-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, StiUGrn0gdYkreVkUy8FgArDm0XbEFsGDshdrgQAtm4VMm4rfcewEwlyr7Zp5MMz vOIjt5c+Rk6FaEtAMsPclw== 0000818968-99-000013.txt : 19990413 0000818968-99-000013.hdr.sgml : 19990413 ACCESSION NUMBER: 0000818968-99-000013 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19990412 EFFECTIVENESS DATE: 19990412 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARDING LAWSON ASSOCIATES GROUP INC CENTRAL INDEX KEY: 0000818968 STANDARD INDUSTRIAL CLASSIFICATION: HAZARDOUS WASTE MANAGEMENT [4955] IRS NUMBER: 680132062 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-76063 FILM NUMBER: 99591550 BUSINESS ADDRESS: STREET 1: 7655 REDWOOD BLVD STREET 2: P O BOX 578 CITY: NOVATO STATE: CA ZIP: 94945 BUSINESS PHONE: 4158920821 MAIL ADDRESS: STREET 1: 7655 REDWOOD BLVD CITY: NOVATO STATE: CA ZIP: 94945 FORMER COMPANY: FORMER CONFORMED NAME: HARDING ASSOCIATES INC DATE OF NAME CHANGE: 19920703 S-8 1 1998 STOCK OPTION PLAN SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 HARDING LAWSON ASSOCIATES GROUP, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 68-0132062 (State of Other Jurisdiction of (IRS Employer Incorporation or Organization) Identification No.) 7655 Redwood Boulevard, Novato, California 94945 (Address of Principal Executive Offices) Harding Lawson Associates Group, Inc. 1998 Stock Option Plan Non-Qualified Stock Option Agreement (Full Title of the Plan) Gregory A. Thornton Vice President and Chief Financial Officer Harding Lawson Associates Group, Inc. 7655 Redwood Boulevard, Novato, California 94945 (Name and Address of Agent For Service) (415) 892-0821 (Telephone Number, Including Area Code, of Agent For Service)
CALCULATION OF REGISTRATION FEE Title of Each Proposed Proposed Class Of Maximum Maximum Securities Amount Offering Aggregate Amount Of To Be To Be Price Offering Registration Registered Registered Per Unit Price Fee Common Stock 1998 Stock Option Plan 500,000 $6.50 (1) $3,250,000 $903.50 Non-qualified Stock Option Agreement 100,000 $10.00 $1,000,000 $278.00 (1) Estimated solely for the purpose of determining the registration fee, computed in accordance with Rule 457(h) and Rule 457(c) on the basis of the average of the reported high and low prices for the Common Stock on The Nasdaq National Market on April 8, 1999.
PART I INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS Item 1. Plan Information.* Item 2. Registrant Information and Employee Plan Annual Information.* *Information required by Part I to be contained in the Section 10(a) prospectus is omitted from this Registration Statement in accordance with Rule 428 under the Securities Act of 1933 and the note to Part I of Form S-8. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. Incorporation of Documents by Reference. The following documents filed by the Registrant with the Securities and Exchange Commission are incorporated by reference in this Registration Statement: (a) Annual Report on Form 10-K for the fiscal year ended May 31, 1998 filed pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"); (b) Quarterly Report on Form 10-Q for the quarter ended August 31, 1998; (c) Quarterly Report on Form 10-Q for the quarter ended November 30, 1998; (d) Quarterly Report on Form 10-Q for the quarter ended February 28, 2999; (e) Current Report on Form 8-K dated October 2, 1998 regarding the resignation of Donald L. Schreuder as Chief Executive Officer. (f) Current Report on Form 8-K dated March 26, 1999 regarding the appointment of Robert L. Costello, Jr. as Chief Executive Officer. (g) The description of the Registrant's Common Stock contained in the Registration Statement on Form 10 filed on August 29, 1987 under Section 12 of the Exchange Act, including any amendment or report filed for the purpose of updating such description. All documents filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold, or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement, and to be a part hereof from the date of filing of such documents. Item 4. Description of Securities. Not applicable. Item 5. Interests of Name Experts and Counsel. Not applicable. Item 6. Indemnification of Directors and Officers. The Delaware General Corporation Law provides for the indemnification of officers and directors under certain conditions. The Restated Certificate of Incorporation and Bylaws of the Registrant permit indemnification of directors and officers to the maximum extent permitted by Delaware law. The Restated Certificate of Incorporation contains a provision which eliminates the personal liability of directors of the Registrant for monetary damages for certain breaches of fiduciary duty, as permitted by Section 102(b)(7) of the Delaware General Corporation Law. The Registrant has also entered into indemnification agreements with its executive officers and directors by which the Registrant has agreed to provide indemnification to them under certain circumstances. The Registrant has in effect director and officer liability insurance policies indemnifying the Registrant and the officers and directors of the Registrant and officers and directors of the Registrant's subsidiaries within specific limits for certain liabilities incurred by reason of their being or having been directors or officers. The Registrant pays the entire premium for these policies. Item 7. Exemption From Registration Claimed. Not applicable. Item 8. Exhibits. EXHIBIT INDEX Exhibit No. Exhibit Name 5 Opinion of Counsel; Howard Rice Nemerovski Canady Falk & Rabkin, a professional corporation 23.1 Consent of Ernst & Young LLP, Independent Auditors 23.2 Consent of Counsel (See Exhibit 5) 24 Power of Attorney (see signature pages) 99.1 Harding Lawson Associates Group, Inc. 1998 Stock Option Plan 99.2 Non-qualified Stock Option Agreement Between the Registrant and Robert L. Costello, Jr. Item 9. Undertakings. (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 13(d) of the Exchange Act that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (5) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Novato, State of California, on April 8, 1999. HARDING LAWSON ASSOCIATES GROUP, INC. By /s/ Gregory A. Thornton Gregory A. Thornton Vice President and Chief Financial Officer Power of Attorney Each person whose signature appears below on this Registration Statement hereby constitutes and appoints Gregory A. Thornton and Patricia A. England with full power to act without the other, his/her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him/her and in his/her name, place and stead, in any and all capacities to sign any and all amendments (including post-effective amendments) to this registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, grant unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming that said attorneys-in-fact and agents or any of them, or their or his/her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. Signature Title Date /s/ Robert L. Costello, Jr. President and Chief Executive Officer 4-8-99 Robert L. Costello, Jr. (Principal Executive Officer) /s/ Gregory A. Thornton Vice President and Chief Financial Officer 4-8-99 Gregory A. Thornton (Principal Financial and Accounting Officer) /s/ Richard D. Puntillo Chairman of the Board of Directors 4-8-99 Richard D. Puntillo /s/ Richard S. Harding Director and Chairman Emeritus 4-8-99 Richard S. Harding /s/ Ross K. Anderson Director 4-8-99 Ross K. Anderson /s/ James M. Edgar Director 4-8-99 James M. Edgar /s/ Stuart F. Platt Director 4-8-99 Stuart F. Platt /s/ Donald K. Stager Director 4-8-99 Donald K. Stager EXHIBIT INDEX Exhibit No. Exhibit Name 5 Opinion