-----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, EpQ6m5ZuXjGrmOBDxG/bb7YL0GqMorajacGQLR6uvUcbaU/hUyB7+6+vHl8HffgR CgVV2C2bztjUiCEe+82gIw== /in/edgar/work/20000614/0000950129-00-003093/0000950129-00-003093.txt : 20000919 0000950129-00-003093.hdr.sgml : 20000919 ACCESSION NUMBER: 0000950129-00-003093 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20000430 FILED AS OF DATE: 20000614 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VERITAS DGC INC CENTRAL INDEX KEY: 0000028866 STANDARD INDUSTRIAL CLASSIFICATION: [1382 ] IRS NUMBER: 760343152 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07427 FILM NUMBER: 654765 BUSINESS ADDRESS: STREET 1: 3701 KIRBY DR STREET 2: STE 112 CITY: HOUSTON STATE: TX ZIP: 77098 BUSINESS PHONE: 7135128300 MAIL ADDRESS: STREET 1: 3701 KIRBY DRIVE SUITE 112 CITY: HOUSTON STATE: TX ZIP: 77098 FORMER COMPANY: FORMER CONFORMED NAME: DIGICON INC DATE OF NAME CHANGE: 19920703 10-Q 1 0001.txt VERITAS DGC INC. - DATED APRIL 30, 2000 1 =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE - --- ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED APRIL 30, 2000 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - --- EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ________ COMMISSION FILE NUMBER 1-7427 VERITAS DGC INC. (Exact name of registrant as specified in its charter) DELAWARE 76-0343152 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 3701 KIRBY DRIVE, SUITE #112 HOUSTON, TEXAS 77098 (Address of principal executive offices) (Zip Code)
(713) 512-8300 (Registrant's telephone number, including area code) NO CHANGES (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter 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 [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. The number of shares of the Company's common stock (the "Common Stock"), $.01 par value, outstanding at May 31, 2000 was 26,763,912 (including 2,019,134 Veritas Energy Services Inc. exchangeable which are identical to the Common Stock in all material respects). =============================================================================== 2 VERITAS DGC INC. AND SUBSIDIARIES FORM 10-Q INDEX ================================================================================
Page Number ----------- PART I. Financial Information Item 1. Financial Statements Consolidated Statements of Income and Comprehensive Income - For the Three and Nine Months Ended April 30, 2000 and 1999 1 Consolidated Balance Sheets - April 30, 2000 and July 31, 1999 2 Consolidated Statements of Cash Flows - For the Nine Months Ended April 30, 2000 and 1999 3 Notes to Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk 12 PART II. Other Information Item 6. Exhibits and Reports on Form 8-K 14 Signatures 17
3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS VERITAS DGC INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME UNAUDITED
THREE MONTHS ENDED NINE MONTHS ENDED APRIL 30, APRIL 30, ------------------------ ------------------------ 2000 1999 2000 1999 ---------- ---------- ---------- ---------- (In thousands) REVENUES $ 93,742 $ 74,610 $ 253,442 $ 323,061 COSTS AND EXPENSES: Cost of services Operating expenses 62,931 47,416 166,256 217,477 Research and development 2,079 2,214 6,119 5,679 Depreciation and amortization 17,490 17,415 54,328 51,999 Selling, general & administrative 4,569 4,525 12,279 13,582 Interest expense 3,605 3,553 10,595 9,156 Other income (822) (1,496) (1,997) (3,899) ---------- ---------- ---------- ---------- Total costs and expenses 89,852 73,627 247,580 293,994 Income before provision for income taxes and equity in loss of joint venture 3,890 983 5,862 29,067 Provision for income taxes 1,411 292 2,474 9,231 Equity in (earnings) loss of joint venture (60) 186 259 273 ---------- ---------- ---------- ---------- Net income before extraordinary charge 2,539 505 3,129 19,563 Extraordinary loss on debt repurchase (net of tax, $95) 187 ---------- ---------- ---------- ---------- Net income $ 2,539 $ 505 $ 2,942 $ 19,563 Other comprehensive income (loss) (net of tax - $0 in both periods) Foreign currency translation adjustments (1,649) 1,826 588 (1,427) Unrealized gain (loss) on investments-available for sale 356 (837) (923) (837) ---------- ---------- ---------- ---------- Comprehensive income $ 1,246 $ 1,494 $ 2,607 $ 17,299 ========== ========== ========== ========== PER SHARE: BASIC Net income per common share before extraordinary item $ .10 $ .02 $ .12 $ .86 Net loss per common share from extraordinary item ---------- ---------- ---------- ---------- Net income per common share $ .10 $ .02 $ .12 $ .86 ========== ========== ========== ========== Weighted average common shares 26,080 22,756 25,055 22,721 ========== ========== ========== ========== DILUTED Net income per common share before extraordinary item $ .09 $ .02 $ .12 $ .85 Net loss per common share from extraordinary item (.01) ---------- ---------- ---------- ---------- Net income per common share $ .09 $ .02 $ .11 $ .85 ========== ========== ========== ========== Weighted average common shares 26,817 22,982 25,631 22,923 ========== ========== ========== ==========
See Notes to Consolidated Financial Statements 1 4 VERITAS DGC INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
APRIL 30, JULY 31, 2000 1999 ------------ ------------ Unaudited (In thousands) ASSETS Current assets: Cash and cash equivalents $ 35,476 $ 73,447 Restricted cash investments 202 300 Accounts and notes receivable (net of allowance: April $2,248; July $3,038) 108,982 113,761 Materials and supplies inventory 4,964 4,417 Prepayments and other 9,206 8,259 Investments-available for sale 4,119 3,671 ------------ ------------ Total current assets 162,949 203,855 Property and equipment 398,085 357,397 Less accumulated depreciation 253,046 201,026 Plus assets held for sale (see Note 2) 4,938 ------------ ------------ Property and equipment - net 149,977 156,371 Multi-client data library 211,410 138,753 Investment in and advances to joint venture 2,381 2,640 Goodwill (net of accumulated amortization: April $4,510; July $3,683) 10,502 2,159 Deferred tax asset 34,232 23,120 Long term notes receivable (net of allowance: $1,000 in both periods) 4,062 3,696 Other assets 11,175 11,252 ------------ ------------ Total $ 586,688 $ 541,846 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $ 129 $ 240 Accounts payable - trade 32,142 26,243 Accrued interest 566 4,010 Other accrued liabilities 41,490 48,640 Income taxes payable 2,136 5,472 ------------ ------------ Total current liabilities 76,463 84,605 Non-current liabilities: Long-term debt - less current maturities 135,000 135,011 Other non-current liabilities 10,780 6,672 ------------ ------------ Total non-current liabilities 145,780 141,683 Stockholders' equity: Preferred stock, $.01 par value; authorized: 1,000,000 shares; none issued Common stock, $.01 par value; authorized: 40,000,000 shares; issued: 24,551,735 shares at April and 21,470,938 shares at July (excluding exchangeable shares of 2,033,027 at April and 1,505,595 at July) 245 214 Additional paid-in capital 254,768 208,749 Accumulated earnings (from August 1, 1991 with respect to Digicon Inc.) 117,594 114,652 Accumulated comprehensive income: Cumulative foreign currency translation adjustment (3,764) (4,352) Unrealized loss on investments-available for sale (1,480) (557) Unearned compensation (1,010) (602) Treasury stock, at cost; 109,785 shares at April and 150,068 shares at July (1,908) (2,546) ------------ ------------ Total stockholders' equity 364,445 315,558 ------------ ------------ Total $ 586,688 $ 541,846 ============ ============
See Notes to Consolidated Financial Statements 2 5 VERITAS DGC INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED
NINE MONTHS ENDED APRIL, 30 ------------------------ 2000 1999 ---------- ---------- (In thousands) OPERATING ACTIVITIES: Net income $ 2,942 $ 19,563 Non-cash items included in net income: Depreciation and amortization 54,328 51,999 Net loss on disposition of property and equipment 182 530 Equity in loss of joint venture 259 273 Amortization of multi-client data library 745 1,104 Deferred taxes (9,576) 10,154 Amortization of unearned compensation 513 318 Change in operating assets/liabilities: Accounts and notes receivable 6,761 26,684 Materials and supplies inventory (515) 106 Prepayments and other (1,833) 8,007 Multi-client data library (72,151) (67,955) Accounts payable and other accrued liabilities (9,451) (20,313) Income taxes payable (1,362) (11,737) Other non-current liabilities 4,108 222 Other (800) (1,795) ---------- ---------- Total cash (used in) provided by operating activities (25,850) 17,160 FINANCING ACTIVITIES: Net (payments) borrowings on long-term debt (296) 59,768 Senior notes issue costs (34) (1,882) Net proceeds from sale of common stock 20,063 1,009 Purchase of treasury stock (145) (2,859) ---------- ---------- Total cash provided by financing activities 19,588 56,036 INVESTING ACTIVITIES: Decrease (increase) in restricted cash investments 98 (108) Decrease in investment in and advances to joint venture 1,183 Acquisitions, net of cash received (2,262) (704) Sale of KC Offshore, net 6,935 Purchase of property and equipment (39,505) (34,651) Sale of property and equipment 3,036 284 ---------- ---------- Total cash used by investing activities (31,698) (33,996) Currency loss on foreign cash (11) (1,427) ---------- ---------- Change in cash and cash equivalents (37,971) 37,773 Beginning cash and cash equivalents balance 73,447 40,089 ---------- ---------- Ending cash and cash equivalents balance $ 35,476 $ 77,862 ========== ==========
See Notes to Consolidated Financial Statements 3 6 VERITAS DGC INC. AND SUBSIDIARIES SUPPLEMENTARY SCHEDULES TO CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED
NINE MONTHS ENDED APRIL 30, -------------------------- 2000 1999 ---------- ---------- (In thousands) SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Increase in property and equipment for accounts payable - trade $ 713 $ 4,560 Utilization of net operating loss carryforwards existing prior to the quasi-reorganization resulting in an increase (decrease) in: Deferred tax asset valuation allowance (212) (1,019) Additional paid-in capital 212 1,019 Treasury stock issued for purchase of Time Seismic Exchange Ltd. 664 Treasury stock issued in lieu of cash for bonuses payable 974 Restricted stock issued for future services resulting in an increase in additional paid-in capital and unearned compensation 783 42 Treasury stock issued for future services resulting in an increase (decrease ) in: Additional paid-in-capital 138 (144) Unearned compensation 921 289 Stock and options issued for purchase of Enertec Resource Services Inc. (net of cash received) 25,189 Settlement of accounts receivable and interest payments from investments-available for sale 1,371 Reclass accounts and notes receivable, net to long term notes receivable, net 3,696 Reclass accounts and notes receivable to investments-available for sale 3,510 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for: Interest - Senior notes 13,163 10,026 Equipment purchase obligations 17 30 Other 859 590 Income taxes 9,696 9,994
See Notes to Consolidated Financial Statements 4 7 VERITAS DGC INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONSOLIDATION Veritas DGC Inc. ("Veritas DGC") provides seismic data acquisition, data processing, multi-client data sales and exploration and development information services to the petroleum industry in selected markets worldwide. The accompanying consolidated financial statements include the accounts of Veritas DGC and all majority-owned domestic and foreign subsidiaries. Investment in a joint venture is accounted for on the equity method. All material intercompany balances and transactions have been eliminated. All material adjustments consisting only of normal recurring adjustments that, in the opinion of management are necessary for a fair statement of the results for the interim periods, have been reflected. These interim financial statements should be read in conjunction with the annual consolidated financial statements of Veritas DGC. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NEW ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." This standard requires companies to record derivative financial instruments on the balance sheet as assets or liabilities, as appropriate, at fair value. Gains or losses resulting from changes in the fair values of those derivatives are accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. Veritas DGC will be required to implement this statement in its first quarter of fiscal year 2001. Veritas DGC believes that the implementation of this standard will not have a material effect on its consolidated financial position or results of operations. 2. PURCHASE OF ENERTEC RESOURCE SERVICES INC. On September 30, 1999, Veritas DGC, Veritas Energy Services Inc. ("VESI") and Enertec Resource Services Inc. ("Enertec"), a Canadian company, consummated a business combination (the "Combination") whereby Enertec became a wholly owned subsidiary of VESI. As a result of the Combination, each share of Enertec stock was converted into the right to receive VESI Class A Exchangeable Series 1 stock (the "Exchangeable" shares) at an exchange ratio of 0.345 of a share of the Exchangeable stock for each share of Enertec. All of the holders of Enertec common shares became holders of Exchangeable shares and accordingly, 2,437,527 shares of Exchangeable stock were issued. Each Exchangeable share is convertible, at the option of the shareholder, into one share of Veritas DGC's common stock. Outstanding options to purchase shares of Enertec stock were converted into options to purchase approximately 236,000 shares of Veritas DGC's common stock at the exchange ratio of 0.345 of a Veritas DGC stock option for each Enertec option. The total purchase price of Enertec was approximately $28.0 million, comprised of approximately $24.8 million of stock, $0.9 million of Veritas DGC options and $2.3 million of business combination costs. The acquisition was accounted for as a purchase with the preliminary allocation of purchase price, in accordance with APB 16, yielding approximately $5.9 million of current assets, $13.4 million of property and long-term assets, $2.6 million of liabilities and $11.3 million of goodwill. Goodwill will be amortized over no more than ten years. 5 8 VERITAS DGC INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED Certain seismic acquisition assets obtained through the Enertec transaction are being held for sale. These assets have been assigned an estimated fair market value of $4.9 million based on the current sales prices of equivalent equipment in the marketplace. This amount has been classified on the balance sheet, under property and equipment, as assets held for sale. Veritas DGC anticipates that most of the equipment will be disposed of within one year of its acquisition On April 28, 2000 Veritas DGC sold its marine high resolution survey business, KC Offshore, L.L.C. and its subsidiary Kinco Operating, Inc., to the Racal Corporation for $6.9 million, net after settlement of intercompany accounts. These assets had previously been classified as assets held for sale and valued at $9.0 million. The after tax losses associated with the assets held for sale, including those sold to the Racal Corporation, were excluded from income and accounted for as an adjustment to the carrying value of the assets. The excluded after tax losses for the quarter and nine months ended April 30, 2000 were $315 and $560, respectively. Pro forma revenue, net income before extraordinary item, net income and earnings per share of the combined Veritas DGC/Enertec entity, presented as if the Combination had occurred on August 1, 1999 and 1998, are shown below. This pro forma financial information is not necessarily indicative of the actual results that would have been achieved had the Combination occurred at the beginning of the periods presented.
