance Criteria may be reduced by the Committee on the basis of such further
considerations as the Committee in its sole discretion shall determine.
(e) Tax Withholding Obligation. As a condition of the grant, issuance, vesting, exercise or settlement of an Award granted under the
Plan, the Participant shall make such arrangements as the Administrator may require for the satisfaction of any applicable federal, state,
local or foreign withholding tax obligations that may arise in connection with such grant, issuance, vesting, exercise or settlement of the
Award. The Company shall not be required to issue any Shares under the Plan until such obligations are satisfied.
(f) Compliance with Section 409A. Notwithstanding anything to the contrary contained herein, to the extent that the Administrator
determines that any Award granted under the Plan is subject to Code Section 409A and unless otherwise specified in the applicable
Award Agreement, the Award Agreement evidencing such Award shall incorporate the terms and conditions necessary for such Award
to avoid the consequences described in Code Section 409A(a)(1), and to the maximum extent permitted under Applicable Law (and
unless otherwise stated in the applicable Award Agreement), the Plan and the Award Agreements shall be interpreted in a manner that
results in their conforming to the requirements of Code Section 409A(a)(2), (3) and (4) and any Department of Treasury or Internal
Revenue Service regulations or other interpretive guidance issued under Section 409A (whenever issued, the “Guidance”).
Notwithstanding anything to the contrary in this Plan (and unless the Award Agreement provides otherwise, with specific reference to
this sentence), to the extent that a Participant holding an Award that constitutes “deferred compensation” under Section 409A and the
Guidance is a “specified employee” (also as defined thereunder), no distribution or payment of any amount shall be made before a date
that is six (6) months following the date of such Participant’s “separation from service” (as defined in Section 409A and the Guidance) or,
if earlier, the date of the Participant’s death.
(g) Deferral of Award Benefits. The Administrator may in its discretion and upon such terms and conditions as it determines appropriate
permit one or more Participants whom it selects to (a) defer compensation payable pursuant to the terms of an Award, or (b) defer
compensation arising outside the terms of this Plan pursuant to a program that provides for deferred payment in satisfaction of such
other compensation amounts through the issuance of one or more Awards. Any such deferral arrangement shall be evidenced by an
Award Agreement in such form as the Administrator shall from time to time establish, and no such deferral arrangement shall be a valid
and binding obligation unless evidenced by a fully executed Award Agreement, the form of which the Administrator has approved,
including through the Administrator’s establishing a written program (the “Program”) under this Plan to govern the form of Award
Agreements participating in such Program. Any such Award Agreement or Program shall specify the treatment of dividends or dividend
equivalent rights (if any) that apply to Awards governed thereby, and shall further provide that any elections governing payment of
amounts pursuant to such Program shall be in writing, shall be delivered to the Company or its agent in a form and manner that complies
with Code Section 409A and the Guidance, and shall specify the amount to be distributed in settlement of the deferral arrangement, as
well as the time and form of such distribution in a manner that complies with Code Section 409A and the Guidance.
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ii. increase the share limits set forth in Section 3(b) or the cash limit set forth in Section 12(a);
iii. reprice or otherwise reduce the exercise price of Options outstanding under the Plan, other than an adjustment provided
for under Section 14 of the Plan; or
iv. change the class of persons eligible to receive Awards under the Plan.
(b) Effect of Amendment or Termination. No amendment, suspension or termination of the Plan shall impair the rights of any Award,
unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the
Participant and the Company; provided further that the Administrator may amend an outstanding Award in order to conform it to the
Administrator’s intent (in its sole discretion) that such Award not be subject to Code Section 409A(a)(1)(B). Termination of the Plan shall
not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior
to the date of such termination.
(c) Effect of the Plan on Other Arrangements. Neither the adoption of the Plan by the Board or a Committee nor the submission of
the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or any
Committee to adopt such other incentive arrangements as it or they may deem desirable, including without limitation, the granting of
restricted stock, stock options or cash bonuses otherwise than under the Plan, and such arrangements may be either generally applicable
or applicable only in specific cases. The value of Awards granted pursuant to the Plan will not be included as compensation, earnings,
salaries or other similar terms used when calculating an Awardee’s benefits under any employee benefit plan sponsored by the Company
or any Subsidiary except as such plan otherwise expressly provides.
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20. Notice.
Any written notice to the Company required by any provisions of this Plan shall be addressed to the Secretary of the Company and
shall be effective when received.
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23. Indemnification.
In addition to such other rights of indemnification as they may have as members of the Board or officers or employees of the
Company or an Affiliate, members of the Board and any officers or employees of the Company or an Affiliate to whom authority to act for the
Board or the Company is delegated shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees, actually
and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted
hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as
to which it shall be adjudged in any such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional
misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to handle and defend the same.
18
Exhibit 10.30
EXPONENT, INC.
2008 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the “Agreement”) dated [GRANT DATE] (“Grant Date”) between Exponent, Inc., a Delaware
corporation (the “Company”), and [EMPLOYEE NAME] (“Optionee”), is entered into as follows:
WITNESSETH:
WHEREAS, the Company has established the 2008 Equity Incentive Plan (the “Plan”); and
WHEREAS, the Human Resources Committee of the Board of Directors of the Company or its delegates (the “Committee”) has
determined that Optionee shall be granted an option under the Plan as hereinafter set forth;
The parties hereby agree that the Company grants, effective as of the Grant Date, Optionee a [Nonstatutory Stock Option] [Incentive
Stock Option] (this “Option”) to purchase [SHARES] shares of its $0.001 par value Common Stock (the “Shares”) upon the terms and
conditions set forth in this Agreement.
1. Plan Award. This Option is granted under and pursuant to the Plan and is subject to each and all of the provisions thereof. If this Option is
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designated as an Incentive Stock Option, it is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Internal
Revenue Code of 1986, as amended, and to the extent this Option does not qualify as an Incentive Stock Option under Applicable Laws, then
it is intended to be and will be treated as a Nonstatutory Stock Option. Notwithstanding the above, in the event that this Option is designated
as an Incentive Stock Option and the Shares subject to this Option (and all other Incentive Stock Options granted to Optionee by the
Company or any Subsidiary, including under other plans of the Company or any Subsidiary) that first become exercisable in any calendar year
have an aggregate fair market value (determined for each Share as of the date of grant of the option covering such Share) in excess of $100,000,
this Option shall be treated as a Nonstatutory Stock Option, in accordance with Section 9(b) of the Plan.
2. Exercise Price. The exercise price applicable to this Option (meaning, the price Optionee must pay in order to purchase any Shares
hereunder) shall be [PRICE] per Share.
3. Vesting and Exercise of Option. Subject to Optionee’s not experiencing a Termination of Employment during the following vesting period,
Optionee shall vest in and earn the right to exercise this Option on the following schedule: [VESTING SCHEDULE]
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4. Expiration. This Option will expire ten (10) years from the Grant Date, unless sooner terminated or canceled in accordance with the
provisions of the Plan. This means that (subject to the continuing service requirement set forth in Section 3 above and subject to earlier
termination upon certain other events as set forth in the Plan) this Option must be exercised, if at all, on or before [EXPIRE DATE] (the
“Expiration Date”). If this Option expires on a stock exchange holiday or weekend day, this Option will expire on the last trading day prior to
the holiday or weekend. Optionee shall be solely responsible for exercising this Option, if at all, prior to its Expiration Date. The Company shall
have no obligation to notify Optionee of this Option’s expiration.
5. Exercise Mechanics. This Option may be exercised by delivering to the Stock Plan Administrator at the Company’s head office a written or
electronic notice stating the number of Shares as to which the Option is exercised or by any other method the Committee has approved. The
notice must be accompanied by the payment of the full Option exercise price of such Shares. Exercise shall not be deemed to have occurred
unless and until Optionee has delivered to the Company (or its authorized representative) an approved notice of exercise, full payment of the
exercise price for the Shares being exercised and payment of any applicable withholding taxes in accordance with Section 8 below. Payment of
the Option exercise price may be (a) in cash (including check or wire transfer); (b) through an approved cashless-brokered exercise program;
(c) with other shares of the Company’s Common Stock held by Optionee which have a Fair Market Value on the date of surrender equal to the
aggregate exercise price of the Shares as to which this Option is being exercised (subject to the Company’s discretion to withhold approval for
such payment method at any time); or (d) any combination of the foregoing methods of payment.
6. Termination of Employment. All rights of Optionee in this Option, to the extent that it has not previously become vested and been
exercised, shall terminate upon Optionee’s Termination of Employment except as set forth in this Section 6. The portion of the Option that
relates to any Shares that were unvested and unexercisable as of the date of Optionee’s Termination of Employment shall terminate and expire
effective immediately upon such date. With respect to the vested and exercisable portion of the Option, and subject to the final sentence of
this Section 6:
(i) In the event of Termination of Employment other than as a result of Optionee’s death or disability and other than as a result of Cause,
Optionee shall have three (3) months from the date of such Termination of Employment to exercise the Option as to the Shares subject to the
Option that were vested and exercisable as of the date of Termination of Employment; provided that if during any part of such three (3) month
period, the Option is not exercisable because the issuance of the Shares would violate Applicable Laws, the Option shall remain exercisable
until thirty (30) days after the date the Optionee is notified by the Company that the Option is exercisable; provided further that if during any
part of such three month period, a sale of the Shares would subject the Optionee to suit under Section 16(b) of the Exchange Act, the Option
shall remain exercisable until the earlier to occur of the tenth (10th ) day following the date on which a sale of the Shares by the Optionee would
no longer be subject to suit and the one hundred ninetieth (190th ) day after the Optionee’s Termination of Employment;
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(ii) In the event of Termination of Employment as a result of Optionee’s disability (including a Total and Permanent Disability), Optionee
shall have twelve (12) months to exercise the Option as to the Shares subject to the Option that were vested and exercisable as of the date of
Termination of Employment;
(iii) In the event of Termination of Employment as a result of Optionee’s death or in the event of Optionee’s death within three
(3) months following Optionee’s Termination of Employment, Optionee shall have twelve (12) months following the Optionee’s death to
exercise the Option as to the Shares subject to the Option that were vested and exercisable as of the date of death or, if earlier, the date of
Termination of Employment; and
Notwithstanding the above, in no event may an Option be exercised, even as to vested and otherwise exercisable Shares, after the Expiration
Date set forth in Section 4 above.
7. Transferability. This Option generally is not transferable by Optionee otherwise than by will or the laws of descent and distribution, and is
exercisable only by Optionee during Optionee’s lifetime; provided however that if this Option is a Nonstatutory Stock Option, this Option may
be transferred by instrument to an inter vivos or testamentary trust in which the Option is to be passed to beneficiaries upon the death of the
trustor (settlor) or by gift or pursuant to domestic relations orders to family members of the Optionee.
8. Tax Matters.
(i) Optionee is responsible for, and by accepting this Option agrees to bear, all taxes of any nature, including withholding taxes, interest
or penalties arising out of the grant of this Option, the vesting or exercise of this Option or the subsequent sale of the Shares acquired
pursuant to the exercise of this Option, or any violation of Code Section 409A that impacts this Option, that are legally imposed upon
Optionee in connection with this Option, and the Company does not assume, and will not be liable to any party for, any cost or liability arising
in connection with such tax liability legally imposed on Optionee. The Company has not provided any tax advice with respect to this Option or
the disposition of the Shares. Optionee should obtain advice from an appropriate independent professional adviser with respect to the taxation
implications of any aspect of this Option, including the grant, vesting or exercise of this Option or the subsequent sale of any Shares.
(ii) In the event that the Company or the Employee’s employer, including any Affiliate or Subsidiary qualified to deduct tax at source (the
“Employer”), is required to withhold any amount (including in connection with income tax, employment or payroll taxes, social security
contributions or other similar amounts, with such obligation in aggregate referred to herein as the “Withholding Obligation”) as a result of any
event occurring in connection with this Option, the Employee shall make a cash payment to the Company as necessary to cover all applicable
Withholding Obligations at or prior to the time the event giving rise to the Withholding Obligation occurs; provided that (a) the Company has
the right to withhold a portion of the Shares otherwise to be delivered upon exercise of this Option having a Fair Market Value equal to the
amount of the Withholding Obligation in accordance with such rules as the Company may from time to time establish, (b) the Company or the
Employer has the right, and
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the Employee in accepting this grant explicitly authorizes the Company, to deduct an amount equal to the Withholding Obligation from the
Employee’s compensation or (c) the Company may establish alternative procedures to ensure satisfaction of all applicable Withholding
Obligations arising in connection with this Option. The Employee will receive a cash refund for any payment of cash or fraction of a
surrendered share not necessary to satisfy the Withholding Obligations.
