10-Q

SECURITIES AND UNITED STATES 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 January 31, 2004

OR

o	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.)
10300 Town Park
Houston, Texas	77072
(Address of principal executive offices)	(Zip Code)

(832) 351-8300
(Registrant’s telephone number, including area code)

     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 o

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No o

APPLICABLE ONLY TO CORPORATE ISSUERS:

     The number of shares of the Company’s common stock, $.01 par value, outstanding at February 27, 2004 was 34,010,420 (including 1,221,931 Veritas Energy Services Inc. exchangeable shares which are identical to the Common Stock in all material respects).

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements
		CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
		CONSOLIDATED BALANCE SHEETS
		CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk
	Item 4. Controls and Procedures
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 4. Submission of Matters to a Vote of Security Holders
	Item 6. Exhibits and Reports on Form 8-K
Signatures
EXHIBIT INDEX
Third Amendment to Credit Agreement
Employee Agreement - Thierry Pilenko
Retirement Agreement - David B. Robson
Certification of CEO Pursuant to Section 302
Certification of PFO Pursuant to Section 302
Certification of CEO Pursuant to Section 906
Certification of PFO Pursuant to Section 906

TABLE OF CONTENTS

FORM 10-Q

	Page Number
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Operations and Comprehensive Income (Loss) – For the Three and Six Months Ended January 31, 2004 and 2003		1
Consolidated Balance Sheets – January 31, 2004 and July 31, 2003		2
Consolidated Statements of Cash Flows – For the Six Months Ended January 31, 2004 and 2003		3
Notes to Consolidated Financial Statements		4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		10
Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk		16
Item 4. Controls and Procedures		16
Part II. Other Information
Item 1. Legal Proceedings		17
Item 4. Submission of Matters to a Vote of Security Holders		17
Item 6. Exhibits and Reports on Form 8-K		18
Signatures		19

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

VERITAS DGC INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(unaudited)

	Three Months Ended					Six Months Ended
	January 31,					January 31,
	2004			2003		2004			2003
	(In thousands, except per share amounts)
Revenues	$	147,770		$	125,321	$	252,120		$	262,828
Cost of services		114,988			102,013		232,005			220,949
Research and development		3,695			3,045		7,140			6,053
General and administrative		6,383			7,810		12,574			15,483
Operating income		22,704			12,453		401			20,343
Interest expense		4,197			4,425		8,475			8,367
Other expense (income), net		(370	)		637		(517	)		1,647
Income (loss) before provision for income taxes		18,877			7,391		(7,557	)		10,329
Income taxes		4,638			2,901		4,551			4,276
Net income (loss)	$	14,239		$	4,490	$	(12,108	)	$	6,053
Net income (loss) per share:
Basic:
Net income (loss) per common share	$	.42		$	.14	$	(.36	)	$	.18
Weighted average common shares (including exchangeable shares)		33,745			33,235		33,668			33,193
Diluted:
Net income (loss) per common share	$	.42		$	.14	$	(.36	)	$	.18
Weighted average common shares (including exchangeable shares)		33,952			33,249		33,668			33,220
Comprehensive income (loss):
Net income (loss)	$	14,239		$	4,490	$	(12,108	)	$	6,053
Other comprehensive income (loss) (net of tax, $0 in all periods):
Foreign currency translation adjustments		570			1,374		5,935			1,599
Other unrealized gain (loss)		(691	)		253		(604	)		365
Total other comprehensive income (loss)		(121	)		1,627		5,331			1,964
Comprehensive income (loss)	$	14,118		$	6,117	$	(6,777	)	$	8,017

See Notes to Consolidated Financial Statements

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VERITAS DGC INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value)
unaudited

	January 31,			July 31,
	2004			2003
ASSETS
Current assets:
Cash and cash equivalents	$	69,520		$	72,626
Restricted cash investments		15			205
Accounts and notes receivable (net of allowance: $1,059 and $7,953, respectively)		172,243			131,645
Materials and supplies inventory		4,056			5,044
Prepayments and other		13,303			13,365
Income taxes receivable		11,280			11,335
Total current assets		270,417			234,220
Property and equipment		488,781			492,639
Less accumulated depreciation		352,912			341,430
Property and equipment, net		135,869			151,209
Multi-client data library		350,071			371,949
Investment in and advances to joint ventures		3,483			4,657
Deferred tax asset		1,967			2,546
Other assets		24,678			23,781
Total	$	786,485		$	788,362
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	1,425		$	13,908
Trade accounts payable		36,341			43,423
Other accrued liabilities		64,606			41,880
Total current liabilities		102,372			99,211
Non-current liabilities:
Long-term debt		179,698			180,317
Other non-current liabilities		19,089			18,701
Total non-current liabilities		198,787			199,018
Stockholders’ equity:
Common stock, $.01 par value; issued: 32,487,609 shares and 32,156,781 shares, respectively (excluding common stock equivalent exchangeable shares of subsidiary of 1,422,711 and 1,443,411, respectively)		324			322
Additional paid-in capital		430,697			428,402
Accumulated earnings (from August 1, 1991 with respect to Digicon Inc.)		48,409			60,517
Accumulated other comprehensive income (loss):
Cumulative foreign currency translation adjustment		9,453			3,518
Other comprehensive loss		(1,382	)		(778	)
Unearned compensation		(626	)		(340	)
Treasury stock, at cost; 89,136 shares and 84,143 shares, respectively		(1,549	)		(1,508	)
Total stockholders’ equity		485,326			490,133
Total	$	786,485		$	788,362

See Notes to Consolidated Financial Statements

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VERITAS DGC INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Six Months Ended
	January 31,
	2004			2003
	(In thousands)
Cash flows from operating activities:
Net income (loss)	$	(12,108	)	$	6,053
Non-cash items included in net income (loss):
Depreciation and amortization, net (other than multi-client)		19,869			25,349
Amortization of multi-client library		105,731			73,558
Impairment of land acquisition equipment					1,780
Loss (gain) on disposition of property and equipment		480			(435	)
Equity in loss of joint venture		613			948
Deferred taxes		717
Amortization of unearned compensation		240			354
Change in operating assets/liabilities:
Accounts and notes receivable		(39,205	)		(12,380	)
Materials and supplies inventory		993			12,744
Prepayments and other		(462	)		(852	)
Income tax receivable		1,360			3,624
Accounts payable and other accrued liabilities		14,467			(17,074	)
Other		(3,693	)		(930	)
Net cash provided by operating activities		89,002			92,739
Cash flows from investing activities:
Decrease in restricted cash		190
Investment in multi-client data library, net cash		(70,315	)		(75,587	)
Purchase of property and equipment		(13,557	)		(12,967	)
Sale of property and equipment		655			2,235
Sale of (RC)2 software operation		2,000
Purchase of Hampson-Russell Software Services Ltd.					(9,250	)
Net cash used by investing activities		(81,027	)		(95,569	)
Cash flows from financing activities:
Borrowing of long-term debt, net of debt issuance costs					120,500
Payments on long-term debt		(13,102	)		(49,950	)
Net proceeds from sale of common stock		1,524			1,186
Net cash (used) provided by financing activities		(11,578	)		71,736
Currency loss on foreign cash		497			50
Change in cash and cash equivalents		(3,106	)		68,956
Beginning cash and cash equivalents balance		72,626			10,586
Ending cash and cash equivalents balance	$	69,520		$	79,542
Schedule of non-cash transactions:
Capitalization of depreciation and amortization resulting in an increase in multi-client data library	$	9,915		$	12,645

See Notes to Consolidated Financial Statements

3

VERITAS DGC INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1. Summary of significant accounting policies

Consolidation

     The accompanying consolidated financial statements include our accounts and the accounts of majority-owned domestic and foreign subsidiaries. Investment in an 80% owned joint venture is accounted for on the equity method due to provisions in the joint venture agreement that give minority shareholders the right to exercise control. On April 30, 2004, we will adopt FIN 46R which will require us to consolidate the 80% owned joint venture. See “Recent accounting pronouncements” below for more detail. 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 presented, have been reflected. These interim financial statements should be read in conjunction with our annual audited consolidated financial statements.

Use of estimates

     The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions 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.

Reclassification of prior year balances

     Certain prior year balances have been reclassified for consistent presentation.

Recent accounting pronouncements

     In December 2003, the Financial Accounting Standards Board issued FIN 46R, a revision to FIN 46 (Consolidation of Variable Interest Entities). FIN 46R replaces FIN 46 and provides additional clarification on the application of ARB No. 51, Consolidated Financial Statements, to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. We will adopt FIN 46R on April 30, 2004. Adoption will not have a material effect on our financial position or results of operations, however, it will require consolidation of our 80% owned joint venture currently accounted for under the equity method. The 80% owned joint venture provides processing and acquisition services and sells licenses to multi-client library.

     In December 2003, the Financial Accounting Standards Board issued SFAS No. 132 (Revised 2003), Employer’s Disclosures about Pension and Other Postretirement Benefits. This statement retains the disclosures required by SFAS No. 132 and adds additional disclosures. Those disclosures include information describing the types of plan assets, investment strategy, measurement date(s), plan obligations, cash flows, and components of net periodic benefit cost recognized during interim periods. We will adopt SFAS No. 132 (Revised 2003) in the third quarter of fiscal 2004.

4

2. Multi-client library accounting change

     As of August 1, 2003, we changed our multi-client amortization policy to include a minimum amortization from the date of survey completion, instead of only during the last 24 months of survey book life. This change resulted in a catch-up adjustment of $22.1 million recognized as additional amortization expense during the current fiscal year and is included in cost of services on the “Consolidated Statements of Operations and Comprehensive Income (Loss)”.

3. Other expense (income), net

     Other expense (income), net consists of the following:

	Three Months Ended						Six Months Ended
	January 31,						January 31,
	2004			2003			2004			2003
				(In thousands)
Interest income	$	(250	)	$	(154	)	$	(484	)	$	(228	)
Net foreign currency exchange loss (gain)		(297	)		414			(265	)		697
Loss from unconsolidated joint venture		364			349			613			948
Other		(187	)		28			(381	)		230
Total	$	(370	)	$	637		$	(517	)	$	1,647

4. Earnings per common share

     Basic and diluted earnings per common share are computed as follows:

	Three Months Ended				Six Months Ended
	January 31,				January 31,
	2004		2003		2004			2003
	(In thousands, except per share amounts)
Net income (loss)	$	14,239	$	4,490	$	(12,108	)	$	6,053
Basic:
Weighted average common shares (including exchangeable shares)		33,745		33,235		33,668			33,193
Net income (loss) per share	$	.42	$	.14	$	(.36	)	$	.18
Diluted:
Weighted average common shares (including exchangeable shares)		33,745		33,235		33,668			33,193
Shares issuable from assumed exercise of options		207		14					27
Total		33,952		33,249		33,668			33,220
Net income (loss) per share	$	.42	$	.14	$	(.36	)	$	.18

5

     The following options to purchase common shares have been excluded from the computation assuming dilution because the options’ exercise prices exceed the average market price of the underlying common shares or the options are anti-dilutive due to a net loss.

	Three Months Ended				Six Months Ended
	January 31,				January 31,
	2004		2003		2004		2003
Number of options		3,438,173		3,338,074		4,269,195		3,293,541
Exercise price range	$	10.71-55.125	$	10.71-$55.125	$	5.25-55.125	$	10.71- $55.125
Expiring through	March 2012		March 2012		March 2012		March 2012

5. Long-term debt

     Long-term debt is as follows:

	January 31, 2004		July 31, 2003
	(In thousands)
Term A loan due February 2006	$	27,314	$	29,850
Term B loan due February 2007		113,809		124,375
Term C loan due February 2008		40,000		40,000
Total debt		181,123		194,225
Less: Current portion of long-term debt		1,425		13,908
Total long-term debt	$	179,698	$	180,317

     On February 14, 2003, we entered into a Credit Agreement (the “Credit Agreement”) with Deutsche Bank AG, New York Branch, as Administrative Agent, Deutsche Bank AG, Canada Branch, as Canadian Administrative Agent, and certain other lending institutions. The Credit Agreement provides term financing of $195.0 million under term A, term B and term C tranches (the “Term Loans”), a revolving loan facility aggregating $55.0 million, including a facility for swing line loans of up to $10.0 million and the issuance of letters of credit in an aggregate amount of up to $40.0 million. As of January 31, 2004, there were $3.1 million in letters of credit outstanding, leaving $51.9 million available for borrowings. Among other restrictions, the Credit Agreement prohibits us from paying cash dividends. Proceeds from the Term Loans were used to satisfy the obligations under our previous credit agreement and our Senior Notes.