Three Months Ended Nine Months Ended April 30, April 30, --------------------------- --------------------------- 2000 1999 2000 1999 ------------ ------------ ------------ ------------ (In thousands, except per share amounts) Revenue $ 93,742 $ 81,139 $ 258,811 $ 347,232 Net income before extraordinary item $ 2,539 $ (305) $ 3,362 $ 17,932 Net income $ 2,539 $ (305) $ 3,175 $ 17,932 Earnings per share: Basic Net income per common share before extraordinary item 0.10 (0.01) 0.13 0.71 Net income per common share 0.10 (0.01) 0.13 0.71 Diluted Net income per common share before extraordinary item 0.09 (0.01) 0.12 0.71 Net income per common share 0.09 (0.01) 0.12 0.71
3. INVESTMENT IN INDONESIAN JOINT VENTURE Veritas DGC owns 80% of an Indonesian joint venture (now known as P.T. Veritas DGC Mega Pratama). The joint venture is accounted for under the equity method due to provisions in the joint venture agreement that gives minority shareholders the right to exercise control. Summarized financial information is as follows: 6 9 VERITAS DGC INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) UNAUDITED
April 30, July 31, 2000 1999 -------- -------- (In thousands) Current assets $ 1,109 $ 1,380 Property and equipment, net 110 314 Multi-client data library 2,854 -------- -------- Total assets $ 4,073 $ 1,694 ======== ======== Current liabilities $ 466 $ 438 Advances from affiliates 15,122 12,479 Stockholders' deficit: Common stock 2,576 2,576 Accumulated deficit (14,091) (13,799) -------- -------- Total stockholders' deficit (11,515) (11,223) -------- -------- Total liabilities and stockholders' deficit $ 4,073 $ 1,694 ======== ========
Three Months Ended Nine Months Ended April 30, April 30, -------------------- -------------------- 2000 1999 2000 1999 -------- -------- -------- -------- (In thousands) Revenues $ 355 $ 1,123 $ 1,304 $ 1,907 Cost and expenses: Cost of services 267 1,220 1,327 1,834 Depreciation and amortization 83 84 253 254 Other (income) expense (55) 5 (17) 92 -------- -------- -------- -------- Total costs and expenses 295 1,309 1,563 2,180 -------- -------- -------- -------- Net income (loss) $ 60 $ (186) $ (259) $ (273) ======== ======== ======== ========
4. LONG-TERM DEBT Long-term debt is as follows:
April 30, July 31, 2000 1999 ---------- ---------- (In thousands) Senior notes due October 2003, at 9 3/4% $ 135,000 $ 135,000 Equipment purchase obligations maturing through September 2000, at a weighted average rate of 10% 251 Equipment purchase obligations maturing through July 2001, at 8.75% 129 ---------- ---------- Total 135,129 135,251 Less current maturities 129 240 ---------- ---------- Due after one year $ 135,000 $ 135,011 ========== ==========
The senior notes are due in October 2003 with interest payable semi-annually at 9 3/4% per annum. The senior notes are unsecured and are effectively subordinated to secured debt of Veritas DGC with respect to the assets securing such debt and to all debt of its subsidiaries whether secured or unsecured. The indenture relating to the senior notes contains certain covenants that limit Veritas DGC's ability to, among other things, incur additional debt, pay dividends and complete mergers, acquisitions and sales of assets. Upon a change in control of Veritas DGC, as defined in the indenture, the holders of the senior notes have the right to require Veritas DGC to purchase all or a portion of such holder's senior note at a price equal to 101% of the aggregate principal amount. Veritas DGC has the right to redeem the senior notes, in whole or part, on or after October 15, 2000. On September 24, 1999, Veritas DGC repurchased $5.5 million of 9 3/4% senior notes on the open market at a price of $5.7 million, resulting in an 7 10 extraordinary loss of $0.2 million, net of tax. On December 3, 1999, Veritas DGC reissued $1.0 million of 9 3/4% senior notes at a price of $1.0 million. On December 10, 1999, Veritas DGC reissued $4.6 million of 9 3/4% senior notes at a price of $4.7 million. Veritas DGC maintains a revolving credit agreement due July 2001 with commercial lenders that provides advances up to $50.0 million. Advances are limited by a borrowing base, which is in excess of the credit limit at April 30, 2000 and bears interest, at Veritas DGC's election, at LIBOR plus a margin or prime rate based on certain financial ratios maintained by Veritas DGC. Advances are secured by certain accounts receivable. Covenants in the agreement limit, among other things, Veritas DGC's right to take certain actions, including creating indebtedness. In addition, the agreement requires Veritas DGC to maintain certain financial ratios. No advances were outstanding at April 30, 2000 and July 31, 1999 under the credit agreement, although $5.8 million in letters of credit had been issued under the facility. Veritas DGC's equipment purchase obligations represent installment loans and capitalized lease obligations primarily related to computer and seismic equipment. 5. OTHER ACCRUED LIABILITIES Other accrued liabilities include the following:
April 30, July 31, 2000 1999 --------------- -------------- (In thousands) Accrued payroll and benefits $ 8,709 $ 5,518 Deferred revenues $ 13,867 $ 10,717 Accrued taxes other than income $ 4,621 $ 12,086
6. OTHER INCOME Other income consists of the following:
Three Months Ended Nine Months Ended April 30, April 30, ---------------------- ---------------------- 2000 1999 2000 1999 -------- -------- -------- -------- (In thousands) Interest income $ (914) $ (1,267) $ (2,457) $ (2,721) Net loss on disposition of property and equipment 74 211 182 530 Net foreign currency exchange losses (gains) 18 (420) 256 (1,549) Other (20) 22 (159) -------- -------- -------- -------- Total $ (822) $ (1,496) $ (1,997) $ (3,899) ======== ======== ======== ========
8 11 7. EARNINGS PER COMMON SHARE Earnings (losses) per common share - basic and diluted are computed as follows:
Three Months Ended Nine Months Ended April 30, April 30, ---------------------- --------------------- 2000 1999 2000 1999 -------- -------- -------- -------- (In thousands, except per per share amounts) Net income before extraordinary item $ 2,539 $ 505 $ 3,129 $ 19,563 Extraordinary loss on debt repurchase 187 -------- -------- -------- -------- Net income $ 2,539 $ 505 $ 2,942 $ 19,563 ======== ======== ======== ======== Weighted average common shares 26,080 22,756 25,055 22,721 Basic Net income per common share before extraordinary item $ .10 $ .02 $ .12 $ .86 Net loss per common share from extraordinary item -------- -------- -------- -------- Net income per common share $ .10 $ .02 $ .12 $ .86 ======== ======== ======== ======== Weighted average common shares - assuming dilution: Weighted average common shares 26,080 22,756 25,055 22,721 Shares issuable from assumed conversion of: Options 737 226 576 202 Warrants -------- -------- -------- -------- Total 26,817 22,982 25,631 22,923 ======== ======== ======== ======== Diluted Net income per common share before extraordinary item $ .09 $ .02 $ .12 $ .85 Net loss per common share from extraordinary item (.01) -------- -------- -------- -------- Net income per common share $ .09 $ .02 $ .11 $ .85 ======== ======== ======== ========
VESI exchangeable shares, which were issued in business combinations, and may be exchanged for Veritas DGC's common stock and are identical to Veritas DGC's common stock in all material respects, are included in the above computations. The following options to purchase common shares have been excluded from the computation assuming dilution because the options' exercise prices exceeded the average market price of the underlying common shares as of the date the period ended.
Nine Months Three Months Ended Ended April 30, April 30, ---------------------------------------- ------------------------------------------- 2000 1999 2000 1999 ----------------- ------------------ ------------------ ------------------ Number of options 725,314 837,966 1,372,340 812,131 Exercise price range $19 3/8 - $55 1/8 $12 5/16 - $56 1/2 $17 1/16 - $55 1/8 $16 5/16 - $56 1/2 Expiring through March 2010 March 2009 March 2010 November 2008
9 12 8. UNREALIZED LOSS ON INVESTMENTS-AVAILABLE FOR SALE In April 1999, Veritas DGC exchanged a $4.7 million account receivable from Miller Exploration Company ("Miller"), a publicly traded company, for a long term note receivable paying 18% interest. Interest is paid in common stock warrants, with an exercise price of $0.01 per share, in advance, at six month intervals. The common stock underlying these warrants has been registered with the SEC. In addition, Veritas DGC exchanged a $4.1 million account receivable from Brigham Exploration Company ("Brigham"), a publicly traded company, for 1,211,580 shares of Brigham common stock. The cost basis of the investments available for sale is determined by the fair market value on the date received.
April 30, 2000 July 31, 1999 ------------------------------------- ------------------------------------- Unrealized Unrealized Cost Basis (Loss) Fair Value Cost Basis (Loss)/Gain Fair Value ---------- ---------- ---------- ---------- ----------- ----------- (In thousands) Brigham common stock $ 4,099 $(1,070) $ 3,029 $ 3,809 $(1,143) $ 2,666 Miller Warrants 1,500 (410) 1,090 419 586 1,005 ------- ------- ------- ------- ------- ------- $ 5,599 $(1,480) $ 4,119 $ 4,228 $ (557) $ 3,671 ======= ======= ======= ======= ======= =======
9. INCOME TAXES The increase in the effective tax rate results from unbenefitted losses in certain countries and the inability to use foreign tax credits in the current year. 10 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This report contains forward-looking statements that involve risks and uncertainties. Veritas DGC's actual results could differ materially from those anticipated in the forward-looking statements as a result of certain factors which are more fully described in other reports filed with the Securities and Exchange Commission and which include changes in market conditions in the oil and gas industry as well as declines in prices of oil and gas. RESULTS OF OPERATIONS THREE MONTHS ENDED APRIL 30, 2000 COMPARED WITH THREE MONTHS ENDED APRIL 30, 1999 Revenues. Revenues increased 26%, from $74.6 million to $93.7 million. Multi-client revenue increased 37%, from $33.8 million to $46.4 million. This is a reflection of Veritas DGC's expansion of its multi-client business in the Gulf of Mexico and Brazil. Contract revenue increased 16%, from $40.8 million to $47.3 million, driven by an increase in the utilization of land acquisition crews from seven to nine. Cost of services. Cost of services increased 31%, from $49.6 million to $65.0 million. However, cost of services as a percent of revenues increased from 67% to 69%. Depreciation and amortization. Depreciation and amortization expense remained relatively the same. An increase in depreciation as a result of the Enertec acquisition and capital spending is offset by a decrease due to fully depreciated assets in Oman. Gross property and equipment, excluding assets held for sale, increased by $43.6 million, or 13% between the comparative income statement period ending dates. Selling, general and administrative. Selling, general and administrative expense remained relatively the same. Interest expense. Interest expense remained essentially flat, with long term debt being the same in both quarters. Other income. Other income decreased from $1.5 million to $0.8 million. Interest income in the current period was $.9 million, versus $1.3 million last year, due to a decrease in cash between the comparative period ending dates. A currency gain of $.4 million in the prior year contributed to the remaining difference. Income taxes. Income taxes increased from a provision of $0.3 million to $1.4 million as a result of Veritas DGC's higher earnings in the current quarter. The increase in the effective tax rate from 30% to 36% is due to unbenefitted losses in certain countries and the inability to use foreign tax credits in the current year. Equity in (earnings) loss of joint venture. Equity in (earnings) loss of joint venture is related to the Indonesian joint venture. An increase in marine contract work in Jakarta accounts for the increased profitability in the current quarter. NINE MONTHS ENDED APRIL 30, 2000 COMPARED WITH NINE MONTHS ENDED APRIL 30, 1999 Revenues. Revenues decreased 22%, from $323.1 million to $253.4 million. Multi-client revenue decreased 1%, from $129.3 million to $128.6 million, while contract revenue decreased 36%, from $193.8 million to $124.8 million. The overall decrease is due to the continuing downturn in exploration spending, but the relatively flat multi-client numbers reflects Veritas DGC's increased investment in its multi-client data base as well as an increasing industry trend to acquire seismic data by licensing it on a multi-client basis. Cost of services. Cost of services decreased 23%, from $223.2 million to $172.4 million. However, cost of services as a percent of revenues decreased from 69% to 68%. 11 14 Depreciation and amortization. Depreciation and amortization expense increased by 4%, from $52.0 million to $54.3 million, due to capital spending and the Enertec acquisition. Gross property and equipment, excluding assets held for sale, increased by $43.6 million, or 13%, between the comparative income statement period ending dates. Selling, general and administrative. Selling, general and administrative expense decreased by 10%, from $13.6 million to $12.3 million. The termination of a process improvement project in fiscal year 1999 and lower property tax accruals in the first quarter of fiscal year 2000 were the primary reasons for the reduction. Interest expense. Interest expense increased from $9.2 million to $10.6 million due to the addition of $60.0 million of 9 3/4% senior notes at the end of October 1998. Other income. Other income decreased from $3.9 million to $2.0 million. Most of the difference is due to $0.3 million of additional interest income and $1.5 million of foreign currency exchange gains during the previous fiscal year. Income taxes. Income taxes decreased from a provision of $9.2 million to $2.5 million as a result of Veritas DGC's lower earnings in the current year. The increase in the effective tax rate from 32% to 42% is due to unbenefitted losses in certain countries and the inability to use foreign tax credits in the current year. Equity in (earnings) loss of joint venture. Equity in (earnings) loss of joint venture is related to the Indonesian joint venture. Decrease in marine contract work accounts for the decreased profitability in the current fiscal year. Extraordinary loss on debt repurchase. On September 24, 1999, Veritas DGC repurchased $5.5 million of its 9 3/4% senior notes on the open market at a price of $5.7 million. The excess of purchase price over face value and the write off of the pro rata debt issuance costs associated with the notes are reported as an extraordinary item, net of tax. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES REGARDING MARKET RISK There have been no significant changes that would effect market risk since July 31, 1999. LIQUIDITY AND CAPITAL RESOURCES SOURCES AND USES Veritas DGC's internal sources of liquidity are cash, cash equivalents and cash flow from operations. External sources include public and private financing, the unutilized portion of a revolving credit facility, equipment financing and trade credit. As of April 30, 2000, Veritas DGC had $135.0 million in senior notes outstanding due in October 2003. Veritas DGC also has a revolving credit facility due July 2001 from commercial lenders that provides advances up to $50.0 million. Advances are limited by a borrowing base, which is in excess of the credit limit at April 30, 2000 and bear interest, at Veritas DGC's election, at LIBOR plus a margin or prime rate based on certain financial ratios maintained by Veritas DGC. Advances are secured by certain accounts receivable. As of April 30, 2000, there are no outstanding advances under the credit facility, but $5.8 million of the credit facility has been utilized for letters of credit, leaving $44.2 million available for borrowings. In April 2000, Veritas DGC sold KC Offshore, L.L.C. and its subsidiary Kinco Operating, Inc. for $8.6 million. The net cash received, after settlement of intercompany accounts, was $6.9 million. KC Offshore was an operating unit of Enertec Resource Services Inc., which was acquired by Veritas DGC in September 1999. Veritas DGC requires significant amounts of working capital to support its operations and fund capital spending and research and development programs. Veritas DGC's current capital expenditure forecast for fiscal 2000 is approximately $56.0 million, which includes expenditures of approximately $25.0 million 12 15 to maintain or replace current operating equipment. Research and development expenditures for fiscal 2000 are budgeted at $8.3 million. Veritas DGC has also increased its multi-client activity and significantly expanded its multi-client data library. Because of the elapsed time between survey execution, sale and ultimate cash receipt, multi-client work generally requires greater amounts of working capital than contract work. Depending upon the timing of the sales of the multi-client surveys and the contract terms relating to the collection of the proceeds from such sales, Veritas DGC's liquidity may be affected. Veritas DGC seeks pre-funding commitments from customers for a portion of the cost of these surveys. However, because of market conditions, customer purchase commitment levels are currently much lower than in past years. Veritas DGC believes that these multi-client surveys have good long-term sales, earnings and cash flow potential, but there is no assurance that Veritas DGC will recover the costs of these surveys. In addition to the capital expenditure budget, the planned net investment in the multi-client data library (the change in the balance sheet account) for fiscal 2000 is $81.0 million. Veritas DGC will require substantial cash flow to continue operations on a satisfactory basis, complete its capital expenditure and research and development programs and meet its principal and interest obligations with respect to outstanding indebtedness. While management believes that Veritas DGC has adequate sources of funds to meet its liquidity needs, its ability to meet its obligations depends on its future performance, which, in turn, is subject to general economic conditions, business and other factors beyond Veritas DGC's control. Key factors affecting future results will include utilization levels of acquisition and processing assets and the level of multi-client data library sales, all of which are driven by exploration spending and, ultimately, by underlying commodity prices. If Veritas DGC is unable to generate sufficient cash flow from operations or otherwise to comply with the terms of its revolving credit facility or indentures, it may be required to refinance all or a portion of its existing debt or obtain additional financing. Veritas DGC cannot make any assurances that it would be able to obtain such refinancing or financing, or any refinancing or financing would result in a level of net proceeds required. To ensure that Veritas DGC has available as many financing options as possible, it has filed a shelf registration allowing the issuance of up to $200 million in debt, preferred stock or common stock. On October 26, 1999 Veritas DGC filed a prospectus supplement relating to the sale of up to 2.0 million shares of Veritas DGC common stock, from time to time through ordinary brokerage transactions, under the currently effective shelf registration. As of April 30, 2000, Veritas DGC has issued 0.7 million shares under this prospectus supplement, generating $15.4 million in proceeds. OTHER Since Veritas DGC's quasi-reorganization with respect to Digicon Inc. on July 31, 1991, the tax benefits of net operating loss carryforwards existing at the date of the quasi-reorganization have been recognized through a direct addition to paid-in capital, when realization is more likely than not. Additionally, the utilization of the net operating loss carryforwards existing at the date of the quasi-reorganization is subject to certain limitations. During the nine months ended April 30, 2000, Veritas DGC recognized $0.2 million of these benefits, due to increased profitability of Veritas DGC's U.K. operations. Veritas DGC maintains operations in Europe, which are predominately conducted from its U.K. offices. Although the U.K. has not currently elected to convert to the new "euro" currency, Veritas DGC does have transactions with companies in countries that have adopted the new currency. Veritas DGC has made a preliminary assessment and does not anticipate any material effect to the consolidated financial statements as a result of the new currency. See Note 1 of Notes to Consolidated Financial Statements regarding new accounting pronouncements not yet adopted. 13 16 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) EXHIBITS FILED WITH THIS REPORT: Exhibit ------- 3-A) Restated Certificate of Incorporation with amendments of Digicon Inc. dated August 30, 1996. (Exhibit 3.1 to Veritas DGC Inc.'s Current Report on Form 8-K dated September 16, 1996 is incorporated herein by reference.) 3-B) Certificate of Ownership and Merger of New Digicon Inc. and Digicon Inc. (Exhibit 3-B to Digicon Inc.'s Registration Statement No. 33-43873 dated November 12, 1991 is incorporated herein by reference.) 3-C) By-laws of new Digicon Inc. dated June 24, 1991. (Exhibit 3-C to Digicon Inc.'s Registration Statement No. 33-43873 dated November 12, 1991 is incorporated herein by reference.) 3-D) Certificate of Amendment to Restated Certificate of Incorporation of Veritas DGC Inc. dated September 30, 1999. (Exhibit 3-D to Veritas DGC Inc.'s Form 10-K for the year ended July 31, 1999 is incorporated herein by reference.) 