(iii) Optionee acknowledges and agrees that the ultimate liability for any tax-related item legally due by Optionee is and remains
Optionee’s responsibility and that the Company and or the Employer (a) make no representations nor undertakings regarding the treatment of
any such tax items in connection with any aspect of this Option, including the grant, vesting or exercise of this Option or the subsequent sale
of the Shares acquired upon exercise of this Option; and (b) do not commit to structure the terms or any aspect of this Option to reduce or
eliminate the Employee’s liability for such tax items. The Company may refuse to honor the exercise of this Option and refuse to deliver the
Shares if Optionee fails to comply with Optionee’s obligations in connection with the satisfaction of the Withholding Obligations.
9. Optionee Acknowledgements. By accepting the grant of this Option, Optionee acknowledges and agrees that the Plan is established
voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time
unless otherwise provided in the Plan or this Agreement. Optionee acknowledges that all decisions with respect to future grants, if any, will be
at the sole discretion of the Company. Optionee’s participation in the Plan shall not create a right to further employment with Employer and
shall not interfere with the ability of Employer to terminate Optionee’s employment relationship at any time with or without cause and it is
expressly agreed and understood that employment is terminable at the will of either party, insofar as permitted by law. Optionee agrees that
this Option is not part of normal or expected compensation or salary for any purposes, including, but not limited to calculating any severance,
resignation, termination, redundancy, end-of-service payments, bonuses, long-service awards, pension or retirement benefits or similar
payments insofar as permitted by law. In the event that Optionee is not an employee of the Company, this Option grant will not be interpreted
to form an employment contract or relationship with the Company, the Employer or any Subsidiary or Affiliate of the Company. Optionee
acknowledges that the future value of the underlying Shares is unknown, may increase or decrease in the future, and cannot be predicted with
certainty. In consideration of the grant of this Option, no claim or entitlement to compensation or damages shall arise from termination of this
Option or diminution in value of this Option or Shares purchased through exercise of this Option resulting from Optionee’s Termination of
Employment by the Company or the Employer (for any reason whatsoever and whether or not in breach of Applicable Laws).
10. Data Transfer. Optionee explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of
Optionee’s personal data as described in this document by and among, as applicable, the Employer, and the Company and its Subsidiaries and
Affiliates for the exclusive purpose of implementing, administering and managing Optionee’s participation in the Plan. Optionee understands
that the Company, its Affiliates, its Subsidiaries and the Employer hold certain personal information about Optionee, including, but not limited
to, name, home address and telephone number, date of birth, social security number (or other
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identification number), salary, nationality, job title, any shares of stock or directorships held in the Company, details of all options or any other
entitlement to shares of stock awarded, canceled, purchased, exercised, vested, unvested or outstanding in Optionee’s favor for the purpose
of implementing, managing and administering the Plan (“Data”). Optionee understands that the Data may be transferred to any third parties
assisting in the implementation, administration and management of the Plan, that these recipients may be located in Optionee’s country or
elsewhere and that the recipient country may have different data privacy laws and protections than Optionee’s country. Optionee may request
a list with the names and addresses of any potential recipients of the Data by contacting the [Stock Plan Administrator]. Optionee authorizes
the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering
and managing Optionee’s participation in the Plan, including any requisite transfer of such Data, as may be required to a broker or other third
party with whom Optionee may elect to deposit any Shares acquired upon the exercise of this Option. Optionee understands that Data will be
held only as long as is necessary to implement, administer and manage participation in the Plan. Optionee may, at any time, view Data, request
additional information about the storage and processing of the Data, require any necessary amendments to the Data or refuse or withdraw the
consents herein, in any case without cost, by contacting the Stock Plan Administrator in writing. Optionee understands that refusing or
withdrawing consent may affect Optionee’s ability to participate in the Plan. For more information on the consequences of refusing to consent
or withdrawing consent, Optionee may contact the [Stock Plan Administrator] at the Company.
11. Copies of Plan Materials. Optionee acknowledges that Optionee has received copies of the Plan and the Plan prospectus from the
Company and agrees to receive stockholder information, including copies of any annual report, proxy statement and periodic report, from the
Company’s website at http://www.exponent.com/sec-filings/. Optionee acknowledges that copies of the Plan, Plan prospectus, Plan
information and stockholder information are also available upon written or telephonic request to the [Stock Plan Administrator].
12. Entire Agreement; Plan Controls. The Plan is incorporated herein by reference. The Plan and this Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to Optionee’s interest except by means
of a writing signed by the Company and Optionee. This Agreement is governed by the laws of the state of Delaware. In the event of any
conflict between the terms and provisions of the Plan and this Agreement, the Plan terms and provisions shall govern. Capitalized terms used
but not defined in this Agreement have the meanings assigned to them in the Plan. Certain other important terms governing this Agreement
are contained in the Plan.
By:
Name:
[Optionee Name] Title:
5
Exhibit 10.31
EXPONENT, INC.
2008 Equity Incentive Plan
Restricted Stock Unit Employee Bonus Grant Agreement
This Restricted Stock Unit Employee Bonus Grant Agreement (the “Agreement”) is entered into between Exponent, Inc., a Delaware
corporation (the “Company”), and (the “Employee”).
Pursuant to the terms of the 2008 Equity Incentive Plan (the “Plan”) the Company hereby awards to Employee restricted stock units
(“Restricted Stock Units”) on the terms and conditions as set forth in this Agreement and the Plan. The grant date for this award is ,
200 (the “Grant Date”). Capitalized terms used but not defined in this Agreement shall have the meaning specified in the Plan.
In consideration of the mutual promises set forth below, the parties hereto agree as follows:
1. Award of Restricted Stock Units. Subject to the terms and conditions of this Agreement and the Plan (the terms of which are
incorporated herein by reference) and effective as of the Grant Date, the Company hereby grants to the Employee Restricted Stock
Units. The Restricted Stock Units relate on a one-for-one basis to shares of the Company’s Common Stock (each such share, adjusted in
accordance with Section 14 of the Plan, a “Share”).
2. Fully Vested Award. The Restricted Stock Units are fully vested (meaning that the Employee’s right to the Restricted Stock Units is
not subject to any continuing service requirement) on the Grant Date.
3. Distribution of Shares and Settlement of Award. Subject to any limitations set forth in this Agreement (including Sections 6 and 16)
and the Plan, a number of Shares of Common Stock will be issued (“distributed”) to the Employee in settlement and full satisfaction of this
Restricted Stock Unit equal to the number of Restricted Stock Units on (or as soon as practicable after, but in no later event later than the date
that is forty-five (45) days after) the earlier of (a) the fourth anniversary of the Grant Date (the “Fourth Anniversary”), (b) the date of the
Employee’s death prior to the Fourth Anniversary, or (c) the date of any accelerated distribution as a result of Section 4 below (such date, the
“Change of Control Date”) (the earlier of such dates, the “Distribution Date”). Upon or as soon as practicable following the Distribution Date,
stock certificates (including electronic representations of the same, the “Certificate”) evidencing the Shares issued upon settlement of vested
Restricted Stock Units shall be issued and registered in the Employee’s name and delivered to (or appropriate notice in the case of electronic
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Certificate delivered to) the Employee (or in the case of the Employee’s death, to the Employee’s beneficiary or estate).
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4. Change in Control. In the event of a Change in Control (as defined in the Plan and as modified by Section 16 below), the successor to
the Company shall assume, or substitute equivalent awards for, this award on the same terms and conditions (including vesting
conditions). The medium of settlement, whether shares, cash or some combination thereof, shall be determined at the discretion of the
Administrator with the consent of the successor at the time of the Change in Control. If the award holder is involuntarily terminated for any
reason other than award holder’s failure to substantially perform the duties of award holder’s position, after written notice and a reasonable
opportunity to cure, within a two-year period beginning on the date of the Change in Control, all awards shall be vested and settled on the
date of termination. For this purpose, involuntary termination shall include the occurrence of one or more of the following events (which
occurs involuntarily to the award holder) provided that the award holder provides notice of such event within 30 days of its first occurrence
and terminates employment within 12 months of the first occurrence of the event: (1) A material diminution in the award holder’s base
compensation. (2) A material diminution in the award holder’s authority, duties, or responsibilities. (3) A material diminution in the authority,
duties, or responsibilities of the supervisor to whom the award holder is required to report. (4) A material diminution in the budget over which
the award holder retains authority. (5) A material change in the geographic location at which the award holder must perform the services.
5. Dividends. To the extent the Company pays any cash dividends, stock dividends or other distributions on or with respect to Shares
prior to the Distribution Date, the Employee shall be entitled to receive credit for cash dividends, stock dividends and other distributions paid
during the Restricted Period with respect to the corresponding number of Shares of Common Stock underlying the Restricted Stock Units,
provided that the fair market value of any such dividends or distributions shall be converted into an additional number of Restricted Stock
Units (based on the Fair Market Value of the Common Stock at the time of such payment or distribution), which additional Restricted Stock
Units shall be subject to the same forfeiture restrictions and restrictions on transferability as apply to, and shall be settled at the same time the
Restricted Stock Units with respect to which they relate. Credit under this paragraph for any dividends paid during the Restricted Period shall
be done as soon as practicable following the payment date for such dividend.
6. Tax Withholding Obligations. To meet the obligations of the Company (or a Subsidiary if the Employee is employed by an entity other
than the Company) and the Employee with respect to any income or employment withholding taxes, FICA contributions, or the like under any
federal, state, local or foreign statute, ordinance, rule, or regulation in or connection with the award grant, vesting or settlement of the
Restricted Stock Units (including without limitation additional Restricted Stock Units (if any) provided to the Employee pursuant to Section 5
above), the Committee shall require that the Company withhold a number of shares of Common Stock otherwise deliverable under this award
having a Fair Market Value sufficient to satisfy the statutory minimum (or such higher amount as is allowable without adverse accounting
consequences) of the Employees estimated total federal, state, local and/or foreign tax obligations associated with grant, vesting or settlement
of the Restricted Stock Units. The Company may also in lieu of or in addition to the foregoing, at its sole discretion, either require the
Employee to deposit with the Company an amount of cash sufficient to meet such obligations and/or, withhold the required amounts from the
Employee’s pay during the pay periods
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immediately preceding the date on which any such applicable withholding tax or similar obligation otherwise arises. The Company shall not
deliver any of the Certificates until and unless the Employee has made the deposit required herein or proper provision for all applicable tax
withholding and similar obligations has been made. The Employee hereby consents to any action reasonably taken by the Company to meet all
or any of such obligations. The Employee understands that, because this award is fully vested at grant, certain withholding taxes will be due
immediately upon grant of the Restricted Stock Units.
7. Restriction on Transferability. Until the Distribution Date, the Restricted Stock Units may not be sold, transferred, pledged, assigned,
or otherwise alienated at any time. Any attempt to do so contrary to the provisions hereof shall be null and void. Notwithstanding the above,
distribution can be made pursuant to will, the laws of descent and distribution, intra-family transfer instruments or to an inter vivos trust.
8. Rights as Shareholder. Subject to Section 5 above with respect to dividend rights, the Employee shall not have voting or any other
rights as a stockholder of the Company with respect to the Restricted Stock Units prior to the Distribution Date. Upon the Distribution Date,
the Employee will obtain full voting and other rights as a shareholder of the Company.
9. Administration. The Committee shall have the power to interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation, and application of the Plan as are consistent therewith and to interpret or revoke any such rules. All actions
taken and all interpretations and determinations made by the Committee shall be final and binding upon the Employee, the Company, and all
other interested persons. No member of the Committee shall be personally liable for any action, determination, or interpretation made in good
faith with respect to the Plan or this Agreement.
10. Effect on Other Employee Benefit Plans. The value of the Restricted Stock Units granted pursuant to this Agreement shall not be
included as compensation, earnings, salaries, or other similar terms used when calculating the Employee’s benefits under any employee or
other benefit plan sponsored by the Company or any Subsidiary except as such plan otherwise expressly provides. The Company expressly
reserves its rights to amend, modify, or terminate any of the Company’s or any Subsidiary’s employee benefit plans.