     The term A loan was in the original principal amount of $30.0 million, matures in February 2006, and requires quarterly interest payments at a rate, at our election, of LIBOR plus a margin ranging from 3.5% to 4.0% or a base rate plus a margin ranging from 2.25% to 2.75%. These margins are based on certain of our financial ratios. The term B loan was in the original principal amount of $125.0 million, matures in February 2007, and requires quarterly interest payments at a rate, at our election, of LIBOR plus 5.0%, subject to a 2% LIBOR floor or a base rate plus 3.75%. The term C loan was in the original principal amount of $40.0 million, matures in February 2008, and requires quarterly interest payments at a rate, at our election, of LIBOR plus 7.5%, subject to a 3% LIBOR floor or a base rate plus 6.25%.

     The term A and term B loans required quarterly combined principal payments of $387,500 representing 0.25% of the initial principal balances. Should there be an event of default or if an unmatured event of default exists, or the credit rating of any of the debt is below Moody’s Ba2 or S&P’s BB, or our leverage ratio as of the last day of the most recent excess cash flow calculation period rises above certain levels, the term A and B loans also require principal payments of 50% of the prior fiscal year’s cash flow, calculated as per the loan agreement. This payment is due 100 days after the end of the fiscal year and results in a ratable reduction of the future required quarterly principal payments. As our lowest debt rating by Moody’s was below the minimum level, we paid $12.4 million of principal in November 2003 related to the company’s cash flow from January 1, 2003 through July 31, 2003. Based upon this payment, our required quarterly combined principal payments was reduced to $356,371. Future excess cash flow payments of this type, if any, will be based on cash flow for full fiscal years.

     Loans made under the revolving loan facility, including swing-line loans, bear interest at a variable rate determined on the date of borrowing that is related to various base rates and margins depending upon our leverage ratio and the location of the borrowing. The revolving loan facility expires in February 2006.

6

     Borrowings under the Credit Agreement are secured by assets, including equipment, vehicles, multi-client data library, intellectual property, and stock of certain material subsidiaries, owned by us and certain of our subsidiaries. At January 31, 2004, the carrying value of the secured assets, including intercompany receivables, was $1.1 billion. The Credit Agreement and related documents contain a number of covenants, including financial covenants relating to interest coverage, leverage and net worth. At January 31, 2004, we were in compliance with these covenants.

     See Note 9, “Subsequent Events” of Notes to Consolidated Financial Statements for a description of our recently issued unsecured convertible senior notes.

6. Hedge transactions

     In March 2001, we entered into a contract requiring payments in Norwegian kroner to charter the seismic vessel M/V Seisquest. The contract requires 36 monthly payments commencing on June 1, 2001. To protect against exposure to exchange rate risk, we entered into multiple forward contracts as cash flow hedges effectively fixing our exchange rate for Norwegian kroner to the U.S. dollar.

     On February 25, 2003, we entered into interest rate swaps in order to reduce our exposure to the variable interest rates under our Credit Agreement described above. These swaps, with notional amounts totaling $80.0 million, effectively hedge 41% of our exposure to interest rate changes for the two-year term of the swaps and had no value at inception.

     Details of the interest rate swaps are summarized in the following table:

							LIBOR
Tranche Hedged	Amount		Term	Pay %		Receive	Floor
	(in thousands)
Term A	$	25,000	24 months		1.86	LIBOR	None
Term B	$	55,000	24 months		2.49	LIBOR		2	%

     The values of the forward contracts and the interest rate swaps are as follows:

	January 31, 2004								July 31, 2003
	Forward		Unrealized						Forward		Unrealized
	Value		Gain/(Loss)			Fair Value			Value		Gain/(Loss)			Fair Value
						(In thousands)
Forward contracts	$	1,103	$	313		$	1,416		$	2,780	$	632		$	3,412
Interest rate swaps				(384	)		(384	)				(777	)		(777	)

7. Segment information

     We have two segments, land and marine operations, both of which provide geophysical products and services to the petroleum industry. The two segments have been aggregated, as they are similar in their economic characteristics and the nature of their products, production processes and customers. A reconciliation of the reportable segments’ results to those of the total enterprise is given below:

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	Three Months Ended
	January 31,
	2004							2003
	Segments		Corporate			Total		Segments		Corporate			Total
						(In thousands)
Revenues	$	147,770				$	147,770	$	125,321				$	125,321
Operating income (loss)		31,107	$	(8,403	)		22,704		21,224	$	(8,771	)		12,453
Income (loss) before provision for income taxes		31,352		(12,475	)		18,877		20,511		(13,120	)		7,391

	Six Months Ended
	January 31,
	2004								2003
	Segments		Corporate			Total			Segments		Corporate			Total
						(In thousands)
Revenues	$	252,120				$	252,120		$	262,828				$	262,828
Operating income (loss)		17,202	$	(16,801	)		401			37,781	$	(17,438	)		20,343
Income (loss) before provision for income taxes		16,892		(24,449	)		(7,557	)		36,188		(25,859	)		10,329

8. Stock based compensation

     Compensation expense, net of tax, relating to stock based compensation was $156,000 and $230,000 for the six months ended January 31, 2004 and 2003, respectively.

     We account for stock based employee compensation using the intrinsic method prescribed in Accounting Principles Board Opinion No. 25 and have adopted the disclosure only provisions of Statement of Financial Accounting Standards No. 148. The effect on net income and earnings per share that would have been recorded using the fair value based method for stock options is as follows:

	Three Months Ended						Six Months Ended
	January 31,						January 31,
	2004			2003			2004			2003
				(In thousands)
Net income (loss), as reported	$	14,239		$	4,490		$	(12,108	)	$	6,053
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(1,563	)		(1,299	)		(3,196	)		(4,313	)
Pro forma net income (loss)	$	12,676		$	3,191		$	(15,304	)	$	1,740
Earnings (loss) per share:
Basic – as reported	$	.42		$	.14		$	(.36	)	$	.18
Basic – pro forma		.38			.10			(.45	)		.05
Diluted – as reported		.42			.14			(.36	)		.18
Diluted – pro forma		.37			.10			(.45	)		.05

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9. Subsequent Event

     On March 3, 2004, we sold $125 million aggregate principal amount of Floating Rate Convertible Senior Notes Due 2024 in a private placement. On March 11, 2004, we sold an additional $30 million of Convertible Senior Notes due to the initial purchaser’s option exercise. The convertible notes are our senior unsecured obligations and are convertible under certain circumstances into a combination of cash and our common stock at a fixed conversion price of $24.03 (subject to adjustment in certain circumstances), which is equivalent to an initial conversion ratio of approximately 41.6 shares of our common stock per $1,000 principal amount of convertible notes, or a maximum of approximately 6.4 million shares for the $155 million aggregate principal amount. In general, upon conversion of a convertible note, the holder of such note will receive cash equal to the principal amount of the note and shares of our common stock for the note’s conversion value in excess of such principal amount.

     The convertible notes bear interest at a per annum rate which will equal the three-month LIBOR rate, adjusted quarterly, minus a spread of 0.75%. The initial interest rate of the notes (through June 15, 2004) will be 0.37%. The convertible notes will mature on March 15, 2024 and may not be redeemed by us prior to March 20, 2009. Holders of the convertible notes may require us to repurchase some, or all, of the convertible notes on March 15, 2009, 2014 and 2019. They could also require repurchase upon a change of control (as defined in the indenture under which the convertible notes were issued).

     We used $129 million of the net proceeds from the offering to prepay a portion of the amounts outstanding under our existing bank credit facility and used $20 million of the net proceeds to repurchase, in negotiated transactions, 1,222,494 shares of our common stock sold by certain purchasers of the convertible notes in connection with the offering.

     The convertible notes were sold only to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended. The convertible notes and the underlying common stock issuable upon conversion have not been registered under the Securities Act or any applicable state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements. We have entered into a registration rights agreement in which we have agreed to file within 90 days of March 3, 2004 a registration statement with the Securities and Exchange Commission to register resales of the notes and associated shares of common stock within 90 days of the closing date. We will be required to pay liquidated damages in the form of additional interest in the event we fail to file the registration statement within the required period, it is not effective on or before the 180th day after March 3, 2004 or under certain other circumstances.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     This report on Form 10-Q and the documents incorporated by reference contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include statements incorporated by reference from other documents we file with the SEC. Forward-looking statements include, among other things, business strategy and expectations concerning industry conditions, market position, future operations, margins, profitability, liquidity and capital resources. Forward-looking statements generally can be identified by the use of terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate” or “believe” or similar expressions or the negatives thereof. These expectations are based on management’s assumptions and current beliefs based on currently available information. Although we believe that the expectations reflected in such statements are reasonable, we can give no assurance that such expectations will be correct. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report on Form 10-Q. Our operations are subject to a number of uncertainties, risks and other influences, many of which are outside our control, and any one of which, or a combination of which, could cause our actual results of operations to differ materially from the forward-looking statements. Important factors that could cause actual results to differ materially from our expectations are disclosed in “Risk Factors” and elsewhere in our Annual Report on Form 10-K.

Overview

     The sluggish customer spending during the first quarter of fiscal 2004, resulting in an operating loss , gave way to significant year-end spending that enabled us to generate $0.42 per share for the second quarter of fiscal 2004. The spending fluctuations were seen most dramatically in multi-client sales, which amplified the effect on our earnings. The last weeks of 2003 and beginning of 2004 demonstrated the power of the multi-client business to generate profits and cash flow.

     It is too early to know if the increase was simply driven by the year-end spending of our customers. Notably, some of our customers have highlighted their reserve replacement in recent earnings releases and appear to be focusing on that as an important metric going forward. In addition, we are seeing more tenders for marine contract projects in recent months and our marine acquisition backlog is higher than we have seen for many quarters. Moreover, multi-client sales have continued to be strong beyond the calendar year-end.

     However, we expect our results to continue to be volatile. As we reduce our investment in new library assets, we should experience a concurrent decrease in pre-funding revenue and a greater dependence upon less predictable shelf sales. We are addressing this situation in three ways. First, we are running our company with a conservative balance sheet so that we can withstand market variability. Second, we are strongly committed to the library business and are actively seeking opportunities to invest. However, we are not willing to take excessive risks and have tempered our spending to the level dictated by our current portfolio of acceptable surveys. Third, we are seeking contract work in areas where our particular set of skills and equipment offers us a measure of differentiation and an opportunity to make a reasonable profit. An example of this is our participation in the very specialized, high-end processing market. Here, we work under negotiated contracts with major customers to process large volumes of data through our proprietary algorithms. We get paid appropriately for our ability and our customer receives value for their seismic dollar.

     In March 2004, we sold $155.0 million of convertible notes with a floating rate equal to the three-months LIBOR rate less 0.75%, or 0.37% for a beginning rate. We used $129.0 million of the proceeds to prepay our bank debt, leaving a balance of $52.1 million. This transaction allowed us to extend the maturity of our debt while reducing our interest expense.