3-F) By-laws of Veritas DGC Inc. as amended and restated March 7, 2000. (Exhibit 3-E to Veritas DGC Inc.'s Form 10-Q for the quarter ended January 31, 2000 is incorporated herein by reference.) 4-A) Specimen certificate for Senior Notes (Series A). (Included as part of Section 2.2 Exhibit 4-B to Veritas DGC Inc.'s Registration Statement No. 333-12481 dated September 20, 1996 is incorporated herein by reference.) 4-B) Form of Trust Indenture relating to the 9 3/4% Senior Notes due 2003 of Veritas DGC Inc. between Veritas DGC Inc. and Fleet National Bank, as trustee. (Exhibit 4-B to Veritas DGC Inc.'s Registration Statement No. 333-12481 dated September 20, 1996 is incorporated herein by reference.) 4-C) Specimen Veritas DGC Inc. Common Stock certificate. (Exhibit 4-C to Veritas DGC Inc.'s Form 10-K for the year ended July 31, 1996 is incorporated herein by reference.) 4-D) Rights Agreement between Veritas DGC Inc. and ChaseMellon Shareholder Services, L.L.C. dated May 15, 1997. (Exhibit 4.1 to Veritas DGC Inc.'s Current Report on Form 8-K dated May 27, 1997 is incorporated herein by reference.) 4-E) Form of Restricted Stock Grant Agreement. (Exhibit 4.8 to Veritas DGC Inc.'s Registration Statement No. 333-48953 dated March 31, 1998 is incorporated herein by reference.) *4-F) Veritas DGC Inc. Restricted Stock Plan (As amended and restated March 7, 2000.) 4-G) Key Contributor Incentive Plan as Amended and Restated dated March 9, 1999. (Exhibit 4.9 to Veritas DGC Inc.'s Registration Statement No. 333-74305 dated March 12, 1999 is incorporated herein by reference.) 4-H) Specimen for Senior Notes (Series C). (Exhibit 4-K to Veritas DGC Inc.'s Form 10-Q for the quarter ended January 31, 1999 is incorporated herein by reference.) 14 17 4-I) Indentures relating to the 9 3/4% Senior Notes due 2003, Series B and Series C of Veritas DGC Inc. between Veritas DGC Inc. and State Street Bank and Trust Company dated October 28, 1998. (Exhibit 4.3 to Veritas DGC Inc.'s Current Report on Form 8-K dated November 12, 1998 is incorporated herein by reference.) 9-A) Voting and Exchange Trust Agreement dated August 30, 1996 among Digicon Inc., Veritas Energy Services Inc. and the R-M Trust Company dated August 30, 1996. (Exhibit 9.1 to Veritas DGC Inc.'s Current Report on Form 8-K dated September 16, 1996 is incorporated herein by reference.) 9-B) Voting and Exchange Trust Agreement dated September 30, 1999 among Veritas DGC Inc., Veritas Energy Services Inc. and the CIBC Mellon Trust Company. (Exhibit 9-B to Veritas DGC Inc.'s Form 10-K for the year ended July 31, 1999 is incorporated herein by reference.) 10-A) Support Agreement between Digicon Inc. and Veritas Energy Services Inc. dated August 30, 1996. (Exhibit 10.1 to Veritas DGC Inc.'s Current Report on Form 8-K dated August 30, 1996 is incorporated herein by reference.) *10-B) 1992 Non-Employee Director Stock Option Plan (As amended and restated March 7, 2000.) *10-C) 1992 Employee Nonqualified Stock Option Plan (As amended and restated March 7, 2000.) 10-D) 1997 Employee Stock Purchase Plan. (Exhibit 4.1 to Veritas DGC Inc.'s Registration Statement No. 333-38377 dated October 21, 1997 is incorporated herein by reference.) 10-E) Restricted Stock Agreement between Veritas DGC Inc. and Anthony Tripodo dated April 1, 1997. (Exhibit 10-O to Veritas DGC Inc.'s Form 10-K for the year ended July 31, 1997 is incorporated herein by reference.) 10-F) Employment Agreement executed by David B. Robson. (Exhibit 10-L to Veritas DGC Inc.'s Form 10-K for the year ended July 31, 1997 is incorporated herein by reference.) 10-G) Employment Agreement executed by Stephen J. Ludlow. (Exhibit 10-B to Veritas DGC Inc.'s Form 10-Q for the quarter ended April 30, 1997 is incorporated herein by reference.) 10-H) Employment Agreement executed by Anthony Tripodo. (Refer to Exhibit 10-I to Veritas DGC Inc.'s Form 10-Q for the quarter ended April 30, 1997 is incorporated herein by reference.) 10-I) Employment Agreement executed by Rene M.J. VandenBrand. (Exhibit 10-N to Veritas DGC Inc.'s Form 10-K for the year ended July 31, 1997 is incorporated herein by reference.) 10-J) Employment Agreement executed by Timothy L. Wells. (Exhibit 10-J to Veritas DGC Inc.'s Form 10-K for the year ended July 31, 1999 is incorporated herein by reference.) 10-K) Credit Agreement among Veritas DGC Inc., as borrower, and Bank One, Texas, N.A., as issuing bank, as a bank and agent for the banks, and the banks therein named dated November 1, 1999. (Exhibit 10-N to Veritas DGC Inc.'s Form 10-Q for the quarter ended October 31, 1999 is incorporated herein by reference.) 15 18 10-L) Sales agency agreement between Veritas DGC Inc. and PaineWebber Incorporated, dated October 26, 1999. (Exhibit 1.1 to Veritas DGC Inc.'s Form 8-K filed on October 26, 1999 is incorporated herein by reference.) *10-M) Form of Indemnity Agreement between Veritas DGC Inc. and its executive officers and directors (as amended and restated March 7, 2000.) 10-N) Employment Agreement executed by Richard C. White. (Exhibit 10-Q to Veritas DGC Inc's Form 10-Q for the quarter ended January 31, 2000 is incorporated herein by reference.) *10-O) Indemnity Agreement between Veritas DGC Inc. and Richard C. White. *27) Financial Data Schedule. * Filed herewith b) REPORTS ON FORM 8-K Veritas DGC did not file a Form 8-K during the quarter ended April 30, 2000. 16 19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned; thereunto duly authorized, on the 14th day of June 2000. VERITAS DGC INC. By: /s/ Richard C. White ------------------------------------- RICHARD C. WHITE Chief Executive Officer /s/ Anthony Tripodo ------------------------------------- ANTHONY TRIPODO Executive Vice President, Chief Financial Officer and Treasurer 17 20 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION ------ ----------- 4-F Veritas DGC Inc. Restricted Stock Plan (As amended and restated March 7, 2000.) 10-B 1992 Non-Employee Director Stock Option Plan (As amended and restated March 7, 2000.) 10-C 1992 Employee Nonqualified Stock Option Plan (As amended and restated March 7, 2000.) 10-M Form of Indemnity Agreement between Veritas DGC Inc. and its executive officers and directors (as amended and restated March 7, 2000.) 10-O Indemnity Agreement between Veritas DGC Inc. and Richard C. White. 27 Financial Data Schedule.
EX-4.F 2 0002.txt AMENDED RESTRICED STOCK PLAN - MARCH 7, 2000 1 EXHIBIT 4-F VERITAS DGC INC. RESTRICTED STOCK PLAN (AS AMENDED AND RESTATED MARCH 7, 2000) SECTION 1. GENERAL PROVISIONS RELATING TO PLAN GOVERNANCE, COVERAGE AND BENEFITS 1.1 PURPOSE The purpose of the Plan is to foster and promote the long-term financial success of Veritas DGC Inc. (the "Company") and its Subsidiaries and to increase stockholder value by: (a) encouraging the commitment of selected key Employees, (b) motivating superior performance of such Employees by means of long-term performance related incentives, (c) encouraging and providing such Employees with a program for obtaining ownership interests in the Company which link and align their personal interests to those of the Company's stockholder, (d) attracting and retaining key Employees by providing competitive incentive compensation opportunities, and (e) enabling key Employees to share in the long-term growth and success of the Company. The Plan provides for the payment of restricted stock incentive compensation and it is not intended to be a plan that is subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA). The Plan shall be interpreted, construed and administered consistent with its status as a plan that is not subject to ERISA. The Plan shall become effective as of June 9, 1998 (the "Effective Date"). The Plan shall commence on the Effective Date, and shall remain in effect, subject to the right of the Board to amend or terminate the Plan at any time pursuant to Section 4.6, until all Shares subject to the Plan have been purchased or acquired according to its provisions. However, in no event may an Incentive Award be granted under the Plan after the expiration of ten (10) years from the Effective Date. The plan was amended and restated by the Board on March 7, 2000. 1.2 DEFINITIONS Capitalized terms used herein shall have the meanings set forth in Schedule A attached. 1.3 PLAN ADMINISTRATION (a) Authority of the Committee. Except as may be limited by law and subject to the provisions herein, the Committee shall have full power to (i) select Grantees who shall participate in the Plan; (ii) determine the sizes, duration and types of Incentive Awards; (iii) determine the terms and conditions of Incentive Awards 2 and Restricted Stock Agreements; (iv) determine whether any Shares subject to Incentive Awards will be subject to any restrictions on transfer; (v) construe and interpret the Plan and any Restricted Stock Agreement or other agreement entered into under the Plan; and (vi) establish, amend, or waive rules for the Plan's administration. Further, the Committee shall make all other determinations which may be necessary or advisable for the administration of the Plan. The Committee may grant an Incentive Award to an individual who it expects to become an Employee within the next six months, with such Incentive Award being subject to such individual actually becoming an Employee within such time period, and subject to such other terms and conditions as may be established by the Committee in its discretion. (b) Meetings. The Committee shall designate a chairman from among its members who shall preside at all of its meetings, and shall designate a secretary, without regard to whether that person is a member of the Committee, who shall keep the minutes of the proceedings and all records, documents, and data pertaining to its administration of the Plan. Meetings shall be held at such times and places as shall be determined by the Committee and the Committee may hold telephonic meetings. The Committee may take any action otherwise proper under the Plan by the affirmative vote, taken with or without a meeting, of a majority of its members. The Committee may authorize any one or more of their members or any officer of the Company to execute and deliver documents on behalf of the Committee. (c) Decisions Binding. All determinations and decisions made by the Committee shall be made in its discretion pursuant to the provisions of the Plan, and shall be final, conclusive and binding on all persons including the Company, its shareholders, Employees, Grantees, and their estates and beneficiaries. The Committee's decisions and determinations with respect to any Incentive Award need not be uniform and may be made selectively among Incentive Awards and Grantees, whether or not such Incentive Awards are similar or such Grantees are similarly situated. (d) Modification of Outstanding Incentive Awards. Subject to any required stockholder approval requirements, if applicable, the Committee may, in its discretion, provide for the extension of the exercisability of an Incentive Award, accelerate the vesting or exercisability of an Incentive Award, eliminate or make less restrictive any restrictions contained in an Incentive Award, waive any restriction or other provisions of an Incentive Award, or otherwise amend or modify an Incentive Award in any manner that is either (i) not adverse to the Grantee to whom such Incentive Award was granted, or (ii) consented to by such Grantee. (e) Delegation of Authority. The Committee may delegate to any Authorized Officer certain of its duties under the Plan pursuant to such conditions or limitations as 2 3 the Committee may establish from time to time, except that the Committee may not delegate to any person the authority to (i) grant Incentive Awards to any Insider, or (ii) take any action that would contravene the requirements of Rule 16b-3 under the Exchange Act or the Performance-Based Exception under Section 162(m) of the Code to the extent that Rule 16b-3 or the Performance-Based Exemption is applicable to the Grantee as determined by the Committee; provided, however, any such action if taken by an Authorized Officer may be subsequently ratified by the Committee, in its discretion, before the Incentive Award becomes vested and, in such event, any Incentive Award that is granted to the Insider shall be subject to such subsequent ratification by the Committee. (f) Expenses of Committee. The Committee may employ legal counsel, including, without limitation, independent legal counsel and counsel regularly employed by the Company, and other agents as the Committee may deem appropriate for the administration of the Plan. The Committee may rely upon any opinion or computation received from any such counsel or agent. All expenses incurred by the Committee in interpreting and administering the Plan, including, without limitation, meeting expenses and professional fees, shall be paid by the Company. (g) Surrender of Previous Incentive Awards. The Committee may, in its absolute discretion, grant Incentive Awards to Grantees on the condition that such Grantees surrender to the Committee for cancellation such other Incentive Awards as the Committee directs. Incentive Awards granted on the condition precedent of surrender of outstanding Incentive Awards shall not count against the limits set forth in Section 1.4 until such time as such previous Incentive Awards are surrendered and canceled. (h) Indemnification. Each person who is or was a member of the Committee shall be indemnified by the Company against and from any damage, loss, liability, cost and expense that may be imposed upon or reasonably incurred by him in connection with or resulting from any claim, action, suit, or proceeding to which he may be a party or in which he may be involved by reason of any action taken or failure to act under the Plan, except for any such act or omission constituting willful misconduct or gross negligence. Such person shall be indemnified by the Company for all amounts paid by him in settlement thereof, with the Company's approval, or paid by him in satisfaction of any judgment in any such action, suit, or proceeding against him, provided he shall give the Company an opportunity, at its own expense, to handle and defend the same before he undertakes to handle and defend it on his own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. 3 4 1.4 SHARES OF COMMON STOCK AVAILABLE FOR INCENTIVE AWARDS. Subject to adjustment under Section 3.5, there shall be available for Incentive Awards under the Plan an aggregate of One Hundred Seventy Three Thousand Nine Hundred Seventy-Five (173,975) Shares of Common Stock; provided, however, that, together with all other plans of the Company not exempt under Para. 312.03(a)(1)-(3) of the NYSE Listed Company Manual, in no case shall the Plan allow the issuance of more than five percent (5%) of the Company's Common Stock outstanding as of June 9, 1998 or as of any such later time at which the Plan is amended to increase the number of Shares authorized for issuance under the Plan. The number of Shares of Common Stock subject to Incentive Awards that are forfeited or terminated, or are settled in a manner such that all or some of the Shares covered by the Incentive Award are not issued to a Grantee, shall again immediately become available for Incentive Awards hereunder. The Committee may from time to time adopt and observe such procedures concerning the counting of Shares against the Plan maximum as it may deem appropriate. If the Committee determines that a particular Incentive Award granted to a Covered Employee is not intended to comply with the Performance-Based Exception, then, subject to adjustment as provided in Section 3.5, the maximum aggregate number of Shares of Common Stock that may be granted or that may vest, as applicable, in any calendar year pursuant to any Incentive Award held by any individual Covered Employee shall be 50,000 Shares. 1.5 SHARE POOL ADJUSTMENTS FOR AWARDS AND PAYOUTS. A grant of Shares of Restricted Stock shall reduce, on a one Share for one Share basis, the number of Shares authorized for issuance under the Share Pool. The following transactions shall restore, on a one Share for one Share basis, the number of Shares authorized for issuance under the Share Pool: (a) A cancellation, termination, expiration, forfeiture, or lapse for any reason of any Shares subject to an Incentive Award; and (b) The payment of any purchase price for Shares by the Grantee with previously acquired Shares, or by withholding Shares which otherwise would be acquired on purchase (i.e., the Share Pool shall be increased by the number of Shares turned in or withheld as payment of the purchase price, if any, for an Incentive Award). 1.6 COMMON STOCK AVAILABLE. The Common Stock available for issuance or transfer under the Plan shall be made available from Shares now or hereafter (a) held in the treasury of the Company, (b) authorized but unissued Shares or (c) Shares to be purchased or acquired by the Company. No fractional Shares shall be issued under the Plan; payment for fractional Shares shall be made in cash. 4 5 1.7 ELIGIBILITY FOR PARTICIPATION. In its discretion, the Committee shall from time to time designate those Employees to be granted Incentive Awards under the Plan, the number of Shares subject to the Incentive Award, and the other terms or conditions relating to the Incentive Award as it deems appropriate to the extent not inconsistent with the provisions of the Plan. A Grantee who has been granted an Incentive Award may, if otherwise eligible, be granted additional Incentive Awards at any time. SECTION 2. RESTRICTED STOCK 2.1 AWARD OF RESTRICTED STOCK (a) Grant. In consideration for Employment by the Grantee, Shares of Restricted Stock may be awarded under the Plan by the Committee with such restrictions during the Restriction Period as the Committee designates in its discretion, any of which restrictions may differ with respect to a particular Grantee. Restricted Stock shall be awarded for no additional consideration or such additional consideration as the Committee may determine, which consideration may be less than, equal to or more than the Fair Market Value of the Shares of Restricted Stock on the date of grant. The terms and conditions of each grant of Restricted Stock shall be evidenced by a Restricted Stock Agreement. (b) Immediate Transfer Without Immediate Delivery of Restricted Stock. Unless otherwise specified in the Grantee's Restricted Stock Agreement, each Restricted Stock Award shall constitute an immediate transfer of the record and beneficial ownership of the Shares of Restricted Stock to the Grantee in consideration of the performance of services as an Employee, entitling such Grantee to all voting and other ownership rights in such Shares subject to any restrictions thereon. As specified in the Restricted Stock Agreement, a Restricted Stock Award may limit the Grantee's dividend rights during the Restriction Period in which the Shares of Restricted Stock are subject to a "substantial risk of forfeiture" (within the meaning given to such term under Code Section 83) and restrictions on transfer. In the Restricted Stock Agreement, the Committee may apply any restrictions to the dividends that the Committee deems appropriate. Without limiting the generality of the preceding sentence, if the grant or vesting of Shares of Restricted Stock for a Covered Employee is designed to comply with the requirements of the Performance-Based Exception, the Committee may apply any restrictions that it deems appropriate to the payment of dividends declared with respect to such Shares of Restricted Stock, such that the dividends and/or the Shares of Restricted Stock maintain eligibility for the Performance-Based Exception. In the event that any dividend constitutes a derivative security or an 5 6 equity security pursuant to the rules under Section 16 of the Exchange Act, if applicable, such dividend shall be subject to a vesting period equal to the remaining vesting period of the Shares of Restricted Stock with respect to which the dividend is paid. As determined by the Committee, Shares awarded pursuant to a grant of Restricted Stock may be issued in the name of the Grantee and held, together with a stock power endorsed by the Grantee in blank, by the Committee or the Secretary of the Company (or their delegates) as a depository for safekeeping until such time as the forfeiture restrictions and restrictions on transfer have lapsed. All such terms and conditions shall be set forth in the particular Grantee's Restricted Stock Agreement. The Company or Committee shall issue to the Grantee a receipt evidencing the certificates held by it which are registered in the name of the Grantee. 2.2 RESTRICTIONS (a) Forfeiture of Restricted Stock. Restricted Stock awarded to a Grantee may be subject to the following restrictions until the expiration of the Restriction Period: (i) a restriction that constitutes a "substantial risk of forfeiture" (as defined in Code Section 83), or a restriction on transferability under Code Section 83; and (ii) any other restrictions that the Committee determines are appropriate, including, without limitation, rights of repurchase or first refusal in the Company or provisions subjecting the Restricted Stock to a continuing substantial risk of forfeiture in the hands of any transferee. Any such restrictions shall be set forth in the particular Grantee's Restricted Stock Agreement. (b) Issuance of Certificates. Coincident with or promptly after the grant date with respect to Shares of Restricted Stock, the Company shall cause to be issued a stock certificate, registered in the name of the Grantee to whom such Restricted Stock was granted, evidencing such Shares; provided, however, that the Company shall not cause to be issued such a stock certificate unless it has received a stock power duly endorsed in blank by the Grantee with respect to such Shares. Each such stock certificate shall bear the following legend or any other legend approved by the Company: THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE RESTRICTIONS, TERMS AND CONDITIONS (INCLUDING FORFEITURE AND RESTRICTIONS AGAINST TRANSFER) CONTAINED IN THE VERITAS DGC INC. RESTRICTED STOCK PLAN AND A RESTRICTED STOCK AGREEMENT DATED 6 7 _______________, ____ BETWEEN THE REGISTERED OWNER OF SUCH SHARES AND VERITAS DGC INC. RESTRICTIONS ON THE RIGHT TO OWN OR TRANSFER THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE BEEN IMPOSED PURSUANT TO SAID RESTRICTED STOCK AGREEMENT. A COPY OF THE RESTRICTED STOCK AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF THIS CERTIFICATE UPON RECEIPT BY THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE OF A WRITTEN REQUEST FROM THE HOLDER REQUESTING SUCH COPY. Such legend shall not be removed from the certificate evidencing such Shares of Restricted Stock until such Shares vest pursuant to the terms of the Restricted Stock Agreement. (c) Removal of Restrictions. The Committee, in its discretion, shall have the authority to remove any or all of the restrictions on the Restricted Stock if it determines that, by reason of a change in applicable law or another change in circumstance arising after the grant date of the Restricted Stock, such action is appropriate. 