of Counsel; Howard Rice Nemerovski Canady Falk & Rabkin, a professional corporation 23.1 Consent of Ernst & Young LLP, Independent Auditors 23.2 Consent of Counsel (See Exhibit 5) 24 Power of Attorney (see signature pages) 99.1 Harding Lawson Associates Group Inc. 1998 Stock Option Plan 99.2 Non-qualified Stock Option Agreement Between the Registrant and Robert L. Costello, Jr. EX-5 2 OPINION OF COUNSEL April 5, 1999 Harding Lawson Associates Group, Inc. 7655 Redwood Boulevard Novato, California 94945 Ladies and Gentlemen: You have requested our opinion as counsel for Harding Lawson Associates Group, Inc., a Delaware corporation (the "Company"), in connection with the registration under the Securities Act of 1933, as amended, and the Rules and Regulations promulgated thereunder, of 600,000 shares of Common Stock ("Stock") of the Company pursuant to the Company's 1998 Stock Option Plan, relating to 500,000 shares, and pursuant to a Non-qualified Stock Option Agreement between the Company and Robert L. Costello, Jr., relating to 100,000 shares (collectively, the "Plans"). We have examined the Company's Registration Statement on Form S-8 filed with the Securities and Exchange Commission on or about the date hereof (the "Registration Statement"). We further have examined the certificate of incorporation, the By-Laws, the minutes of the Board of Directors and stockholders of the Company regarding approval of the Plan, a certificate of an officer of the Company and such other documents as we deemed pertinent as a basis for the opinion hereinafter expressed. In connection with this opinion we have assumed the following: (a) the authenticity of original documents and genuineness of all signatures; (b) the conformity to the originals of all documents submitted to us as copies; and (c) the truth, accuracy and completeness of the information contained in the certificate we have reviewed. As to matters of fact material to our opinions, we have relied on our review of the documents referred to above and on statements made to us by officers of the Company. We have not independently verified any factual matters or any assumptions made by us in this letter and disclaim any inference as to the reasonableness of any such assumption. Based on the foregoing examination, we are of the opinion that upon the issuance and sale of shares of Stock pursuant to and in accordance with the terms of the respective Plans, such shares of Stock will be legally issued, fully paid and nonassessable. We are members of the bar of the State of California and are not admitted to practice in any other jurisdiction. The opinions set forth above are limited in all respects to matters governed by the federal laws of the United States of America and the General Corporation Law of the State of Delaware. The opinion set forth herein is given as of the date hereof and is expressly limited to the matters stated. No opinion is implied or may be inferred beyond what is explicitly stated in this letter. Copies of this letter may not be circulated or furnished to any other person or entity, and this letter may not be referred to in any report or document furnished to any other person or entity, without our prior written consent. We consent to the filing of this opinion as an exhibit to the Registration Statement. Sincerely, HOWARD, RICE, NEMEROVSKI, CANADY, FALK & RABKIN A Professional Corporation By /s/ Daniel J. Winnike Daniel J. Winnike, Esq. EX-23 3 CONSENT OF ERNST & YOUNG LLP Exhibit 23.1 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8) pertaining to the 1998 Stock Option Plan and the Non-Qualified Stock Option Agreement of Harding Lawson Associates Group, Inc. of our report dated July 3, 1998 with respect to the consolidated financial statements of Harding Lawson Associates Group, Inc. included in its Form 10-K for the year ended May 31, 1998, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP San Francisco, California April 8, 1999 EX-99 4 1998 STOCK OPTION PLAN HARDING LAWSON ASSOCIATES GROUP, INC. 1998 STOCK OPTION PLAN 1. Adoption and Purpose of the Plan. This stock option plan, to be known as the "Harding Lawson Associates 1998 Stock Option Plan" (but referred to herein as the "Plan") has been adopted by the board of directors (the "Board") of Harding Lawson Associates Group, Inc., a Delaware corporation (the "Company"), and is subject to the approval of its shareholders pursuant to section 7 below. The purpose of this Plan is to advance the interests of the Company and its shareholders by enabling the Company to attract and retain qualified directors, officers, and employees with an opportunity for investment in the Company. The options that may be granted hereunder ("Options") represent the right by the grantee thereof (each, including any permitted transferee, an "Optionee") to acquire shares of the Company's common stock ("Shares," which if acquired pursuant to the exercise of an Option will be referred to as "Option Shares") subject to the terms and conditions of this Plan and a written agreement between the Company and the Optionee to evidence each such Option (an "Option Agreement"). 2. Certain Definitions. The defined terms set forth in Exhibit A attached hereto and incorporated herein (together with other capitalized terms defined elsewhere in this Plan) will govern the interpretation of this Plan. 3. Eligibility. The Company may grant Options under this Plan only to persons who, at the time of such grant, are directors, officers and/or employees of the Company and/or any of its Subsidiaries (collectively, "Eligible Participants"). No person will be an Eligible Participant following his or her Termination of Eligibility Status and no Option may be granted to any person other than an Eligible Participant. There is no limitation on the number of Options that may be granted to an Eligible Participant. 4. Shares Reserved for Options. The plan shall consist of 500,000 Option Shares. At all times while Options granted under this Plan are outstanding, the Company will reserve for issuance for the purposes hereof a sufficient number of authorized and unissued Shares to fully satisfy the Company's obligations under all such outstanding Options. 5. Administration. This Plan will be administered and interpreted by the Board, or by a committee consisting of two or more members of the Board, appointed by the Board for such purpose (the Board, or such committee, referred to herein as the "Administrator"). Subject to the express terms and conditions hereof, the Administrator is authorized to prescribe, amend and rescind rules and regulations relating to this Plan, and to make all other determinations necessary or advisable for its administration and interpretation. Specifically, the Administrator will have full and final authority in its discretion, subject to the specific limitations on that discretion as are set forth herein and in the Articles of Incorporation and Bylaws of the Company, at any time: (a) to select and approve the Eligible Participants to whom Options will be granted from time to time hereunder; (b) to determine the Fair Market Value of the Shares as of the Grant Date for any Option that is granted hereunder; (c) with respect to each Option it decides to grant, to determine the terms and conditions of that Option, to be set forth in the Option Agreement evidencing that Option (the form of which also being subject to approval by the Administrator), which may vary from the "default" terms and conditions set forth in section 6 below, except to the extent otherwise provided in this Plan, including, without limitation, as