11. No Right to Employment. The award of the Restricted Stock Units pursuant to this Agreement shall not give the Employee any right
to remain employed by the Company or a Subsidiary or otherwise change the at-will nature of the Employee’s relationship with the Company
or a Subsidiary, as applicable. It does not constitute part of the Employee’s salary or wages and, unless specifically agreed to otherwise in
writing with the Company, is not relevant for purposes of determining any post-employment payment or severance to which the Employee may
become entitled.
12. Amendment. This Agreement may be amended only by a writing executed by the Company and the Employee which specifically
states that it is amending this Agreement. Notwithstanding the foregoing, this Agreement may be amended solely by the Committee by a
writing which specifically states that it is amending this Agreement, so long as a copy of such amendment is delivered to the Employee, and
provided that no such amendment adversely
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affects the rights of the Employee (but limiting the foregoing, the Committee reserves the right to change, by written notice to the Employee,
the provisions of the Restricted Stock Units or this Agreement in any way it may deem necessary or advisable to carry out the purpose of the
grant as a result of any change in applicable laws or regulations or any future law, regulation, ruling, or judicial decision, provided that any
such change shall be applicable only to Restricted Stock Units which are then subject to restrictions as provided herein). Notwithstanding
anything else to the contrary in this Section 12 or in the Plan, any amendment to this Agreement shall be subject to the requirements of
Section 16 below.
13. Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of its
stock administrator. Any notice to be given to Employee shall be addressed to Employee at the address listed in the Company’s records. By a
notice given pursuant to this Section, either party may designate a different address for notices. Any notice shall have been deemed given
when actually delivered.
14. Severability. If all or any part of this Agreement or the Plan is declared by any court or governmental authority to be unlawful or
invalid, such unlawfulness or invalidity shall not invalidate any portion of this Agreement or the Plan not declared to be unlawful or invalid.
Any Section of this Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner
which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.
15. Construction. The Restricted Stock Units are being issued pursuant to Section 11 of the Plan and are subject to the terms of the Plan.
A copy of the Plan has been given to the Employee, and additional copies of the Plan are available upon request during normal business hours
at the principal executive offices of the Company. To the extent that any provision of this Agreement violates or is inconsistent with an
express provision of the Plan, the Plan provision shall govern and any inconsistent provision in this Agreement shall be of no force or effect.
16. Code Section 409A Matters. This Restricted Stock Unit award is a “nonqualified deferred compensation arrangement” subject to
Code Section 409A. The Company has attempted in good faith to structure this Restricted Stock Unit award in a manner that conforms to the
requirements of Code Section 409A(a)(2), (3) and (4) and any ambiguities herein will be interpreted to so conform with these requirements to
the maximum extent permissible. To the extent the IRS challenges whether this award in fact complies with Code Section 409A(a)(2), (3) and (4),
the Employee shall be fully responsible for any additional taxes, penalties and/or interest that might apply as a result of any adverse
determination resulting from such challenge. Any subsequent deferral election, if permitted in the Company’s sole discretion, shall comply
with the subsequent deferral election rules of Code Section 409A(a)(4)(C). Notwithstanding anything else to the contrary in this Agreement or
in the Plan, the Company may accelerate distribution of Shares under this Agreement only in accordance with Treas. Reg. §1.409A-3(j)(4).
Notwithstanding anything to the contrary contained in the Plan or this Agreement, any acceleration of the Distribution Date that occurs
pursuant to Section 4 above and/or Section 14(c) of the Plan shall only occur on a Change in Control (as defined in the Plan) that qualifies as a
“change in ownership or effective control,” or a “change in ownership of a substantial portion of the assets,” of the Company, all as defined
under Code Section 409A.
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In addition, and notwithstanding any provision of this Agreement including Section 3 above to the contrary, if at the time of the
Employee’s Termination Date he or she is a “specified employee” (as defined in Code Section 409A), and if and only if the deferral of payment
(distribution of Shares) as a result of the Employee’s termination of service is necessary in order to prevent any accelerated income
recognition or additional tax under Code Section 409A(a)(1), then the Distribution Date shall be delayed until the earlier of (1) that date that is
six months following the date on which occurs the Employee’s separation from service or (2) the date of the Employee’s death following his or
her separation from service.
17. Miscellaneous.
(a) The Board may terminate, amend, or modify the Plan; provided, however, that no such termination, amendment, or modification
of the Plan may in any way adversely affect the Employee’s rights under this Agreement, without the Employee’s written approval.
(b) This Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required. The Company shall have no liability for failure to issue Shares pursuant to this
Agreement unless it is able to do so in compliance with all Applicable Laws.
(c) All obligations of the Company under the Plan and this Agreement, with respect to the Restricted Stock Units, shall be binding
on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation,
or otherwise, of all or substantially all of the business and/or assets of the Company.
(d) By signing this Agreement, the Employee acknowledges that his or her personal employment or other service information
regarding participation in the Plan and information necessary to determine and pay, if applicable, benefits under the Plan must be shared with
other entities, including companies related to the Company and persons responsible for certain acts in the administration of the Plan. By
signing this Agreement, the Employee consents to such transmission of personal data, as the Company believes is appropriate to administer
the Plan.
(e) To the extent not preempted by federal law, this Agreement shall be governed by, and construed in accordance with, the laws of
the State of California.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement effective as of the day and year first above written.
“Employee” “Company”
Exponent, Inc.
By
Name: Richard L. Schlenker, Jr.
Title: Chief Financial Officer and
Corporate Secretary
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Exhibit 10.32
EXPONENT, INC.
2008 Equity Incentive Plan
Restricted Stock Unit Employee Matching Grant Agreement
This Restricted Stock Unit Employee Matching Grant Agreement (the “Agreement”) is entered into between Exponent, Inc., a Delaware
corporation (the “Company”), and (the “Employee”).
Pursuant to the terms of the 2008 Equity Incentive Plan (the “Plan”) the Company hereby awards to Employee restricted stock units
(“Restricted Stock Units”) on the terms and conditions as set forth in this Agreement and the Plan. The grant date for this award is ,
200 (the “Grant Date”). Capitalized terms used but not defined in this Agreement shall have the meaning specified in the Plan.
In consideration of the mutual promises set forth below, the parties hereto agree as follows:
1. Award of Restricted Stock Units. Subject to the terms and conditions of this Agreement and the Plan (the terms of which are
incorporated herein by reference) and effective as of the Grant Date, the Company hereby grants to the Employee Restricted Stock
Units. The Restricted Stock Units relate on a one-for-one basis to shares of the Company’s Common Stock (each such share, adjusted in
accordance with Section 14 of the Plan, a “Share”).
2. Vesting. Restricted Stock Units vest (meaning that the Employee’s right to the Restricted Stock Units becomes nonforfeitable and no
longer subject to any continuing service requirement) on the fourth (4th) anniversary of the Grant Date (the “Vesting Date”), provided that
through the Vesting Date the following requirements are met: (a) the Employee remains continuously employed by or in service with the
Company or a Subsidiary at a level that is no less than the Minimum Work Level (as defined below); (b) the Employee does all engineering and
scientific services work through the Company or a Subsidiary; and (c) the Employee does not during the Restricted Period (as defined below)
become an employee of, or do engineering and scientific services work outside the Company for, a past or present client or competitor of the
Company or a Subsidiary. The “Minimum Work Level” is the level that equals twenty percent (20%) of the average level of bona fide services
performed (whether or not as an employee) over the immediately preceding thirty-six (36) month period (or the full service period if less than
thirty-six (36) months). The Employee has an affirmative duty to notify the Company in advance of his or her performing any services that he
or she will not provide through the Company. The period between the Grant Date and the earlier to occur of (a) the Vesting Date, (b) the date
on which the Employee’s services with the Company or a Subsidiary terminate as a result of his or her Disability (as defined in Section 17
below) or death (such date, the “Termination Date”), or (c) the date of any accelerated vesting as a result of Section 5 below (such date, the
“Change of Control Date”) is referred to as the “Restricted Period.”
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3. Effect of Termination of Service; Forfeiture. If the Employee’s service is terminated by the Employee or by the Company or a
Subsidiary, as applicable, for any reason except the Employee’s death, Disability or “Retirement” (termination after age 59 1/2 years for any
reason) before the Vesting Date, or if the Employee otherwise fails satisfy the conditions set forth in Section 2 above through that date, all
Restricted Stock Units shall be forfeited. Upon forfeiture of Restricted Stock Units under this Agreement, the portion of the award so forfeited
shall terminate and the Company shall have no obligation to issue any Shares in settlement of that portion of the award. If the Employee dies
or becomes Disabled, the pro rata portion of the Employee’s Restricted Stock Units through the Termination Date (measured as if the award
had vested on a monthly basis from the Grant Date) shall vest immediately upon the Termination Date, with the Shares underlying the portion
of the award that so vests being issued as set forth in Section 4 below, and the remainder of the Restricted Stock Units shall immediately be
forfeited. If the Employee Retires at 59 1/2 years or older during the Restricted Period, all the Shares underlying the award shall be distributed
on the Vesting Date in the manner set forth in Section 4 provided that through the vesting date the following requirements are met
(1) Employee does all consulting work through the Company; and (2) Employee does not become an employee of, or do consulting work
outside the Company for, a past or present client, beneficial party or competitor of the Company. If the Employee returns to service
immediately after the end of an approved leave of absence which is either no more than six (6) months in duration or following which the
Employee has a right to re-employment under an applicable statute or by contract, for the purposes of this Agreement only, the Employee shall
be deemed to have remained continuously employed by or in service with the Company through the period of the leave of absence.
4. Distribution of Shares and Settlement of Award. Subject to any limitations set forth in this Agreement (including Sections 7 and 17)
and the Plan, a number of Shares of Common Stock will be issued (“distributed”) to the Employee in settlement and full satisfaction of this
Restricted Stock Unit equal to the number of then-vested Restricted Stock Units on (or as soon as practicable after, but in no later event later
than the date that is forty-five (45) days after) the earlier of (a) the Vesting Date (including in the event of a qualifying Retirement), (b) the
Termination Date (but only with respect to the portion of the award that vests as set forth in Section 3 above), or (c) the Change in Control
Date (the earlier of such dates, the “Distribution Date”). Upon or as soon as practicable following the Distribution Date, stock certificates
(including electronic representations of the same, the “Certificate”) evidencing the Shares issued upon settlement of vested Restricted Stock
Units shall be issued and registered in the Employee’s name and delivered to (or appropriate notice in the case of electronic Certificate
delivered to) the Employee (or in the case of the Employee’s death, to the Employee’s beneficiary or estate).
5. Change in Control. In the event of a Change in Control (as defined in the Plan and as modified by Section 17 below), the successor to
the Company shall assume, or substitute equivalent awards for, this award on the same terms and conditions (including vesting
conditions). The medium of settlement, whether shares, cash or some combination thereof, shall be determined at the discretion of the
Administrator with the consent of the successor at the time of the Change in Control. If the award holder is involuntarily terminated for any
reason other than award holder’s failure to substantially perform the duties of award holder’s position, after written notice and a reasonable
opportunity to cure, within a two-year period beginning on the date of the Change in Control, all awards shall be vested and settled on the
date of termination.
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For this purpose, involuntary termination shall include the occurrence of one or more of the following events (which occurs involuntarily to
the award holder) provided that the award holder provides notice of such event within 30 days of its first occurrence and terminates
employment within 12 months of the first occurrence of the event: (1) A material diminution in the award holder’s base compensation. (2) A
material diminution in the award holder’s authority, duties, or responsibilities. (3) A material diminution in the authority, duties, or
responsibilities of the supervisor to whom the award holder is required to report. (4) A material diminution in the budget over which the award
holder retains authority. (5) A material change in the geographic location at which the award holder must perform the services.
6. Dividends. To the extent the Company pays any cash dividends, stock dividends or other distributions on or with respect to Shares
during the Restricted Period, the Employee shall be entitled to receive credit for cash dividends, stock dividends and other distributions paid
during the Restricted Period with respect to the corresponding number of Shares of Common Stock underlying the Restricted Stock Units,
provided that the fair market value of any such dividends or distributions shall be converted into an additional number of Restricted Stock
Units (based on the Fair Market Value of the Common Stock at the time of such payment or distribution), which additional Restricted Stock
Units shall be subject to the same forfeiture restrictions and restrictions on transferability as apply to, and shall be settled at the same time as,
and subject to the same deferral elections as, the Restricted Stock Units with respect to which they relate. Credit under this paragraph for any
dividends paid during the Restricted Period shall be done as soon as practicable following the payment date for such dividend.
