THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933
HARDING LAWSON ASSOCIATES GROUP, INC.
200,000 Shares
of
Common Stock
($0.01 par value)
M E M O R A N D U M
April 27, 1997
NON-EMPLOYEE DIRECTOR COMPENSATION STOCK PLAN
This memorandum relates to 200,000 shares of common stock, $0.01 par
value (the "Shares") of Harding Lawson Associates Group, Inc., a Delaware
corporation (the "Corporation"), which may be acquired by Non-Employee Directors
of the Corporation under the Non-Employee Director Compensation Stock Plan (the
"Stock Plan"). The Stock Plan was adopted by the Board of Directors and approved
by the Corporation's stockholders in 1997. Participants in the Corporation's
Non-qualified Deferred Compensation Plan (the "Deferred Compensation Plan") may
elect each year to defer the receipt of any Shares that may be acquired by them
under the Stock Plan in the following calendar year.
For more information regarding the Stock Plan and the Deferred
Compensation Plan and their administration, contact Ms. Patricia A. England,
Vice President, Corporate Communications and Investor Relations, at the
Corporation's principal executive offices located at 7655 Redwood Boulevard,
P.O. Box 578, Novato, California 94948 (telephone: (415) 892-0821).
General Information about the Stock Plan
Purpose. The Stock Plan is intended to serve as an independent director
incentive and to encourage stock ownership by Non-Employee Directors of the
Corporation so that they may increase their proprietary interest in the success
of the Corporation. The Stock Plan is intended to assist the Corporation in its
efforts to attract and retain highly qualified Non-Employee Directors.
Administration. The Stock Plan is administered by the Salary Deferral
Committee which is appointed by the Board of Directors. The Directors are
elected by the stockholders of the Corporation every three years. The members of
the Board of Directors are divided into three classes, with the different
classes staggered so that the term of one class will expire each year. Members
of the Board may be removed in accordance with Delaware law.
The Board of Directors has full and complete authority in its
discretion to determine, among other things, the time or times at which, Shares
may be acquired and the nature, timing, price and size of such acquisitions,.
The Board of Directors has full and complete authority to interpret the Stock
Plan, to prescribe, amend, and rescind rules and regulations pertaining to it,
and to make all other determinations deemed necessary or desirable for the
administration of the Stock Plan.
Participation in the Plan. Participation in the Stock Plan shall be
limited to Non-Employee Directors.
Election to Acquire Shares in Lieu of Cash Compensation. Non-Employee
Directors shall make an election each December to receive all, or any portion of
the compensation for the upcoming year in the form of stock.
Such elections for the following year are irrevocable.
Available Shares. The Corporation may issue up to 200,000 Shares under
the Stock Plan, which may be authorized but unissued shares or treasury shares.
In the event of changes in the number of shares of the Corporation's common
stock by reason of stock dividends, split ups, recapitalizations, mergers,
consolidations, combinations or exchanges of shares and the like, the Board of
Directors will make appropriate adjustments in the number and kind of shares
reserved under the Stock Plan and in any other matters which relate to the stock
awards and which are affected by the changes referred to above.
Securities Law Considerations. The Corporation will not be obligated to
issue any Shares at any time unless and until all applicable requirements
imposed by any federal and state securities and other laws, rules and
regulations, by any regulatory agencies, or by any stock exchange upon which the
Corporation's common stock may be listed, have been fully met. As a condition
precedent to any issuance of Shares and delivery of certificates evidencing
Shares, the Board of Directors may require Non-Employee Directors to take such
actions and to make such representations as the Board of Directors in its
discretion deems necessary or advisable to insure compliance with such
requirements. Non-Employee Directors are responsible for complying with all
applicable federal and state securities and other laws, rules and regulations in
connection with any offer, sale or other transfer of Shares issued pursuant to
the Stock Plan.
Amendment. The Board of Directors has the right at any time and from
time to time to amend or modify the Stock Plan, except that (a) no such
amendment or modification shall revoke or alter the terms of any stock award
previously acquired, without the consent of the holder of the stock, and (b) to
the extent required for the Stock Plan to comply or maintain compliance with
Rule 16b-3 or any successor rule or regulation, such amendment or modification
shall be subject to stockholder approval.
Withholding Taxes. All taxes, if any, required to be withheld and
payable with respect to the acquisition of Shares will be deducted from the
Non-Employee Director's Compensation. If at any time such amounts are not
adequate to cover taxes required to be withheld, the Non-Employee Director shall
make adequate arrangement with the Corporation for the payment of the excess as
a condition to the issuance of the Shares.
Effectiveness of the Stock Plan. The Stock Plan became effective on
January 1, 1997. Stockholders of the Corporation approved the Plan at the 1997
annual meeting of stockholders. The Stock Plan will terminate on January 1,
2007, unless sooner terminated by the Board.