follows: (i) the total number of Option Shares that may be acquired by the Optionee pursuant to the Option; (ii) if the Option satisfies the conditions under Section 422(b) of the Code, whether the Option will be treated as an ISO; (iii) the per share purchase price to be paid to the Company by the Optionee to acquire the Option Shares issuable upon exercise of the Option (the "Option Price"); (iv) the maximum period or term during which the Option will be exercisable (the "Option Term"); (v) the maximum period following any Termination of Eligibility Status, whether resulting from an Optionee's death, disability or any other reason, during which period (the "Grace Period") the Option will be exercisable, subject to Vesting and to the expiration of the Option Term; (vi) whether to accept a promissory note or other form of legal consideration in addition to cash as payment of all or a portion of the Option Price and/or Tax Withholding Liability to be paid by the Optionee upon the exercise of an Option granted hereunder; (vii) the conditions (e.g., the passage of time or the occurrence of events), if any, that must be satisfied prior to the vesting of the right to exercise all or specified portions of an Option (such portions being described as the number of Option Shares, or the percentage of the total number of Option Shares that may be acquired by the Optionee pursuant to the Option; the vested portion being referred to as a "Vested Option" and the unvested portion being referred to as an "Unvested Option"); and (d) to delegate all or a portion of the Administrator's authority under sections 5(a), (b) and (c) above to one or more members of the Board who also are executive officers of the Company, and subject to such restrictions and limitations as the Administrator may decide to impose on such delegation. 6. Default Terms and Conditions of Option Agreements. Unless otherwise expressly provided in an Option Agreement based on the Administrator's determination pursuant to section 5(c) above, the following terms and conditions will be deemed to apply to each Option as if expressly set forth in the Option Agreement: 6.1 ISO. No Option will be treated as an ISO unless treatment as an ISO is expressly provided for in an Option Agreement and such Option satisfies the conditions of Section 422(b) of the Code. 6.2 Option Term. The Option Term will be for a period of 10 years beginning on the Grant Date (or 5 years in the case of an ISO granted to a 10% shareholder). 6.3 Grace Periods. Following a Termination of Eligibility Status: (a) Unless the Termination of Eligibility Status is a result of a Qualified Retirement or Termination for Cause, that portion of the Option that is a Vested Option will be exercisable for 30 days from the date of termination, except in the case of death or permanent disability, when such Vested Options will be exercisable for one year from the date of death or determination of permanent disability; (b) If the termination of Eligibility Status is the result of a Qualified Retirement, that portion of the Option that is a Vested Option will be exercisable at any time prior to the expiration of the Option Term; and (c) the Option will terminate, and there will be no Grace Period, effective immediately as of the date and time of a Termination for Cause of the Optionee, regardless of whether the Option is Vested or Unvested. 6.4 Vesting. The Option initially will be deemed an entirely Unvested Option, but portions of the Option will become a Vested Option on the following schedule, unless otherwise specified in the Option Agreement: (a) fifty percent (50%) will become a Vested as of the second anniversary of the "Grant Date" specified in the Option Agreement; and (b) twenty-five percent (25%) of the Option will become a Vested Option as of the third anniversary of the Grant Date; and (c) twenty-five percent (25%) of the Option will become a Vested Option as of the fourth anniversary of the Grant Date; provided that the Optionee does not suffer a Termination of Eligibility Status prior to each such vesting date and provided further that additional vesting will be suspended during any period while the Optionee is on a leave of absence from the Company or its Subsidiaries, as determined by the Administrator. 6.5 Exercise of the Option; Issuance of Share Certificate. (a) The portion of the Option that is a Vested Option may be exercised by giving written notice thereof to the Company, on such form as may be specified by the Administrator, but in any event stating: the Optionee's intention to exercise the Option; the date of exercise; the number of full Option Shares to be purchased; the amount and form of payment of the Option Price; and such assurances of the Optionee's investment intent as the Company may require to ensure that the transaction complies in all respects with the requirements of the 1933 Act and other applicable securities laws. The notice of exercise will be signed by the person or persons exercising the Option. In the event that the Option is being exercised by the representative of the Optionee, the notice will be accompanied by proof satisfactory to the Company of the representative's right to exercise the Option. The Option may be exercised by a securities broker acting on behalf of the Optionee pursuant to authorization instructions approved by the Company. The notice of exercise will be accompanied by full payment of the Option Price for the number of Option Shares to be purchased, in United States dollars, in cash, by check made payable to the Company, or by delivery of such other form of payment (if any) as approved by the Administrator. Payment may also be made by delivering a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds sufficient to pay the Option Price and, if required, the amount of any Tax Witholding Liability. (b) To the extent required by applicable federal, state, local or foreign law, and as a condition to the Company's obligation to issue any Shares upon the exercise of the Option in full or in part, the Optionee will make arrangements satisfactory to the Company for the payment of any applicable Tax Withholding Liability that may arise by reason of or in connection with such exercise. Such arrangements may include, in the Company's sole discretion, that the Optionee tender to the Company the amount of such Tax Withholding Liability, in cash, by check made payable to the Company, by delivery of irrevocable instructions to a broker as described in the last sentence of section (a) above, or in the form of such other payment as may be approved by the Administrator, in its discretion pursuant to section 5(c)(vi) above. (c) After receiving a proper notice of exercise and payment of the applicable Option Price and Tax Withholding Liability, the Company will cause to be issued a certificate or certificates or an electronic transfer of shares, where requested, for the Option Shares as to which the Option has been exercised, registered in the name of the person rightfully exercising the Option and the Company will cause such certificate or certificates or electronic transfer to be delivered to such person. 