7. Tax Withholding Obligations. To meet the obligations of the Company (or a Subsidiary if the Employee is employed by an entity other
than the Company) and the Employee with respect to any income or employment withholding taxes, FICA contributions, or the like under any
federal, state, local or foreign statute, ordinance, rule, or regulation in or connection with the award grant, vesting or settlement of the
Restricted Stock Units (including without limitation additional Restricted Stock Units (if any) provided to the Employee pursuant to Section 6
above), the Committee shall require that the Company withhold a number of shares of Common Stock otherwise deliverable under this award
having a Fair Market Value sufficient to satisfy the statutory minimum (or such higher amount as is allowable without adverse accounting
consequences) of the Employees estimated total federal, state, local and/or foreign tax obligations associated with grant, vesting or settlement
of the Restricted Stock Units. The Company may also in lieu of or in addition to the foregoing, at its sole discretion, either require the
Employee to deposit with the Company an amount of cash sufficient to meet such obligations and/or, withhold the required amounts from the
Employee’s pay during the pay periods immediately preceding the date on which any such applicable withholding tax or similar obligation
otherwise arises. The Company shall not deliver any of the Certificates until and unless the Employee has made the deposit required herein or
proper provision for all applicable tax withholding and similar obligations has been made. The Employee hereby consents to any action
reasonably taken by the Company to meet all or any of such obligations. The Employee understands that, to the extent this award becomes
subject to any deferral on distribution of the Shares beyond the date on which he or she vests in the Restricted Stock Units covering such
Shares (including upon the date on which he or she reaches the age at which he or should could Retire), certain withholding taxes will be due
immediately at the time of vesting.
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8. Restriction on Transferability. Until the Distribution Date, the Restricted Stock Units may not be sold, transferred, pledged, assigned,
or otherwise alienated at any time. Any attempt to do so contrary to the provisions hereof shall be null and void. Notwithstanding the above,
distribution can be made pursuant to will, the laws of descent and distribution, intra-family transfer instruments or to an inter vivos trust.
9. Rights as Shareholder. Subject to Section 6 above with respect to dividend rights, the Employee shall not have voting or any other
rights as a stockholder of the Company with respect to the Restricted Stock Units prior to the Distribution Date. Upon the Distribution Date,
the Employee will obtain full voting and other rights as a shareholder of the Company.
10. Administration. The Committee shall have the power to interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation, and application of the Plan as are consistent therewith and to interpret or revoke any such rules. All actions
taken and all interpretations and determinations made by the Committee shall be final and binding upon the Employee, the Company, and all
other interested persons. No member of the Committee shall be personally liable for any action, determination, or interpretation made in good
faith with respect to the Plan or this Agreement.
11. Effect on Other Employee Benefit Plans. The value of the Restricted Stock Units granted pursuant to this Agreement shall not be
included as compensation, earnings, salaries, or other similar terms used when calculating the Employee’s benefits under any employee or
other benefit plan sponsored by the Company or any Subsidiary except as such plan otherwise expressly provides. The Company expressly
reserves its rights to amend, modify, or terminate any of the Company’s or any Subsidiary’s employee benefit plans.
12. No Right to Employment. The award of the Restricted Stock Units pursuant to this Agreement shall not give the Employee any right
to remain employed by the Company or a Subsidiary or otherwise change the at-will nature of the Employee’s relationship with the Company
or a Subsidiary, as applicable. It does not constitute part of the Employee’s salary or wages and, unless specifically agreed to otherwise in
writing with the Company, is not relevant for purposes of determining any post-employment payment or severance to which the Employee may
become entitled.
13. Amendment. This Agreement may be amended only by a writing executed by the Company and the Employee which specifically
states that it is amending this Agreement. Notwithstanding the foregoing, this Agreement may be amended solely by the Committee by a
writing which specifically states that it is amending this Agreement, so long as a copy of such amendment is delivered to the Employee, and
provided that no such amendment adversely affects the rights of the Employee (but limiting the foregoing, the Committee reserves the right to
change, by written notice to the Employee, the provisions of the Restricted Stock Units or this Agreement in any way it may deem necessary
or advisable to carry out the purpose of the grant as a result of any change in applicable laws or regulations or any future law, regulation,
ruling, or judicial decision, provided that any such change shall be applicable only to Restricted Stock Units which are then subject to
restrictions as provided herein). Notwithstanding anything else to the contrary in this Section 13 or in the Plan, any amendment to this
Agreement shall be subject to the requirements of Section 17 below.
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14. Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of its
stock administrator. Any notice to be given to Employee shall be addressed to Employee at the address listed in the Company’s records. By a
notice given pursuant to this Section, either party may designate a different address for notices. Any notice shall have been deemed given
when actually delivered.
15. Severability. If all or any part of this Agreement or the Plan is declared by any court or governmental authority to be unlawful or
invalid, such unlawfulness or invalidity shall not invalidate any portion of this Agreement or the Plan not declared to be unlawful or invalid.
Any Section of this Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner
which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.
16. Construction. The Restricted Stock Units are being issued pursuant to Section 11 of the Plan and are subject to the terms of the Plan.
A copy of the Plan has been given to the Employee, and additional copies of the Plan are available upon request during normal business hours
at the principal executive offices of the Company. To the extent that any provision of this Agreement violates or is inconsistent with an
express provision of the Plan, the Plan provision shall govern and any inconsistent provision in this Agreement shall be of no force or effect.
17. Code Section 409A Matters. This Restricted Stock Unit award may be considered a “nonqualified deferred compensation
arrangement” subject to Code Section 409A. The Company has attempted in good faith to structure this Restricted Stock Unit award in a
manner that conforms to the requirements of Code Section 409A(a)(2), (3) and (4) and any ambiguities herein will be interpreted to so conform
with these requirements to the maximum extent permissible. To the extent the IRS challenges whether this award in fact complies with Code
Section 409A(a)(2), (3) and (4), the Employee shall be fully responsible for any additional taxes, penalties and/or interest that might apply as a
result of any adverse determination resulting from such challenge. Any subsequent deferral election, if permitted in the Company’s sole
discretion, shall comply with the subsequent deferral election rules of Code Section 409A(a)(4)(C). Notwithstanding anything else to the
contrary in this Agreement or in the Plan, the Company may accelerate distribution of Shares under this Agreement only in accordance with
Treas. Reg. §1.409A-3(j)(4).
Notwithstanding anything to the contrary contained in the Plan or this Agreement, (1) any acceleration of the Distribution Date that
occurs pursuant to Section 5 above and/or Section 14(c) of the Plan shall only occur on a Change in Control (as defined in the Plan) that
qualifies as a “change in ownership or effective control,” or a “change in ownership of a substantial portion of the assets,” of the Company, all
as defined under Code Section 409A; and (2) “Disability” shall mean a “disability” as defined under Code Section 409A.
In addition, and notwithstanding any provision of this Agreement including Section 4 above to the contrary, if at the time of the
Employee’s Termination Date he or she is a “specified employee” (as defined in Code Section 409A), and if and only if the deferral of payment
(distribution of Shares) as a result of the Employee’s termination of service is necessary in order to prevent any accelerated income
recognition or additional tax under Code Section 409A(a)(1), then the Distribution Date shall be delayed until the earlier of (1) that date that is
six months following the date on which occurs the Employee’s separation from service or (2) the date of the Employee’s death following his or
her separation from service.
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18. Miscellaneous.
(a) The Board may terminate, amend, or modify the Plan; provided, however, that no such termination, amendment, or modification
of the Plan may in any way adversely affect the Employee’s rights under this Agreement, without the Employee’s written approval.
(b) This Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required. The Company shall have no liability for failure to issue Shares pursuant to this
Agreement unless it is able to do so in compliance with all Applicable Laws.
(c) All obligations of the Company under the Plan and this Agreement, with respect to the Restricted Stock Units, shall be binding
on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation,
or otherwise, of all or substantially all of the business and/or assets of the Company.
(d) By signing this Agreement, the Employee acknowledges that his or her personal employment or other service information
regarding participation in the Plan and information necessary to determine and pay, if applicable, benefits under the Plan must be shared with
other entities, including companies related to the Company and persons responsible for certain acts in the administration of the Plan. By
signing this Agreement, the Employee consents to such transmission of personal data, as the Company believes is appropriate to administer
the Plan.
(e) To the extent not preempted by federal law, this Agreement shall be governed by, and construed in accordance with, the laws of
the State of California.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement effective as of the day and year first above written.
“Employee” “Company”
Exponent, Inc.
By
Name: Richard L. Schlenker, Jr.
Title: Chief Financial Officer and
Corporate Secretary
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Exhibit 10.33
EXPONENT, INC.
2008 Equity Incentive Plan
Restricted Stock Unit Director Grant Agreement
This Restricted Stock Unit Director Grant Agreement (the “Agreement”) is entered into between Exponent, Inc., a Delaware corporation
(the “Company”), and (the “Director”).
Pursuant to the terms of the 2008 Equity Incentive Plan (the “Plan”) the Company hereby awards to Director restricted stock units
(“Restricted Stock Units”) on the terms and conditions as set forth in this Agreement and the Plan. The grant date for this award is ,
200 (the “Grant Date”). Capitalized terms used but not defined in this Agreement shall have the meaning specified in the Plan.
In consideration of the mutual promises set forth below, the parties hereto agree as follows:
1. Award of Restricted Stock Units. Subject to the terms and conditions of this Agreement and the Plan (the terms of which are
incorporated herein by reference) and effective as of the Grant Date, the Company hereby grants to the Director Restricted Stock Units.
The Restricted Stock Units relate on a one-for-one basis to shares of the Company’s Common Stock (each such share, adjusted in accordance
with Section 14 of the Plan, a “Share”).
2. Vesting. Restricted Stock Units vest (meaning that the Director’s right to the Restricted Stock Units become nonforfeitable and no
longer subject to any service requirement) in three equal installments on the day prior to each of the Company’s three annual stockholder
meetings next following the Grant Date (each such date, a “Vesting Date”), provided that with respect to each Vesting Date the Director
remains in continuous service on the Company’s Board of Directors (the “Board”) from the Grant Date through the Vesting Date. The period
between the Grant Date and the earlier of (a) the third Vesting Date referred to in the preceding sentence (b) the Termination Date (defined in
Section 3 below), and (c) the date of any accelerated vesting pursuant to Section 5 below (such date, the “Change in Control Date”) is referred
to as the “Restricted Period.”
3. Effect of Termination of Service; Forfeiture. If the Director’s service as a member of the Board terminates for any reason or under any
circumstances (including death or disability), the Director will vest in a pro rata portion of the Restricted Stock Units through the date of such
service termination that qualifies as a “separation from service” with respect to Board service under Code Section 409A (the “Termination
Date”) so that he or she will be treated as vested in that number of Restricted Stock Units that vested on each Vesting Date occurring prior to
the Termination Date plus that additional number of Restricted Stock Units as he or she would have been vested in as of the Termination Date
if the award had been subject to daily vesting for the 365-day period beginning on the last preceding Vesting Date and ending on the
Termination
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Date and the remainder of the Restricted Stock Units shall be forfeited. Upon forfeiture of Restricted Stock Units, the portion of the award so
forfeited shall terminate and the Company shall have no obligation to issue any Shares in settlement of that portion of the award.
4. Distribution. Subject to any limitations set forth in this Agreement (including Sections 8 and 17) and the Plan, and subject to any
deferral election made pursuant to Section 6 below, a number of Shares of Common Stock will be issued (“distributed”) to the Director in
settlement of this Restricted Stock Unit equal to the number of then-vested Restricted Stock Units on (or as soon as practicable after, but in no
later event later than the date that is forty-five (45) days after) the earlier of (a) the third anniversary of the Grant Date, (b) the Termination
Date, or (c) the Change in Control Date (the earlier of such dates, and without regard to any deferral of such date pursuant to Section 6, the
“Distribution Date”). Subject to any deferral election made pursuant to Section 6 below, upon or as soon as practicable following the
Distribution Date, stock certificates (including electronic representations of the same, the “Certificate”) evidencing the Shares issued upon
settlement of vested Restricted Stock Units shall be issued and registered in the Director’s name and delivered to (or appropriate notice in the
case of electronic Certificate delivered to) the Director (or in the case of the Director’s death, to the Director’s beneficiary or estate).