2.3 DELIVERY OF SHARES OF COMMON STOCK. Subject to withholding taxes under Section 4.3 and to the terms of the Restricted Stock Agreement, a stock certificate evidencing the Shares of Restricted Stock with respect to which the restrictions in the Restricted Stock Agreement have lapsed or otherwise been satisfied shall be delivered to the Grantee or other appropriate recipient free of restrictions. Such delivery shall be effected for all purposes when the Company shall have deposited such certificate in the United States mail, addressed to the Grantee or other appropriate recipient. 2.4 SUPPLEMENTAL PAYMENT ON VESTING OF RESTRICTED STOCK. The Grantee shall be responsible for the payment of any federal, state or other income taxes due in connection with the Grant, whether such taxes are due at the time the Incentive Award is granted or otherwise. 7 8 SECTION 3. PROVISIONS RELATING TO PLAN PARTICIPATION 3.1 PLAN CONDITIONS. (a) Restricted Stock Agreement. Each Grantee to whom an Incentive Award is granted shall be required to enter into a Restricted Stock Agreement with the Company, in such a form as is provided by the Committee. The Restricted Stock Agreement shall contain specific terms as determined by the Committee, in its discretion, with respect to the Grantee's particular Incentive Award. Such terms need not be uniform among all Grantees or any similarly-situated Grantees. The Restricted Stock Agreement may include, without limitation, vesting, forfeiture and other provisions particular to the particular Grantee's Incentive Award, as well as, for example, provisions to the effect that the Grantee (i) shall not disclose any confidential information acquired during Employment with the Company, (ii) shall abide by all the terms and conditions of the Plan and such other terms and conditions as may be imposed by the Committee, (iii) shall not interfere with the employment or other service of any employee, (iv) shall not compete with the Company or become involved in a conflict of interest with the interests of the Company, (v) shall forfeit an Incentive Award if terminated for Cause, (vi) shall not be permitted to make an election under Section 83(b) of the Code when applicable, and (vii) shall be subject to any other agreement between the Grantee and the Company regarding Shares that may be acquired under an Incentive Award including, without limitation, an agreement restricting the transferability of Shares by Grantee. A Restricted Stock Agreement shall include such terms and conditions as are determined by the Committee, in its discretion, to be appropriate with respect to any individual Grantee. The Restricted Stock Agreement shall be signed by the Grantee to whom the Incentive Award is made and by an Authorized Officer. (b) No Right to Employment. Nothing in the Plan or any instrument executed pursuant to the Plan shall create any Employment rights (including without limitation, rights to continued Employment) in any Grantee or affect the right of the Company to terminate the Employment of any Grantee at any time without regard to the existence of the Plan. (c) Securities Requirements. The Company shall be under no obligation to effect the registration pursuant to the Securities Act of 1933 of any Shares of Common Stock to be issued hereunder or to effect similar compliance under any state laws. Notwithstanding anything herein to the contrary, the Company shall not be obligated to cause to be issued or delivered any certificates evidencing Shares pursuant to the Plan unless and until the Company is advised by its legal counsel that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authorities, and the requirements of any securities exchange on which Shares are traded. The Committee may require, as a condition of the issuance and delivery of certificates evidencing Shares 8 9 pursuant to the terms hereof, that the recipient of such Shares make such covenants, agreements and representations, and that such certificates bear such legends, as the Committee, in its discretion, deems to be necessary or desirable. (d) Officer and Director Issuance Limitations. No single officer or Director may acquire under the Plan more than one percent (1%) of the Shares of the Company's Common Stock outstanding as of June 9, 1998 or as of any such later time at which the Plan is amended to increase the number of Shares authorized for issuance. 3.2 TRANSFERABILITY. (a) Non-Transferable Awards. No Incentive Award and no right under the Plan, contingent or otherwise, will be (i) assignable, saleable, or otherwise transferable by a Grantee except by will or by the laws of descent and distribution, or (ii) subject to any encumbrance, pledge, lien, assignment or charge of any nature. No transfer by will or by the laws of descent and distribution shall be effective to bind the Company unless the Committee has been furnished with a copy of the deceased Grantee's enforceable will or such other evidence as the Committee deems necessary to establish the validity of the transfer. Any attempted transfer in violation of this Section 3.2(a) shall be void and ineffective. (b) Ability to Exercise Rights. Subject to a valid beneficiary designation pursuant to Section 4.5, only the Grantee (or his legal guardian in the event of Grantee's Disability), or in the event of his death, his estate, may assume any rights of the Grantee hereunder. 3.3 RIGHTS AS A STOCKHOLDER. (a) Stockholder Rights. Except as otherwise provided in his Restricted Stock Agreement for the grant of Restricted Stock, the Grantee (or a permitted transferee of such Grantee) shall have voting and other rights as a stockholder with respect to such Shares of Restricted Stock prior to the lapse of any restrictions thereon. (b) Representation of Ownership. In the case of the exercise of an Incentive Award by a person or estate acquiring the right to exercise such Incentive Award by reason of the death or Disability of a Grantee, the Committee may require evidence as to the ownership of such Incentive Award, or the authority of such person, and may require such consents and releases of taxing authorities as the Committee deems advisable. 9 10 3.4 LISTING AND REGISTRATION OF SHARES OF COMMON STOCK. The exercise of any Incentive Award granted hereunder shall only be effective at such time as legal counsel to the Company shall have determined that the issuance and delivery of Shares of Common Stock pursuant to such exercise is in compliance with all applicable laws, regulations of governmental authorities and the requirements of any securities exchange on which Shares are traded. The Committee may, in its discretion, defer the effectiveness of any exercise of an Incentive Award in order to allow the issuance of Shares to be made pursuant to registration or an exemption from registration or other methods for compliance available under federal or state securities laws. The Committee shall inform the Grantee in writing of its decision to defer the effectiveness of the exercise of an Incentive Award. During the period that the effectiveness of an Incentive Award has been deferred, the Grantee may, by written notice to the Committee, withdraw such exercise and obtain the refund of any amount paid with respect thereto. 3.5 CHANGE IN STOCK AND ADJUSTMENTS. (a) Changes in Law or Circumstances. Subject to Section 3.7 (which only applies in the event of a Change in Control), in the event of any change in applicable laws or any change in circumstances which results in or would result in any dilution of the rights granted under the Plan, or which otherwise warrants equitable adjustment because it interferes with the intended operation of the Plan, then, if the Committee should determine, in its absolute discretion, that such change equitably requires an adjustment in the number or kind of shares of stock or other securities or property theretofore subject, or which may become subject, to issuance or transfer under the Plan or in the terms and conditions of outstanding Incentive Awards, such adjustment shall be made in accordance with such determination. Such adjustments may include changes with respect to (i) the aggregate number of Shares that may be issued under the Plan, (ii) the number of Shares subject to Incentive Awards, and (iii) the price per Share for outstanding Incentive Awards. (b) Exercise of Corporate Powers. The existence of the Plan or outstanding Incentive Awards hereunder shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalization, reorganization or other changes in the Company's capital structure or its business or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding whether of a similar character or otherwise. (c) Recapitalization of the Company. Subject to Section 3.7, if while there are Incentive Awards outstanding, the Company shall effect any subdivision or consolidation of Shares of Common Stock or other capital readjustment, the payment of a stock dividend, stock split, combination of Shares, recapitalization or other increase or reduction in the number of Shares outstanding, without receiving compensation therefor in money, services or property, then the number 10 11 of Shares available under the Plan and the number of Incentive Awards which may thereafter be exercised shall (i) in the event of an increase in the number of Shares outstanding, be proportionately increased and the price per share of the Incentive Awards awarded shall be proportionately reduced; and (ii) in the event of a reduction in the number of Shares outstanding, be proportionately reduced, and the price per share of the Incentive Awards awarded shall be proportionately increased. The Committee shall take such action and whatever other action it deems appropriate, in its discretion, so that the value of each outstanding Incentive Award to the Grantee shall not be adversely affected by a corporate event described in this subsection (c). (d) Reorganization of the Company. Subject to Section 3.7, if the Company is reorganized, merged or consolidated, or is a party to a plan of exchange with another corporation, pursuant to which reorganization, merger, consolidation or exchange, stockholders of the Company receive any Shares of Common Stock or other securities or property, or if the Company should distribute securities of another corporation to its stockholders, each Grantee shall be entitled to receive, in lieu of the number of Restricted Stock shares, with a corresponding adjustment to the price per Share of said Incentive Awards, to which he would have been entitled if, immediately prior to such corporate action, such Grantee had been the holder of record of a number of Shares equal to the number of the outstanding Incentive Awards payable in Shares that were previously awarded to him. For this purpose, Shares of Restricted Stock shall be treated the same as unrestricted outstanding Shares of Common Stock. In this regard, the Committee shall take whatever other action it deems appropriate to preserve the rights of Grantees holding outstanding Incentive Awards. (e) Issue of Common Stock by the Company. Except as hereinabove expressly provided in this Section 3.5 and subject to Section 3.7, the issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, for cash or property, or for labor or services, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon any conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of, or price per Share of, any Incentive Awards then outstanding under previously granted Incentive Awards; provided, however, in such event, outstanding Shares of Restricted Stock shall be treated the same as outstanding unrestricted Shares of Common Stock. (f) Acquisition of the Company. Subject to Section 3.7, in the case of any sale of assets, merger, consolidation or combination of the Company with or into another corporation other than a transaction in which the Company is the continuing or surviving corporation and which does not result in the outstanding Shares being converted into or exchanged for different securities, cash or other property, or any combination thereof (an "Acquisition"), in the absolute discretion of the Committee, any Grantee who holds an outstanding Incentive Award shall have the 11 12 right (subject to any limitation applicable to the Incentive Award) thereafter and during the term of the Incentive Award, to receive upon exercise thereof the Acquisition Consideration (as defined below) receivable upon the Acquisition by a holder of the number of Shares which would have been obtained upon exercise of the Incentive Award immediately prior to the Acquisition. The term "Acquisition Consideration" shall mean the kind and amount of shares of the surviving or new corporation, cash, securities, evidence of indebtedness, other property or any combination thereof receivable in respect of one Share upon consummation of an Acquisition. The Committee, in its discretion, shall have the authority to take whatever action it deems appropriate to effectuate the provisions of this subsection (f). (g) Assumption under the Plan of Other Restricted Stock Awards. The Committee, in its absolute discretion, may authorize the assumption and continuation under the Plan of outstanding stock-based incentive awards that were granted under a plan or agreement that is or was maintained by a corporation or other entity that was merged into, consolidated with, or whose stock or assets were acquired by, the Company as the surviving corporation. Any such action shall be upon such terms and conditions as the Committee, in its discretion, may deem appropriate, including provisions to preserve the holder's rights under the previously granted stock-based restricted stock award. Any such assumption and continuation of any such previously granted and unexercised restricted stock award shall be treated as an outstanding Incentive Award under the Plan and shall thus count against the number of Shares reserved for issuance pursuant to Section 1.4. (h) Assumption of Incentive Awards by a Successor. In the event of a dissolution or liquidation of the Company, a sale of all or substantially all of the Company's assets, a merger or consolidation involving the Company in which the Company is not the surviving corporation, or a merger or consolidation involving the Company in which the Company is the surviving corporation but the holders of Shares of Common Stock receive securities of another corporation and/or other property, including cash, the Committee shall, in its absolute discretion, have the right and power to: (i) cancel, effective immediately prior to the occurrence of such corporate event, each outstanding Incentive Award (whether or not then exercisable), and, in full consideration of such cancellation, pay to the Grantee to whom such Incentive Award was granted an amount in cash equal to the excess of (A) the value, as determined by the Committee, of the property (including cash) received by the holder of a Share of Common Stock as a result of such event over (B) the Grantee's purchase price, if any, under such Incentive Award; or (ii) provide for the exchange of each Incentive Award outstanding immediately prior to such corporate event (whether or not then exercisable) for another award on some or all of the property for which 12 13 such Incentive Award is exchanged and, incident thereto, make an equitable adjustment as determined by the Committee, in its discretion, in the purchase price of the Incentive Award, or the number of Shares or amount of cash subject to the Incentive Award or, if deemed appropriate, provide for a cash payment to the Grantee in consideration for the exchange of his Incentive Award. The Committee, in its discretion, shall have the authority to take whatever action it deems appropriate to effectuate the provisions of this subsection (h). 3.6 TERMINATION OF EMPLOYMENT, DEATH AND DISABILITY. (a) Termination of Employment. Unless otherwise expressly provided in his Restricted Stock Agreement, if the Grantee's Employment is terminated for Retirement or any other reason except due to his death or Disability, any non-vested portion of his outstanding Incentive Award at the time of such termination shall automatically expire and terminate and no further vesting shall occur. (b) Disability or Death. Unless otherwise expressly provided in his Restricted Stock Agreement, upon termination of Employment as a result of the Grantee's Disability or death, any non-vested portion of his Incentive Award shall become 100% vested upon termination of Employment due to Disability or death. (c) Continuation of Incentive Award. Subject to applicable law, in the event that a Grantee ceases to be an Employee, for whatever reason, the Committee and Grantee may mutually agree with respect to any outstanding Incentive Award then held by the Grantee (i) for an acceleration or other adjustment in any vesting schedule applicable to the Incentive Award, or (ii) to any other change in the terms and conditions of the Incentive Award. In the event of any such change to an outstanding Incentive Award, a written amendment to the Grantee's Restricted Stock Agreement shall be required. 3.7 CHANGE IN CONTROL. Notwithstanding any contrary provision in the Plan, in the event of a Change in Control (as defined below), the following actions shall automatically occur as of the day immediately preceding the Change in Control date unless otherwise expressly provided in the Grantee's Restricted Stock Agreement: (a) all of the restrictions and conditions of any Incentive Award then outstanding shall be deemed satisfied, and the Restriction Period with respect thereto shall be deemed to have lapsed and expired; and (b) all Restricted Stock shall be 100% vested and deemed earned in full. Notwithstanding any other provision of this Plan, unless expressly provided otherwise in the Grantee's Restricted Stock Agreement, the provisions of this Section 3.7 may not be 13 14 terminated, amended, or modified to adversely affect any Incentive Award theretofore granted under the Plan without the prior written consent of the Grantee with respect to his outstanding Incentive Award subject, however, to the last paragraph of this Section 3.7. For all purposes of the Plan, a "Change in Control" of the Company shall mean: (a) The acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more of the total voting power of all the Company's then outstanding securities entitled to vote generally in the election of Directors to the Board; provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change in Control: (i) any acquisition by the Company or its Parent or Subsidiaries, (ii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or its Parent or Subsidiaries, or (iii) any acquisition consummated with the prior approval of the Board; or (b) During the period of two consecutive calendar years, individuals who at the beginning of such period constitute the Board, and any new Directors whose election by the Board or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds of the Directors then still in office, who either were Directors at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board; or (c) The Company becomes a party to a merger, plan of reorganization, consolidation or share exchange in which either (i) the Company will not be the surviving corporation or (ii) the Company will be the surviving corporation and any outstanding Shares of the Company's Common Stock will be converted into shares of any other company (other than a reincorporation or the establishment of a holding company involving no change of ownership of the Company) or other securities, cash or other property (excluding payments made solely for fractional Shares; or (d) The shareholders of the Company approve a merger, plan of reorganization, consolidation or share exchange with any other corporation, and immediately following such merger, plan of reorganization, consolidation or share exchange the holders of the voting securities of the Company outstanding immediately prior thereto hold securities representing fifty percent (50%) or less of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger, plan of reorganization, consolidation or share exchange; provided, however, that notwithstanding the foregoing, no Change in Control shall be deemed to have occurred if one-half (1/2) or more of the members of the Board of the Company or such surviving entity immediately after such merger, plan of reorganization, consolidation or share exchange is comprised of persons who served as Directors of the Company immediately prior 14 15 to such merger, plan of reorganization, consolidation or share exchange or who are otherwise designees of the Company; or (e) Upon approval by the Company's shareholders of a complete liquidation and dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company other than to a Parent or Subsidiary; or (f) Any other event that a majority of the Board, in its sole discretion, shall determine constitutes a Change in Control. Notwithstanding the occurrence of any of the foregoing events of this Section 3.7 which would otherwise result in a Change in Control, the Board may determine in its complete discretion, if it deems it to be in the best interest of the Company, that an event or events otherwise constituting a Change in Control shall not be considered a Change in Control. Such determination shall be effective only if it is made by the Board prior to the occurrence of an event that otherwise would be a Change in Control, or after such event if made by the Board a majority of which is composed of Directors who were members of the Board immediately prior to the event that otherwise would be a Change in Control. 