10

Results of operations

Three months ended January 31, 2004 compared with three months ended January 31, 2003

     Revenues. Revenues increased by 18% overall. Multi-client revenue increased by 27% compared to the prior year’s second quarter. More significantly, multi-client revenue increased for the first time after three consecutive quarters of decline. The second quarter of fiscal 2004 was our best quarter of library sales ever. While some of the increase in library sales may be attributed to “year-end money,” sales continued to be strong beyond the calendar year-end. Marine multi-client revenue increased by 45% compared to the prior year’s second quarter. Marine shelf sales were strong in the Gulf of Mexico and Nigeria, with sales in Brazil and the North Sea contributing to the excellent results. Land multi-client revenue decreased by 16% compared to the prior year’s second quarter due to lower prefunding and decreased investment. Contract revenue increased by 7% compared to the prior year’s second quarter. Marine contract revenue increased by 17% as a result of additional contract work in West Africa, the Mediterranean and India. Land contract revenue remained relatively flat.

     Revenues break down as follows:

	Three Months Ended
	January 31,
					%
	2004		2003		Increase/(Decrease)
	(In thousands)
Multi-client:
Land	$	15,925	$	18,919		(16	%)
Marine		67,645		46,644		45	%
Subtotal		83,570		65,563		27	%
Contract:
Land		31,695		32,020		(1	%)
Marine		32,505		27,738		17	%
Subtotal		64,200		59,758		7	%
Total Revenues	$	147,770	$	125,321		18	%

     Operating income. Operating income as a percentage of revenue increased from 10% to 15.4% due to the predominance of multi-client shelf sales (sales of completed surveys) in the current quarter. Some component of revenue from shelf sales is generally derived from surveys that are fully amortized, thus yielding almost 100% margin, whereas prefunding revenue usually generates margins of 20% to 25%. During the current quarter, 81% of multi-client revenue was generated from shelf sales compared to 47% in the comparable period of fiscal 2003. Contract margins remained relatively flat.

     General and administrative expense declined by $1.4 million. Of the decrease, $0.6 million was due to expense reduction efforts implemented in the prior fiscal year. Severance expense associated with these efforts was $1.8 million in the prior year, while during this quarter we incurred expense of $1.4 million related to the retirement of our former Chairman and Chief Executive Officer, David Robson. The remainder of the reduction was due to differences in various categories.

     Other expense (income), net. Other expense (income), net changed from expense of $0.6 million to income of $0.4 million. A combination of increased interest income due to a higher cash balance, proceeds from the sale of Miller Exploration stock, and declining foreign currency exchange losses account for the largest portion of the change.

     Income taxes. The effective tax rate decreased from 39% to 25% as compared to the prior year’s second quarter. The 25% effective rate is based upon the annual expected rate (excluding the effect of the multi-client amortization change) using the expected mix of income by jurisdiction. The lower rate compared to the prior fiscal year is due to the current use of previously unbenefited loss carryforwards and other tax credits.

11

Six months ended January 31, 2004 compared with six months ended January 31, 2003

     Revenues. Revenues decreased by 4% overall. Multi-client revenue remained relatively flat for both land and marine while contract revenue decreased by 9%. While marine contract revenue was unchanged, land contract revenue decreased by 15% due to large land acquisition projects in Peru and Bolivia completed in the prior fiscal year. This was partially offset by increased projects in Argentina and Alaska in the current fiscal year. Marine contract revenue remained relatively flat.

     Revenues break down as follows:

	Six Months Ended
	January 31,
					%
	2004		2003		Increase/(Decrease)
	(In thousands)
Multi-client:
Land	$	29,827	$	29,940		(0.3	%)
Marine		93,529		91,902		2	%
Subtotal		123,356		121,842		1	%
Contract:
Land		68,442		80,383		15	%
Marine		60,322		60,603		(0.4	%)
Subtotal		128,764		140,986		(9	%)
Total Revenues	$	252,120	$	262,828		(4	%)

     Operating income. Operating income as a percentage of revenue decreased from 7.7% to 0.2%. The decreased results for the current fiscal year were due mostly to a change in accounting for our multi-client library, which resulted in a charge of $22.1 million (included in cost of services on the “Consolidated Statements of Operations and Comprehensive Income (Loss)”). This charge represents the adjustment necessary to reduce each of our surveys as of August 1, 2003 to a balance no greater than that which would have been recorded had we been using the new method. While the sales forecast method remains our primary means of expensing multi-client surveys, we have now established a minimum cumulative amortization for each survey based upon straight-line amortization over five years. The monthly expense recognized for each survey is the greater of the amount derived by the sales forecast method or the amount of minimum amortization. This is a change from the prior method that provided for a minimum amortization only during the last two years of the survey’s book lives.

     Disregarding the charge for the change in accounting method, operating income as a percentage of revenue increased from 7.7% to 8.9% largely due to the mix of multi-client surveys and the greater proportion of shelf sales in the current fiscal year. The benefit of greater shelf sales was largely offset by increased required multi-client amortization expense of $16.6 million, compared with $1.0 million in the prior year and the very low multi-client revenue during the first quarter of the current year. Contract margins were higher for the six months of fiscal 2004 than in the prior year’s comparable period, although the prior fiscal period’s margins reflect several operational disruptions and low margins on a large land acquisition job in Peru.

     General and administrative expense declined by $2.9 million. The reduction was due to differences in the cost of various isolated expenses, such as severance, in each period.

     Other expense (income), net. Other expense (income), net changed from expense of $1.6 million to income of $0.5 million. No single item accounts for a significant portion of the change. A combination of increased interest income due to a higher cash balance, proceeds from the sale of Miller Exploration stock, declining losses from our unconsolidated Indonesian joint venture and declining foreign currency exchange losses account for the largest portion of the change.

     Income taxes. Our effective tax rate for the first six months of fiscal 2004 (before the $22.1 million charge for the catch-up entry for the change in multi-client amortization policy) was 31% compared to 41% for the first six months of fiscal 2003. The 31% effective rate is based upon the annual expected rate (excluding the effect of the multi-client amortization change) using the expected mix of income by jurisdiction. The lower rate compared to the prior fiscal year is due to the current use of previously unbenefited loss carryforwards and other tax credits.

12

Liquidity and capital resources

Cash flow and liquidity

     Our internal sources of liquidity are cash, cash equivalents and cash flow from operations. External sources include public financing, equity sales, equipment financing, our revolving loan facility, and trade credit. We believe that our current cash balance and cash flow from operations will be adequate to meet our liquidity needs for fiscal 2004. However, key elements of our forecasted cash flow are shelf sales of multi-client surveys and contract acquisition work. Should these not occur at forecasted levels we would need to curtail planned discretionary spending. While we believe that we have adequate sources of funds to meet our liquidity needs, our ability to meet our obligations depends on our future performance, which, in turn, is subject to many factors beyond our control. Key internal factors affecting future results include utilization levels of acquisition and processing assets and the level of multi-client data library licensing, all of which are driven by the external factors of exploration spending and, ultimately, underlying commodity prices.

     Net cash provided by operating activities decreased by $3.7 million for the first six months of 2004 as compared to the first six months of the prior fiscal year due to increases in working capital in the current fiscal year. Net cash used by investing activities decreased by $14.5 million primarily due to the $9.3 million used for the purchase of Hampson-Russell in fiscal 2003 and a $5.3 million decrease in our multi-client investment in the current year. Cash flow for the first six months of fiscal 2004 was enhanced by $2.0 million from the sale of (RC)2. Our capital expenditure estimate for fiscal 2004 is approximately $43 million and will be spent on replacement and upgrading of existing equipment, with very little spent on capacity expansion. For fiscal 2004, we are forecasting approximately $130 million to $140 million cash investment in our data library. We expect to fund these investments from our current cash balance and from internally generated cash flows. Net cash provided by financing activities decreased from $71.7 million in the first six months of fiscal 2003 to a use of cash of $11.6 million in the first six months of fiscal 2004. In the prior fiscal year, we entered into the Credit Agreement to satisfy the obligations under the previous credit agreement and the Senior Notes, while in the current fiscal year we have paid down $13.1 million of this debt.

     Free cash flow from operations is an important measure of liquidity for us. We define free cash flow as cash from operating activities less cash multi-client spending and capital expenditures. This non-GAAP liquidity measure is useful as an addition to the most directly comparable GAAP measure of “net cash provided by operating activities” because free cash flow includes investments in operational assets and therefore presents a more complete picture of net cash flow from ongoing operations. This measure excludes items such as proceeds from the disposal of assets, cash paid for acquisitions and all financing activities. Some portion of projected positive free cash flow is committed to items such as debt repayment obligations and so it is not a measure of residual cash flow available for discretionary expenditures.

     Our free cash flow for the first six months of fiscal 2004 was positive due to decreased investment in multi-client library. We intend to manage our business to achieve positive free cash flow for fiscal 2004 by maintaining flexibility in our capital and multi-client investments and generally spending within the constraints established by our operational cash flow.

     A reconciliation of free cash flow to net cash provided by operating activities is presented in the following table:

	Six Months Ended
	January 31,
	2004			2003
	(In thousands)
Net cash provided by operating activities	$	89,002		$	92,739
Multi-client expenditures, net cash		(70,315	)		(75,587	)
Capital expenditures		(13,557	)		(12,967	)
Free cash flow	$	5,130		$	4,185

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     The following represents our financial contractual obligations and commitments as of January 31, 2004 for the specified periods:

	Payments Due
									Greater
Contractual Cash Obligations	Total		Less than 1 year		1 – 3 years		3 – 5 years		than 5 years
					(In thousands)
Payments due for operating lease obligations	$	140,004	$	37,026	$	50,572	$	21,111	$	31,295
Scheduled principal payments under debt obligations		181,123		713		29,475		150,935
Forward exchange contracts		1,104		1,104
Potential payments under letters of credit		3,142		2,705		437
1Subsequent to the sale of the new convertible notes, payment under the credit agreement are as follows:	$	181,123	$	129,155	$	11,003	$	40,965

Debt structure

     On February 14, 2003, we entered into a Credit Agreement (the “Credit Agreement”) with Deutsche Bank AG, New York Branch, as Administrative Agent, Deutsche Bank AG, Canada Branch, as Canadian Administrative Agent, and certain other lending institutions. The Credit Agreement provides term financing of $195.0 million under term A, term B and term C tranches (the “Term Loans”), a revolving loan facility aggregating $55.0 million, including a facility for swing line loans of up to $10.0 million and the issuance of letters of credit in an aggregate amount of up to $40.0 million. As of January 31, 2004, there were $3.1 million in letters of credit outstanding, leaving $51.9 million available for borrowings. Among other restrictions, the Credit Agreement prohibits us from paying cash dividends. Proceeds from the Term Loans were used to satisfy the obligations under our previous credit agreement and our Senior Notes.

     The term A loan was in the original principal amount of $30.0 million, matures in February 2006, and requires quarterly interest payments at a rate, at our election, of LIBOR plus a margin ranging from 3.5% to 4.0% or a base rate plus a margin ranging from 2.25% to 2.75%. These margins are based on certain of our financial ratios. The term B loan was in the original principal amount of $125.0 million, matures in February 2007, and requires quarterly interest payments at a rate, at our election, of LIBOR plus 5.0%, subject to a 2% LIBOR floor or a base rate plus 3.75%. The term C loan was in the original principal amount of $40.0 million, matures in February 2008, and requires quarterly interest payments at a rate, at our election, of LIBOR plus 7.5%, subject to a 3% LIBOR floor or a base rate plus 6.25%.

     The term A and term B loans required quarterly combined principal payments of $387,500 representing 0.25% of the initial principal balances. Should there be an event of default or if an unmatured event of default exists, or the credit rating of any of the debt is below Moody’s Ba2 or S&P’s BB, or our leverage ratio as of the last day of the most recent excess cash flow calculation period rises above certain levels, the term A and B loans also require principal payments of 50% of the prior fiscal year’s cash flow, calculated as per the loan agreement. This payment is due 100 days after the end of the fiscal year and results in a ratable reduction of the future required quarterly principal payments. As our lowest debt rating by Moody’s is below the minimum level, we paid $12.4 million of principal in November 2003 related to the company’s cash flow from January 1, 2003 through July 31, 2003. Based upon this payment, our required quarterly combined principal payment was reduced to $356,371. Future excess cash flow payments of this type, if any, will be based on cash flow for full fiscal years. In March 2004, we sold $155.0 million of convertible notes and used approximately $129.0 million of the proceeds to repay in full the Term C loan and to prepay portions of the Term A and B loans. After application of these payments, the outstanding balance on the Term A and B loans was $10.1 million and $42.0 million, respectively. See Note 9, “Subsequent events” of Notes to Consolidated Financial Statements for a description of our recently issued convertible notes.