5. Change in Control. In the event of a Change in Control (as defined in the Plan and as modified by Section 17 below), all awards shall be
vested and the shares underlying the Restricted Stock Units will be distributed as set forth in section 4 above.
6. Deferral Election. Subject to any conditions deemed appropriate from time to time by the Committee (including suspension of the right
to elect deferrals or to make changes to any existing deferral election), the Director may elect to defer the Distribution Date set forth in
Section 4 above using the form attached as Exhibit A (or any successor form approved by the Administrator).
7. Dividends. Participants holding Restricted Stock Units shall be entitled to receive credit for cash dividends, stock dividends and other
distributions paid during the Restricted Period (or, with respect to an award as to which a further deferral election has been made under
Section 6 above, also during the period following the Restricted Period prior to the date the Shares are to be distributed under the terms of
such deferral election) with respect to the corresponding number of Shares of Common Stock underlying the Restricted Stock Units , provided
that the fair market value of any such dividends or distributions shall be converted into an additional number of Restricted Stock Units (based
on the Fair Market Value of the Common Stock at the time of such payment or distribution), which additional Restricted Stock Units shall be
subject to the same forfeiture restrictions and restrictions on transferability as apply to, and shall be settled at the same time as, and subject to
the same deferral elections as, the Restricted Stock Units with respect to which they relate. Credit under this paragraph for any dividends paid
during the Restricted Period (including any additional deferral period) shall be done as soon as practicable following the payment date for
such dividend.
8. Tax Withholding Obligations. In such rare circumstances in which withholding is applicable, to meet any such obligations of the
Company and Director that might arise with respect to any withholding taxes, FICA contributions, or the like under any federal, state, or local
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statute, ordinance, rule, or regulation in or connection with the award grant, vesting, deferral, or settlement of the Restricted Stock Units, the
Committee can, in the limited circumstances where appropriate, require that the Company withhold a number of shares of Common Stock
otherwise deliverable having a Fair Market Value sufficient to satisfy the statutory minimum (or such higher amount as is allowable without
adverse accounting consequences) of the Participant’s estimated total federal, state, and local tax obligations associated with vesting or
settlement of the Restricted Stock Units. In such rare circumstances, the Company may also, in lieu of or in addition to the foregoing, at its sole
discretion, either require the Director to deposit with the Company an amount of cash sufficient to meet the withholding requirements and/or
withhold the required amounts from the Director’s pay during the pay periods next following the date on which any such applicable tax liability
otherwise arises. The Company shall not deliver any of the Certificates until and unless the Director has made the deposit required herein or
proper provision for required withholding has been made. The Director hereby consents to any action reasonably taken by the Company to
meet the withholding obligations.
9. Restriction on Transferability. Until the Distribution Date, the Restricted Stock Units may not be sold, transferred, pledged, assigned,
or otherwise alienated at any time. Any attempt to do so contrary to the provisions hereof shall be null and void.
10. Rights as Shareholder. Subject to Section 6 above with respect to dividend rights, the Director shall not have voting or any other
rights as a stockholder of the Company with respect to the Restricted Stock Units prior to the Distribution Date. Upon the Distribution Date,
the Director will obtain full voting and other rights as a shareholder of the Company.
11. Administration. The Committee shall have the power to interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation, and application of the Plan as are consistent therewith and to interpret or revoke any such rules. All actions
taken and all interpretations and determinations made by the Committee shall be final and binding upon the Director, the Company, and all
other interested persons. No member of the Committee shall be personally liable for any action, determination, or interpretation made in good
faith with respect to the Plan or this Agreement.
12. Effect on Other Employee Benefit Plans. The value of the Restricted Stock Units granted pursuant to this Agreement shall not be
included as compensation, earnings, salaries, or other similar terms used when calculating the Director’s benefits under any director or other
benefit plan sponsored by the Company or any Subsidiary except as such plan otherwise expressly provides. The Company expressly reserves
its rights to amend, modify, or terminate any of the Company’s or any Subsidiary’s employee benefit plans.
13. Amendment. This Agreement may be amended only by a writing executed by the Company and the Director which specifically states
that it is amending this Agreement. Notwithstanding the foregoing, this Agreement may be amended solely by the Committee by a writing
which specifically states that it is amending this Agreement, so long as a copy of such amendment is delivered to the Director, and provided
that no such amendment adversely affects the rights of the Director (but limiting the foregoing, the Committee reserves the right to change, by
written notice to the Director, the provisions of the Restricted Stock Units or this Agreement in any way it may deem necessary or advisable to
carry out the purpose of the grant as a result of
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any change in applicable laws or regulations or any future law, regulation, ruling, or judicial decision, provided that any such change shall be
applicable only to Restricted Stock Units which are then subject to restrictions as provided herein). Notwithstanding anything else to the
contrary in this Section 13 or in the Plan, any amendment to this Agreement shall be subject to the requirements of Section 17 below.
14. Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of its
stock administrator. Any notice to be given to Director shall be addressed to Director at the address listed in the Company’s records. By a
notice given pursuant to this Section, either party may designate a different address for notices. Any notice shall have been deemed given
when actually delivered.
15. Severability. If all or any part of this Agreement or the Plan is declared by any court or governmental authority to be unlawful or
invalid, such unlawfulness or invalidity shall not invalidate any portion of this Agreement or the Plan not declared to be unlawful or invalid.
Any Section of this Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner
which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.
16. Construction. The Restricted Stock Units are being issued pursuant to Section 11 of the Plan and are subject to the terms of the Plan.
A copy of the Plan has been given to the Director, and additional copies of the Plan are available upon request during normal business hours
at the principal executive offices of the Company. To the extent that any provision of this Agreement violates or is inconsistent with an
express provision of the Plan, the Plan provision shall govern and any inconsistent provision in this Agreement shall be of no force or effect.
17. Code Section 409A Matters. This Restricted Stock Unit award is a nonqualified deferred compensation arrangement subject to Code
Section 409A. The Company has attempted in good faith to structure this Restricted Stock Unit award (including any deferral elections made in
connection with such award) in a manner that conforms to the requirements of Code Section 409A(a)(2), (3) and (4) and any ambiguities herein
will be interpreted to so conform with these requirements to the maximum extent permissible. To the extent the IRS challenges whether this
award in fact conforms with Code Section 409A(a)(2), (3) and (4), the Director shall be fully responsible for any additional taxes, penalties
and/or interest that might apply as a result of any adverse determination resulting from such challenge. To the extent this award contemplates
multiple Distribution Dates (including as a result of a deferral election), each amount to be paid (Shares to be distributed) hereunder on any
particular Distribution Date is designated as a separate payment and such payments will not collectively be treated as a single payment. Any
subsequent deferral election shall comply with the subsequent deferral election rules of Section 409A(a)(4)(C) (which, as relevant to this
award, are set forth on the election form attached hereto as Exhibit A). Notwithstanding anything else to the contrary in this Agreement or in
the Plan, the Company may accelerate distribution of Shares under this Agreement only in accordance with Treas. Reg. §1.409A-3(j)(4).
Notwithstanding anything to the contrary contained in the Plan or this Agreement, any acceleration of the Distribution Date that occurs
pursuant to Section 5 above and/or Section 14(c) of the Plan shall only occur on a Change in Control (as defined in the Plan) that qualifies as a
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“change in ownership or effective control,” or a “change in ownership of a substantial portion of the assets,” of the Company, all as defined
under Code Section 409A. In addition, for all purposes under this Agreement and to the extent permitted under Code Section 409A, the
Director shall have a “separation from service” as defined under Code Section 409A upon the Termination Date.
In addition, and notwithstanding any provision of this Agreement including Section 4 above to the contrary, if at the time of the
Director’s Termination Date he or she is a “specified employee” (as defined in Code Section 409A), and if and only if the deferral of payment
(distribution of Shares) as a result of the Director’s termination of service is necessary in order to prevent any accelerated income recognition
or additional tax under Code Section 409A(a)(1), then the Distribution Date shall be delayed until the earlier of (1) that date that is six months
following the date on which occurs the Director’s separation from service or (2) the date of the Director’s death following his or her separation
from service.
18. Miscellaneous.
(a) The Board may terminate, amend, or modify the Plan; provided, however, that no such termination, amendment, or modification
of the Plan may in any way adversely affect the Participant’s rights under this Agreement, without the Participant’s written approval.
(b) This Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required. The Company shall have no liability for failure to issue Shares pursuant to this
Agreement unless it is able to do so in compliance with all Applicable Laws.
(c) All obligations of the Company under the Plan and this Agreement, with respect to the Restricted Stock Units, shall be binding
on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation,
or otherwise, of all or substantially all of the business and/or assets of the Company.
(d) By signing this Agreement, the Director acknowledges that his or her personal employment or other service information
regarding participation in the Plan and information necessary to determine and pay, if applicable, benefits under the Plan must be shared with
other entities, including companies related to the Company and persons responsible for certain acts in the administration of the Plan. By
signing this Agreement, the Director consents to such transmission of personal data, as the Company believes is appropriate to administer the
Plan.
(e) To the extent not preempted by federal law, this Agreement shall be governed by, and construed in accordance with, the laws of
the State of California.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement effective as of the day and year first above written.
“Director” “Company”
Exponent, Inc.
By
Name: Richard L. Schlenker, Jr.
Title: Chief Financial Officer and
Corporate Secretary
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EXPONENT, INC.
RESTRICTED STOCK UNIT
DEFERRAL ELECTION
The following election constitutes an election by the undersigned (“you”) to defer payment of vested benefits and recognition of income
pursuant to the Restricted Stock Unit (“RSU”) Director Grant Agreement (“Agreement”) between you and Exponent, Inc. (“Company”) under
the Company’s 2008 Equity Incentive Plan. This Deferral Election may be entered into prior to or, in limited circumstances (described below)
following, the grant of your RSU. Capitalized terms used but not defined have the meanings set forth in the Company’s standard form
Agreement for Director RSU grants.
You understand you are not obligated to make a deferral election in the manner offered on this election form. If you do not make a
deferral election on this form, the Distribution Date of the RSU (the date the Shares subject to vested RSUs will be issued to you) will be the
earlier of:
(a) the third anniversary of the Grant Date of your RSU (the “Third Anniversary”), or
(b) your Termination Date (see Sections 2, 3 and 4 of the Agreement), or
(c) the Change in Control Date (see Sections 2, 4, 5 and 17 of the Agreement and Section 14(c) of the Plan),
or as soon as practicable thereafter, but in no later event later than the date that is forty-five (45) days after the relevant date.
Even if you make a deferral election on this form, the Shares underlying your vested RSUs will be distributed to you (or your heirs or
estate) earlier than the date(s) you elect in the event of (1) your death prior the elected distribution date(s), or (2) a Change in Control of the
Company in which your RSUs are terminating under Section 5 of the Agreement.
I. Deferral Election Made Prior to Grant Date of RSU. To defer the Distribution Date of the RSU beyond the date specified in the
second paragraph above, please select one of the following choices (A-E).
You agree to defer the Distribution Date applicable to your RSU so that the Shares underlying your vested RSU will be issued to you:
A. In one installment on January 15 , 20 (but not before the Third Anniversary); or
B. In (not to exceed five) annual installments starting on January 15, 20__ (but not before the Third Anniversary); or
C. In one installment on the date that is thirty (30) days following your Termination Date (the date that your service on the
Company’s Board terminates other than as a result of your death) that occurs after the Third Anniversary; or
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D. In one installment on the earlier of (1) January 15, 20 (but not before the Third Anniversary) or (2) the date that is thirty
(30) days following your Termination Date that occurs after the Third Anniversary; or
E. In (not to exceed five) annual installments starting on January 15, 20 (but not before the Third Anniversary),
unless your Termination Date occurs after the Third Anniversary but before distribution of the final installment under this Section
E, in which case any Shares related to vested RSUs that have not yet been distributed shall be distributed in a single installment on
the date that is thirty (30) days following your Termination Date.
Your election above shall become irrevocable as of the Grant Date and may be changed only in accordance with the requirements of Section II
below.