3.8 EXCHANGE OF INCENTIVE AWARDS. The Committee may, in its discretion, permit any Grantee to surrender outstanding Incentive Awards in order to exercise or realize his rights under other Incentive Awards or in exchange for the grant of new Incentive Awards, or require holders of Incentive Awards to surrender outstanding Incentive Awards (or comparable rights under other plans or arrangements) as a condition precedent to the grant of new Incentive Awards. 3.9 FINANCING. The Company may extend and maintain, or arrange for and guarantee, the extension and maintenance of financing to any Grantee to purchase Shares pursuant to exercise of an Incentive Award upon such terms as are approved by the Committee in its discretion. SECTION 4. GENERAL 4.1 EFFECTIVE DATE AND GRANT PERIOD. This Plan is adopted by the Board effective as of the Effective Date. Unless sooner terminated by the Board, no Incentive Award shall be granted under the Plan after ten (10) years from the Effective Date. 15 16 4.2 FUNDING AND LIABILITY OF COMPANY. No provision of the Plan shall require the Company, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made, or otherwise to segregate any assets. In addition, the Company shall not be required to maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for purposes of the Plan. The Company shall not be required to segregate any assets that may at any time be represented by cash, Common Stock or rights thereto. The Plan shall not be construed as providing for such segregation, nor shall the Company, the Board or the Committee be deemed to be a trustee of any cash, Common Stock or rights thereto. Any liability or obligation of the Company to any Grantee with respect to an Incentive Award shall be based solely upon any contractual obligations that may be created by this Plan and any Restricted Stock Agreement, and no such liability or obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company. Neither the Company, the Board nor the Committee shall be required to give any security or bond for the performance of any obligation that may be created by the Plan. 4.3 WITHHOLDING TAXES. (a) Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require a Grantee to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of an Incentive Award. (b) Share Withholding. With respect to tax withholding required upon the lapse of restrictions on Shares of Restricted Stock, or upon any other taxable event arising as a result of any Incentive Awards, Grantees may elect, subject to the approval of the Committee in its discretion, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax which could be imposed on the transaction. All such elections shall be made in writing, signed by the Grantee, and shall be subject to any restrictions or limitations that the Committee, in its discretion, deems appropriate. (c) Loans. The Committee, in its discretion, may provide for loans, on either a short term or demand basis, from the Company to a Grantee to permit the payment of taxes required by law. 4.4 NO GUARANTEE OF TAX CONSEQUENCES. Neither the Company nor the Committee makes any commitment or guarantee that any federal, state or local tax treatment will apply or be available to any person participating or eligible to participate hereunder. 16 17 4.5 DESIGNATION OF BENEFICIARY BY PARTICIPANT. Each Grantee may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under any Incentive Award is to be paid in case of his death before he receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Grantee, shall be in a form prescribed by the Committee, and will be effective only when filed by the Grantee in writing with the Committee during the Grantee's lifetime. A Grantee may, from time to time, revoke or change his beneficiary designation by filing a new designation form with the Committee (or its delegate). The last valid designation received shall be controlling; provided, however, that no beneficiary designation, or change or revocation thereof, shall be effective unless received prior to the Grantee's death and in no event shall it be effective as of a date prior to its receipt. Notwithstanding any contrary provision of this Section 4.5, no beneficiary designation made by a married Grantee, other than one under which the surviving lawful spouse of such Grantee is designated as the sole beneficiary, shall be valid and effective without the written consent of such spouse. If no valid and effective beneficiary designation exists at the time of the Grantee's death, or if no designated beneficiary survives the Grantee, or if such designation conflicts with applicable law, the payment of the Grantee's Incentive Award, if earned and payable hereunder, shall be made to the Grantee's surviving lawful spouse, if any, or if there is no such surviving spouse, to the executor or administrator of his estate. If the Committee is in doubt as to the right of any person to receive such amount, the Committee may direct that the amount be paid into any court of competent jurisdiction in an interpleader action, and such payment shall be a full and complete discharge of any liability or obligation of the Plan, Company, Committee or Board therefor. 4.6 AMENDMENT AND TERMINATION. The Board shall have the plenary power and authority to terminate or amend the Plan at any time. No termination, amendment, or modification of the Plan shall adversely affect in any material way any outstanding Incentive Award previously granted to a Grantee under the Plan, without the written consent of such Grantee or other designated holder of such Incentive Award. To the extent that the Committee determines that (a) the listing for qualification requirements of any national securities exchange or quotation system on which the Company's Common Stock is then listed or quoted, if applicable, (b) Rule 16b-3 under the Exchange Act or other requirements of applicable securities laws, regulations or rules, or (c) the Code (or regulations promulgated thereunder), require stockholder approval in order to maintain compliance with such listing or securities requirements or to maintain any favorable tax advantages or qualifications, then the Plan shall not be amended in such respect without approval of the Company's stockholders. 17 18 4.7 REQUIREMENTS OF LAW. The granting of Incentive Awards and the issuance of Shares under the Plan 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. Certificates evidencing Shares of Common Stock delivered under this Plan (to the extent that such Shares are so evidenced) may be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules and regulations of the Securities and Exchange Commission, any securities exchange or transaction reporting system upon which the Common Stock is then listed or to which it is admitted for quotation, and any applicable federal or state securities law. The Committee may cause a legend or legends to be placed upon such certificates to make appropriate reference to such restrictions. 4.8 RULE 16b-3 SECURITIES LAW COMPLIANCE. With respect to Insiders, to the extent applicable, as determined by the Committee, transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 under the Exchange Act. Any ambiguities or inconsistencies in the construction of an Incentive Award or the Plan shall be interpreted to give effect to such intention. However, to the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void to the extent permitted by law and deemed advisable by the Committee in its discretion. 4.9 NYSE SHAREHOLDER APPROVAL COMPLIANCE. With respect to the Shares available for issuance under the Plan, transactions under the Plan are intended to comply with all applicable conditions of Para. 312.03(a)(4) in the NYSE Listed Company Manual exempting the Plan from shareholder approval. Those conditions are specifically set forth in Section 1.4 and Section 3.1(d) of the Plan. Any ambiguities or inconsistencies in the construction of an Incentive Award or the Plan shall be interpreted to give effect to such intention. However, to the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void to the extent permitted by law and deemed advisable by the Committee in its discretion. 4.10 SUCCESSORS. All obligations of the Company under the Plan with respect to Incentive Awards granted hereunder 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. 4.11 MISCELLANEOUS PROVISIONS. (a) No Employee shall have any claim or right to be granted an Incentive Award under the Plan. Neither the Plan, nor any action taken hereunder, shall be construed as giving any Employee any right to be retained in Employment. 18 19 (b) No Shares of Common Stock shall be issued hereunder unless counsel for the Company is then satisfied that such issuance will be in compliance with federal and state securities laws. (c) The expenses of the Plan shall be borne by the Company. (d) By accepting any Incentive Award, each Grantee and each person claiming by or through him shall be deemed to have indicated his acceptance of the Plan. 4.12 SEVERABILITY. In the event that any provision of this Plan shall be held illegal, invalid or unenforceable for any reason, such provision shall be fully severable, but shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if the illegal, invalid, or unenforceable provision was not included herein. 4.13 GENDER, TENSE AND HEADINGS. Whenever the context so requires, words of the masculine gender used herein shall include the feminine and neuter, and words used in the singular shall include the plural. Section headings as used herein are inserted solely for convenience and reference and constitute no part of the interpretation or construction of the Plan. 4.14 GOVERNING LAW. The Plan shall be interpreted, construed and constructed in accordance with the laws of the State of Texas without regard to its conflicts of law provisions, except as may be superseded by applicable laws of the United States. IN WITNESS WHEREOF, Veritas DGC Inc. has caused this Plan to be duly executed in its name and on its behalf by its duly authorized officer. VERITAS DGC INC. By: --------------------------------------- Anthony Tripodo Executive Vice President, Treasurer and Chief Financial Officer 19 EX-10.B 3 0003.txt 1992 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN 1 EXHIBIT 10-B VERITAS DGC INC. 1992 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN (AS AMENDED AND RESTATED MARCH 7, 2000) 1. PURPOSE OF THE PLAN. The purpose of the Veritas DGC Inc. 1992 Non-Employee Director Stock Option Plan ("Plan") is to attract the services of experienced and knowledgeable non-employee Directors and provide an opportunity for ownership by such non-employee Directors of the common stock, $.01 par value ("Common Stock"), of Veritas DGC Inc., a Delaware corporation ("Company"). 2. DEFINITIONS. Capitalized terms used herein shall have the meanings set forth in Schedule A. 3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Board of Directors of the Company or any committee duly appointed thereby ("Board"). Subject to the terms of the Plan, the Board shall have the power to interpret the provisions and supervise the administration of the Plan. All decisions made by the Board pursuant to the provisions of the Plan shall be made by a majority of its members at a duly held regular or special meeting or by written consent in lieu of any such meeting. 4. STOCK RESERVED FOR THE PLAN. The maximum number of Shares of Common Stock which may at any time be subject to outstanding Options issued under the Plan is 600,000, subject to adjustment as provided under paragraph 17. The Company shall reserve for issuance pursuant to the Plan such number of Shares of Common Stock as may from time to time be subject to Options granted pursuant to the Plan. Should any Option expire or be canceled prior to its exercise in full, the Shares theretofore subject to such Option may again be made subject to an Option under the Plan. If Common Stock is used by the Optionee to pay the Option Price of an Option, only the net number of Shares of Common Stock issued by the Company shall be considered utilized under the Plan. If Shares of Common Stock are withheld by the Company to pay tax withholding due from the Employee, the number of such Shares withheld shall not be considered utilized under the Plan. 5. GRANT OF OPTIONS. Each Director of the Company who is not otherwise an employee of the Company or any of the Company's subsidiaries (as defined in Section 424(f) of the Internal Revenue Code of 1986, as amended) (hereinafter referred to as an "Eligible Director") and who is a 2 member of the Board after December 31, 1996 (the "Effective Date") shall be granted on each Date of Grant (as defined below) (provided that on such Date of Grant such Eligible Director is a member of the Board) one Option to purchase 5,000 Shares of Common Stock, subject to adjustment as provided under paragraph 17 (the "Option"). The Option Price per Share of Common Stock of the Option granted to an Eligible Director shall be the Fair Market Value of the Common Stock on its date of grant. For the purposes of this paragraph, "Date of Grant" means March 11, 1997, and thereafter the date of the first regularly scheduled meeting of the Board in each calendar year after the Effective Date on which an Eligible Director is a member of the Board. 6. SPECIAL PROVISION FOR NEWLY-ELECTED DIRECTORS. In the case of a Director who is initially elected or appointed to the Board between Dates of Grant, the Board may in its discretion grant an Option to such newly elected or appointed Director for a number of Shares of Common Stock not to exceed 5,000; subject to adjustment as provided under paragraph 17, provided that any such Option shall have an Option Price at least equal to the Fair Market Value of the Common Stock on its date of grant. 7. OPTION AGREEMENT. Options granted under the Plan shall be evidenced by an Option Agreement, in a form approved by the Board, which shall be subject to the terms and conditions of the Plan. Any Option Agreement may contain such other terms, provisions and conditions as may be determined by the Board. 8. TERM OF OPTIONS. Except as otherwise set forth in an Option Agreement, Options granted will be exercisable as to 25% of the Shares of Common Stock covered by such Option at any time after the Date of Grant and as to an additional 25% on each anniversary thereafter until the third anniversary of the Date of Grant, following which the Option will be exercisable in full; provided, however, that no Option shall be exercisable after the expiration of ten years from the Date of Grant; and, provided further, that each Option shall be subject to earlier termination, expiration or cancellation as provided in the Plan or as may be set forth in an Option Agreement. 9. PROCEDURE FOR EXERCISE. Shares of common stock purchased under Options shall at the time of purchase be paid for in full. To the extent that the right to purchase Shares has accrued hereunder, Options may be exercised from time to time by written notice to the Company stating the full number of Shares with respect to which the Option is being exercised, and the time of delivery thereof, which shall be at least 15 days after the giving of such notice unless an earlier date shall have been mutually agreed upon. Payment shall be by cash or by 2 3 certified or official bank check payable to the Company. Except as otherwise provided by the Committee before the Option is exercised: (i) all or a portion of the Option Price may be paid by the Director by delivery of Shares of Common Stock owned by the Director and acceptable to the Committee having an aggregate Fair Market Value (valued as of the date of the exercise) that is equal to the amount of cash that would otherwise be required; and (ii) the Director may pay the Option Price by authorizing a third party to sell Shares of Common Stock (or a sufficient portion of the Shares) acquired upon exercise of the Option and remit to the Company a sufficient portion of the sale proceeds to pay the entire Option Price and any tax withholding resulting from such exercise. The Option shall not be exercisable if and to the extent the Company determines that such exercise does not follow regulations of any securities exchange on which the Common Stock is traded. If the Company makes such a determination hereunder, the Company may rely on the opinion of counsel for the Company. 10. NON-ASSIGNABILITY OF OPTION RIGHTS. No Option granted under the Plan shall be assignable or transferable otherwise than by will or by the laws of descent and distribution. During the lifetime of an Optionee, the Option shall be exercisable only by him. 11. EFFECT OF TERMINATION. (a) In the event of the death or Disability of an Optionee, the Options shall immediately become fully vested and exercisable as of the date of such termination. Options shall be exercisable for the period ending on the earlier of (1) one-year from the date of such termination due to death or Disability, or (2) the expiration of each Option granted. (b) If an Optionee ceases to be a Director of the Company for any reason other than death or Disability, the Options granted to him shall immediately become fully vested and exercisable as of the date of such termination. Options shall be exercisable for the period ending on the earlier of (i) three years from the Optionee's cessation of service as a Director, or (ii) expiration of each Option granted. 12. NO RIGHTS AS STOCKHOLDER. No Optionee shall have any rights as a stockholder with respect to Shares covered by an Option until the date of issuance of a stock certificate or certificates for such Shares of Common Stock. 13. EXTRAORDINARY CORPORATE TRANSACTIONS. New Options may be substituted for the Options granted under the Plan, or the Company's duties as to Options outstanding under the Plan may be assumed, by a corporation other than the Company, or by a Parent or Subsidiary of the Company or 3 4 such corporation, in connection with any merger, consolidation, acquisition, separation, reorganization, liquidation or like occurrence in which the Company is involved. Notwithstanding the foregoing or the provisions of paragraph 14 hereof, in the event such corporation, or Parent or Subsidiary of the Company or such corporation, does not substitute new Options for, and substantially equivalent to, the Options granted hereunder, or assume the Options granted hereunder, the Options granted hereunder shall be canceled, immediately prior to the effective date of such event, and, in full consideration of such cancellation, and the Optionee to whom the Option was granted shall be paid an amount in cash equal to the excess of (i) the value, as determined by the Board in its absolute discretion, of the property (including cash) received by the holder of a Share of Common Stock as a result of such event less (ii) the Option Price of the Option. 14. CHANGE IN CONTROL. Notwithstanding any contrary provision in the Plan, in the event of a Change in Control (as defined below), all Options shall be 100% vested and deemed earned in full as of the day immediately preceding the Change in Control date unless otherwise expressly provided in the Optionee's Option Agreement. Notwithstanding any other provision of this Plan, unless expressly provided otherwise in the Optionee's Option Agreement, the provisions of this Section 14 may not be terminated, amended, or modified to adversely affect any Option theretofore granted under the Plan without the prior written consent of the Optionee with respect to his outstanding Option subject, however, to the last paragraph of this Section 14. For all purposes of the Plan, a "Change in Control" of the Company shall mean: (a) The acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more of the total voting power of all the Company's then outstanding securities entitled to vote generally in the election of Directors to the Board; provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change in Control: (i) any acquisition by the Company or its Parent or Subsidiaries, (ii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or its Parent or Subsidiaries, or (iii) any acquisition consummated with the prior approval of the Board; or (b) During the period of two consecutive calendar years, individuals who at the beginning of such period constitute the Board, and any new Directors whose election by the Board or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds of the Directors then still in office, who either were Directors at the beginning of the two-year period or whose 4 5 election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board; or (c) The Company becomes a party to a merger, plan of reorganization, consolidation or share exchange in which either (i) the Company will not be the surviving corporation or (ii) the Company will be the surviving corporation and any outstanding Shares of the Company's common stock will be converted into shares of any other company (other than a re-incorporation or the establishment of a holding company involving no change of ownership of the Company) or other securities, cash or other property (excluding payments made solely for fractional Shares; or (d) The shareholders of the Company approve a merger, plan of reorganization, consolidation or share exchange with any other corporation, and immediately following such merger, plan of reorganization, consolidation or share exchange the holders of the voting securities of the Company outstanding immediately prior thereto hold securities representing fifty percent (50%) or less of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger, plan of reorganization, consolidation or share exchange; provided, however, that notwithstanding the foregoing, no Change in Control shall be deemed to have occurred if one-half (1/2) or more of the members of the Board of the Company or such surviving entity immediately after such merger, plan of reorganization, consolidation or share exchange is comprised of persons who served as Directors of the Company immediately prior to such merger, plan of reorganization, consolidation or share exchange or who are otherwise designees of the Company; or (e) Upon approval by the Company's shareholders of a complete liquidation and dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company other than to a Parent or Subsidiary; or (f) Any other event that a majority of the Board, in its sole discretion, shall determine constitutes a Change in Control. Notwithstanding the occurrence of any of the foregoing events of this Section 14 which would otherwise result in a Change in Control, the Board may determine in its complete discretion, if it deems it to be in the best interest of the Company, that an event or events otherwise constituting a Change in Control shall not be considered a Change in Control. Such determination shall be effective only if it is made by the Board prior to the occurrence of an event that otherwise would be a Change in Control, or after such event if made by the Board a majority of which is composed of Directors who were members of the Board immediately prior to the event that otherwise would be a Change in Control. 