     Loans made under the revolving loan facility, including swing-line loans, bear interest at a variable rate determined on the date of borrowing that is related to various base rates and margins depending upon our leverage ratio and the location of the borrowing. The revolving loan facility expires in February 2006.

14

     Borrowings under the Credit Agreement are secured by assets, including equipment, vehicles, multi-client data library, intellectual property, and stock of certain material subsidiaries, owned by us and certain of our subsidiaries. At January 31, 2004, the carrying value of the secured assets, including intercompany receivables, was $1.1 billion. The Credit Agreement and related documents contain a number of covenants, including financial covenants relating to interest coverage, leverage and net worth. At January 31, 2004 we were in compliance with these covenants.

Off-balance sheet instruments

     Our limited hedging program consists of off-balance sheet instruments to fix the U.S. dollar value of foreign currency payments to be made under a Norwegian vessel charter and interest rate swap contracts that effectively fix the interest rate on $80.0 million of our variable rate long–term debt. None of these hedges are critical to our operations but they reduce our exposure to currency and interest rate fluctuations and allow us to better plan our future cash flows. These instruments are described in detail in Item 3, Quantitative and Qualitative Disclosures Regarding Market Risk, as well as in Note 6 of Notes to Consolidated Financial Statements.

Critical accounting policies

     While all of our accounting policies are important in assuring that we adhere to current accounting standards, certain policies are particularly important due to their impact on our financial statements. These are described in detail in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Significant Accounting Policies included in our Annual Report on Form 10-K for the fiscal year ended July 31, 2003 which description is incorporated herein by reference. Since our last annual filing, we have changed our accounting policy regarding the amortization of our multi-client data library. This new policy is described below.

Multi-client data library

     In our multi-client data library business, we collect and process geophysical data for our own account and retain all ownership rights. We license the data to multiple clients on a non-transferable basis. We capitalize the costs associated with acquiring and processing the multi-client data on a survey-by-survey basis (versus a pooled basis). We amortize these costs using the sales forecast method, but require a minimum amortization expense equal to that which would have been recorded had the survey been amortized over a five-year period on a straight line basis. The sales forecast method amortizes the capitalized cost of multi-client data in the period revenue is recognized in an amount equal to the period revenue multiplied by the percentage of total estimated costs to total estimated revenue. Therefore, multi-client margins recognized in any given period are the product of estimated costs and estimated sales and may not reflect the ultimate cash margins recognized from a survey. We periodically review the carrying value of the multi-client data library to assess whether there has been a permanent impairment of value and then record losses when it is determined that estimated sales will not be sufficient to cover the carrying value of the asset.

     Until August 1, 2003, we required a minimum amortization of surveys only during the last twenty-four months of book life, versus from the date of survey completion as we currently require. This change in policy resulted in a charge of $22.1 million in the current year as a catch-up adjustment to multi-client amortization and is included in cost of services on the “Consolidated Statements of Operations and Comprehensive Income (Loss)”.

Accounting policies not yet adopted

     In December 2003, the Financial Accounting Standards Board issued FIN 46R (A revision to FIN 46 (Consolidation of Variable Interest Entities)). FIN 46R replaces FIN 46 and provides additional clarification on the application of ARB No. 51, Consolidated Financial Statements, to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. We will adopt FIN 46R on April 30, 2004. Adoption will not have a material effect on our financial position or results or operations, however, it will require consolidation of our 80% owned joint venture currently accounted for under the equity method. The 80% owned joint venture provides processing and acquisition services and sells licenses to multi-client library.

15

     In December 2003, the Financial Accounting Standards Board issued SFAS No. 132 (Revised 2003), Employer’s Disclosures about Pension and Other Postretirement Benefits. This statement retains the disclosures required by SFAS No. 132 and adds additional disclosures. Those disclosures include information describing the types of plan assets, investment strategy, measurement date(s), plan obligations, cash flows, and components of net periodic benefit cost recognized during interim periods. We will adopt SFAS No. 132 (Revised 2003) in the third quarter of fiscal 2004.

Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk

     At January 31, 2004, we had limited market risk related to foreign currencies. In March 2001, we entered into a contract requiring payments in Norwegian kroner to charter the seismic vessel M/V Seisquest. The contract requires 36 monthly payments commencing on June 1, 2001. To protect against exposure to exchange rate risk, we entered into multiple forward contracts as cash flow hedges fixing our exchange rates for Norwegian kroner to the U.S. dollar. The total fair value of the open forward contracts at January 31, 2004 in U.S. dollars was $1.4 million.

     We are exposed to interest rate risk based upon fluctuations in the LIBOR rate. To partially mitigate this risk, on February 25, 2003, we entered into interest rate swaps in the notional amount of $80.0 million, effectively hedging 41% of our exposure to interest rate fluctuations for the two-year term of the swaps. These swaps had no value at inception.

     Details of the interest rate swaps are summarized in the following table:

							LIBOR
Tranche Hedged	Amount		Term	Pay %		Receive	Floor
	(in thousands)
Term A	$	25,000	24 months		1.86	LIBOR	None
Term B	$	55,000	24 months		2.49	LIBOR		2	%

     The fair value of the swaps on January 31, 2004 was a negative $384,000 and is included in other accrued liabilities on the “Consolidated Balance Sheets”.

Item 4. Controls and Procedures

     Our management, including the Chief Executive Officer and the principal financial officer, has conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Exchange Act Rule 13a-15. Based on that evaluation, our Chief Executive Officer and the principal financial officer concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms. There have been no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) identified in connection with the evaluation described above that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

16

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

     On occasion, we are named as a defendant in litigation relating to our normal business operations. Although we are insured against various business risks to the extent we believe prudent, there is no assurance that the nature and amount of such insurance will be adequate in every case.

Item 4. Submission of Matters to a Vote of Security Holders

     On December 2, 2003, at the Annual Meeting of Stockholders, the stockholders voted, as follows, to elect seven directors of Veritas DGC Inc.

Name	Votes For		Votes Withheld
Loren K. Carroll		25,420,048		2,985,697
Clayton P. Cormier		25,814,263		2,591,482
James R. Gibbs		25,280,477		3,125,268
Stephen J. Ludlow		26,204,254		2,201,491
Brian F. MacNeill		25,529,611		2,876,134
Jan Rask		25,816,413		2,859,332
David B. Robson		25,616,284		2,789,461

     The stockholders voted, as follows, for approval of the amendment of our Restated Certificate of Incorporation to increase our authorized common stock to 78.5 million shares.

Votes For
Votes Withheld
Abstentions 23,157,685
5,231,253
16,806

     The stockholders voted, as follows, for approval of the amendment and restatement of our 1997 Employee Stock Purchase Plan to among other things increase the number of shares authorized under the plan to 2.0 million shares.

Votes For
Votes Withheld
Abstentions 23,944,590
1,526,358
253,985

     The stockholders voted, as follows, for consent to a stock option exchange program under which employee stock options could be exchanged.

Votes For
Votes Withheld
Abstentions 19,328,021
6,164,968
231,943

17

Item 6. Exhibits and Reports on Form 8-K

a) Exhibits filed with this report:

Exhibit
No.	Description
10.1	—	Indenture dated March 3, 2004 between Veritas DGC Inc. and U.S. Bank National Association, as trustee (Exhibit 4.2 to Veritas DGC Inc.’s Current Report on Form 8-K dated March 3, 2004 is incorporated herein by reference.)
*10.2	—	Third Amendment to Credit Agreement dated February 20, 2004 by and among Veritas DGC Inc., Veritas DGC Limited, Veritas Energy Services Inc., Veritas Energy Services Partnership, Deutsche Bank AG, New York Branch, as Administrative Agent, Deutsche Bank AG, Canada Branch, as Canadian Administrative Agent, and the various lending institutions named therein.
*10.3	—	Employee Agreement between Veritas DGC Inc. and Thierry Pilenko dated January 26, 2004.
*10.4	—	Retirement Agreement between Veritas DGC Inc. and David B. Robson dated January 1, 2004.
*31.1	—	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer.
*31.2	—	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by principal financial officer.
*32.1	—	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer.
*32.2	—	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by principal financial officer.

* filed herewith

b) Reports on Form 8-K

     On November 25, 2003, we filed a Current Report on Form 8-K reporting information under Item 12, Results of Operations and Financial Condition.

18

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 12^th day of March 2004.

Veritas DGC Inc.
By:	/s/ Thierry Pilenko
	THIERRY PILENKO
	Chairman of the Board and Chief Executive Officer

/s/ Vincent M. Thielen  

VINCENT M. THIELEN 

Vice President, Corporate Controller (Chief Accounting Officer) 

19

EXHIBIT INDEX

Exhibit
No.	Description
10.1	—	Indenture dated March 3, 2004 between Veritas DGC Inc. and U.S. Bank National Association, as trustee (Exhibit 4.2 to Veritas DGC Inc.’s Current Report on Form 8-K dated March 3, 2004 is incorporated herein by reference.)
*10.2	—	Third Amendment to Credit Agreement dated February 20, 2004 by and among Veritas DGC Inc., Veritas DGC Limited, Veritas Energy Services Inc., Veritas Energy Services Partnership, Deutsche Bank AG, New York Branch, as Administrative Agent, Deutsche Bank AG, Canada Branch, as Canadian Administrative Agent, and the various lending institutions named therein.
*10.3	—	Employee Agreement between Veritas DGC Inc. and Thierry Pilenko dated January 26, 2004.
*10.4	—	Retirement Agreement between Veritas DGC Inc. and David B. Robson dated January 1, 2004.
*31.1	—	Certification pursuant to Section 302 of the Sarbanes- Oxley Act of 2002 by Chief Executive Officer.
*31.2	—	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by principal financial officer.
*32.1	—	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer.
*32.2	—	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by principal financial officer.

* filed herewith

20

EX-10.2

                                                                    EXHIBIT 10.2

                       THIRD AMENDMENT TO CREDIT AGREEMENT

         THIS THIRD AMENDMENT TO CREDIT AGREEMENT, dated as of February 20, 2004
(this "Amendment"), is by and among VERITAS DGC INC., a Delaware corporation
("Company"), VERITAS ENERGY SERVICES INC., an Alberta corporation ("VES"), and
VERITAS ENERGY SERVICES PARTNERSHIP, an Alberta general partnership ("VESP";
collectively, VES and VESP are referred to herein as "Canadian Borrowers"),
VERITAS DGC LIMITED, a company incorporated under the laws of England and Wales
("UK Borrower"; collectively, Company, Canadian Borrowers and UK Borrower are
referred to herein as "Borrowers" and individually as a "Borrower"), certain
financial institutions party to the Credit Agreement referred to below (the
"Lenders"), DEUTSCHE BANK AG, NEW YORK BRANCH, in its capacity as administrative
agent ("Administrative Agent"), and DEUTSCHE BANK AG, CANADA BRANCH, in its
capacity as Canadian administrative agent ("Canadian Administrative Agent";
Administrative Agent and Canadian Administrative Agent are collectively referred
to herein as "Agents").

                                   BACKGROUND

         A.       Borrowers, the Lenders, and Agents are parties to that certain
Credit Agreement dated as of February 14, 2003 (as amended, restated,
supplemented or otherwise modified and in effect from time to time, the "Credit
Agreement").

         B.       Borrowers have requested Agents and the Lenders to amend the
Credit Agreement in certain respects as set forth herein, and Agents and the
Lenders are agreeable to the same, subject to the terms and conditions set forth
herein.

                                    AGREEMENT

         NOW THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:

         SECTION 1. DEFINED TERMS. Unless otherwise defined herein, all
capitalized terms used herein shall have the meanings given them in the Credit
Agreement.