6.6 Compliance with Law. Notwithstanding any other provision of this Plan, Options may be granted pursuant to this Plan, and Option Shares may be issued pursuant to the exercise thereof by an Optionee, only after and on the condition that there has been compliance with all applicable federal and state securities laws. The Company will not be required to list, register or qualify any Option Shares upon any securities exchange, under any applicable state, federal or foreign law or regulation, or with the Securities and Exchange Commission or any state agency, or secure the consent or approval of any governmental regulatory authority, except that if at any time the Board determines, in its discretion, that such listing, registration or qualification of the Option Shares, or any such consent or approval, is necessary or desirable as a condition of or in connection with the exercise of an Option and the purchase of Option Shares thereunder, that Option may not be exercised, in whole or in part, unless and until such listing, registration, qualification, consent or approval is effected or obtained free of any conditions that are not acceptable to the Board, in its discretion. However, the Company will seek to register or qualify with, or as may be provided by applicable local law, file for and secure an exemption from such registration or qualification requirements from, the applicable securities administrator and other officials of each jurisdiction in which an Eligible Participant would be granted an Option hereunder prior to such grant. 6.7 Restrictions on Transfer. (a) Options Nontransferable. No Option will be transferable by an Optionee otherwise than by will or the laws of descent and distribution. During the lifetime of a natural person who is granted an Option under this Plan, the Option will be exercisable only by him or her. Notwithstanding anything else in this Plan to the contrary, no Option Agreement will contain any provision which is contrary to, or which modifies, the provisions of this section 6.7(a). (b) Prohibited Transfers. No Holder of any Option Shares may Transfer such Shares, or any interest therein: (i) except as expressly provided in this Plan; and (ii) in full compliance with all applicable securities laws and any applicable restrictions on Transfer provided in the Company's Articles of Incorporation and/or Bylaws, which will be deemed incorporated by reference into this Plan. All Transfers of Option Shares not complying with the specific limitations and conditions set forth in this section 6.7 are expressly prohibited. Any prohibited Transfer is void and of no effect, and no purported transferee in connection therewith will be recognized as a Holder of Option Shares for any purpose whatsoever. Should such a Transfer purport to occur, the Company may refuse to carry out the Transfer on its books, attempt to set aside the Transfer, enforce any undertakings or rights under this Plan, or exercise any other legal or equitable remedy. (c) Conditions to Transfer. It will be a condition to any Transfer of any Option Shares that: (i) the transferee of the Shares will execute such documents as the Company may reasonably require to ensure that the Company's rights under this Plan, and any applicable Option Agreement, are adequately protected with respect to such Shares, including, without limitation, the transferee's agreement to be bound by all of the terms and conditions of this Plan and such Agreement, as if he or she were the original Holder of such Shares; and (ii) the Company is satisfied that such Transfer complies in all respects with the requirements imposed by applicable state and federal securities laws and regulations. (d) Market Standoff. If in connection with any public offering of securities of the Company (or any Successor Entity), the underwriter or underwriters managing such offering so requests, then each Optionee and each Holder of Option Shares will agree to not sell or otherwise Transfer any such Shares (other than Shares included in such underwriting) without the prior written consent of such underwriter, for such period of time as may be requested by the underwriter commencing on the effective date of the registration statement filed with the Securities and Exchange Commission in connection with such offering. 6.8 Change of Control Transactions. Except as otherwise provided in the Option Agreement, or any contract of employment or engagement between Optionee and the Company, in the event of a Change of Control Transaction, the Company shall endeavor to cause the Successor Entity in such transaction either to assume all of the Options which have been granted hereunder and which are outstanding as of the consummation of such transaction ("Closing"), or to issue (or cause to be issued) in substitution thereof comparable options of such Successor Entity (or of its parent or its Subsidiary). If the Successor Entity is unwilling to either assume such Options or grant comparable options in substitution for such Options, on terms that are acceptable to the Company as determined by the Board in the exercise of its discretion, then with respect to each outstanding Option, that portion of the Option which remains Unvested will become Vested immediately prior to such Closing; and the Board may cancel all outstanding Options, and terminate this Plan, effective as of the Closing, provided that it will notify all Optionees of the proposed Change of Control Transaction a reasonable amount of time prior to the Closing so that each Optionee will be given the opportunity to exercise the Vested portion of his or her Option (after giving effect to the acceleration of such vesting discussed above) prior to the Closing. For purposes of this section 6.8, the term "Change of Control Transaction" means (a) the sale of all or substantially all of the assets of the Company to any person or entity that, prior to such sale, did not control, was not under common control with, or was not controlled by, the Company, or (b) a merger or consolidation or other reorganization in which the Company is not the surviving entity or becomes owned entirely by another entity, unless at least fifty percent (50%) of the outstanding voting securities of the surviving or parent corporation, as the case may be, immediately following such transaction are beneficially held by such persons and entities in the same proportion as such persons and entities beneficially held the outstanding voting securities of the Company immediately prior to such transaction, or (c) the sale or other change of beneficial ownership of the outstanding voting securities of the Company such that any person or "group" as that term is defined under the Securities Exchange Act of 1934, as amended becomes the beneficial owner of more than 50% of the outstanding voting securities of the Company. 6.9 Additional Restrictions on Transfer; Investment Intent. By accepting an Option and/or Option Shares under this Plan, the Optionee will be deemed to represent, warrant and agree that, unless a registration statement is in effect with respect to the offer and sale of Option Shares: (i) neither the Option nor any such Shares will be freely tradeable and must be held indefinitely unless such Option and such Shares are either registered under the 1933 Act or an exemption from such registration is available; (ii) the Company is under no obligation to register the Option or any such Shares; (iii) upon exercise of the Option, the Optionee will purchase the Option Shares for his or her own account and not with a view to distribution within the meaning of the 1933 Act, other than as may be effected in compliance with the 1933 Act and the rules and regulations promulgated thereunder; (iv) no one else will have any beneficial interest in the Option Shares; (v) the Optionee has no present intention of disposing of the Option Shares at any particular time; and (vi) neither the Option nor the Shares have been qualified under the securities laws of any state and may only be offered and sold pursuant to an exception from qualification under applicable state securities laws. 6.10 Stock Certificates; Legends. Certificates representing Option Shares will bear all legends required by law and necessary or appropriate in the Administrator's discretion to effectuate the provisions of this Plan and of the applicable Option Agreement. The Company may place a "stop transfer" order against Option Shares until full compliance with all restrictions and conditions set forth in this Plan, in any applicable Option Agreement and in the legends referred to in this section 6.10. 