5 6 15. INVESTMENT REPRESENTATION. Each Option Agreement shall contain an agreement that, upon demand by the Board for such a representation, the Optionee (or any person acting under paragraph 10) shall deliver to the Company at the time of any exercise of an Option a written representation that the Shares to be acquired upon such exercise are to be acquired for investment and not for resale or with a view to the distribution thereof or such other representation as the Board deems advisable. Upon such demand, delivery of such representation, prior to the delivery of any Shares issued upon exercise of an Option and prior to the expiration of the Option period, shall be a condition precedent to the right of the Optionee or such other person to purchase any Shares. 16. AMENDMENTS OR TERMINATION. The Board may amend, alter or discontinue the Plan; provided, however, that, without the approval of the Company's stockholders, no amendment shall (i) increase the number of Shares subject to the Plan; (ii) modify the requirements as to eligibility for participation in the Plan; or (iii) modify the number or time at which Options may be granted. 17. CHANGES IN COMPANY'S CAPITAL STRUCTURE. The existence of outstanding Options shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company, or any issuance of Common Stock or any bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any reorganization or other corporate act or proceeding, whether of a similar character or otherwise; provided, however, that if the outstanding Shares of Common Stock of the Company shall at any time be changed or exchanged by declaration of a stock dividend, stock split, combination of Shares, or recapitalization, the number and kind of shares then subject to any outstanding Option shall be appropriately and equitably adjusted so as to maintain the proportionate number of Shares without changing the aggregate Option Price of any outstanding Option. 18. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. The Plan, the grant and exercise of Options thereunder, and the obligation of the Company to sell and deliver Shares under such Options, shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any governmental or regulatory agency or national securities exchange as may be required. The Company shall not be required to issue or deliver any certificates for Shares of Common Stock prior to the completion of any registration or qualification of such Shares under any federal or state law, or any ruling or regulation of any government body or national 6 7 securities exchange which the Company shall, in its sole discretion, determine to be necessary or advisable. 19. EFFECTIVE DATE AND TERM OF THE PLAN. The Plan was adopted by the Board on October 29, 1992, and approved by the stockholders of the Company at the annual meeting on December 17, 1992, and amended and restated by the Board on February 17, 1997, December 9, 1998 and on March 7, 2000. 7 EX-10.C 4 0004.txt 1992 EMPLOYEE NONQUALIFIED STOCK OPTION PLAN 1 EXHIBIT 10-C VERITAS DGC INC. 1992 EMPLOYEE NON-QUALIFIED STOCK OPTION PLAN (AS AMENDED AND RESTATED MARCH 7, 2000) 1. PURPOSE. The purpose of this 1992 Employee Non-qualified Stock Option Plan (the "Plan") of Veritas DGC Inc. (the "Company") (formerly known as Digicon Inc.) is to provide officers and other key Employees with a continuing proprietary interest in the Company. The Plan is intended to advance the interests of the Company by enabling it (i) to increase the interest in the Company's welfare of those Employees who share the primary responsibility for the management, growth, and protection of the business of the Company, (ii) to furnish an incentive to such persons to continue their services to the Company, (iii) to provide a means through which the Company may continue to induce able management and operating personnel to enter its employ, and (iv) to provide a means through which the Company may effectively compete with other organizations offering similar incentive benefits in obtaining and retaining the services of competent management and operating personnel. 2. DEFINITIONS. Capitalized terms used herein shall have the meanings set forth in Schedule A attached. 3. STOCK SUBJECT TO THE PLAN. The Company may grant from time to time Options to purchase Shares of the Company's authorized but unissued common stock, par value $.01 per share, or treasury shares of the Common Stock. Subject to adjustment as provided in Section 11 hereof, the aggregate number of Shares which may be issued or covered by Options pursuant to the Plan is 3,954,550 Shares, as adjusted for the one for three reverse stock split effective January 17, 1995. Shares of Common Stock applicable to Options which have expired unexercised or terminated for any reason, or not issued due to a Cashless Exercise, may again be subject to an Option or Options under the Plan. 4. ADMINISTRATION. (a) The Plan shall be administered by the Committee, which shall be comprised solely of at least two members who are both Disinterested Persons and Outside Directors. No voting member of the Committee shall be eligible to receive Options under the Plan. The Committee shall select one of its members chairman and shall hold meetings at such times and places as it may determine. The Committee may appoint a secretary and, subject to the provisions of the Plan and to policies determined by the Board, may make such rules and regulations for the conduct of its business as it shall deem advisable. A majority of the Committee shall constitute a quorum. All actions of the Committee shall be taken by a 2 majority of the members, and action so taken shall be fully as effective as if it had been taken by a vote of the majority of the members at a meeting duly called and held. (b) Subject to the express terms and conditions of the Plan, the Committee shall have full power to construe or interpret the Plan, to prescribe, amend, and rescind rules and regulations relating to it and to make all other determinations necessary or advisable for its administration. (c) Subject to the provisions of Sections 5 and 6 hereof, the Committee may, from time to time, determine which Employees of the Company or Subsidiary corporations shall be granted Options under the Plan, the number of Shares subject to each Option, and the time or times at which Options shall be granted. (d) The Committee shall report to the Board the names of Employees granted Options, and the number of Option Shares subject to, and the terms and conditions of, each Option; provided, however that no Option may be granted to an otherwise eligible Employee if, after giving effect to the proposed grant, such Employee would then hold Options covering more than 500,000 Shares of Common Stock under the Plan. (e) No member of the Board or of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Option. 5. ELIGIBILITY. All full-time salaried Employees of the Company and of its majority-owned subsidiaries shall be eligible to participate in the Plan, and Options may be granted by the Committee to eligible Employees designated by the Committee, either at the Committee's own initiative or upon the recommendation of management. In determining the Employees to whom Options shall be granted and the number of Shares to be covered by each Option, the Committee may take into account the nature of the services rendered by the respective Employees, their present and potential contributions to the success of the Company, and such other factors as the Committee in its discretion shall deem relevant. The Company shall effect the granting of Options under the Plan in accordance with the determination made by the Committee. 6. PRICE OF OPTIONS. The price of the Option shall be the Fair Market Value on the date of grant. 2 3 7. TERM OF OPTION. Except as otherwise set forth in an Option Agreement, the Option shall terminate on the earliest to occur of the following: (a) The expiration of ten (10) years from the date of grant. (b) Three (3) months after the termination of the Optionee, as long as termination is not the result of Disability, death, termination for Cause or Retirement. (c) In the case of termination as a result of Disability or death, one (1) year after the date of such termination. In the event the Optionee's relationship with the Company terminates as a result of Disability or death, the Option shall immediately become fully vested and exercisable as of the date of such termination. (d) In the case of termination as a result of Retirement, three (3) years after the date of such termination. In the event the Optionee's relationship with the Company terminates as a result of Retirement the Option shall immediately become fully vested and exercisable as of the date of such termination. (e) In the case of termination as a result of Cause, immediately upon the determination by the Committee or the Chairman of the Committee that exists therefor. 8. EXERCISE OF OPTIONS. (a) General. Except as provided below, each Option may be exercised at such times and in such amounts as the Committee in its discretion may provide. (b) Manner of Exercising Options. Shares of Common Stock purchased under Options shall at the time of purchase be paid for in full. To the extent that the right to purchase Shares has accrued hereunder, Options may be exercised from time to time by written notice to the Company stating the full number of Shares with respect to which the Option is being exercised, and the time of delivery thereof, which shall be at least 15 days after the giving of such notice unless an earlier date shall have been mutually agreed upon. Payment shall be by cash or by certified or official bank check payable to the Company. Except as otherwise provided by the Committee before the Option is exercised; (i) all or a portion of the Exercise Price may be paid by the participant by delivery of Shares of Stock owned by the Participant and acceptable to the Committee having an aggregate Fair Market Value (valued as of the date of exercise) that is equal to the amount of cash that would otherwise be required; and (ii) the Participant may pay the Exercise Price by authorizing a third party to sell Shares of Stock (or sufficient portion of the sale proceeds to pay the entire Exercise Price and any tax withholding resulting from such exercise). The Option shall not be exercisable if 3 4 and to the extent the Company determines that such exercise does not follow regulations of any securities exchange on which the Stock is traded. If the Company makes such determination hereunder, the Company may rely on the opinion of counsel for the Company. 9. NON-ASSIGNABILITY OF OPTION RIGHTS. No Option granted under the Plan shall be assignable or transferable otherwise than by will or by the laws of descent and distribution. During the lifetime of an Optionee the Option shall be exercisable only by him. 10. LEAVE OF ABSENCE. In the discretion of the Chairman or the Committee, an approved leave of absence shall not be deemed a termination of employment; however, no Option may be exercised during such leave of absence. 11. CHANGE OF CONTROL. Notwithstanding any contrary provision in the Plan, in the event of a Change in Control (as defined below), all Options shall be 100% vested and deemed earned in full as of the day immediately preceding the Change in Control date unless otherwise expressly provided in the Optionee's Option Agreement. Notwithstanding any other provision of this Plan, unless expressly provided otherwise in the Optionee's Option Agreement, the provisions of this Section 11 may not be terminated, amended, or modified to adversely affect any Option theretofore granted under the Plan without the prior written consent of the Optionee with respect to his outstanding Option subject, however, to the last paragraph of this Section 11. For all purposes of the Plan, a "Change in Control" of the Company shall mean: (a) The acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more of the total voting power of all the Company's then outstanding securities entitled to vote generally in the election of Directors to the Board; provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change in Control: (i) any acquisition by the Company or its Parent or Subsidiaries, (ii) any acquisition by any Employee benefit plan (or related trust) sponsored or maintained by the Company or its Parent or Subsidiaries, or (iii) any acquisition consummated with the prior approval of the Board; or (b) During the period of two consecutive calendar years, individuals who at the beginning of such period constitute the Board, and any new Directors whose election by the Board or nomination for election by the Company's shareholders 4 5 was approved by a vote of at least two-thirds of the Directors then still in office, who either were Directors at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board; or (c) The Company becomes a party to a merger, plan of reorganization, consolidation or share exchange in which either (i) the Company will not be the surviving corporation or (ii) the Company will be the surviving corporation and any outstanding Shares of the Company's Common Stock will be converted into shares of any other company (other than a re-incorporation or the establishment of a holding company involving no change of ownership of the Company) or other securities, cash or other property (excluding payments made solely for fractional Shares; or (d) The shareholders of the Company approve a merger, plan of reorganization, consolidation or share exchange with any other corporation, and immediately following such merger, plan of reorganization, consolidation or share exchange the holders of the voting securities of the Company outstanding immediately prior thereto hold securities representing fifty percent (50%) or less of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger, plan of reorganization, consolidation or share exchange; provided, however, that notwithstanding the foregoing, no Change in Control shall be deemed to have occurred if one-half (1/2) or more of the members of the Board of the Company or such surviving entity immediately after such merger, plan of reorganization, consolidation or share exchange is comprised of persons who served as Directors of the Company immediately prior to such merger, plan of reorganization, consolidation or share exchange or who are otherwise designees of the Company; or (e) Upon approval by the Company's shareholders of a complete liquidation and dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company other than to a Parent or Subsidiary; or (f) Any other event that a majority of the Board, in its sole discretion, shall determine constitutes a Change in Control. Notwithstanding the occurrence of any of the foregoing events of this Section 11 which would otherwise result in a Change in Control, the Board may determine in its complete discretion, if it deems it to be in the best interest of the Company, that an event or events otherwise constituting a Change in Control shall not be considered a Change in Control. Such determination shall be effective only if it is made by the Board prior to the occurrence of an event that otherwise would be a Change in Control, or after such event if made by the Board a majority of which is composed of Directors who were members of the Board immediately prior to the event that otherwise would be a Change in Control. 5 6 12. ADJUSTMENT OF OPTIONS ON RECAPITALIZATION OR REORGANIZATION. The aggregate number of Shares of Common Stock on which Options may be granted to persons participating under the Plan, the aggregate number of Shares of Common Stock on which Options may be granted to any one such person, the number of Shares thereof covered by each outstanding Option, and the price per Share thereof in each such Option, shall be proportionately adjusted for any increase or decrease in the number of issued Shares of Common Stock of the Company resulting from the subdivision or combination of Shares or other capital adjustments, or the payment of a Common Stock dividend after the effective date of this Plan, or other increase or decrease in such Shares effected without receipt of consideration by the Company; provided, however, that no adjustment shall be made unless the aggregate effect of all such increases and decreases occurring in any one fiscal year after the effective date of this Plan will increase or decrease the number of issued Shares of Common Stock of the Company by 5% or more; and, provided, further, that any Options to purchase fractional Shares resulting from any such adjustment shall be eliminated. Subject to any required action by the stockholders and to Section 11 hereof, if the Company shall be the surviving or resulting corporation in any merger or consolidation, any Option granted hereunder shall pertain to and apply to the securities to which a holder of the number of Shares of Common Stock subject to Option would have been entitled had such Option been exercised immediately preceding such merger or consolidation; but a dissolution or liquidation of the Company, or a merger or consolidation in which the Company is not the surviving or resulting corporation (except for a change in Control as defined in Section 11 hereof in which case Section 11 shall govern then outstanding Options shall cause every Option outstanding hereunder to terminate, except that the surviving or resulting corporation may, in its absolute and uncontrolled discretion, tender an Option or Options to purchase its Shares on its terms and conditions, both as to the number of Shares and otherwise. Adjustments under this Section shall be made by the Committee, whose determination as to what adjustments shall be made, and the extent thereof, shall be final, binding and conclusive. 13. AGREEMENTS BY OPTIONEE. Each individual Optionee shall agree: (a) If requested by the Company, at the time of exercise of any Option, to execute an agreement stating that he is purchasing the Shares subject to Option for investment purposes and not with a view to the resale or distribution thereof; and (b) All deliveries and distribution under this Agreement results in compensation income to the Employee for federal, state or local income tax purposes. Employee shall deliver to the Company at the time of such distribution, as the case may be, such amount of money as the Company may require to meet its 6 7 obligation under applicable tax laws or regulations, and, if such Employee fails to do so, Company is authorized to withhold from any cash or stock remuneration then or thereafter payable to Employee any tax required to be withheld by reason of such resulting compensation income. 14. RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as a stockholder with respect to any Shares of Common Stock of the Company held under Option until the date of issuance of the stock certificates to him for such Shares. 15. EFFECTIVE DATE. The Plan was effective as of September 1, 1992, upon approval by the holders of a majority of the Shares of outstanding capital stock present at the December 17, 1992 annual meeting of the Company's stockholders. The Plan was amended by the Board on August 29, 1997, and amended and restated by the Board on March 10, 1997, December 9, 1998, and March 7, 2000. 16. AMENDMENTS. (a) The Board may, from time to time, alter, suspend or terminate the Plan, or alter or amend any and all Option agreements granted thereunder but only for one or more of the following purposes: (1) To modify the administrative provisions of the Plan or Options; (2) To make any other amendment which does not materially alter the intent or benefits of the Plan; or (3) Increase the maximum number of Shares as to which Options may be granted under the Plan either to all persons participating in the Plan or to any one such person. (b) It is expressly provided that no such action of the Board may, without the approval of the stockholders, alter the provisions of the Plan or Option agreements granted thereunder so as to: Decrease the Option price applicable to any Options granted under the Plan, provided, however, that the provisions of this clause: (a) shall not prevent the granting, to any person holding an Option under the Plan, of additional Options under the Plan exercisable at a lower Option price; or (b) alter any outstanding Option agreement to the detriment of the Optionee, without his consent. 