         SECTION 2. AMENDMENTS TO CREDIT AGREEMENT.

                  (a)      Section 1.1 of the Credit Agreement is hereby amended
         by inserting the following definitions in their proper alphabetical
         sequence:

                           "Convertible Note Offering" means the offering and
                  sale by the Company of the Convertible Notes on or prior to
                  May 31, 2004.

                           "Convertible Notes" means the Company's unsecured
                  convertible notes issued and sold in the Convertible Note
                  Offering (i) in an aggregate principal amount up to $155
                  million, (ii) with a stated maturity no earlier than one (1)
                  year after the latest maturity date for the Facilities, (iii)
                  having market terms substantially similar to those for
                  comparable issuances, (iv) on terms and conditions not more
                  restrictive to the Company and its Subsidiaries than those set
                  forth in this Agreement and (v) otherwise on terms and
                  conditions and in form and substance satisfactory to
                  Administrative Agent.

                  (b)      Section 3.2(e) of the Credit Agreement is hereby
         amended by deleting the reference to "Sections 4.4(c), (e) or (f)" and
         inserting a reference to "Sections 4.4(c), (e), (f) or (h)" in lieu
         thereof.

                  (c)      Section 4.4 of the Credit Agreement is hereby amended
         by inserting the following subsection (h) thereto at the end of such
         Section:



                  "(h)     MANDATORY PREPAYMENT WITH PROCEEDS OF CONVERTIBLE
         NOTE OFFERING. No later than the first Business Day after receipt
         thereof by the Company or any Subsidiary, an amount equal to 100% of
         the Net Offering Proceeds of the Convertible Note Offering shall be
         applied as a mandatory prepayment of principal of the Loans pursuant to
         the terms of Section 4.5(a); provided that, notwithstanding the
         foregoing, within 30 days of the closing of the Convertible Note
         Offering the Company may apply up to the lesser of $20,000,000 or 20%
         of the Net Offering Proceeds of the Convertible Note Offering toward a
         repurchase of the Company's Capital Stock as permitted under Section
         8.5(c)."

         (d)      Section 4.5(a) of the Credit Agreement is hereby amended and
restated in its entirety as follows (emphasis added in this Amendment for
convenient reference of inserted text only):

                  "(a)     PREPAYMENTS. Except as expressly provided in this
         Agreement, all prepayments of principal made by any Borrower pursuant
         to Section 4.4(c) through (f) shall be applied (i) first, to the
         payment of the unpaid principal amount of the Term Loans constituting
         First Priority Debt on a pro rata basis until paid in full (ii) second,
         to the pro rata payment of the then outstanding balance of the UK
         Revolving Loans, the Domestic Revolving Loans and Canadian Revolving
         Loans (with corresponding permanent reductions to such Commitments)
         until paid in full and the cash collateralization of LC Obligations,
         (iii) third, to the payment of the unpaid principal amount of the Term
         C Loans until paid in full, (iv) within each of the foregoing Loans,
         first to the payment of Base Rate Loans and second to the payment of
         Eurocurrency Loans; and (v) with respect to Eurocurrency Loans, in such
         order as such Borrower shall request (and in the absence of such
         request, as Administrative Agent shall determine). All prepayments of
         principal made by Borrowers pursuant to Section 4.4(h) shall be applied
         (i) first, to the payment of the unpaid principal amount of the Term C
         Loans until paid in full, (ii) second, to the payment of the unpaid
         principal amount of the Terms A Loans and Term B Loans on a pro rata
         basis, (iii) within each of the foregoing Loans, first to the payment
         of Base Rate Loans and second to the payment of Eurocurrency Loans and
         (iv) with respect to Eurocurrency Loans, in such order as such Borrower
         shall request (and in the absence of such request, as Administrative
         Agent shall determine). Each prepayment of Term Loans constituting
         First Priority Debt made pursuant to Section 4.4 shall be allocated to
         such Term Loans based on the aggregate principal amount of the
         Scheduled Term Repayments based upon their applicable Term Pro Rata
         Share and pro rata to each Scheduled Term Repayment. Each prepayment of
         the Term C Loans shall be applied to reduce the principal amount
         thereof. If any prepayment of Eurocurrency Loans made pursuant to a
         single Borrowing shall reduce the outstanding Loans made pursuant to
         such Borrowing to an amount less than the Minimum Borrowing Amount,
         such Borrowing shall immediately be converted into Base Rate Loans. All
         prepayments shall include payment of accrued interest on the principal
         amount so prepaid, shall be applied to the payment of interest before
         application to principal and shall include amounts payable, if any,
         under Section 3.5."

         (e)      Section 8.2 of the Credit Agreement is hereby amended by
deleting the word "and" at the end of clause (k), changing the existing
subsection (l) to subsection (m) and adding the following new subsection (l)
thereto:

                  "(l)     Indebtedness pursuant to the Convertible Notes; and"

         (f)      Section 8.5(c) of the Credit Agreement is hereby amended by
inserting the following text at the end of such Section:

                  ", which amount shall increase, dollar for dollar but in no
         event by more than $10,000,000, on the first anniversary of the initial
         sale of Convertible Notes, to the extent that the Net Offering Proceeds
         of such sale are used to repurchase the Company's Capital Stock prior
         to such date"

         SECTION 3. FEES. Borrowers agree jointly and severally to pay all
reasonable costs and expenses of Administrative Agent in connection with the
negotiation, preparation, printing, typing, reproduction, execution and

                                       2



delivery of this Amendment and all other documents furnished pursuant hereto or
in connection herewith, including without limitation, the reasonable fees and
out-of-pocket expenses of Winston & Strawn LLP, special counsel to
Administrative Agent, as well as the reasonable fees and out-of-pocket expenses
of any local counsel retained by Administrative Agent relative hereto, other
Attorney Costs, independent public accountants and other outside experts
retained by Administrative Agent in connection with the administration of this
Amendment.

         SECTION 4. CONDITIONS PRECEDENT TO EFFECTIVENESS OF AGREEMENT. This
Amendment shall become effective upon the date (the "Third Amendment Effective
Date") each of the following conditions have been satisfied:

                  (a)      Third Amendment. Borrowers, Agents, the Majority
Lenders of the Term A Facility, the Majority Lenders of the Term B Facility and
the Required Lenders shall have executed and delivered this Amendment.

                  (b)      Convertible Note Offering. The Convertible Notes
shall have been offered and sold by the Company in the Convertible Note
Offering.

                  (c)      No Defaults. No Event of Default or Unmatured Event
of Default under the Credit Agreement (as amended hereby) shall have occurred
and be continuing.

                  (d)      Representations and Warranties. The representations
and warranties of each Borrower contained in this Amendment, the Credit
Agreement (as amended hereby) and the other Loan Documents shall be true and
correct in all material respects as of the Third Amendment Effective Date, with
the same effect as though made on such date, except to the extent that any such
representation or warranty expressly relates to an earlier date, in which case
such representation or warranty shall be true and correct in all material
respects as of such earlier date.

                  (e)      Payment of Fees. Borrowers shall have paid in full
(i) to Administrative Agent the fees set forth in Section 3 hereof and (ii) to
the Administrative Agent for the account of each Lender executing and delivering
its signature page to this Amendment on or prior to 1:00 p.m. (New York City
time) on Friday, February 20, 2004, a fee equal to 0.10% of the aggregate amount
of such Lender's Commitments.

                  (f)      Reaffirmation of Guaranty. Each Guarantor shall have
executed and delivered a Reaffirmation of Guaranty in the form attached as
Exhibit A hereto.

                  (g)      Other. Receipt by Agents or any Lender of such other
documents, instruments and certificates as Agents or such Lender shall have
reasonably requested.

         SECTION 5. REPRESENTATIONS AND WARRANTIES.

                  (a)      Each Borrower represents and warrants (i) that it has
full corporate (or equivalent) power and authority to enter into this Amendment
and perform its obligations hereunder in accordance with the provisions hereof,
(ii) that this Amendment has been duly authorized, executed and delivered by
such Borrower and (iii) that this Amendment constitutes the legal, valid and
binding obligation of such Borrower, enforceable against such Borrower in
accordance with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or law).

                  (b)      Each Borrower represents and warrants that the
following statements are true and correct, in each case after giving effect to
this Amendment:

                           (i)      The representations and warranties contained
                  in the Credit Agreement and each of the other Loan Documents
                  are and shall each be true and correct in all material
                  respects on and as of the Third Amendment Effective Date to
                  the same extent as though made on and as of that date, except
                  to the extent such representations and warranties expressly
                  relate to an earlier date, in which case they were true and
                  correct in all material respects on and as of such earlier
                  date.

                                       3



                           (ii)     No Event of Default or Unmatured Event of
                  Default shall have occurred and be continuing.

                           (iii)    Neither the execution, delivery and
                  performance by such Borrower of this Amendment, nor compliance
                  by it with the terms and provisions hereof, nor the
                  consummation of the transactions described herein (A) will
                  contravene any provision of any Requirement of Law applicable
                  to such Borrower, (B) will violate or result in any breach of
                  or constitute a tortious interference with any of the terms,
                  covenants, conditions or provisions of, or constitute a
                  default under, or result in the creation or imposition of (or
                  the obligation to create or impose) any Lien (except pursuant
                  to the Security Documents) upon any of the property or assets
                  of such Borrower pursuant to the terms of any material
                  Contractual Obligation to which such Borrower is a party or by
                  which it or any of its property or assets is bound or to which
                  it may be subject, (C) will violate any provision of any
                  Organizational Document of such Borrower or (D) require any
                  approval of stockholders or any approval or consent of any
                  Person (other than a Governmental Authority).

                           (iv)     No order, consent, approval, license,
                  authorization or validation of, or filing, recording or
                  registration with, or exemption by, any Governmental
                  Authority, is required to authorize, or is required in
                  connection with, (A) the execution, delivery and performance
                  of this Amendment or (B) the legality, validity, binding
                  effect or enforceability of this Amendment.

         SECTION 6. REFERENCES TO AND EFFECT ON THE CREDIT AGREEMENT.

                  (a)      On and after the Third Amendment Effective Date each
reference in the Credit Agreement to "this Agreement," "hereunder," "hereof,"
"herein," or words of like import, and each reference to the Credit Agreement in
the Loan Documents and all other documents (the "Ancillary Documents") delivered
in connection with the Credit Agreement shall mean and be a reference to the
Credit Agreement as amended hereby.

                  (b)      Except as specifically amended above, the Credit
Agreement, the Loan Documents and all other Ancillary Documents shall remain in
full force and effect and are hereby ratified and confirmed.

                  (c)      The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of the
Lenders or Administrative Agent under the Credit Agreement, the Loan Documents
or the Ancillary Documents.

         SECTION 7. EXECUTION IN COUNTERPARTS. This Amendment may be executed in
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument. Delivery of an executed counterpart of a signature page of this
Amendment by facsimile transmission shall be effective as delivery of a manually
executed counterpart of this Amendment.

         SECTION 8. GOVERNING LAW. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES
SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF SAID
STATE, INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS
LAW BUT EXCLUDING ALL OTHER CHOICE OF LAW AND CONFLICTS OF LAWS RULES.

         SECTION 9. HEADINGS. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purposes.

         SECTION 10. REAFFIRMATION. Company hereby unconditionally consents to
the terms of this Amendment and fully ratifies and affirms its Guaranty set
forth in Article XIV of the Credit Agreement, taking into account this
Amendment.

                            [signature pages follow]

                                       4



         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective officers thereunto duly authorized as of the
date above first written.

                                    VERITAS DGC INC.

                                    By: ________________________________________
                                        David B. Robson
                                        Chairman & Chief Executive Officer

                                    VERITAS DGC LIMITED

                                    By: ________________________________________
                                        Nicholas A.C. Bright
                                        Managing Director

                                    VERITAS ENERGY SERVICES INC.

                                    By: ________________________________________
                                        David B. Robson
                                        President

                                    VERITAS ENERGY SERVICES PARTNERSHIP,
                                    by its partners,

                                    VERITAS ENERGY SERVICES INC.