II. Deferral Election Made After the Date of Grant. To defer the Distribution Date of the RSU beyond the date specified at the Grant
Date (including any Deferral Election you previously made with respect to the RSU under Section I above), the following rules will apply to
your Deferral Election and, to the extent your election under this Section II does not conform with these rules, your election will be void and
the original Distribution Date or your prior election, as applicable, will continue to apply:
• Your Deferral Election under this Section II will become irrevocable as of tenth (10th) day after it is delivered to the Company,
subject to the Company’s review of the Deferral Election to ensure that it complies with all the requirements set forth herein,
in the Agreement and in the Plan.
• Your Deferral Election under this Section II will not be given effect until twelve (12) months and one day after the date on
which it becomes irrevocable.
• The date specified in your Deferral Election under this Section II must be after the date that is five (5) years after whichever
of the following date(s) (the “Prior Distribution Date”) would have applied in the absence of your election under this Section
II: (a) the Third Anniversary, or (b) the last of the date(s) previously specified under a Deferral Election under Section I
above.
You agree to defer the Distribution Date applicable to your RSU so that the Shares underlying your vested RSU will be issued to you:
A. In one installment on January 15, 20 (but not before the fifth anniversary of the Prior Distribution Date); or
B. In (not to exceed five) annual installments starting on January 15, 20 (but not before the fifth anniversary of the
Prior Distribution Date); or
C. In one installment on the earlier of (1) January 15, 20 (but not before the Prior Distribution Date) or (2) the date that is
thirty (30) days following the fifth (5th) anniversary of your Termination Date (the date that your service on the Company’s Board
terminates other than as a result of your death).
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The Company shall have sole discretion to revise the terms of this election form, or the procedures with respect to making this election or
any election change, to the extent the Company deems it helpful or appropriate to comply with applicable law.
[Director Name]
[Date]
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Exhibit 10.34
EXPONENT, INC.
Restricted Stock Award Plan
Amended and Restated Restricted Stock Unit Bonus Grant Agreement
This Restricted Stock Unit Bonus Grant Agreement (the “Agreement”) is dated as of , 200 and is entered into between
Exponent, Inc., a Delaware corporation (the “Company”), and (the “Employee”).
Pursuant to the terms of the Restricted Stock Award Plan (the “Plan”) the Company hereby awards to Employee restricted stock units
(“Restricted Stock Units”) on the terms and conditions as set forth in this Agreement and the Plan. Capitalized terms used but not defined in
this Agreement shall have the meaning specified in the Plan.
In consideration of the mutual promises set forth below, the parties hereto agree as follows:
1. Award of Restricted Stock Units. Subject to the terms and conditions of this Agreement and the Plan (the terms of which are
incorporated herein by reference) and effective as of the date set forth above, the Company hereby grants to the Employee ( )
restricted stock units.
2. Vesting. The restricted stock units, which are payable as part of an earned bonus under the Company’s Equity Compensation Program,
are fully vested regardless of future service.
3. Distribution. Stock certificates (the “Certificate”) evidencing the conversion of restricted stock units into shares of Common Stock
shall be issued and registered in the Employee’s name as of the later of the fourth anniversary of the date of this Agreement. Subject to
Section 6 of this Agreement, Certificates will be delivered to the Employee as soon as practicable after the end of the restricted period.
4. Effect of Termination of Service. If the Employee’s service is terminated by the Employee or by the Company or a Subsidiary for any
reason, including Disability but not including death, before the end of the restricted period, Certificates will be distributed to the Employee as
soon as practicable after the end of the restricted period. In the event of death, Certificates will be delivered as soon as practicable to
Employee’s beneficiary or estate.
5. Dividends. Participants holding restricted stock units shall be entitled to receive cash payments equal to any cash dividends and other
distributions paid with respect to a corresponding number of shares of Common Stock, provided that if any such dividends or distributions are
paid in shares of Common Stock, the Fair Market Value of such shares of Common Stock shall be converted into restricted stock units, and
further provided that such restricted stock units shall be subject to the same forfeiture restrictions and restrictions on transferability as apply
to the restricted stock units with respect to which they relate.
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6. Tax Withholding Obligations. To meet the obligations of the Company and Employee with respect to any withholding taxes, FICA
contributions, or the like under any federal, state, or local statute, ordinance, rule, or regulation in or connection with the award, deferral, or
settlement of the restricted stock units, the Committee shall require that the Company withhold a number of shares of Company Stock
otherwise deliverable having a Fair Market Value sufficient to satisfy the statutory minimum (or such higher amount as is allowable without
adverse accounting consequences) of the Participant’s estimated total federal, state, and local tax obligations associated with vesting or
settlement of the restricted stock units. The Company may also in lieu of or in addition to the foregoing, at its sole discretion, either require the
Employee to deposit with the Company an amount of cash sufficient to meet the withholding requirements and/or, withhold the required
amounts from the Employee’s pay during the pay periods next following the date on which any such applicable tax liability otherwise arises.
The Company shall not deliver any Certificates until and unless the Employee has made the deposit required herein or proper provision for
required withholding has been made. Employee hereby consents to any action reasonably taken by the Company to meet the withholding
obligations.
7. Restriction on Transferability. Until distribution, the restricted stock units may not be sold, transferred, pledged, assigned, or
otherwise alienated at any time. Any attempt to do so contrary to the provisions hereof shall be null and void. Notwithstanding the above,
distribution can be made pursuant to will, the laws of descent and distribution, intra-family transfer instruments or to an inter vivos trust.
8. Rights as Shareholder. The Employee shall not have voting or any other rights as a shareholder of the Company with respect to the
restricted stock units. Upon settlement of the Restricted Stock Units into shares of Company Stock, the Employee will obtain full voting and
other rights as a shareholder of the Company.
9. Administration. The Committee shall have the power to interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation, and application of the Plan as are consistent therewith and to interpret or revoke any such rules. All actions
taken and all interpretations and determinations made by the Committee shall be final and binding upon the Employee, the Company, and all
other interested persons. No member of the Committee shall be personally liable for any action, determination, or interpretation made in good
faith with respect to the Plan or this Agreement.
10. Effect on Other Employee Benefit Plans. The value of the restricted stock units granted pursuant to this Agreement shall not be
included as compensation, earnings, salaries, or other similar terms used when calculating the Employee’s benefits under any employee benefit
plan sponsored by the Company or any Subsidiary except as such plan otherwise expressly provides. The Company expressly reserves its
rights to amend, modify, or terminate any of the Company’s or any Subsidiary’s employee benefit plans.
11. No Employment Rights. The award of the restricted stock units pursuant to this Agreement shall not give the Employee any right to
remain employed by the Company or a
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Subsidiary. Also, the award is completely within the discretion of the Company. It is not made as a part of any ongoing element of
compensation or something which Employee should expect to receive annually or on any other periodic basis. It does not constitute part of
Employee’s salary or wages and unless specifically agreed to otherwise with the Company is not relevant for purposes of determining any
post-employment payment or severance.
12. Amendment. This Agreement may be amended only by a writing executed by the Company and the Employee which specifically
states that it is amending this Agreement. Notwithstanding the foregoing, this Agreement may be amended solely by the Committee by a
writing which specifically states that it is amending this Agreement, so long as a copy of such amendment is delivered to the Employee, and
provided that no such amendment adversely affects the rights of the Employee (but limiting the foregoing, the Committee reserves the right to
change, by written notice to the Employee, the provisions of the restricted stock units or this Agreement in any way it may deem necessary or
advisable to carry out the purpose of the grant as a result of any change in applicable laws or regulations or any future law, regulation, ruling,
or judicial decision, provided that any such change shall be applicable only to restricted stock units which are then subject to restrictions as
provided herein).
13. Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of its
stock administrator. Any notice to be given to Employee shall be addressed to Employee at the address listed in the Company’s records. By a
notice given pursuant to this Section, either party may designate a different address for notices. Any notice shall have been deemed given
when actually delivered.
14. Severability. If all or any part of this Agreement or the Plan is declared by any court or governmental authority to be unlawful or
invalid, such unlawfulness or invalidity shall not invalidate any portion of this Agreement or the Plan not declared to be unlawful or invalid.
Any Section of this Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner
which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.
15. Construction. The restricted stock units are being issued pursuant to Section 7 of the Plan and are subject to the terms of the Plan. A
copy of the Plan has been given to the Employee, and additional copies of the Plan are available upon request during normal business hours at
the principal executive offices of the Company. To the extent that any provision of this Agreement violates or is inconsistent with an express
provision of the Plan, the Plan provision shall govern and any inconsistent provision in this Agreement shall be of no force or effect.
16. Miscellaneous.
(a) The Board may terminate, amend, or modify the Plan; provided, however, that no such termination, amendment, or modification
of the Plan may in any way adversely affect the Participant’s rights under this Agreement, without the Participant’s written approval.
(b) This Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required.
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(c) All obligations of the Company under the Plan and this Agreement, with respect to the restricted stock units, shall be binding
on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation,
or otherwise, of all or substantially all of the business and/or assets of the Company.
(d) By signing this Agreement, the Employee acknowledges that his or her personal employment information regarding
participation in the Plan and information necessary to determine and pay, if applicable, benefits under the Plan must be shared with other
entities, including companies related to the Company and persons responsible for certain acts in the administration of the Plan. By signing
this Agreement employee consents to such transmission of personal data as the Company believes is appropriate to administer the Plan.
(e) To the extent not preempted by federal law, this Agreement shall be governed by, and construed in accordance with, the laws of
the State of California.
(f) “Disability” means the total and permanent disability of the Employee where, by reason of any medically determinable physical
or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve
(12) months, the Participant is either (i) unable to engage in any substantial gainful activity; or (ii) receiving income replacement benefits for a
period of not less than three (3) months under an accident or health plan covering employees of the Company, in each case in accordance with
Code Section 409A and applicable guidance issued thereunder.
(g) The only circumstance in which a transaction specified in Section 17 below will result in acceleration of distribution of Shares
shall be in connection with a transaction or series of transactions in which the Company experiences a “change in ownership,” a “change in
effective control,” or a “change in the ownership of a substantial portion of assets,” in each case as defined under Code Section 409A and
applicable guidance issued thereunder.
17. Change In Control. In the event of a Change in Control, the successor to the Company shall assume, or substitute equivalent awards
for, this award on the same terms and conditions (including vesting conditions). The medium of settlement, whether shares, cash or some
combination thereof, shall be determined at the discretion of the Administrator with the consent of the successor at the time of the Change in
Control. If the award holder is involuntarily terminated for any reason other than award holder’s failure to substantially perform the duties of
award holder’s position, after written notice and a reasonable opportunity to cure, within a two-year period beginning on the date of the
Change in Control, all awards shall be vested and settled on the date of termination. For this purpose, involuntary termination shall include the
occurrence of one or more of the following events (which occurs involuntarily to the award holder) provided that the award holder provides
notice of such event within 30 days of its first occurrence and terminates employment within 12 months of the first occurrence of the event:
(1) A material diminution in the award holder’s base compensation. (2) A material diminution in the award holder’s authority, duties, or
responsibilities. (3) A material diminution in the authority, duties, or responsibilities of the supervisor to whom the award holder is required to
report. (4) A material diminution in the budget over which the award holder retains authority. (5) A material change in the geographic location
at which the award holder must perform the services.
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18. General Code Section 409A Matters. This award may be a “nonqualified deferred compensation arrangement” subject to Code
Section 409A. To the extent that it is, the parties intend that it conform to the requirements of Code Section 409A(a)(2), (3) and (4) and any
ambiguities herein will be interpreted to so conform with these requirements to the maximum extent permissible. To the extent the IRS
challenges whether this award in fact conforms with Code Section 409A(a)(2), (3) and (4), the Employee shall be fully responsible for any
additional taxes, penalties and/or interest that might apply as a result of any adverse determination resulting from such challenge. Any
subsequent deferral election, if permitted in the Company’s sole discretion, shall comply with the subsequent deferral election rules of Code
Section 409A(a)(4)(C). In addition, notwithstanding anything else to the contrary in this Agreement or in the Plan, (a) the Company may
accelerate distribution of Shares under this Agreement only in accordance with Treas. Reg. §1.409A-3(j)(4), and (b) no amendment may be
made to this award except as permitted under this paragraph.
In addition, if at the time of the Employee’s Termination Date he or she is a “specified employee” (as defined in Code Section 409A), and if and
only if the deferral of payment or distribution of Shares as a result of the Employee’s termination of services is necessary in order to prevent
any accelerated income recognition or additional tax under Code Section 409A(a)(1), then the Distribution Date shall be delayed until the
earlier of (1) that date that is six months following the date on which occurs the Employee’s separation from service or (2) the date of the
Employee’s death following his or her separation from service.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement effective as of the day and year first above written.