7 8 17. EMPLOYMENT OBLIGATION. The granting of any Option under this Plan shall not impose upon the Company any obligation whatsoever to employ or to continue to employ any Optionee, and the right of the Company to terminate the employment of any officer or other Employee shall not be diminished or affected by reason of the fact that an Option has been granted to him under the Plan. 18. VES OPTIONS. In order to carry out the terms of (i) the Combination Agreement dated May 10, 1996, between the Company and Veritas Energy Services Inc. ("VES") which was approved by the Company's stockholders at a special meeting held on August 20, 1996, and (ii) the Plan of Arrangement under Part 15 of the Business Corporations Act (Alberta) relating to the combination of the Company and VES which, pursuant to an interim order of the Court of Queen's Bench of Alberta dated July 18, 1996, was approved at special meetings of VES Optionholders and shareholders held August 20, 1996, this Plan shall include under its terms each of the Options (the "VES Options") outstanding on the Effective Date (as defined in the Combination Agreement) (which includes all outstanding Options granted under VES' Stock Option Plan for Directors, Officers and Key Employees (the "VES Option Plan")) without any further action on the part of any holder thereof (each a "VES Optionholder"). Effective as of the Effective Time, each VES Option will be exercisable to purchase that number of Shares of the Company's Common Stock determined by multiplying the number of VES common shares (the "VES Common Shares") subject to such VES Option at the Effective Time by the Exchange Ratio (as defined in the Combination Agreement), at an exercise price per share of such VES Options immediately prior to the Effective Time, divided by the Exchange Ratio. On the Effective Date (as defined in the Combination Agreement), such exercise price shall be converted into a United States dollar equivalent based on the noon spot rate of exchange of the Bank of Canada on such date. If the foregoing calculation results in an exchanged VES Option being exercisable for a fractional Share of the Company's Common Stock, then the number of Shares of the Company's Common Stock subject to such Option will be rounded down to the nearest whole number of Shares and the total exercise price for the Option will be reduced by the exercise price of the fractional Share. The term, exercisability, vesting schedule and all other terms and conditions of the VES Options will otherwise be unchanged and shall operate in accordance with their terms, notwithstanding anything to the contrary contained herein. 19. ENERTEC OPTIONS. In order to carry out the terms of (i) the Combination Agreement dated as of March 30, 1999 which was approved by the Company's stockholders at a special meeting held on September 21, 1999, and (ii) the Plan of Arrangement under Part 15 of the Business Corporations Act (Alberta) relating to the combination of the Company and Enertec Resource Services Inc. which, pursuant to an amended interim order of the Court of Queen's Bench of Alberta dated August 11, 1999, was approved at special meetings of 8 9 Enertec Optionholders and shareholders held September 22, 1999, this Plan shall include under its terms each of the Options (the "Enertec Options") outstanding on the Effective Date (as defined in the Combination Agreement) (which includes all outstanding Options granted under Enertec's stock option plans for directors, officers and Employees [collectively, the "Enertec Option Plan"]) without any further action on the part of any holder thereof (each an "Enertec Optionholder"). Effective as of the Effective Time, each Enertec Option will be exercisable to purchase that number of Shares of the Company's Common Stock determined by multiplying the number of Enertec common shares (the "Enertec Common Shares") subject to such Enertec Option at the Effective Time by the Exchange Ratio (as defined in the Combination Agreement), at an exercise price per Share of Veritas Common Stock equal to the exercise price per share of such Enertec Option immediately prior to the Effective Time, divided by the Exchange Ratio. On the Effective Date (as defined in the Combination Agreement), such exercise price shall be converted into a United States dollar equivalent based on the rate of exchange as stated in The Wall Street Journal next published after the Effective Time. If the foregoing calculation results in an exchanged Enertec Option being exercisable for a fractional Share of Veritas Common Stock, then the number of Shares of Veritas Common Stock subject to such Option will be rounded down to the nearest whole number of Shares and the total exercise price for the Option will be reduced by the exercise price of the fractional Share. Each Veritas Option shall be: (i) fully vested immediately after the Effective Time; and (ii) for a term commencing at the Effective Time and ending as follows: (A) for each Optionholder who: (1) is an Enertec director, officer or Employee, at the Effective Time (a "Current Optionholder; and (2) after the Effective Time is employed or retained by the Company, Enertec or one of their Subsidiaries, (3) on the date as set forth in subsections 5(b) and (d) of the Enertec Option Plan; (B) for each Current Optionholder who at the Effective Time is not retained as a director, officer or Employee of the Company, Enertec or one of their subsidiaries, on the date that is the first business day on or immediately after the date that is 90 days after the later of the Effective Date and the date such director, officer or Employee is terminated; or (C) notwithstanding the provisions of (A) and (B) above, the Enertec Option Plan or the Plan, for each Current Optionholder with an executive termination contract, on the current expiry date of such Option (the sixth anniversary date). 9 10 The term, exercisability, and all other terms and conditions of the Enertec Options will otherwise be unchanged and shall operate in accordance with their terms, notwithstanding anything to the contrary contained herein." 10 EX-10.M 5 0005.txt FORM OF INDEMNITY AGREEMENT - DATED MARCH 7, 2000 1 EXHIBIT 10-M INDEMNITY AGREEMENT THIS AGREEMENT made this _____ day of ________ 20___, between Veritas DGC Inc., a Delaware corporation ("Company"), and ______________________ ("Indemnitee"). WHEREAS, the Company and Indemnitee desire that Indemnitee continue to serve as a director and/or officer of the Company; and WHEREAS, the Company desires and intends hereby to provide indemnification (including advancement of expenses) against any and all liabilities asserted against Indemnitee to the fullest extent permitted by the General Corporation Law of the State of Delaware. NOW, THEREFORE, for and in consideration of the premises, the mutual promises hereinafter set forth, the reliance of the Indemnitee hereon in continuing to serve the Company in his present capacity and in undertaking to serve the Company in any additional capacity or capacities, the Company and the Indemnitee agree as follows: 1. Continued Service. Indemnitee will continue to serve, at the will of the Company and under separate contract, if such exists, as a director and/or officer so long as he is duly elected and qualified in accordance with the Bylaws of the Company or until he tenders his resignation. 2. Indemnification. The Company shall indemnify Indemnitee as follows: (a) The Company shall indemnify and advance Expenses (as hereinafter defined) to Indemnitee to the fullest extent, and only to the extent, permitted by applicable law in effect on the date of this Agreement and to such greater extent as applicable law may thereafter from time to time permit. The rights of Indemnitee provided under the preceding sentence shall include, but shall not be limited to, the rights set forth in the other paragraphs of this Section 2 or any other Sections of this Agreement. 2 (b) The Company shall indemnify Indemnitee when he is a party or is threatened to be made a party to any threatened, pending or completed Proceeding (other than a Proceeding by or in the right of the Company) by reason of his Corporate Status (as hereinafter defined) against expenses, judgments, awards, penalties, fines and amounts paid in settlements actually and reasonably incurred by him or on his behalf in connection with such Proceeding or any claim, issue or matter therein if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal Proceeding had no reasonable cause to believe his conduct was unlawful. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal Proceeding, had reasonable cause to believe that his conduct was unlawful. (c) The Company shall indemnify Indemnitee when he is a party or is threatened to be made a party to any threatened, pending or completed Proceeding by or in the right of the Company to procure a judgment in its favor by reason of the fact of his Corporate Status against expenses actually and reasonably incurred by him or on his behalf in connection with such Proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company and except that no indemnification shall be made in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged to be liable to the Company unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, 2 3 Indemnitee is fairly and reasonably entitled to indemnification for such expenses which the Court of Chancery of the State of Delaware or such other court shall deem proper. (d) Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. For the purposes of this paragraph (d) of this Section 2 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, wit or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter. (e) In the event the indemnity contained in paragraphs (b), (c) or (d) of this Section 2 is unavailable or insufficient to hold Indemnitee harmless in a Proceeding described therein, then in accordance with the non-exclusivity provisions of the Delaware General Corporation law and the Certificate and Bylaws, and separate from and in addition to, the indemnity provided elsewhere herein, the Company shall contribute to Expenses, judgements, penalties, fines and amounts paid in settlement actually and reasonably incurred by or on behalf of Indemnitee in connection with such Proceeding or any claim, issue or matter therein, in such proportion as appropriately reflects the relative benefits received by, and fault of, the Company on the one hand and the Indemnitee on the other in the acts, transactions or matters to which the Proceeding relates and other equitable considerations. 3 4 (f) The termination of any Proceeding described in paragraphs (b), (c) or (d) of this Section 2, or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful. (g) Any indemnification under paragraphs (b), (c), (d) or (e) of this Section 2 (unless ordered by a court) shall be made by the Company only as authorized in the specific case upon a determination (in accordance with Section 3 hereof) that indemnification of Indemnitee is proper in the circumstances because he has met the applicable standard of conduct set forth in paragraphs (b), (c), (d) or (e) of this Section 2. Such determination shall be made (1) by a majority vote of Disinterested Directors (as hereinafter defined), even though less than a quorum, or (2) if there are no such directors, or if such directors so direct, by Independent Legal Counsel (as hereinafter defined) in a written opinion, or (3) by the stockholders. If, with regard to paragraph (e) of this Section 2, such a determination is not permitted by law or if a quorum of Disinterested Directors so directs, such determination shall be made by the Chancery Court of the State of Delaware or the court in which the Proceeding giving rise to the claim for indemnification is brought. (h) Expenses incurred by Indemnitee in defending a Proceeding shall be paid by the Company in advance of the final disposition of such Proceeding as authorized (in accordance with Section 4 hereof) by the board of directors in the specific case upon receipt of an undertaking by or on behalf of Indemnitee to repay such amount if it is ultimately determined 4 5 that he is not entitled to be indemnified by the Company under this Agreement or otherwise. (i) The indemnification and advancement of Expenses provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may be entitled under any statute, bylaw, insurance policy, agreement, judicial determination, vote of stockholders or disinterested directors or otherwise, both as to action in his Corporate Status and as to action in another capacity while holding a Corporate Status, and shall continue after Indemnitee has ceased to be a director, officer, employee or agent, shall continue for so long as Indemnitee shall be or could become subject to any possible Proceeding in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses under this Agreement, and shall inure to the benefit of his heirs, executors and administrators. 3. Determination of Right to Indemnification. For purposes of making the determination in a specific case under paragraph (g) of Section 2 hereof whether to make indemnification, the board of directors, Independent Legal Counsel, or stockholders, as the case may be, shall make such determination in accordance with the following procedure: (a) To obtain indemnification under this Agreement, Indemnitee shall submit to the board of directors a sworn statement of request for indemnification substantially in the form of Exhibit 1 attached hereto and made a part hereof ("Indemnification Statement") stating that he has met the applicable standard of conduct set forth in paragraphs (b), (c), (d) or (e) of Section 2 hereof; (b) Submission of the Indemnification Statement to the board of directors shall create a rebuttable presumption that Indemnitee is entitled to indemnification under this Agreement, and the board of directors, Independent Legal Counsel, or stockholders, as the case may be, shall within 60 days after submission of the Indemnification Statement specifically 5 6 determine that Indemnitee is so entitled, unless it or they shall possess sufficient evidence to rebut the presumption that Indemnitee has met the applicable standard of conduct set forth in paragraph (b), (c), (d) or (e) of Section 2 hereof, which evidence shall be disclosed to Indemnitee with particularity in a written statement signed by all persons who participated in the determination and voted to deny indemnification. (c) In the event that the determination of entitlement to indemnification is to be made by Independent Legal Counsel pursuant to this Section 3, the Independent Legal Counsel shall be selected as provided in this section 3(c0. The Independent Legal Counsel shall be selected by the Board of directors, and the Company shall give written notice to Indemnitee advising him of the identity of the Independent Legal Counsel so selected. Indemnitee may, within 7 days after receipt of such written notice of selection shall have been given, deliver to the Company a written objection to such selection. Such objection may be asserted only on the ground that the Independent legal Counsel so selected does not meet the requirements of "Independent Legal Counsel as defined in Section 6 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. If such written objection is made, the Independent Legal Counsel so selected shall be disqualified from action as such. If, within 20 days after submission by Indemnitee of a written request for indemnification pursuant to Section 3(a) of this Agreement, no Independent Legal Counsel shall have been selected, or if selected shall have been objected to, in accordance with Section 3(c), either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware for the appointment as Independent Legal Counsel of a person selected by such court or by such other person as such court shall designate, and the person so appointed shall act as Independent Legal Counsel under Section 3(b) of this Agreement, and the Company shall pay all reasonable fees and expenses 6 7 incident to the procedures of this Section 3(c), regardless of the manner in which such Independent Legal Counsel was selected or appointed. 4. Authorization of Advancement of Expenses. For purpose of determining whether to authorize advancement of expenses in a specific case pursuant to paragraph (h) of Section 2 hereof, the board of directors shall make such determination in accordance with the following procedure: (a) Indemnitee may submit to the board of directors a request for advancement of expenses substantially in the form of Exhibit 2 attached hereto and made a part hereof ("Undertaking"), stating that (i) he has reasonably incurred or will reasonably incur actual expenses in defending a Proceeding, and (ii) he undertakes to repay such amount if it is ultimately determined that he is not entitled to be indemnified by the Company under this Agreement or otherwise; (b) Upon receipt of the Undertaking the board of directors shall within 14 days authorize immediate payment of the Expenses stated in the Undertaking. 5. Merger, Consolidation or Change in Control. In the event that the Company shall be a constituent corporation in a consolidation or merger, whether the Company is the resulting or surviving corporation or is absorbed, or if there is a change in control of the Company as defined in Section 6 hereof, Indemnitee shall stand in the same position under this Agreement with respect to the resulting, surviving or changed corporation as he would have with respect to the Company if its separate existence had continued or if there had been no change in the control of the Company. 6. Certain Definitions. For purposes of this Agreement, the following definitions apply herein: 7 8 (a) "change of control" shall include any change in the ownership of a majority of the capital stock of the Company or in the composition of a majority of the members of the board of directors of the Company. (b) "Corporate Status" describes the status of a person who is or was a director, officer, agent or fiduciary of the Company or of any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise (including civic, non-profit or charitable organizations, whether or not incorporated), which such person is or was serving at the request of the Company. (c) "Disinterested Director" means a director of the company who is not and was not at any time a party to the Proceeding in respect of which indemnification is sought by Indemnitee. (d) "Expenses" shall include all reasonable attorneys' fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend or investigating a Proceeding. (e) "Fines" shall include any excise taxes assessed on Indemnitee with respect to any employee benefit plan. (f) "Independent Legal Counsel" means a law firm, or a member of a law firm, that is experienced in matters of corporate law and neither presently is, nor in the past five years has been retained to represent (i) the Company or Indemnitee in any matter material to either such party or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Legal 8 9 Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an act in to determine Indemnitee's rights under this Agreement. (g) "Proceeding" includes any action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding whether civil, criminal, administrative or investigative. (h) "serving at the request of the Company" shall include any service at the request or with the express or implied authorization of the Company, as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, Indemnitee with respect to an enterprise, its participants or beneficiaries; and if Indemnitee acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of such enterprise," he shall be deemed to have acted in a manner "not opposed to the best interests of the Company" as referred to in this Agreement. 7. D&O Insurance. The Company represents that it has purchased or currently maintains and will maintain (except as hereinafter provided) insurance protecting its officers and directors and certain other persons (including the Indemnitee) against certain losses arising out of actual or threatened Proceedings to which such persons may be made or threatened to be made parties ("D&O Insurance"). Although there can be no assurance as to the continuation or renewal of the D&O Insurance or that any such D&O Insurance will provide coverage for losses to which the Indemnitee may be exposed, the Company will use commercially reasonable efforts, taking into consideration availability of D&O Insurance in the marketplace, to continue D&O Insurance in effect at current levels for the duration of Indemnitee's service and for six (6) years thereafter. 9 10 8. Reliance by Indemnitee. The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve or continue to serve as a director and/or officer of the Company, and acknowledges that Indemnitee is relying up-on this Agreement in serving or continuing to serve in such capacity. 9. Attorneys' Fees. In the event that Indemnitee institutes any legal action to enforce his rights or collect moneys due under this Agreement or to recover damages for breach of this Agreement, Indemnitee, if he prevails in whole or in part, shall be entitled to recover from the Company all attorneys' fees and disbursements incurred by him. 10. Severability. If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid or unenforceable, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected. 11. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to any conflict of law rules or principle that might refer to the laws of another state or country. 