                                    By: ________________________________________
                                        David B. Robson
                                        President

                                    TIME SEISMIC EXCHANGE LTD.

                                    By: ________________________________________
                                        Richard E. Earle
                                        President

             Signature Page -- Third Amendment to Credit Agreement
                                VERITAS DGC INC.



                                    DEUTSCHE BANK AG, NEW YORK BRANCH,
                                    in its individual capacity and as
                                    Administrative Agent

                                    By: ________________________________________
                                        Name:
                                        Title:

                                    By: ________________________________________
                                        Name:
                                        Title:

                                    DEUTSCHE BANK AG, CANADA BRANCH,
                                    as Canadian Administrative Agent

                                    By: ________________________________________
                                        Name:

                                        Title:

                                    By: ________________________________________
                                        Name:
                                        Title:

             Signature Page -- Third Amendment to Credit Agreement
                                VERITAS DGC INC.



                                    HSBC BANK CANADA

                                    By: ________________________________________
                                        Name:
                                        Title:

             Signature Page -- Third Amendment to Credit Agreement
                                VERITAS DGC INC.



                                    WELLS FARGO BANK, N.A.

                                    By: ________________________________________
                                        Name:
                                        Title:

             Signature Page -- Third Amendment to Credit Agreement
                                VERITAS DGC INC.



                                    BANK ONE, NA, with its main offices in
                                    Chicago, Illinois

                                    By: ________________________________________
                                        Name:
                                        Title:

             Signature Page -- Third Amendment to Credit Agreement
                                VERITAS DGC INC.



                                    NATEXIS BANQUES POPULAIRES

                                    By: ________________________________________
                                        Name:
                                        Title:

             Signature Page -- Third Amendment to Credit Agreement
                                VERITAS DGC INC.



                                    ABELCO FINANCE LLC

                                    By: ________________________________________
                                        Name:
                                        Title:

             Signature Page -- Third Amendment to Credit Agreement
                                VERITAS DGC INC.



                                    ____________________________________________
                                              [Name of Institution]

                                    By: ________________________________________
                                        Name:
                                        Title:

             Signature Page -- Third Amendment to Credit Agreement
                                VERITAS DGC INC.



                                    EXHIBIT A

                            REAFFIRMATION OF GUARANTY

             Signature Page -- Third Amendment to Credit Agreement
                                VERITAS DGC INC.



                            REAFFIRMATION OF GUARANTY

         Each of the undersigned acknowledges receipt of the Credit Agreement
dated as of February 14, 2003, as amended by the Third Amendment to Credit
Agreement dated as of February 20, 2004 (as so amended, the "Credit Agreement"),
by and among Veritas DGC Inc., a Delaware corporation, Veritas Energy Services
Inc., an Alberta corporation, Veritas Energy Services Partnership, an Alberta
general partnership, Veritas DGC Limited, a company incorporated under the laws
of England and Wales, certain financial institutions party thereto, Deutsche
Bank AG, New York Branch, in its capacity as administrative agent, and Deutsche
Bank AG, Canada Branch, in its capacity as Canadian administrative agent and
each of the undersigned consents to the Credit Agreement (as so amended) and
each of the amendments, referenced therein, and hereby reaffirms its obligations
under its respective Guaranty (as such term is defined in the Credit Agreement)
executed by the undersigned.

Dated as of February 20, 2004

HAMPSON-RUSSELL LIMITED PARTNERSHIP,
by its general partner Hampson-Russell GP Inc.

By: __________________________________________
    Brian Russell
    Vice President

VERITAS ENERGY SERVICES PARTNERSHIP,
by its partners,

         VERITAS ENERGY SERVICES INC.

         By: __________________________________
             David B. Robson
             President

         TIME SEISMIC EXCHANGE LTD.

         By: __________________________________
             Richard E. Earle
             President

VERITAS ENERGY SERVICES INC.

By: ___________________________________________
    David B. Robson
    President

             Signature Page -- Third Amendment to Credit Agreement
                                VERITAS DGC INC.



TIME SEISMIC EXCHANGE LTD.

By: ___________________________________________
    Richard E. Earle
    President

VERITAS DGC LIMITED

By: ___________________________________________
    Nicholas A.C. Bright
    Managing Director

VERITAS GEOPHYSICAL CORPORATION

By: ___________________________________________
    Timothy L. Wells
    President

EUROSEIS, INC.

By: ___________________________________________
    Timothy L. Wells
    President

VERITAS DGC LAND INC.

By: ___________________________________________
    Craig P. Rothwell
    President

VIKING MARITIME INC.

By: ___________________________________________
    Timothy L. Wells
    President

             Signature Page -- Third Amendment to Credit Agreement
                                VERITAS DGC INC.



RC SURVIVOR CORP.

By: ___________________________________________
    Larry L. Worden
    Vice President

VERITAS DGC ASIA PACIFIC LTD.

By: ___________________________________________
    Timothy L. Wells
    President

             Signature Page -- Third Amendment to Credit Agreement
                                VERITAS DGC INC.

EX-10.3

                                                                    EXHIBIT 10.3

                              EMPLOYMENT AGREEMENT

         This Employment Agreement (this "Agreement") is made and entered into
by and between Veritas DGC Inc., a Delaware corporation (hereinafter referred to
as "Employer"), and Thierry Pilenko, an individual currently resident in Paris,
France (hereinafter referred to as "Employee"), effective as of January 26, 2004
(the "Effective Date").

                                  WITNESSETH:

         WHEREAS, attendant to Employee's employment by Employer, Employer and
Employee wish for there to be a complete understanding and agreement between
Employer and Employee with respect to, among other terms, Employee's duties and
responsibilities to Employer; the compensation and benefits owed to Employee;
the fiduciary duties owed by Employee to Employer; Employee's obligation to
avoid conflicts of interest, disclose pertinent information to Employer, and
refrain from using or disclosing Employer's information; and the term of
Employee's employment;

         WHEREAS, Employer considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing its best
interests and the best interests of its stockholders;

         WHEREAS, Employer recognizes that, because Employer is a publicly held
company and as is the case with many such companies, the possibility of a change
in control may exist and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the departure or
distraction of management personnel to the detriment of Employer and its
stockholders;

         WHEREAS, the Board of Directors of Employer (the "Board") has
determined that appropriate steps should be taken to reinforce and encourage the
continued attention and dedication of members of Employer's management,
including Employee, to their assigned duties without distraction in the face of
the potentially disturbing circumstances arising from the possibility of a
change in control of Employer;

         WHEREAS, Employer recognizes that Employee could suffer adverse
financial and professional consequences if a change in control of Employer were
to occur;

         WHEREAS, Employer and Employee wish to enter into this Agreement to,
among other things, protect Employee if a change in control of Employer occurs,
thereby encouraging Employee to remain in the employ of Employer and not to be
distracted from the performance of his duties to Employer by the possibility of
a change in control of Employer;

         NOW, THEREFORE, in consideration of the mutual promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Employer and Employee agree as
follows:



Section 1. General Duties of Employer and Employee.

                  (a)      Commencing on the Commencement Date (as defined in
Section 4) Employer agrees to employ Employee and Employee agrees to accept
employment by Employer and to serve Employer in an executive capacity as its
Chairman & Chief Executive Officer on the terms and conditions stated in this
Agreement. At the Commencement Date, Employee will report to the Board. The
powers, duties and responsibilities of Employee as Chairman & Chief Executive
Officer include those duties that are the usual and customary powers, duties and
responsibilities of such office, including those powers, duties and
responsibilities specified in Employer's Bylaws, and such other and further
duties appropriate to such position as may from time to time be assigned to
Employee by the Board or by any committee of the Board authorized to make such
assignments.

                  (b)      While employed hereunder, Employee will devote
substantially all reasonable and necessary time, efforts, skills and attention
for the benefit of and with his primary attention to the affairs of Employer in
order that he may faithfully perform his duties and obligations. The preceding
sentence will not, however, be deemed to restrict Employee from attending to
matters or engaging in activities not directly related to the business of
Employer, provided that (i) such activities or matters are reasonable in scope
and time commitment and not otherwise in violation of this Agreement, and (ii)
Employee will not become a director of any corporation or other entity
(excluding charitable or other non-profit organizations) without prior written
disclosure to, and consent of, Employer.

                  (c)      Employer's headquarters is currently located at 10300
Town Park, Houston, Texas (the "Employer's Headquarters").

                  (d)      Employee agrees and acknowledges that during the term
of this Agreement, he owes a fiduciary duty of loyalty, fidelity and allegiance
to act at all times in the performance of his duties in the best interests of
Employer and to do no act knowingly and intentionally in the performance of his
duties which would injure Employer's business, its interests or its reputation.

Section 2. Compensation and Benefits.

                  (a)      Employer will pay to Employee for the period
beginning on the Commencement Date and throughout the term of this Agreement, a
base salary at the rate of $450,000 per annum (such base salary as increased by
the Compensation Committee of the Board as hereinafter provided is referred to
herein as the "Base Salary"). The Compensation Committee of the Board will
review the Base Salary from time to time and, during the term of this Agreement,
may increase, but may not decrease, the Base Salary. The Base Salary will be
paid to Employee in equal installments every two weeks or on such other schedule
as Employer may establish from time to time for its management personnel.

                  (b)      Employer will pay to Employee a one-time Sign-On
Bonus in the amount of $75,000 as soon as practicable following the Commencement
Date.

                  (c)      During each fiscal year during the term of this
Agreement, Employee will be eligible to participate in that year's Veritas DGC
Inc. Key Contributor Incentive Plan (the

                                      -2-



"Key Contributor Plan") or other replacement incentive or bonus plan Employer
establishes for its key executives. Employee's "Target Payout" for incentive
bonus compensation under the Key Contributor Plan will be 75% of Base Salary
and, provided that the individual Employee objectives and company objectives are
met as required by the plan, Employee will be eligible to earn up to 150% of his
Base Salary as incentive bonus compensation under the Key Contributor Plan.

                  (d)      On the Commencement Date, Employee will be granted
options to purchase 120,000 shares of Employer's common stock, $.01 par value
("Common Stock") pursuant to the Veritas DGC Inc. Share Incentive Plan (or other
replacement equity compensation plan Employer establishes for its key
executives) ("Share Incentive Plan"). This initial grant (the "Initial Grant")
will vest in one-third increments on each of the first, second and third
anniversaries of the Commencement Date (as defined in Section 4). The options
granted pursuant to the Initial Grant shall be exercisable for five years from
the Commencement Date, provided they have vested prior to their exercise and
provided further that the five-year period may be shorter in the event
Employee's employment is terminated prior to exercise. The exercise price for
each share of Common Stock to be purchased pursuant to the Initial Grant shall
be the closing price for a share of Common Stock on the New York Stock Exchange
on the last trading day prior to the Commencement Date. All other terms of the
Initial Grant shall be as provided in the Share Incentive Plan and any grant
agreement entered into by Employee and Employer pursuant thereto. Employee will
be eligible for such additional option grants to purchase shares of Common Stock
pursuant to the terms of the Share Incentive Plan as the Compensation Committee
may, in its discretion, award from time to time.

                  (e)      From and after the Commencement Date and during the
term of this Agreement, Employee will be entitled to paid vacation of not less
than four (4) weeks each year. Vacation may be taken by Employee at the time and
for such periods as may be mutually agreed upon between Employer and Employee.

                  (f)      From and after the Commencement Date and during the
term of this Agreement, Employee will be reimbursed in accordance with
Employer's normal expense reimbursement policy for all of the actual and
reasonable costs and expenses incurred by him in the performance of his services
and duties hereunder, including, but not limited to, travel and entertainment
expenses. Employee will furnish Employer with all invoices and vouchers
reflecting amounts for which Employee seeks Employer's reimbursement under this
or any other paragraph of this Agreement.