6.11 Notices. Any notice to be given to the Company under the terms of an Option Agreement will be addressed to the Company at its principal executive office, Attention: Secretary, or at such other address as the Company may designate in writing. Any notice to be given to an Optionee will be addressed to him or her at the address provided to the Company by the Optionee. Any such notice will be deemed to have been duly given if and when enclosed in a properly sealed envelope, addressed as aforesaid, deposited, postage prepaid, in a post office or branch post office regularly maintained by the local postal authority. 6.12 Other Provisions. Each Option Agreement may contain such other terms, provisions and conditions, including restrictions on the Transfer of Option Shares, and rights of the Company to repurchase such Shares, not inconsistent with this Plan and applicable law, as may be determined by the Administrator in its sole discretion. 6.13 Specific Performance. Under those circumstances in which the Company chooses to timely exercise its rights to repurchase Option Shares as provided herein or in any Option Agreement, the Company will be entitled to receive such Shares in specie in order to have the same available for future issuance without dilution of the holdings of other shareholders of the Company. By accepting Option Shares, the Holder thereof therefore acknowledges and agrees that money damages will be inadequate to compensate the Company and its shareholders if such a repurchase is not completed as contemplated hereunder and that the Company will, in such case, be entitled to a decree of specific performance of the terms hereof or to an injunction restraining such holder (or such Holder's personal representative) from violating this Plan or Option Agreement, in addition to any other remedies that may be available to the Company at law or in equity. 7. Term of the Plan. This Plan will become effective on the date of its adoption by the Board. This Plan will expire on the tenth (10th) anniversary of the date of its adoption by the Board or its approval by the shareholders of the Company, whichever is earlier, unless it is terminated earlier pursuant to section 11 of this Plan, after which no more Options may be granted under this Plan, although all outstanding Options granted prior to such expiration or termination will remain subject to the provisions of this Plan, and no such expiration or termination of this Plan will result in the expiration or termination of any such Option prior to the expiration or early termination of the applicable Option Term. 8. Adjustments Upon Changes in Stock. In the event of any change in the outstanding Shares of the Company as a result of a stock split, reverse stock split, stock bonus or distribution, recapitalization, combination or reclassification, appropriate proportionate adjustments will be made in: (i) the aggregate number of Shares that are reserved for issuance in the Option Pool pursuant to section 4 above, under outstanding Options or future Options granted hereunder; (ii) the Option Price and the number of Option Shares that may be acquired under each outstanding Option granted hereunder; and (iii) other rights and matters determined on a per share basis under this Plan or any Option Agreement evidencing an outstanding Option granted hereunder. Any such adjustments will be made only by the Board, and when so made will be effective, conclusive and binding for all purposes with respect to this Plan and all Options then outstanding. No such adjustments will be required by reason of the issuance or sale by the Company for cash or other consideration of additional Shares or securities convertible into or exchangeable for Shares. 9. Modification, Extension and Renewal of Options. Subject to the terms and conditions and within the limitations of this Plan, the Administrator may modify outstanding Options granted under this Plan, but under no circumstances may the shares be repriced or surrendered and replaced with other options bearing a lower exercise price. Notwithstanding the foregoing, however, no modification of any Option will, without the consent of the Optionee, alter or impair any rights or obligations under any outstanding Option. 10. Governing Law. The internal laws of the State of Delaware (irrespective of its choice of law principles) will govern the validity of this Plan, the construction of its terms and the interpretation of the rights and duties of the parties hereunder and under any Option Agreement. 11. Amendment and Discontinuance. The Board may amend, suspend or discontinue this Plan at any time or from time to time; provided that no action of the Board will, without the approval of the shareholders of the Company, materially increase (other than by reason of an adjustment pursuant to section 8 hereof) the maximum aggregate number of Option Shares in the Option Pool, or materially modify the category of, or eligibility requirements for, persons who are Eligible Participants. However, no such action may alter or impair any Option previously granted under this Plan without the consent of the Optionee, nor may the number of Option Shares in the Option Pool be reduced to a number that is less than the aggregate number of Option Shares (i) that may be issued pursuant to the exercise of all outstanding and unexpired Options granted hereunder, and (ii) that have been issued and are outstanding pursuant to the exercise of Options granted hereunder. 12. No Shareholder Rights. No rights or privileges of a shareholder in the Company are conferred by reason of the granting of an Option. No Optionee will become a shareholder in the Company with respect to any Option Shares unless and until the Option has been properly exercised and the Option Price fully paid as to the portion of the Option exercised. 13. Copies of Plan. A copy of this Plan will be delivered to each Optionee at or before the time he, she or it executes an Option Agreement. Date Plan Adopted by Board of Directors: September 25, 1998 Date Plan Approved by the Shareholders: November 4, 1998 EXHIBIT A DEFINITIONS 1. "10% shareholder" means a person who owns, either directly or indirectly by virtue of the ownership attribution provisions set forth in Section 424(d) of the Code at the time he or she is granted an Option, stock possessing more than 10% of the total combined voting power or value of all classes of stock of the Company and/or of its Subsidiaries. 2. "1933 Act" means the Securities Act of 1933, as amended. 3. "Administrator" has the meaning set forth in section 5 of the Plan. 4. "Board" has the meaning set forth in section 1 of the Plan. 5. "Business Combination" has the meaning set forth in section 6.8 of the Plan. 6. "Change of Control Transaction" has the meaning set forth in section 6.8 of the Plan. 7. "Closing" has the meaning set forth in section 6.8 of the Plan. 8. "Code" means the Internal Revenue Code of 1986, as amended (references herein to Sections of the Code are intended to refer to Sections of the Code as enacted at the time of the Plan's adoption by the Board and as subsequently amended, or to any substantially similar successor provisions of the Code resulting from recodification, renumbering or otherwise). 