“Employee” “Company”
Exponent, Inc.
By
Name:
Title:
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Exhibit 10.35
EXPONENT, INC.
Restricted Stock Award Plan
Amended and Restated Restricted Stock Unit Matching Grant Agreement
This Restricted Stock Unit Matching Grant Agreement (the “Agreement”) is dated as of , 200 and is entered into between
Exponent, Inc., a Delaware corporation (the “Company”), and (the “Employee”).
Pursuant to the terms of the Restricted Stock Award Plan (the “Plan”) the Company hereby awards to Employee restricted stock units
(“Restricted Stock Units”) on the terms and conditions as set forth in this Agreement and the Plan. Capitalized terms used but not defined in
this Agreement shall have the meaning specified in the Plan.
In consideration of the mutual promises set forth below, the parties hereto agree as follows:
1. Award of Restricted Stock Units. Subject to the terms and conditions of this Agreement and the Plan (the terms of which are
incorporated herein by reference) and effective as of the date set forth above, the Company hereby grants to the Employee ( )
Restricted Stock Units.
2. Vesting. Restricted stock units vest on the fourth anniversary (“Vesting Date”) of the date of this Agreement provided that through
the Vesting Date the following requirements are met: (1) Employee remains continuously employed by the Company at a 20% work rate or
more; (2) Employee does all consulting work through the Company; and (3) Employee does not become an employee of, or do consulting work
outside the Company for, a past or present client, beneficial party or competitor of the Company. Employee has an affirmative duty to notify
the Company of any services which are required to be provided through the Company. In the event of a merger or asset sale within the
meaning of the Plan, the vesting of Restricted Stock Units shall accelerate to the extent, if any, provided in the Plan.
3. Effect of Termination of Service or Leave of Absence. If the Employee’s service is terminated by the Employee or by the Company or a
Subsidiary for any reason except Employee’s death, Disability or “Retirement” (termination after age 59 1/2 ) before the Vesting Date, all
restricted stock units shall be forfeited. If Employee dies or becomes Disabled, the pro rata portion of Employee’s restricted stock units
through the date of death or Disability shall vest. In the case of Retirement, all restricted stock units shall vest. If Employee returns to service
immediately after the end of an approved leave of absence, Employee shall be deemed to have remained continuously employed by the
Company through the period of the leave of absence.
4. Distribution. Stock certificates (the “Certificate”) evidencing the conversion of restricted stock units into shares of Common Stock
shall be issued and registered in the Employee’s name as of the Vesting Date. Subject to Section 6 of this Agreement, Certificates
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will be delivered to the Employee as soon as practicable after the end of the restricted period. In the case of death, Certificates shall be
delivered to the Employee’s beneficiary or estate as soon as practicable following the date of death.
5. Dividends. Participants holding restricted stock units shall be entitled to receive cash payments equal to any cash dividends and other
distributions paid with respect to a corresponding number of shares of Common Stock, provided that if any such dividends or distributions are
paid in shares of Common Stock, the Fair Market Value of such shares of Common Stock shall be converted into restricted stock units, and
further provided that such restricted stock units shall be subject to the same forfeiture restrictions and restrictions on transferability as apply
to the Restricted Stock Units with respect to which they relate.
6. Tax Withholding Obligations. To meet the obligations of the Company and Employee with respect to any withholding taxes, FICA
contributions, or the like under any federal, state, or local statute, ordinance, rule, or regulation in or connection with the award, deferral, or
settlement of the restricted stock units, the Committee shall require that the Company withhold a number of shares of Common Stock otherwise
deliverable having a Fair Market Value sufficient to satisfy the statutory minimum (or such higher amount as is allowable without adverse
accounting consequences) of the Participant’s estimated total federal, state, and local tax obligations associated with vesting or settlement of
the restricted stock units. The Company may also in lieu of or in addition to the foregoing, at its sole discretion, either require the Employee to
deposit with the Company an amount of cash sufficient to meet the withholding requirements and/or, withhold the required amounts from the
Employee’s pay during the pay periods next following the date on which any such applicable tax liability otherwise arises. The Company shall
not deliver any of the Certificates until and unless the Employee has made the deposit required herein or proper provision for required
withholding has been made. Employee hereby consents to any action reasonably taken by the Company to meet the withholding obligations.
7. Restriction on Transferability. Until distribution, the restricted stock units may not be sold, transferred, pledged, assigned, or
otherwise alienated at any time. Any attempt to do so contrary to the provisions hereof shall be null and void. Notwithstanding the above,
distribution can be made pursuant to will, the laws of descent and distribution, intra-family transfer instruments or to an inter vivos trust.
8. Rights as Shareholder. The Employee shall not have voting or any other rights as a shareholder of the Company with respect to the
restricted stock units. Upon settlement of the restricted stock units into shares of Company Stock, the Employee will obtain full voting and
other rights as a shareholder of the Company.
9. Administration. The Committee shall have the power to interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation, and application of the Plan as are consistent therewith and to interpret or revoke any such rules. All actions
taken and all interpretations and determinations made by the Committee shall be final and binding upon the Employee, the Company, and all
other interested persons. No member of the Committee shall be personally liable for any action, determination, or interpretation made in good
faith with respect to the Plan or this Agreement.
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10. Effect on Other Employee Benefit Plans. The value of the restricted stock units granted pursuant to this Agreement shall not be
included as compensation, earnings, salaries, or other similar terms used when calculating the Employee’s benefits under any employee benefit
plan sponsored by the Company or any Subsidiary except as such plan otherwise expressly provides. The Company expressly reserves its
rights to amend, modify, or terminate any of the Company’s or any Subsidiary’s employee benefit plans.
11. No Employment Rights. The award of the restricted stock units pursuant to this Agreement shall not give the Employee any right to
remain employed by the Company or a Subsidiary. Also, the award is completely within the discretion of the Company. It is not made as a part
of any ongoing element of compensation or something which Employee should expect to receive annually or on any other periodic basis. It
does not constitute part of Employee’s salary or wages and unless specifically agreed to otherwise with the Company is not relevant for
purposes of determining any post-employment payment or severance.
12. Amendment. This Agreement may be amended only by a writing executed by the Company and the Employee which specifically
states that it is amending this Agreement. Notwithstanding the foregoing, this Agreement may be amended solely by the Committee by a
writing which specifically states that it is amending this Agreement, so long as a copy of such amendment is delivered to the Employee, and
provided that no such amendment adversely affects the rights of the Employee (but limiting the foregoing, the Committee reserves the right to
change, by written notice to the Employee, the provisions of the restricted stock units or this Agreement in any way it may deem necessary or
advisable to carry out the purpose of the grant as a result of any change in applicable laws or regulations or any future law, regulation, ruling,
or judicial decision, provided that any such change shall be applicable only to restricted stock units which are then subject to restrictions as
provided herein).
13. Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of its
stock administrator. Any notice to be given to Employee shall be addressed to Employee at the address listed in the Company’s records. By a
notice given pursuant to this Section, either party may designate a different address for notices. Any notice shall have been deemed given
when actually delivered.
14. Severability. If all or any part of this Agreement or the Plan is declared by any court or governmental authority to be unlawful or
invalid, such unlawfulness or invalidity shall not invalidate any portion of this Agreement or the Plan not declared to be unlawful or invalid.
Any Section of this Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner
which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.
15. Construction. The restricted stock units are being issued pursuant to Section 7 of the Plan and are subject to the terms of the Plan. A
copy of the Plan has been given to the Employee, and additional copies of the Plan are available upon request during normal business hours at
the principal executive offices of the Company. To the extent that any provision of this Agreement violates or is inconsistent with an express
provision of the Plan, the Plan provision shall govern and any inconsistent provision in this Agreement shall be of no force or effect.
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16. Miscellaneous.
(a) The Board may terminate, amend, or modify the Plan; provided, however, that no such termination, amendment, or modification
of the Plan may in any way adversely affect the Participant’s rights under this Agreement, without the Participant’s written approval.
(b) This Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required.
(c) All obligations of the Company under the Plan and this Agreement, with respect to the restricted stock units, shall be binding
on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation,
or otherwise, of all or substantially all of the business and/or assets of the Company.
(d) By signing this Agreement, the Employee acknowledges that his or her personal employment information regarding
participation in the Plan and information necessary to determine and pay, if applicable, benefits under the Plan must be shared with other
entities, including companies related to the Company and persons responsible for certain acts in the administration of the Plan. By signing
this Agreement employee consents to such transmission of personal data as the Company believes is appropriate to administer the Plan.
(e) To the extent not preempted by federal law, this Agreement shall be governed by, and construed in accordance with, the laws of
the State of California.
(f) “Disability” means the total and permanent disability of the Employee where, by reason of any medically determinable physical
or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve
(12) months, the Participant is either (i) unable to engage in any substantial gainful activity; or (ii) receiving income replacement benefits for a
period of not less than three (3) months under an accident or health plan covering employees of the Company, in each case in accordance with
Code Section 409A and applicable guidance issued thereunder.
(g) The only circumstance in which a transaction specified in Section 17 below will result in acceleration of distribution of Shares
shall be in connection with a transaction or series of transactions in which the Company experiences a “change in ownership,” a “change in
effective control,” or a “change in the ownership of a substantial portion of assets,” in each case as defined under Code Section 409A and
applicable guidance issued thereunder.
17. Change in Control. In the event of a Change in Control, the successor to the Company shall assume, or substitute equivalent awards
for, this award on the same terms and conditions (including vesting conditions). The medium of settlement, whether shares, cash or some
combination thereof, shall be determined at the discretion of the Administrator with the consent of the successor at the time of the Change in
Control. If the award holder is involuntarily terminated for any reason other than award holder’s failure to substantially perform the duties of
award holder’s position, after written notice and a reasonable opportunity to cure,
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within a two-year period beginning on the date of the Change in Control, all awards shall be vested and settled on the date of termination. For
this purpose, involuntary termination shall include the occurrence of one or more of the following events (which occurs involuntarily to the
award holder) provided that the award holder provides notice of such event within 30 days of its first occurrence and terminates employment
within 12 months of the first occurrence of the event: (1) A material diminution in the award holder’s base compensation. (2) A material
diminution in the award holder’s authority, duties, or responsibilities. (3) A material diminution in the authority, duties, or responsibilities of
the supervisor to whom the award holder is required to report. (4) A material diminution in the budget over which the award holder retains
authority. (5) A material change in the geographic location at which the award holder must perform the services.
18. General Code Section 409A Matters. This award may be a “nonqualified deferred compensation arrangement” subject to Code
Section 409A. To the extent that it is, the parties intend that it conform to the requirements of Code Section 409A(a)(2), (3) and (4) and any
ambiguities herein will be interpreted to so conform with these requirements to the maximum extent permissible. To the extent the IRS
challenges whether this award in fact conforms with Code Section 409A(a)(2), (3) and (4), the Employee shall be fully responsible for any
additional taxes, penalties and/or interest that might apply as a result of any adverse determination resulting from such challenge. Any
subsequent deferral election, if permitted in the Company’s sole discretion, shall comply with the subsequent deferral election rules of Code
Section 409A(a)(4)(C). In addition, notwithstanding anything else to the contrary in this Agreement or in the Plan, (a) the Company may
accelerate distribution of Shares under this Agreement only in accordance with Treas. Reg. §1.409A-3(j)(4), and (b) no amendment may be
made to this award except as permitted under this paragraph.
In addition, if at the time of the Employee’s Termination Date he or she is a “specified employee” (as defined in Code Section 409A), and if and
only if the deferral of payment or distribution of Shares as a result of the Employee’s termination of services is necessary in order to prevent
any accelerated income recognition or additional tax under Code Section 409A(a)(1), then the Distribution Date shall be delayed until the
earlier of (1) that date that is six months following the date on which occurs the Employee’s separation from service or (2) the date of the
Employee’s death following his or her separation from service.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement effective as of the day and year first above written.
“Employee” “Company”
Exponent, Inc.
By
Name:
Title:
6
Exhibit 10.36
EXPONENT, INC.
Restricted Stock Award Plan
Amended and Restated Restricted Stock Unit Director Grant Agreement
This Restricted Stock Unit Director Grant Agreement (the “Agreement”) is dated as of and is entered into between Exponent, Inc.,
a Delaware corporation (the “Company”), and (the “Director”).