Applicable Laws. The Plan is not qualified under Section 401(a) of the
Internal Revenue Code, as amended (the "Code"), and is not subject to the
provisions of the Employee Retirement Income Security Act of 1974.
Stock Certificates. Unless a timely deferral election has been made in
accordance with the Deferred Compensation Plan, each Non-Employee Director who
elects to acquire Shares in the manner described above will be sent stock
certificates registered in the Non-Employee Director's name and sent to the
Non-Employee Director's address as it appears on the Corporation's records. If a
Non-Employee Director has made a timely deferral election, a stock certificate
for the number of Shares awarded to such Non-Employee Director will be issued in
the name of the trustees of the trust established by the Corporation in
connection with the Deferred Compensation Plan (the "Rabbi Trust") for the
benefit of the Non-Employee Director. The Shares represented by certificates
held by the Rabbi Trust will be distributed to the Non-Employee Director only in
accordance with the terms of the Deferred Compensation Plan.
Stockholders' Rights. All Shares issued pursuant to the Stock Plan will
be entitled to full voting and dividend rights as of the date of issuance.
No Right to Employment. An award of Shares does not create any
obligation whatsoever on the part of the Corporation or any subsidiary to
continue to employ any Non-Employee Director for any specific period and does
not interfere with the right of the Corporation or any of its subsidiaries to
end employment at any time.
Deferral of Receipt of Shares Under the Deferred Compensation Plan
If Non-Employee Directors who elect to acquire Shares under the Stock
Plan also make a timely election to defer the receipt of Shares in accordance
with the Deferred Compensation Plan, such Shares will be held by the trustees of
the Rabbi Trust established in connection with the Deferred Compensation Plan on
their behalf. Like all other assets held in the Rabbi Trust, the Shares will be
subject to claims of the Corporation's creditors. Participants in the Deferred
Compensation Plan will have only unsecured claims against the general assets of
the Corporation.
While the Shares are held in the Rabbi Trust, the participants on whose
behalf the Shares are held will have the right to direct the trustees how to
vote the Shares, however they will not have the right to direct the trustees to
sell the Shares. The Non-Employee Directors who have elected to defer the
receipt of Shares will bear the investment risk associated with the Shares from
the date the Shares are acquired by the Rabbi Trust. A dollar amount equal to
the value of the deferred Shares on the date the Shares were acquired (as
determined by the Board of Directors) will be credited to the participant's
"Stock Account" established as a bookkeeping account under the Deferred
Compensation Plan. The balance in each "Stock Account" will be adjusted at such
intervals as the persons administering the Deferred Compensation Plan may
determine to reflect changes in the value of the deferred Shares. Any
commissions or other charges related to the acquisition or holding of the
deferred Shares will be charged to the participant's "Stock Account."
The Shares (the value of which will equal the balance of the Stock
Account) will be distributed to the participants on whose behalf the Shares were
held in accordance with the terms of the Deferred Compensation Plan. Upon the
death of a participant in the Deferred Compensation Plan, the distribution of
Shares will be made to the participant's beneficiary at the same time the
distribution would have been made to the participant, unless the Board of
Directors determines that the distribution will be made at an earlier date. A
participant in the Deferred Compensation Plan may file a written designation of
beneficiary who will receive distributions under the Deferred Compensation Plan
in the event of the participant's death. If no such designation has been made or
if the designated beneficiaries are not living when distributions are to be
made, then the spouse of the participant shall be the beneficiary, or if the
spouse is not then living, the children of the deceased participant shall be the
beneficiaries in equal shares, or if neither spouse nor children are then
living, the estate of the deceased participant shall be the beneficiary.
Federal Income Tax Rules
The following tax discussion is only a brief summary of current federal
income tax law. It is intended solely as general information and does not make
specific representations to any participant. A taxpayer's particular situation
may be such that some variation of the basic rules is applicable to him or her.
In addition, the federal income tax laws and regulations have been revised
frequently and may be changed again at any time in the future. A tax adviser
should be consulted with respect to any foreign, state or local tax consequences
of a transaction under the Stock Plan.
Purchase and Award of Shares. Unless Shares awarded are subject to
restrictions against transfer or are otherwise subject to a substantial risk of
forfeiture, the participant is deemed to receive an amount of ordinary income
equal to the excess of the fair market value of the Shares at the time the
Shares are awarded over the amount paid for the Shares, if any, by the
participant. The Corporation is entitled to a deduction equal to the amount of
ordinary income recognized by the participant, except that amounts in excess of
$1 million per year are not deductible in certain cases. Each participant's tax
basis in such Shares will be equal to the amount paid for such Shares, if any,
by the participant plus the amount of ordinary income recognized by the
participant at the time of the award. Any gain or loss recognized on a
subsequent sale or other disposition of such Shares by the participant will
generally be characterized as a capital gain or loss.