9. "Company" has the meaning set forth in section 1 of the Plan. 10. "Disability" means any physical or mental disability that results in a Termination of Eligibility Status under applicable law, except that for purposes of section 6.1(c) of the Plan, the term "disability" means permanent and total disability within the meaning of Section 22(e)(3) of the Code. 11. "Donative Transfer" with respect to Option Shares means any voluntary Transfer by a transferor other than for value or the payment of consideration to the transferor. 12. "Eligible Participants" has the meaning set forth in section 3 of the Plan. 13. "Fair Market Value" means, with respect to the Shares and as of the date that is relevant to such a determination (e.g., on the Grant Date), the market price per share of such Shares determined by the Administrator, consistent with the requirements of Section 422 of the Code and to the extent consistent therewith, as follows: (a) if the Shares are traded on a stock exchange on the date in question, then the Fair Market Value will be equal to the closing price reported by the applicable composite-transactions report for such date; (b) if the Shares are traded over-the-counter on the date in question and are classified as a national market issue, then the Fair Market Value will be equal to the last-transaction price quoted by The Nasdaq Stock Market for such date; (c) if the Shares are traded over-the-counter on the date in question but are not classified as a national market issue, then the Fair Market Value will be equal to the mean between the last reported representative bid and asked prices quoted by The Nasdaq Stock Market for such date; and (d) if none of the foregoing provisions is applicable, then the Fair Market Value will be determined by the Administrator in good faith on such basis as it deems appropriate. 14. "Grace Period" has the meaning set forth in section 5(c)(v) of the Plan. 15. "Grant Date" means, with respect to an Option, the date on which the Option Agreement evidencing that Option is entered into between the Company and the Optionee, or such other date as may be set forth in that Option Agreement as the "Grant Date" which will be the effective date of that Option Agreement. 16. "Holder" means the holder of any Option Shares. 17. "Involuntary Transfer" with respect to Option Shares includes, without limitation, any of the following: (A) an assignment of the Shares for the benefit of creditors of the transferor; (B) a Transfer by operation of law; (C) an execution of judgment against the Shares or the acquisition of record or beneficial ownership of Shares by a lender or creditor; (D) a Transfer pursuant to any decree of divorce, dissolution or separate maintenance, any property settlement, any separation agreement or any other agreement with a spouse (except for bona fide estate planning purposes) under which any Shares are Transferred or awarded to the spouse of the transferor or are required to be sold; or (E) a Transfer resulting from the filing by the transferor of a petition for relief, or the filing of an involuntary petition against the transferor, under the bankruptcy laws of the United States or of any other nation. 18. "ISO" means an "incentive stock option" as defined in Section 422 of the Code. 19. "Option Agreement" has the meaning set forth in section 1 of the Plan. 20. "Option Price" has the meaning set forth in section 5(c)(iii) of the Plan. 21. "Option Shares" has the meaning set forth in section 1 of the Plan, provided that for purposes of section 6.7 of the Plan, the term "Option Shares" includes all Shares issued by the Company to a Holder (or his, her or its predecessor) by reason of such holdings, including any securities which may be acquired as a result of a stock split, stock dividend, and other distributions of Shares in the Company made upon, or in exchange for, other securities of the Company. 22. "Option Term" has the meaning set forth in section 5(c)(iv) of the Plan. 23. "Optionee" has the meaning set forth in section 1 of the Plan. 24. "Options" has the meaning set forth in section 1 of the Plan. 25. "Plan" has the meaning set forth in section 1 of the Plan. 26. Qualified Retirement shall mean the voluntary termination of an employee or director of the Company after the individual has reached age 55 with not less than 10 years of service with the Company. In order for such termination to remain a Qualified Retirement under the Plan, the individual must withdraw from the profession in which that individual was employed with the Company and shall not during the time of the Grace Period, directly engage in or have any interest in, any person, firm, corporation or business (whether as an employee, officer, director, agent, security holder, creditor, consultant or otherwise) that engages in any activity or service which is the same as, similar to or competitive with, in whole or in part, the Company. 27. "Shares" has the meaning set forth in section 1 of the Plan. 28. "Subsidiary" has the same meaning as "Subsidiary Corporation" as defined in Section 424(f) of the Code. 29. "Successor Entity" means a corporation or other entity that acquires all or substantially all of the assets of the Company, or which is the surviving or parent entity resulting from a Business Combination, as that term is defined in section 6.8 of the Plan. 30. "Tax Withholding Liability" in connection with the exercise of any Option means all federal and state income taxes, social security tax, and any other taxes applicable to the compensation income arising from the transaction required by applicable law to be withheld by the Company. 31. "Termination of Eligibility Status" means (i) in the case of any employee of the Company and/or any of its Subsidiaries, a termination of his or her employment, whether by the employee or employer, and whether voluntary or involuntary, including without limitation as a result of the death or disability of the employee, and (ii) in the case of any director of the Company and/or any of its Subsidiaries, the death of or resignation by the director or his or her removal from the board in the manner provided by the articles of incorporation, bylaws or other organic instruments of the Company or Subsidiary or otherwise in accordance with applicable law. 32. "Termination for Cause" means (i) in the case of an Optionee who is an employee of the Company and/or any of its Subsidiaries, a termination by the employer of the Optionee's employment for "cause" as defined by any applicable contract of employment, or if not defined therein (or following termination of any such contract of employment), pursuant to the "For Cause Standard" set forth below, (ii) in the case of an Optionee who is or which is an advisor, consultant or independent contractor to the Company and/or any of its Subsidiaries, a termination of the services relationship by the hiring party for "cause" or breach of contract, as defined by any applicable contract of engagement between the parties, or if not defined therein (or following termination of any such contract of engagement), pursuant to the "For Cause Standard" set forth below, and (iii) in the case of an Optionee who is a director, but not an employee, of the Company, removal of him or her from the board of directors by action of the shareholders or, if permitted by applicable law and the articles, bylaws or other