                  (g)      From and after the Commencement Date and during the
term of this Agreement, Employee will be entitled to participate in all
insurance and retirement plans, incentive compensation plans (at a level
appropriate to his position) and such other benefit plans or programs as may be
in effect from time to time for the key management employees of Employer
including, without limitation, those related to savings and thrift, retirement,
employee stock purchase, nonqualified deferred compensation, welfare, medical,
dental, disability, salary continuance, accidental death, travel accident, life
insurance, incentive bonus, membership in business and professional
organizations, and reimbursement of business and entertainment expenses.

                                      -3-



                  (h)      From and after the Commencement Date and during the
term of this Agreement, Employee will be reimbursed for the cost of his
membership in a recreational/?social/?sports club in an amount not to exceed
$6,000 each year. Employee will also be reimbursed for the cost of his
initiation fee and monthly membership dues for a business luncheon club approved
by the Compensation Committee of the Board.

                  (i)      Employee will be reimbursed for the expense of
leasing a vehicle in an amount not to exceed $1,000 per month and for up to 24
months' duration.

                  (j)      Employer will, at its expense, provide counsel to
Employee in applying for an H-1B visa and a green card and shall bear all costs
in connection with applying for and obtaining an H-1B visa on Employee's behalf
and applying for and obtaining green card status for Employee and his family.

                  (k)      Employee will be provided additional compensation
equal to one month's Base Salary in order to defray Employee's start up living
expenses in the United States. Employer will reimburse Executive for the cost of
moving all reasonable household goods, using the most cost efficient method.
Employee will also be reimbursed the reasonable cost of temporary corporate
housing (up to two bedroom, fully furnished) that may be required in connection
with his relocation to the United States for a period of no more than six
months. Employee will also be reimbursed for the cost of economy class roundtrip
airfare from Paris, France to Houston, Texas for himself, his wife and children,
for the purpose of traveling to Houston to locate a house and schools. Employee
will also be reimbursed the normal closing costs associated with the purchase of
a home in the metropolitan Houston, Texas area.

                  (l)      All Base Salary, bonus and other payments made or
benefits provided by Employer to Employee pursuant to this Agreement will be
subject to such payroll and withholding deductions as may be required by law and
other deductions applied generally to employees of Employer for insurance and
other employee benefit plans in which Employee participates. Employee will be
reimbursed for the reasonable costs of preparation of his United States federal
income tax return and his French income tax return for the first two years
following the Effective Date.

                  (m)      Notwithstanding anything to the contrary herein, this
Agreement shall terminate if, within 120 days after the Effective Date, Employee
does not obtain an H-1B visa or otherwise obtain permission to work legally in
the United States for the Employer. In the event of such termination, (i)
Employer shall pay Employee within 120 days after the Effective Date a lump sum
payment of 145,000 Euros to compensate him for his attempted performance of this
Agreement; (ii) Employer shall reimburse Employee for his reasonable out of
pocket expenses incurred in connection with his attempted performance of this
Agreement (including but not limited to any travel and/or moving expenses); and
(iii) Employee shall continue to be bound by Sections 3(b) and 3(c) hereof and
the Employee Confidentiality and Intellectual Property Agreement executed
pursuant to Section 3(d). The payments thus made by Employer to Employee shall
be in complete satisfaction of any obligation whatsoever Employer may then have
to Employee. Without limiting the generality of the foregoing, and for the
avoidance of doubt, in the event of the termination of this Agreement prior to
the Commencement Date for failure to obtain the required permission to work in
the United States, Employee will not be

                                      -4-



entitled to any compensation or benefits under Sections 2(a)-(l) of this
Agreement nor will he be entitled to any severance or other benefits under
Section 6 of this Agreement.

Section 3. Fiduciary Duty; Confidentiality.

                  (a)      In keeping with Employee's fiduciary duties to
Employer, Employee agrees that he will not knowingly take any action that would
create a conflict of interest with Employer, or upon discovery thereof, allow
such a conflict to continue. In the event that Employee discovers that such a
conflict exists, Employee agrees that he will disclose to the Board any facts
which might involve a conflict of interest that has not been approved by the
Board.

                  (b)      As part of Employee's fiduciary duties to Employer,
Employee agrees to protect and safeguard Employer's information, ideas,
concepts, improvements, discoveries, and inventions and any proprietary,
confidential and other information relating to Employer or its business to the
extent such information is in his possession or under his control (collectively,
"Confidential Information") and, except as may be required by Employer, Employee
will not knowingly, either during his employment by Employer or thereafter,
directly or indirectly, use for his own benefit or for the benefit of another,
or disclose to another, any Confidential Information, except (i) with the prior
written consent of Employer; (ii) in the course of the proper performance of
Employee's duties under this Agreement; (iii) for information that becomes
generally available to the public other than as a result of the unauthorized
disclosure by Employee; (iv) for information that becomes available to Employee
on a nonconfidential basis from a source other than Employer or its affiliated
companies who is not bound by a duty of confidentiality to Employer; or (v) as
may be required by any applicable law, rule, regulation, order, or legal
process.

                  (c)      Upon termination of his employment with Employer (or,
if applicable, upon the expiration of 120 days from the Effective Date without
Employee's having obtained an H-1B visa), Employee will immediately deliver to
Employer all documents in Employee's possession or under his control which
embody any of Employer's Confidential Information.

                  (d)      In addition to the foregoing provisions of this
Section 3, and effective as of the Commencement Date, Employee agrees to enter
into an Employee Confidentiality and Intellectual Property Agreement with
Employer, a copy of which is attached hereto as Exhibit A.

Section 4. Term.

         Provided that Employee has then obtained an H-1B visa or otherwise
obtained permission to work legally in the United States for the Employer,
Employee's employment with Employer will commence on March 15, 2004 or such
other date as Employer and Employee may mutually agree. In the event Employee
has not obtained permission to work legally in the United States for the
Employer by March 15, 2004, the commencement of Employee's employment with
Employer shall automatically be postponed from day to day for a period of up to
120 days after the Effective Date. (The date Employee's employment commences in
accordance with this Section 4 is referred to herein as the "Commencement
Date"). Employee's employment will continue from the Commencement Date until
terminated in accordance with Section 5.

                                      -5-



Section 5. Termination of Employment.

                  (a)      Employee's employment with Employer hereunder will
terminate upon the first to occur of the following:

                           (1)      The death or "Disability" (as defined in
                  Section 5(b) hereof) of Employee;

                           (2)      Employer terminates such employment for
                  "Cause" (as defined in Section 5(c) hereof);

                           (3)      Employee terminates such employment for
                  "Good Reason" (as defined in Section 5(d) hereof);

                           (4)      Employer terminates such employment for any
                  reason other than Cause or for no reason at all; or

                           (5)      Employee terminates such employment for any
                  reason other than Good Reason or for no reason at all.

                  (b)      As used in this Agreement, "Disability" means
permanent and total disability (within the meaning of Section 22(e)(3) of the
Internal Revenue Code of 1986, as amended (the "Code"), or any successor
provision) which has existed for at least 180 consecutive days.

                  (c)      As used in this Agreement, "Cause" means:

                           (1)      the willful and continued failure by
                  Employee to make good faith efforts to substantially perform
                  his material obligations under this Agreement (other than any
                  such failure resulting from his Disability) after a demand for
                  substantial performance has been delivered to him by the Board
                  which specifically identifies the manner in which the Board
                  believes Employee has not substantially performed such
                  provisions and Employee has failed to remedy the situation
                  within ten (10) days after such demand;

                           (2)      Employee's (i) willfully engaging in
                  misconduct involving the business or property of Employer or
                  Employee's duties hereunder, which misconduct is materially
                  and demonstrably injurious to the property or business of
                  Employer, including without limitation, fraud,
                  misappropriation of funds or other property of Employer; (ii)
                  gross negligence with regard to a material matter involving
                  the business or property of Employer or Employee's duties
                  hereunder; or (iii) conviction of a felony or any crime of
                  moral turpitude; or

                           (3)      Employee's material breach of this Agreement
                  which breach has not been remedied by Employee within ten (10)
                  days after receipt by Employee of written notice from Employer
                  that he is in material breach of the Agreement, specifying the
                  particulars of such breach.

                                      -6-



For purposes of this Agreement, no act, or failure to act, on the part of
Employee shall be deemed "willful" or engaged in "willfully" if it was due
primarily to an error in judgment or negligence, but shall be deemed "willful"
or engaged in "willfully" only if done, or omitted to be done, by Employee not
in good faith and without reasonable belief that his action or omission was in
the best interest of Employer. Notwithstanding the foregoing, Employee shall not
be deemed to have been terminated as a result of "Cause" hereunder unless and
until there shall have been delivered to Employee a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters of the Board
then in office at a meeting of the Board called and held for such purpose (after
reasonable notice to Employee and an opportunity for Employee, together with his
counsel, to be heard before the Board), finding that, in the good faith opinion
of the Board of Directors, Employee has committed an act set forth above in this
Section 5(c) and specifying the particulars thereof in detail. Nothing herein
shall limit the right of Employee or his legal representatives to contest the
validity or propriety of any such determination.

                  (d)      As used in this Agreement, "Good Reason" means:

                           (1)      Employer's failure to comply with any of the
                  provisions of Section 2 of this Agreement (including, but not
                  limited to, such a failure resulting from any reduction in the
                  Base Salary) which failure is not remedied within ten (10)
                  days after receipt of written notice from Employee specifying
                  the particulars of such breach;

                           (2)      Employer's breach of any other material
                  provision of this Agreement which is not remedied within ten
                  (10) days after receipt by Employer of written notice from
                  Employee specifying the particulars of such breach;

                           (3)      the assignment to Employee of any duties
                  materially inconsistent with Employee's position (including
                  status, offices, titles, and reporting requirements), duties,
                  functions, responsibilities, or authority as contemplated by
                  Section 1 of this Agreement or other action by Employer that
                  results in a diminution (other than an isolated,
                  inconsequential or insubstantial diminution which is remedied
                  by Employer promptly after receipt of written notice thereof
                  given by Employee) in such title, position, duties, functions,
                  responsibilities or authority; or

                           (4)      the relocation of Employee's principal place
                  of performance of his duties and responsibilities under this
                  Agreement to a location more than one hundred miles (100)
                  miles from Employer's Headquarters;

                           (5)      After a "Change in Control" (as defined in
                  Section 6(f) hereof), (i) Employer's failure to continue in
                  effect any benefit or compensation plan (including, but not
                  limited to, any bonus, incentive, retirement, supplemental
                  executive retirement, savings, profit sharing, pension,
                  performance, stock option, stock purchase, deferred
                  compensation, life insurance, medical, dental, health,
                  hospital, accident or disability plans) in which Employee is
                  participating at the time of such Change in Control (or plans
                  providing to Employee, in the aggregate, substantially similar
                  benefits as the benefits enjoyed by Employee under the

                                      -7-



                  benefit and compensation plans in which Employee is
                  participating at the time of such Change in Control), or (ii)
                  the taking of any action by Employer that would adversely
                  affect Employee's participation in or materially reduce
                  Employee's benefits under any of such plans or deprive
                  Employee of any material fringe benefit enjoyed by Employee at
                  the time of such Change in Control;

                           (6)      Any failure by Employer to comply with
                  Section 11(c); or

                           (7)      Any purported termination of Employee's
                  employment by Employer which is not effected pursuant to a
                  Notice of Termination satisfying the requirements of Section
                  5(e) hereof (and for purposes of this Agreement, no such
                  purported termination shall be effective).

                  (e)      Any termination by Employer or Employee of Employee's
employment with Employer shall be communicated by written notice (a "Notice of
Termination") to the other party that shall:

                           (1)      indicate the specific provision of this
                  Agreement relied upon for such termination;

                           (2)      indicate the specific provision of this
                  Agreement pursuant to which Employee is to receive
                  compensation and other benefits as a result of such
                  termination; and

                           (3)      otherwise comply with the provisions of this
                  Section 5(e) and Section 13(a).