If the Shares awarded are subject to restrictions against transfer or
are otherwise subject to a substantial risk of forfeiture (including a
forfeiture resulting from short swing profit liability under Section 16(b) of
the Securities Exchange Act of 1934), Internal Revenue Code section 83(b)
permits a participant to elect, within 30 days after the transfer of such Shares
to him or her, to be taxed at ordinary-income rates on the excess of the fair
market value of the Shares at the time of the award over the amount paid by the
participant for such Shares, if any. If the participant makes a section 83(b)
election, any later appreciation in the value of the Shares is not taxed as
compensation, but instead is taxed as capital gain when the Shares are sold or
transferred. At the time a participant recognizes ordinary income as a result of
making a section 83(b) election, the Corporation generally is entitled to a tax
deduction equal to the amount of the participant's ordinary income. If a
participant makes a section 83(b) election and the Shares are later forfeited,
the participant will not be entitled to a tax deduction or a refund of the tax
paid.
Regardless of whether the Shares awarded are subject to restrictions
against transfer or are otherwise subject to a substantial risk of forfeiture,
the award of such Shares will have certain additional income, employment, and
self-employment tax and withholding consequences. For participants who are
employees of the Company, such Shares will be subject to income and employment
tax withholding by the Company. For participants who are not employees of the
Company, such Shares will not be subject to income or employment tax withholding
requirements but will be subject to self-employment taxes.
Deferral of Shares. If a participant makes a timely election to defer
the receipt of an award of Shares, the Participant will not recognize ordinary
income as described above until such time as the Shares are distributed to the
participant in accordance with the Deferred Compensation Plan. The participant
will recognize ordinary income equal to the excess of the fair market value of
the Shares at the time of distribution over the amount paid for the Shares, if
any, by the participant. Such income is subject to withholding taxes. The
Corporation is entitled to a deduction equal to the amount of ordinary income
recognized by the participant.
For participants who are employees of the Company, such Shares will
generally be subject to employment tax withholding requirements as of the time
the services for which such Shares are awarded are performed, and will be
subject to income tax withholding requirements at the time such Shares are
distributed to the participant. For participants who are not employees of the
Company, such Shares will not be subject to income or employment withholding
taxes, but will be subject to self-employment taxes at the time such Shares are
distributed to the participant.
Resales of Shares
SEC Rule 144. Persons who are not deemed to be "affiliates" of the
Corporation, as that term is defined in Rule 144 under the Securities Act, may
generally resell, from time to time, any Shares they acquire under the Stock
Plan. Persons who are affiliates of the Corporation may generally resell Shares
acquired under the Stock Plan only (i) in accordance with the provisions of Rule
144 under the Securities Act (exclusive of the one-year holding period) or some
other exemption from registration under the Securities Act, or (ii) pursuant to
an effective Registration Statement on such form as may be applicable. Executive
officers, directors or principal stockholders of the Corporation will generally
be deemed to be affiliates of the Corporation under Rule 144.
Participants who elect to defer the receipt of an award of Shares under
the Deferred Compensation Plan may sell such Shares subject to the legal
requirements described above but only after the Shares have been distributed to
them under the terms of the Deferred Compensation Plan.
Participants who are subject to Section 16 of the Securities Exchange
Act of 1934 (the "Exchange Act") will be deemed to have acquired Shares on the
date the Shares are awarded, regardless of whether they have elected to defer
the award of Shares under the Deferred Compensation Plan. Under the new version
of Rule 16b-3 the award of Shares under the Stock Plan will be exempt if the
participant does not sell or otherwise dispose of the Shares for six months
after the date Shares were awarded.
Incorporation of Certain Documents by Reference
The following documents filed by the Corporation with the SEC are
incorporated herein by reference:
a. Annual Report on Form 10-K of the Corporation for the fiscal year
ended May 31, 1998.
b. Quarterly Report on Forms 10-Q for the fiscal quarter ended August
31, 1998.
c. The description of the Corporation's Common Stock contained in the
registration statement on Form 10 for such Common Stock filed on August 29,
1987, under Section 12 of the Exchange Act.
All documents filed by the Corporation pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold, or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this memorandum, and to be a part hereof from the
date of filing of such documents.
Upon written or oral request, the Corporation will provide without
charge to each person to whom this memorandum has been delivered a copy of any
or all of the documents which have been incorporated by reference in this
memorandum (excluding exhibits to such documents unless such exhibits are
specifically incorporated by reference into the information that this memorandum
incorporates) and copies of all reports, proxy statements and other
communications distributed to its security holders generally. Requests for such
information should be directed to: Ms. Patricia A. England, Vice President,
Corporate Communications and Investor Relations, at the Corporation's principal
executive offices located at 7655 Redwood Boulevard, P.O. Box 578, Novato,
California 94948 (telephone: (415) 892-0821).