Pursuant to the terms of the Restricted Stock Award Plan (the “Plan”) the Company hereby awards to Director restricted stock units
(“Restricted Stock Units”) on the terms and conditions as set forth in this Agreement and the Plan. Capitalized terms used but not defined in
this Agreement shall have the meaning specified in the Plan.
In consideration of the mutual promises set forth below, the parties hereto agree as follows:
1. Award of Restricted Stock Units. Subject to the terms and conditions of this Agreement and the Plan (the terms of which are
incorporated herein by reference) and effective as of the date set forth above, the Company hereby grants to the Director Restricted
Stock Units.
2. Vesting. Restricted stock units vest in three equal installments on the day prior to the Company’s annual shareholder meeting
(“Vesting Dates”), provided that through a particular Vesting Date the Director remains continuously in service to the Company.
3. Distribution of Shares. Subject to any limitations set forth in this Agreement (including Sections 6 and 18 below) and the Plan, a
number of Shares of Common Stock will be issued (“distributed”) to the Director in settlement of this Restricted Stock Unit equal to the
number of then-vested Restricted Stock Units on (or as soon as practical after, but in no event later than forty-five (45) days after) the earlier to
occur of (a) the third anniversary of the Grant Date, (b) the Termination Date (but only with respect to the portion of the award that is then-
vested as provided for in Section 4 of the Agreement, or (c) to the extent specified in Section 17 of the agreement, the date which vesting
acceleration occurs in connection with a change in control of the Company (the earlier of such dates, the “Distribution Date”). Upon or as
soon as practicable following the Distribution Date, stock certificates (including electronic representations of the same, the “Certificate”)
evidencing the Shares issued upon settlement of vested Restricted Stock Units shall be issued and registered in the Director’s name and
delivered to (or appropriate notice in the case of electronic Certificate delivered to) the Director (or in the case of the Director’s death, to the
Director’s beneficiary or estate).
4. Effect of Termination of Service. If the Director’s service on the Company’s Board of Directors is terminated by the Director or by the
Company, the pro rata portion of the
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Restricted Stock Units through the date of such service termination that qualifies as a “separation from service” under Code Section 409A (the
“Termination Date”) will vest and the Shares underlying all vested Restricted Stock Units will be distributed as set forth in Section 3 above,
with the remainder of the unvested Restricted Stock Units being immediately forfeited. Upon forfeiture of Restricted Stock Units, the portion of
the award so forfeited shall terminate and the Company shall have no obligation to issue any Shares in settlement of that portion of the award.
5. Dividends. Participants holding restricted stock units shall be entitled to receive cash payments equal to any cash dividends and other
distributions paid with respect to a corresponding number of shares of Common Stock, provided that if any such dividends or distributions are
paid in shares of Common Stock, the Fair Market Value of such shares of Common Stock shall be converted into restricted stock units, and
further provided that such restricted stock units shall be subject to the same forfeiture restrictions and restrictions on transferability as apply
to the Restricted Stock Units with respect to which they relate.
6. Tax Withholding Obligations. In such rare circumstances in which withholding is applicable, to meet any such obligations of the
Company and Director that might arise with respect to any withholding taxes, FICA contributions, or the like under any federal, state, or local
statute, ordinance, rule, or regulation in or connection with the award, deferral, or settlement of the restricted stock units, the Committee can, in
the limited circumstances where appropriate, require that the Company withhold a number of shares of Common Stock otherwise deliverable
having a Fair Market Value sufficient to satisfy the statutory minimum (or such higher amount as is allowable without adverse accounting
consequences) of the Participant’s estimated total federal, state, and local tax obligations associated with vesting or settlement of the
restricted stock units. In such rare circumstances, the Company may also, in lieu of or in addition to the foregoing, at its sole discretion, either
require the Director to deposit with the Company an amount of cash sufficient to meet the withholding requirements and/or, withhold the
required amounts from the Director’s pay during the pay periods next following the date on which any such applicable tax liability otherwise
arises. The Company shall not deliver any of the Certificates until and unless the Director has made the deposit required herein or proper
provision for required withholding has been made. The Director hereby consents to any action reasonably taken by the Company to meet the
withholding obligations.
7. Restriction on Transferability. Until distribution, the restricted stock units may not be sold, transferred, pledged, assigned, or
otherwise alienated at any time. Any attempt to do so contrary to the provisions hereof shall be null and void. Notwithstanding the above,
distribution can be made pursuant to will, the laws of descent and distribution, intra-family transfer instruments or to an inter vivos trust.
8. Rights as Shareholder. The Director shall not have voting or any other rights as a shareholder of the Company with respect to the
restricted stock units. Upon settlement of the restricted stock units into shares of Company Stock, the Director will obtain full voting and other
rights as a shareholder of the Company.
9. Administration. The Committee shall have the power to interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation, and application of the Plan as are consistent therewith and to interpret or revoke any such rules. All actions
taken and
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all interpretations and determinations made by the Committee shall be final and binding upon the Director, the Company, and all other
interested persons. No member of the Committee shall be personally liable for any action, determination, or interpretation made in good faith
with respect to the Plan or this Agreement.
10. Effect on Other Employee Benefit Plans. The value of the restricted stock units granted pursuant to this Agreement shall not be
included as compensation, earnings, salaries, or other similar terms used when calculating the Director’s benefits under any director or other
benefit plan sponsored by the Company or any Subsidiary except as such plan otherwise expressly provides. The Company expressly reserves
its rights to amend, modify, or terminate any of the Company’s or any Subsidiary’s employee benefit plans.
11. No Employment, Consulting or Board Service Rights. The award of the restricted stock units pursuant to this Agreement shall not
give the Director any right to remain in the service of the Company or a Subsidiary. Also, the award is completely within the discretion of the
Company. It is not made as a part of any ongoing element of compensation or something which the Director should expect to receive annually
or on any other periodic basis. It does not constitute part of the Director’s compensation and unless specifically agreed to otherwise with the
Company is not relevant for purposes of determining any post-employment payment or severance.
12. Amendment. This Agreement may be amended only by a writing executed by the Company and the Director which specifically states
that it is amending this Agreement. Notwithstanding the foregoing, this Agreement may be amended solely by the Committee by a writing
which specifically states that it is amending this Agreement, so long as a copy of such amendment is delivered to the Director, and provided
that no such amendment adversely affects the rights of the Director (but limiting the foregoing, the Committee reserves the right to change, by
written notice to the Director, the provisions of the restricted stock units or this Agreement in any way it may deem necessary or advisable to
carry out the purpose of the grant as a result of any change in applicable laws or regulations or any future law, regulation, ruling, or judicial
decision, provided that any such change shall be applicable only to restricted stock units which are then subject to restrictions as provided
herein). Notwithstanding anything to the contrary contained in this Section 12 or in the Plan, any amendments to this Agreement shall be
subject to the requirements of Section 18 of this Agreement.
13. Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of its
stock administrator. Any notice to be given to Director shall be addressed to Director at the address listed in the Company’s records. By a
notice given pursuant to this Section, either party may designate a different address for notices. Any notice shall have been deemed given
when actually delivered.
14. Severability. If all or any part of this Agreement or the Plan is declared by any court or governmental authority to be unlawful or
invalid, such unlawfulness or invalidity shall not invalidate any portion of this Agreement or the Plan not declared to be unlawful or invalid.
Any Section of this Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner
which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.
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15. Construction. The restricted stock units are being issued pursuant to Section 7 of the Plan and are subject to the terms of the Plan. A
copy of the Plan has been given to the Director, and additional copies of the Plan are available upon request during normal business hours at
the principal executive offices of the Company. To the extent that any provision of this Agreement violates or is inconsistent with an express
provision of the Plan, the Plan provision shall govern and any inconsistent provision in this Agreement shall be of no force or effect.
16. Miscellaneous.
(a) The Board may terminate, amend, or modify the Plan; provided, however, that no such termination, amendment, or modification
of the Plan may in any way adversely affect the Participant’s rights under this Agreement, without the Participant’s written approval.
(b) This Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required.
(c) All obligations of the Company under the Plan and this Agreement, with respect to the restricted stock units, shall be binding
on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation,
or otherwise, of all or substantially all of the business and/or assets of the Company.
(d) By signing this Agreement, the Director acknowledges that his or her personal employment information regarding
participation in the Plan and information necessary to determine and pay, if applicable, benefits under the Plan must be shared with other
entities, including companies related to the Company and persons responsible for certain acts in the administration of the Plan. By signing
this Agreement the Director consents to such transmission of personal data, as the Company believes is appropriate to administer the Plan.
(e) To the extent not preempted by federal law, this Agreement shall be governed by, and construed in accordance with, the laws of
the State of California.
17. Change in Control. In the event of a Change in Control, all awards shall be vested and the shares underlying the Restricted Stock
Units will be distributed as set forth in Section 3 above.
18. Code Section 409A Matters. This Restricted Stock Unit award is a “nonqualified deferred compensation arrangement” subject to
Code Section 409A. The Company has attempted in good faith to structure this Restricted Stock Unit award (including any deferral elections
made in connection with such award) in a manner that conforms to the requirements of Code Section 409A(a)(2), (3) and (4), and any
ambiguities herein will be interpreted to so comply with these requirements to the maximum extent permissible. To the extent the IRS challenges
whether this award in fact conforms with Code Section 409A(a)(2), (3) and (4), the Director shall be fully responsible for any additional taxes,
penalties and/or interest that might apply as a result of any adverse determination resulting from such challenge. To the extent this award
contemplates multiple Distribution Dates (including as a result of a deferral election), each
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amount to be paid (Shares to be distributed) hereunder on any particular Distribution Date is designated as a separate payment and such
payments will not collectively be treated as a single payment. Any subsequent deferral election shall comply with the subsequent deferral
election rules of Section 409A(a)(4)(C) (which, as relevant to this award, are set forth on the election form attached hereto as Exhibit A).
Notwithstanding anything else to the contrary in this Agreement or the Plan, the Company may accelerate distribution of Shares under this
Agreement only in accordance with Treas. Reg. §1.409A-3(j)(4).
In addition, and notwithstanding any provision of this Agreement including Section 4 above to the contrary, if at the time of the Director’s
Termination Date he or she is a “specified employee” (as defined in Code Section 409A), and if and only if the deferral of payment or
distribution of Shares as a result of the Director’s termination of services is necessary in order to prevent any accelerated income recognition
or additional tax under Code Section 409A(a)(1), then the Distribution Date shall be delayed until the earlier of (1) that date that is six months
following the date on which occurs the Director’s separation from service or (2) the date of the Director’s death following his or her separation
from service.
Notwithstanding anything to the contrary contained in the Plan or this Agreement, (1) any acceleration of the Distribution Date that occurs
pursuant to Section 17 of the Agreement shall only occur on a transaction that qualifies as a “change in ownership or effective control,” or a
“change in ownership of a substantial portion of the assets,” of the Company, all as defined under Code Section 409A; and (2) for all purposes
under this Agreement and to the extent permitted under Code Section 409A, the Director shall have a “separation from service” as defined
under Code Section 409A upon the Termination Date.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement effective as of the day and year first above written.
“Director” “Company”
Exponent, Inc.
By
Name:
Title:
6
Exhibit 21.1
We consent to the incorporation by reference in the Registration Statements (Nos. 33-38479, 33-46054, 33-72510, 33-79368, 333-31830, 333-
67806, 333-99243, 333-106105, 333-117108, 333-128141, 333-138618, 333-151238) on Form S-8 of Exponent, Inc. of our report dated February 24,
2009, with respect to the consolidated balance sheets of Exponent, Inc. as of January 2, 2009 and December 28, 2007, and related consolidated
statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended
January 2, 2009, and related financial statement schedule and the effectiveness of internal control over financial reporting as of January 2, 2009,
which report appears in the January 2, 2009 annual report on Form 10-K of Exponent, Inc.
CERTIFICATION
CERTIFICATION
In connection with the Annual Report of Exponent, Inc. (the “Company”) on Form 10-K for the fiscal year ending January 2, 2009 as filed
with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael R. Gaulke, Chief Executive Officer and Chairman of
the Board of Directors of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002,
that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Exponent, Inc. (the “Company”) on Form 10-K for the fiscal year ending January 2, 2009 as filed
with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard L. Schlenker, Chief Financial Officer of the
Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.