12. Modification; Survival. This Agreement contains the entire agreement of the parties relating to the subject matter hereof and supercedes any prior agreement regarding the subject matter hereof. This Agreement may be modified only by an instrument in writing signed by both parties hereto. The provisions of this Agreement shall survive the termination of Indemnitee's service as a director and/or officer of the Company. 10 11 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement and the Company has set its seal as of the date first above written. COMPANY: Veritas DGC Inc. (Corporate Seal) By: ---------------------------------------- David B. Robson Chairman INDEMNITEE: -------------------------------------------- 11 12 EXHIBIT 1 STATEMENT OF REQUEST FOR INDEMNIFICATION I, ______________________, submit this Statement pursuant to the Indemnity Agreement dated ______________________, between Veritas DGC Inc., a Delaware corporation ("Company"), and the undersigned (the "Agreement"). 1. I am requesting indemnification against Expenses (as defined in the Agreement) and, with respect to any action not by or in the right of the Company, judgments, fines, penalties and amounts paid in settlement, all of which have been actually and reasonably incurred by me in connection with a certain Proceeding (as defined in the Agreement) to which I am a party or am threatened to be made a party by reason of the fact of my Corporate Status (as defined in the Agreement). 2. With respect to all matters related to any such Proceeding, I acted in good faith and in a manner I reasonably believed to be or not opposed to the best interests of the Company, and, with respect to any criminal Proceeding, I had no reason to believe that my conduct was unlawful. 3. I am requesting indemnification against the following liabilities: . - --------------------------------------------------------------------------- -------------------------------------------- 12 13 EXHIBIT 2 STATEMENT OF UNDERTAKING I, ______________________, submit this Statement pursuant to the Indemnity Agreement dated ______________________, between Veritas DGC Inc., a Delaware corporation ("Company"), and the undersigned (the "Agreement"). 1. I am requesting advancement of certain actual Expenses (as defined in the Agreement) which I have reasonably incurred or will reasonably incur in defending a Proceeding. 2. I hereby undertake to repay this advancement of Expenses if it is ultimately determined that I am not entitled to be indemnified by the Company. 3. The expenses for which advancement is requested are as follows: . - --------------------------------------------------------------------------- -------------------------------------------- 13 EX-10.O 6 0006.txt INDEMNITY AGREEMENT BETWEEN RICHARD C. WHITE 1 EXHIBIT 10-O INDEMNITY AGREEMENT THIS AGREEMENT made this 24th day of January 2000, between Veritas DGC Inc., a Delaware corporation ("Company"), and Richard C. White ("Indemnitee"). A. The Indemnitee has been requested to serve as a director and/or officer of the Company. The Company desires the Indemnitee to serve in such capacity. The Company believes that the Indemnitee's undertaking or continued undertaking of such responsibilities is important to the Company and that the protection afforded by this Agreement will enhance the Indemnitee's ability to discharge such responsibilities under existing circumstances. The Indemnitee is willing, subject to certain conditions including without limitation the execution and performance of this Agreement by the Company and the Company's agreement to provide the Indemnitee at all times the broadest and most favorable (to Indemnitee) indemnification permitted by applicable law (whether by legislative action or judicial decision), to serve or to continue to serve in that capacity. B. In addition to the indemnification to which the Indemnitee is entitled under the Restated Certificate of Incorporation (with amendments) of the Company (the "Certificate") or the Bylaws, as amended, of the Company (the "Bylaws"), the Company has purchased and currently maintains insurance protecting its officers and directors and certain other persons (including the Indemnitee) against certain losses arising out of actual or threatened actions, suits or proceedings to which such persons may be made or threatened to be made parties ("D&O Insurance"). NOW, THEREFORE, for and in consideration of the premises, the mutual promises hereinafter set forth, the reliance of the Indemnitee hereon in continuing to serve the Company in 2 his present capacity and in undertaking to serve the Company in any additional capacity or capacities, the Company and the Indemnitee agree as follows: 1. Continued Service. Indemnitee will continue to serve, at the will of the Company and under separate contract, if such exists, as a director and/or officer so long as he is duly elected and qualified in accordance with the Bylaws of the Company or until he tenders his resignation. 2. Indemnification. The Company shall indemnify Indemnitee as follows: (a) The Company shall indemnify and advance Expenses (as hereinafter defined) to Indemnitee to the fullest extent, and only to the extent, permitted by applicable law in effect on the date of this Agreement and to such greater extent as applicable law may thereafter from time to time permit. The rights of Indemnitee provided under the preceding sentence shall include, but shall not be limited to, the rights set forth in the other paragraphs of this Section 2 or any other Sections of this Agreement. (b) The Company shall indemnify Indemnitee when he is a party or is threatened to be made a party to any threatened, pending or completed Proceeding (other than a Proceeding by or in the right of the Company) by reason of his Corporate Status (as hereinafter defined) against expenses, judgments, awards, penalties, fines and amounts paid in settlements actually and reasonably incurred by him or on his behalf in connection with such Proceeding or any claim, issue or matter therein if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal Proceeding had no reasonable cause to believe his conduct was unlawful. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act 2 3 in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal Proceeding, had reasonable cause to believe that his conduct was unlawful. (c) The Company shall indemnify Indemnitee when he is a party or is threatened to be made a party to any threatened, pending or completed Proceeding by or in the right of the Company to procure a judgment in its favor by reason of the fact of his Corporate Status against expenses actually and reasonably incurred by him or on his behalf in connection with such Proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company and except that no indemnification shall be made in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged to be liable to the Company unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification for such expenses which the Court of Chancery of the State of Delaware or such other court shall deem proper. (d) Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. For the purposes of this 3 4 paragraph (d) of this Section 2 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, wit or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter. (e) In the event the indemnity contained in paragraphs (b), (c) or (d) of this Section 2 is unavailable or insufficient to hold Indemnitee harmless in a Proceeding described therein, then in accordance with the non-exclusivity provisions of the Delaware General Corporation law and the Certificate and Bylaws, and separate from and in addition to, the indemnity provided elsewhere herein, the Company shall contribute to Expenses, judgements, penalties, fines and amounts paid in settlement actually and reasonably incurred by or on behalf of Indemnitee in connection with such Proceeding or any claim, issue or matter therein, in such proportion as appropriately reflects the relative benefits received by, and fault of, the Company on the one hand and the Indemnitee on the other in the acts, transactions or matters to which the Proceeding relates and other equitable considerations. (f) The termination of any Proceeding described in paragraphs (b), (c) or (d) of this Section 2, or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful. (g) Any indemnification under paragraphs (b), (c), (d) or (e) of this Section 2 (unless ordered by a court) shall be made by the Company only as authorized in the specific case upon a determination (in accordance with Section 3 hereof) that indemnification of Indemnitee is 4 5 proper in the circumstances because he has met the applicable standard of conduct set forth in paragraphs (b), (c), (d) or (e) of this Section 2. Such determination shall be made (1) by a majority vote of Disinterested Directors (as hereinafter defined), even though less than a quorum, or (2) if there are no such directors, or if such directors so direct, by Independent Legal Counsel (as hereinafter defined) in a written opinion, or (3) by the stockholders. If, with regard to paragraph (e) of this Section 2, such a determination is not permitted by law or if a quorum of Disinterested Directors so directs, such determination shall be made by the Chancery Court of the State of Delaware or the court in which the Proceeding giving rise to the claim for indemnification is brought. (h) Expenses incurred by Indemnitee in defending a Proceeding shall be paid by the Company in advance of the final disposition of such Proceeding as authorized (in accordance with Section 4 hereof) by the board of directors in the specific case upon receipt of an undertaking by or on behalf of Indemnitee to repay such amount if it is ultimately determined that he is not entitled to be indemnified by the Company under this Agreement or otherwise. (i) The indemnification and advancement of Expenses provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may be entitled under any statute, bylaw, insurance policy, agreement, judicial determination, vote of stockholders or disinterested directors or otherwise, both as to action in his Corporate Status and as to action in another capacity while holding a Corporate Status, and shall continue after Indemnitee has ceased to be a director, officer, employee or agent, shall continue for so long as Indemnitee shall be or could become subject to any possible Proceeding in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses under this Agreement, and shall inure to the benefit of his heirs, executors and administrators. 5 6 3. Determination of Right to Indemnification. For purposes of making the determination in a specific case under paragraph (g) of Section 2 hereof whether to make indemnification, the board of directors, Independent Legal Counsel, or stockholders, as the case may be, shall make such determination in accordance with the following procedure: (a) To obtain indemnification under this Agreement, Indemnitee shall submit to the board of directors a sworn statement of request for indemnification substantially in the form of Exhibit 1 attached hereto and made a part hereof ("Indemnification Statement") stating that he has met the applicable standard of conduct set forth in paragraphs (b), (c), (d) or (e) of Section 2 hereof; (b) Submission of the Indemnification Statement to the board of directors shall create a rebuttable presumption that Indemnitee is entitled to indemnification under this Agreement, and the board of directors, Independent Legal Counsel, or stockholders, as the case may be, shall within 60 days after submission of the Indemnification Statement specifically determine that Indemnitee is so entitled, unless it or they shall possess sufficient evidence to rebut the presumption that Indemnitee has met the applicable standard of conduct set forth in paragraph (b), (c), (d) or (e) of Section 2 hereof, which evidence shall be disclosed to Indemnitee with particularity in a written statement signed by all persons who participated in the determination and voted to deny indemnification. (c) In the event that the determination of entitlement to indemnification is to be made by Independent Legal Counsel pursuant to this Section 3, the Independent Legal Counsel shall be selected as provided in this section 3(c0. The Independent Legal Counsel shall be selected by the Board of directors, and the Company shall give written notice to Indemnitee advising him of the identity of the Independent Legal Counsel so selected. Indemnitee may, 6 7 within 7 days after receipt of such written notice of selection shall have been given, deliver to the Company a written objection to such selection. Such objection may be asserted only on the ground that the Independent legal Counsel so selected does not meet the requirements of "Independent Legal Counsel as defined in Section 6 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. If such written objection is made, the Independent Legal Counsel so selected shall be disqualified from action as such. If, within 20 days after submission by Indemnitee of a written request for indemnification pursuant to Section 3(a) of this Agreement, no Independent Legal Counsel shall have been selected, or if selected shall have been objected to, in accordance with Section 3(c), either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware for the appointment as Independent Legal Counsel of a person selected by such court or by such other person as such court shall designate, and the person so appointed shall act as Independent Legal Counsel under Section 3(b) of this Agreement, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 3(c), regardless of the manner in which such Independent Legal Counsel was selected or appointed. 4. Authorization of Advancement of Expenses. For purpose of determining whether to authorize advancement of expenses in a specific case pursuant to paragraph (h) of Section 2 hereof, the board of directors shall make such determination in accordance with the following procedure: (a) Indemnitee may submit to the board of directors a request for advancement of expenses substantially in the form of Exhibit 2 attached hereto and made a part hereof ("Undertaking"), stating that (i) he has reasonably incurred or will reasonably incur actual expenses in defending a Proceeding, and (ii) he undertakes to repay such amount if it is 7 8 ultimately determined that he is not entitled to be indemnified by the Company under this Agreement or otherwise; (b) Upon receipt of the Undertaking the board of directors shall within 14 days authorize immediate payment of the Expenses stated in the Undertaking. 5. Merger, Consolidation or Change in Control. In the event that the Company shall be a constituent corporation in a consolidation or merger, whether the Company is the resulting or surviving corporation or is absorbed, or if there is a change in control of the Company as defined in Section 6 hereof, Indemnitee shall stand in the same position under this Agreement with respect to the resulting, surviving or changed corporation as he would have with respect to the Company if its separate existence had continued or if there had been no change in the control of the Company. 6. Certain Definitions. For purposes of this Agreement, the following definitions apply herein: (a) "change of control" shall include any change in the ownership of a majority of the capital stock of the Company or in the composition of a majority of the members of the board of directors of the Company. (b) "Corporate Status" describes the status of a person who is or was a director, officer, agent or fiduciary of the Company or of any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise (including civic, non-profit or charitable organizations, whether or not incorporated), which such person is or was serving at the request of the Company. (c) "Disinterested Director" means a director of the company who is not and was not at any time a party to the Proceeding in respect of which indemnification is sought by Indemnitee. 8 9 (d) "Expenses" shall include all reasonable attorneys' fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend or investigating a Proceeding. (e) "Fines" shall include any excise taxes assessed on Indemnitee with respect to any employee benefit plan. (f) "Independent Legal Counsel" means a law firm, or a member of a law firm, that is experienced in matters of corporate law and neither presently is, nor in the past five years has been retained to represent (i) the Company or Indemnitee in any matter material to either such party or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Legal Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an act in to determine Indemnitee's rights under this Agreement. (g) "Proceeding" includes any action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding whether civil, criminal, administrative or investigative. (h) "serving at the request of the Company" shall include any service at the request or with the express or implied authorization of the Company, as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, Indemnitee with respect to an enterprise, its participants or beneficiaries; and if Indemnitee acted in good 9 10 faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of such enterprise," he shall be deemed to have acted in a manner "not opposed to the best interests of the Company" as referred to in this Agreement. 7. D&O Insurance. The Company represents that it has purchased or currently maintains and will maintain (except as hereinafter provided) insurance protecting its officers and directors and certain other persons (including the Indemnitee) against certain losses arising out of actual or threatened Proceedings to which such persons may be made or threatened to be made parties ("D&O Insurance"). Although there can be no assurance as to the continuation or renewal of the D&O Insurance or that any such D&O Insurance will provide coverage for losses to which the Indemnitee may be exposed, the Company will use commercially reasonable efforts, taking into consideration availability of D&O Insurance in the marketplace, to continue D&O Insurance in effect at current levels for the duration of Indemnitee's service and for six (6) years thereafter. 8. Reliance by Indemnitee. The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve or continue to serve as a director and/or officer of the Company, and acknowledges that Indemnitee is relying up-on this Agreement in serving or continuing to serve in such capacity. 9. Attorneys' Fees. In the event that Indemnitee institutes any legal action to enforce his rights or collect moneys due under this Agreement or to recover damages for breach of this Agreement, Indemnitee, if he prevails in whole or in part, shall be entitled to recover from the Company all attorneys' fees and disbursements incurred by him. 10. Severability. If any provision of this Agreement or the application of any 10 11 provision hereof to any person or circumstances is held invalid or unenforceable, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected. 11. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to any conflict of law rules or principle that might refer to the laws of another state or country. 12. Modification; Survival. This Agreement contains the entire agreement of the parties relating to the subject matter hereof. This Agreement may be modified only by an instrument in writing signed by both parties hereto. The provisions of this Agreement shall survive the termination of Indemnitee's service as a director and/or executive officer of the Company. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement and the Company has set its seal as of the date first above written. COMPANY: Veritas DGC Inc. (Corporate Seal) By: ------------------------------------- David B. Robson Chairman INDEMNITEE: ---------------------------------------- Richard C. White 11 12 EXHIBIT 1 STATEMENT OF REQUEST FOR INDEMNIFICATION I, Richard C. White, submit this Statement pursuant to the Indemnity Agreement dated January 24, 2000, between Veritas DGC Inc., a Delaware corporation ("Company"), and the undersigned (the "Agreement"). 1. I am requesting indemnification against Expenses (as defined in the Agreement) and, with respect to any action not by or in the right of the Company, judgments, fines, penalties and amounts paid in settlement, all of which have been actually and reasonably incurred by me in connection with a certain Proceeding (as defined in the Agreement) to which I am a party or am threatened to be made a party by reason of the fact of my Corporate Status (as defined in the Agreement). 2. With respect to all matters related to any such Proceeding, I acted in good faith and in a manner I reasonably believed to be or not opposed to the best interests of the Company, and, with respect to any criminal Proceeding, I had no reason to believe that my conduct was unlawful. 4. I am requesting indemnification against the following liabilities: . - --------------------------------------------------------------------------- ---------------------------------------- Richard C. White 12 13 EXHIBIT 2 STATEMENT OF UNDERTAKING I, Richard C. White, submit this Statement pursuant to the Indemnity Agreement dated January 24, 2000, between Veritas DGC Inc., a Delaware corporation ("Company"), and the undersigned (the "Agreement"). 1. I am requesting advancement of certain actual Expenses (as defined in the Agreement) which I have reasonably incurred or will reasonably incur in defending a Proceeding. 2. I hereby undertake to repay this advancement of Expenses if it is ultimately determined that I am not entitled to be indemnified by the Company. 7. The expenses for which advancement is requested are as follows: . - -------------------------------------------------------------------------- ---------------------------------------- Richard C. White 13 EX-27 7 0007.txt FINANCIAL DATA SCHEDULE
5 1,000 3-MOS JUL-31-2000 AUG-01-1999 APR-30-2000 35,476 4,119 108,982 2,248 4,964 162,949 398,085 253,046 586,688 76,463 0 0 0 245 364,200 586,688 0 93,742 0 65,010 0 0 3,605 3,890 1,411 2,539 0 0 0 2,539 .10 .09
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