organic documents of the Company, by the other directors, in connection with the good faith determination of the board of directors (or of the Company's shareholders if so required, but in either case excluding the vote of the subject individual if he or she is a director or a shareholder) that the "For Cause Standard" set forth below has been satisfied. For purposes hereof, the "For Cause Standard" means that one or more of the following has occurred: (a) the commission by Optionee of any act materially detrimental to the Company, including fraud, embezzlement, theft, bad faith, gross negligence, recklessness or willful misconduct; (b) incompetence or repeated failure or refusal to perform the duties required of Optionee by the Company; (c) conviction of a felony or of any crime of moral turpitude to the extent materially detrimental to the Company; or (d) any material misrepresentation by Optionee to the Company regarding the operation of the business, provided that the action or conduct described in clause (b) above will constitute "Cause" only if such action or conduct continues after the Company has provided Optionee with written notice thereof and a reasonable opportunity (to be not less than 30 days) to cure the same. 33. "Transfer" with respect to Option Shares, includes, without limitation, a voluntary or involuntary sale, assignment, transfer, conveyance, pledge, hypothecation, encumbrance, disposal, loan, gift, attachment or levy of those Shares, including any Involuntary Transfer, Donative Transfer or transfer by will or under the laws of descent and distribution. 34. "Unvested Option" has the meaning set forth in section 5(c)(vii) of the Plan. 35. "Vested Option" has the meaning set forth in section 5(c)(vii) of the Plan. EX-99 5 NON-QUALIFIED STOCK OPTION AGREEMENT HARDING LAWSON ASSOCIATES GROUP, INC. NONSTATUTORY STOCK OPTION AGREEMENT THIS NONSTATUTORY STOCK OPTION AGREEMENT (the "Agreement") is made and entered into by and between HARDING LAWSON ASSOCIATES GROUP, INC., a Delaware corporation (the "Corporation"), and Robert L. Costello, Jr. (the "Optionee"), to be effective as of March 19, 1999 (the "Effective Date"). RECITALS A. This Agreement is entered into pursuant to the Employment Agreement between the Corporation and the Optionee dated March 19, 1999 (the "Employment Agreement"). B. As used herein, the term "Subsidiary" shall mean any present or future corporation which is a wholly owned subsidiary of the Corporation. C. The option(s) subject to this Agreement shall be Nonstatutory Stock Options covering shares of the Corporation's authorized but unissued or reacquired $0.01 par value Common Stock (the "Shares"). D. Although this agreement is not being entered into pursuant to the Harding Lawson Associates 1998 Stock Option Plan (the "Plan"), all provisions of this Agreement are subject to, and shall be interpreted in accordance with, the Plan. In the event that there are any provisions of this Agreement that are contrary to the Plan, the terms of the Agreement shall supersede the provisions of the Plan. NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the parties do hereby agree as follows: 1. Grant of Option. The Corporation hereby grants to the Optionee the right and option (the "Option") to purchase all or any part of an aggregate of One Hundred Thousand (100,000) Shares (the "Option Shares"), such number being subject to adjustment as provided in Section 11 hereof, on the terms and conditions set forth herein and in the Plan. The Option is intended to be a Nonstatutory Stock Option, and not an "incentive stock option" within the meaning of Section 422A of the Internal Revenue Code of 1986, as amended (the "Code"). 2. Exercise Price. The exercise price (the "Exercise Price") of the Option Shares shall be Ten Dollars ($10.00) per Share, which price has been determined by the Corporation to be not less than the fair market value of the Option Shares as of the date on which the Option was granted to the Optionee. 3. Terms of Option. (a) The Option is exercisable up to the date ten (10) years from the Effective Date, subject to earlier termination as provided in Sections 6, 7, 8, and 9 hereof or when the Option has been exercised in full pursuant to the terms of this Agreement. The Optionee shall have the right and option to purchase the following number of Option Shares at the Exercise Price: Cumulative Percent of Options Exercisable Cumulative Number Vest Date (Vested) of Shares Exercisable March 18, 2000 0% 0 March 18, 2001 50% 50,000 March 18, 2002 75% 75,000 March 18, 2003 100% 100,000 (b) The Option may be exercised as to any or all of the vested Option Shares. Except as provided in Sections 6, 7, and 9 hereof the Option may not be exercised at any time unless the Optionee is then serving the Corporation and shall have been continuously serving the Corporation since the Effective Date. The Exercise Price of those Option Shares as to which the Option may be exercised shall be paid in full at the time of exercise, as provided in Section 12 of this Agreement, below. 4. Rights as a Stockholder. The holder of the Option shall have no rights as a stockholder with respect to any Option Shares until he shall have exercised this Option in accordance with its terms and certificates or electronic transfer evidencing the Option Shares shall have been delivered to him or her by the Corporation. No adjustment, except as provided in Section 11 hereof, shall be made for dividends, distributions, or other rights in respect to such Option Shares for which the record date is prior to the date on which the Optionee or his transferee became the holder of record. 5. Nontransferability. (a) During the Optionee's lifetime, the Option (i) shall not be transferable or assignable and (ii) may be exercised only by the Optionee. More particularly (but without limiting the generality of the foregoing), the Option may not be assigned, transferred (except as provided above), pledged, or hypothecated in any way, shall not be assignable by operation of law, and shall not be subject to execution, attachment, or similar process. Any attempted assignment, transfer, pledge, hypothecation, or other disposition of the Option contrary to the provisions hereof, and the levy of any execution, attachment, or similar process upon the Option, shall be null and void and without effect. (b) The foregoing paragraph notwithstanding, the Option may be assigned or transferred by will or by laws of the descent and distribution to the extent provided in Section 6, below; provided, however, that no such transfer or assignment shall be effective unless the Corporation shall have been furnished with written notice thereof and such other evidence as the Corporation may deem necessary to establish compliance with any laws or regulations pertaining thereto. 6. Death of Optionee. In the event of the death of the Optionee while he or she is in the service of the Corporation, his personal representatives, executors, trustees, or legatees shall have the right for a period of twelve (12) months from the date of death to exercise the Option to the extent the Optionee was entitled to exercise the Option on the date of his death; provided, however, that in no event may the Option be exercised after the date on which it would normally have expired under its terms. If no such exercise is made within such twelve (12) month period following death, the Option shall become no longer exercisable. 7. Disability of Optionee. In the event that the Optionee becomes permanently disabled while he or she is serving the Corporation, any unexercised portion of the Option which may be otherwise exercisable by the Optionee at the date of termination due to such disability shall be exercisable for a period of twelve (12) months from the date of termination; provided, however, that in no event may the Option be exercised after the date on which it would normally have expired under its terms. If no such exercise is made within said twelve (12) month period following such termination by reason of disability, the Option shall become no longer exercisable. 8. Termination of Employment for Cause. If an Optionee is determined by the Board of Directors to have committed an act of theft, embezzlement, fraud, dishonesty, a breach of fiduciary duty to the Corporation or a Subsidiary, a deliberate disregard of the rules of the Corporation which resulted in loss, damage, or injury to the Corporation or a Subsidiary, engages in any conduct which constitutes unfair competition with the Corporation or a Subsidiary, or induces any customer, consultant, employee, or supplier of the Corporation or Subsidiary to breach any contract with the Corporation or a Subsidiary, neither the Optionee nor his estate shall be entitled to exercise any Option with respect to any Option Shares whatsoever after termination of employment, whether or not after such termination of employment the Optionee may receive payment from the Corporation for services rendered prior to termination, for fees or payments. In making such determination, the Corporation shall give the Optionee an opportunity to present evidence on his behalf. Termination of employment shall be deemed to occur when the Corporation provides written notice to the Optionee that his employment is terminated. 9. Termination of Employment For Any Reason Other Than Death, Disability, Or Cause. In the event the Optionee, during his life, ceases to be employed by the Corporation, and such employment was terminated (whether at the initiative of the Optionee or the decision of the Board for any reason other than as described in Sections 6, 7, and 8 above, the Optionee shall have the right to exercise the unexpired portion of this Option (to the extent that he or she was entitled to do so at the date of termination) at any time within thirty (30) days after such termination, but thereafter the Option shall become no longer exercisable; provided, however, that in no event may any portion of this Option be exercised after the date on which it would otherwise normally have expired under its terms had the Optionee remained in the Corporation's service. 10. No Rights Conferred. Nothing in this Agreement shall confer upon the Optionee any right to continue in the service of the Corporation. 11. Adjustments Upon Changes in Capital Structure. (a) In the event of any changes in the outstanding Common Stock of the Corporation by reason of any stock dividend, stock split or reverse stock split, combination, reclassification, recapitalization, merger, consolidation, reorganization, or liquidation of or involving the Corporation, the aggregate number and/or the class of shares subject to this Agreement, and the exercise price of the Option prior to such event, shall be appropriately adjusted by the Board of Directors of the Corporation in accordance with the terms of the Plan, and such adjustment shall be conclusive. (b) The exercisability of the options covered hereby in the event of a change of control of the Corporation shall be governed by the provisions in Section 3 (a) of the Employment Agreement. 12. Method of Exercising Option. (a) Subject to the terms and conditions of this Agreement, the Option may be exercised by written notice to the Corporation at its main office. Such notice shall (i) be in form satisfactory to the Corporation, (ii) state the election to exercise the Option and the number of Option Shares in respect of which it is being exercised, (iii) be signed by the person or persons exercising the Option, and (iv) be accompanied by payment of the full purchase price of the Option Shares being purchased, and the Corporation shall deliver a certificate or certificates or electronic transfer representing such Option Shares as soon as practicable after the notice shall be received. (b) Payment upon exercise of the Option may be (i) in cash or by a certified or bank cashier's check, (ii) in stock of the Corporation at such value as the Board of Directors in its sole discretion shall determine, provided that such determination shall be final and binding on both the Corporation and the Optionee, (iii) by a full recourse promissory note secured by the Shares being purchased bearing an interest rate greater than or equal to the applicable federal rate prescribed in Section 1274(d) of the Code, or (iv) by any combination of the above methods of payment. (c) The certificate or certificates or electronic transfer for the Shares as to which the Option shall have been so exercised shall be registered in the name of the Optionee and shall be delivered as provided above to or upon the written order of the person or persons exercising the Option. In the event the Option shall be exercised pursuant to Section 6 hereof, the notice described in paragraph (a), above, shall be accompanied by appropriate proof to the right of such person or persons to exercise the Option. All Option Shares purchased as provided herein shall be fully paid and nonassessable. 13. Notice. Any notice required or permitted by this Agreement shall be deemed given to (a) the Optionee, an authorized transferee or assignee of the Optionee, or a stockholder when delivered personally or three (3) days after it is deposited in the U.S. mail, postage prepaid and addressed to such person at his address appearing on the stock records of the Corporation; or (b) the Corporation, when delivered personally to its President or Secretary or three (3) days after it is deposited in the mail, postage prepaid, and addressed to the Corporation, attention its President, at the Corporation's principal place of business. It shall be the duty of both the Corporation and the Optionee (or his transferee or assignee) to notify the other of any change of address. 14. Restrictive Legends. Limitations on the transferability of shares of Common Stock as may be required by state and federal securities laws and regulations may appear on legends on share certificates issued pursuant to Options granted pursuant to this Agreement, and the Corporation will make notations in its records and make other arrangements so as to ensure compliance with these restrictions on transferability. 15. Income Taxation. The Optionee acknowledges that he or she has been informed that the exercise of this option, in whole or in part, will result in the imposition of federal income taxation at the time of exercise based on the spread between the exercise price and the fair market value of the shares on the date of exercise. Additionally, at the time the Option Shares are sold the Optionee will recognize income or loss associated with gains or losses in an amount equal to the difference between the fair market value of the Option Shares at the time of exercise and the sale price of the shares. IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly executed by its officer thereunto fully authorized, and the Optionee has hereunto set his hand, as of the day and year first above written. HARDING LAWSON ASSOCIATES GROUP, INC. By /s/ Patricia A. England Patricia A. England, Secretary OPTIONEE /s/ Robert L. Costello, Jr. (Signature of Optionee) Robert L. Costello, Jr. (Please Print Name Above) -----END PRIVACY-ENHANCED MESSAGE-----