If a Notice of Termination states that Employee's employment with Employer has
been terminated as a result of Employee's Disability, the notice shall (i)
specifically describe the basis for the determination of Employee's Disability,
and (ii) state the date of the determination of Employee's Disability, which
date shall be not more than ten (10) days before the date such notice is given.
If the notice is from Employer and states that Employee's employment with
Employer is terminated by Employer as a result of the occurrence of Cause, the
Notice of Termination shall specifically describe the action or inaction of
Employee that Employer believes constitutes Cause and shall be accompanied by a
copy of the resolution satisfying Section 5(c). If the Notice of Termination is
from Employee and states that Employee's employment with Employer is terminated
by Employee as a result of the occurrence of Good Reason, the Notice of
Termination shall specifically describe the action or inaction of Employer that
Employee believes constitutes Good Reason. Any purported termination by Employer
of Employee's employment with Employer shall be ineffective unless such
termination shall have been communicated by Employer to Employee by a Notice of
Termination that meets the requirements of this Section 5(e) and the provisions
of Section 13(a).

                  (f)      As used in this Agreement, "Date of Termination"
means:

                           (1)      if Employee's employment with Employer is
                  terminated for Disability, sixty (60) days after Notice of
                  Termination is received by Employee or any later date
                  specified therein, provided that within such sixty (60) day
                  period

                                      -8-



                  Employee shall not have returned to full-time performance of
                  Employee's duties;

                           (2)      if Employee's employment with Employer is
                  terminated as a result of Employee's death, the date of death
                  of Employee;

                           (3)      if Employee's employment with Employer is
                  terminated for Cause, the date Notice of Termination,
                  accompanied by a copy of the resolution satisfying Section
                  5(c), is received by Employee or any later date specified
                  therein, provided that Employer may, in its discretion,
                  condition Employee's continued employment upon such
                  considerations or requirements as may be reasonable under the
                  circumstances and place a reasonable limitation upon the time
                  within which Employee will comply with such considerations or
                  requirements; or

                           (4)      if Employee's employment with Employer is
                  terminated for any reason other than Employee's Disability,
                  Employee's death, or Cause, or for no reason, the date that is
                  fourteen (14) days after the date of receipt of the Notice of
                  Termination.

Section 6. Effect of Termination.

                  (a)      Upon termination of Employee's employment by Employer
for Cause, or by Employee for no reason or any reason other than Good Reason,
all compensation and benefits will cease upon the Date of Termination other
than: (i) those benefits that are provided by retirement and benefit plans and
programs specifically adopted and approved by Employer for Employee that are
earned and vested by the Date of Termination, (ii) as provided in Section 10,
(iii) Employee's Base Salary through the Date of Termination; (iv) any incentive
compensation due Employee if, under the terms of the relevant incentive
compensation arrangement, such incentive compensation was due and payable to
Employee on or before the Date of Termination; and (v) medical and similar
employee welfare benefits the continuation of which is required by applicable
law or provided by the applicable benefit plan.

                  (b)      Upon termination of Employee's employment due to the
death of Employee or upon termination by Employer due to the Disability of
Employee, all compensation and benefits will cease upon the Date of Termination
other than: (i) those benefits that are provided by retirement and benefit plans
and programs specifically adopted and approved by Employer for Employee that are
earned and vested by the Date of Termination, (ii) as provided in Section 10,
(iii) Employee's Base Salary through the Date of Termination; (iv) any incentive
compensation due Employee if, under the terms of the relevant incentive
compensation arrangement, such incentive compensation was due and payable to
Employee on or before the Date of Termination; and (v) medical and similar
employee welfare benefits the continuation of which is required by applicable
law or provided by the applicable benefit plan.

                  (c)      Except as otherwise provided in Section 6(d), if
Employee's employment with Employer is terminated (i) by Employer for no reason
or for any reason other than Cause, or the death or Disability of Employee, or
(ii) by Employee for Good Reason, the obligations of Employer and Employee under
Sections 1 and 2 will terminate as of the Date of Termination,

                                      -9-



and Employer will pay or provide to Employee the following:

                  (1)      Employee's Base Salary through the Date of
         Termination;

                  (2)      (i)      should the Date of Termination be on a day
                                    which is prior to the first anniversary of
                                    the Commencement Date, Employer shall pay
                                    Employee an amount equal to the incentive
                                    bonus compensation he would have received
                                    under the Key Contributor Plan or other
                                    replacement plan but for the termination of
                                    his employment, which incentive bonus
                                    compensation shall be pro rated through the
                                    Date of Termination and paid at the time
                                    other participants in the Key Contributor
                                    Plan or the relevant incentive plan receive
                                    their payments; or,

                           (ii)     should the Date of Termination be on a day
                                    which is on or after the first anniversary
                                    of the Commencement Date, Employer shall pay
                                    Employee the incentive bonus compensation
                                    due Employee, if any, in accordance with the
                                    terms of the relevant incentive compensation
                                    arrangement;

                  (3)      during the three-year period ending on the third
         anniversary of the Date of Termination, Employer shall pay to Employee
         an aggregate amount (the "Severance Payment") equal to one and one-half
         (1.5) times Employee's Base Salary at the highest annual rate in effect
         on or before the Date of Termination (but prior to giving effect to any
         reduction therein which precipitated such termination), which Severance
         Payment will be paid to Employee in equal installments every two weeks
         during such three-year period; provided, however, that at any time
         during such three-year period Employer may, in its discretion, elect to
         pay to Employee the then remaining balance of the Severance Payment in
         the form of a lump sum cash payment;

                  (4)      should the Date of Termination be on a day which is
         prior to the first anniversary of the Commencement Date, 40,000 of the
         options granted in the Initial Grant shall become fully exercisable,
         regardless of whether or not the vesting conditions set forth in the
         relevant stock option agreement have been satisfied in full, and shall
         be fully exercisable for the period commencing on the Date of
         Termination and ending one day less than three months after the Date of
         Termination; and

                  (5)      if immediately prior to the Date of Termination
         Employee (and, if applicable, his spouse and/or dependents) was covered
         under Employer's group medical, dental, health and hospital plan in
         effect at such time, then Employer shall, at its election, pay or
         provide to Employee one (but not both) of the following:

                           (i)      for one (1) year after the Date of
                                    Termination, and provided

                                      -10-



                                    that Employee has timely elected under the
                                    Consolidated Omnibus Budget Reconciliation
                                    Act of 1985, as amended ("COBRA"), to
                                    continue coverage under such plan, Employer
                                    will, at no greater cost or expense to
                                    Employee than was the case immediately prior
                                    to the Date of Termination, maintain such
                                    continued coverage in full force and effect;
                                    or

                           (ii)     pay to Employee a lump sum cash payment (the
                                    "Section 6(c)(4)(ii) Payment") equal to the
                                    sum of:

                                    (A)      an amount equal to (I) twelve (12),
                                             multiplied by (II) the amount of
                                             the applicable monthly COBRA
                                             premium (determined based upon the
                                             applicable COBRA premium rate in
                                             effect immediately after the Date
                                             of Termination) Employee would pay
                                             if Employee elected under COBRA to
                                             maintain coverage identical to the
                                             coverage Employee (and, if
                                             applicable, his spouse and/or
                                             dependents) had under such plan
                                             immediately prior to the Date of
                                             Termination; plus

                                    (B)      an amount equal to the excess of
                                             (I) an amount determined by
                                             dividing (x) the amount determined
                                             under Section 6(c)(4)(ii)(A) above,
                                             by (y) one (1) minus the sum of the
                                             following which shall be determined
                                             for the calendar year that includes
                                             the date of payment of the Section
                                             6(c)(4)(ii) Payment and shall be
                                             expressed as a decimal: (i) the
                                             highest marginal U.S. federal
                                             income tax rate applicable to
                                             individuals for such calendar year,
                                             plus (ii) the highest foreign,
                                             state, provincial and/or local
                                             individual income tax rate or
                                             rates, if any, to which the Section
                                             6(c)(4)(ii) Payment is subject for
                                             such calendar year (which shall be
                                             determined based on the assumption
                                             that Employee pays income tax to
                                             any such foreign, state, provincial
                                             or local jurisdiction at the
                                             highest marginal rate of income tax
                                             imposed by such jurisdiction on
                                             individuals), plus, (iii) the
                                             Hospital (Medicare) Insurance tax
                                             rate under Section 3101(b) of the
                                             Code (or any corresponding
                                             successor statute) for such
                                             calendar year, over (II) the amount
                                             determined under Section
                                             6(c)(4)(ii)(A) above.

Except as otherwise provided above and in Section 10, all other compensation and
benefits will

                                      -11-



cease upon the Date of Termination other than the following: (i) those benefits
that are provided by retirement and benefit plans and programs specifically
adopted and approved by Employer for Employee that are earned and vested by the
Date of Termination, (ii) any rights Employee or his survivors may have under
any grants of options to purchase Employer's Common Stock or under any grants of
restricted stock of Parent; and (iii) medical and similar employee welfare
benefits the continuation of which is required by applicable law or as provided
by the applicable benefit plan. As a condition to making the payments and
providing the benefits specified in this Section 6(c), Employer will require
that Employee execute a release of all claims Employee may have against Employer
at the time of Employee's termination. Such release will be in substantially the
same form as Exhibit B attached hereto.

                  (d)      If (i) a "Change in Control" (as defined in Section
6(f) hereof) shall have occurred, and (ii) within three (3) years after such
Change in Control Employee's employment with Employer is terminated (x) by
Employer for no reason or for any reason other than Cause, or the death or
Disability of Employee, or (y) by Employee for Good Reason, the obligations of
Employer and Employee under Sections 1 and 2 will terminate as of the Date of
Termination, Section 6(c) above shall not apply, and Employer will pay or
provide to Employee:

                           (1)      Employee's Base Salary through the Date of
                  Termination;

                           (2)      incentive compensation due Employee, if any,
                  under the terms of the relevant incentive compensation
                  arrangement;

                           (3)      within thirty (30) days after the Date of
                  Termination, a lump sum cash payment equal to one and one-half
                  (1.5) times the sum of:

                                    (i)      Employee's Base Salary at the
                                             highest annual rate in effect on or
                                             before the Date of Termination (but
                                             prior to giving effect to any
                                             reduction therein which
                                             precipitated such termination),
                                             plus

                                    (ii)     An amount equal to the greatest of:

                                             (A)      the average of the
                                                      incentive bonuses paid to
                                                      Employee for the last
                                                      three (3) full fiscal
                                                      years of Employer ending
                                                      before the Date of
                                                      Termination (or, if
                                                      Employee was not employed
                                                      by Employer hereunder for
                                                      such last three (3) full
                                                      fiscal years, the average
                                                      of the incentive bonuses
                                                      paid to Employee for the
                                                      number of full fiscal
                                                      years of Employer ending
                                                      before the Date of
                                                      Termination during which
                                                      Employee was employed by
                                                      Employer hereunder);

                                             (B)      the incentive bonus paid
                                                      to Employee for the last
                                                      full fiscal year of
                                                      Employer ending before
                                                      the Date of Termination;
                                                      or

                                      -12-



                                             (C)      an amount equal to
                                                      Employee's Base Salary
                                                      described in Section 6(d)
                                                      (3)(i) multiplied by
                                                      Employee's target
                                                      percentage under the Key
                                                      Contributor Plan or other
                                                      replacement incentive or
                                                      bonus plan of Employer
                                                      for the fiscal year which
                                                      includes the Date of
                                                      Termination;

                           (4)      if immediately prior to the Date of
                  Termination Employee (and, if applicable, his spouse and/or
                  dependents) was covered under Employer's group medical,
                  dental, health and hospital plan in effect at such time, then
                  Employer shall, at its election, pay or provide to Employee
                  one (but not both) of the following:

                                    (i)      for eighteen (18) months after the
                                             Date of Termination, and provided
                                             that Employee has timely elected
                                             under COBRA to continue coverage
                                             under such plan, Employer will, at
                                             no greater cost or expense to
                                             Employee than was the case
                                             immediately prior to the Date of
                                             Termination, maintain such
                                             continued coverage in full force
                                             and effect; or

                                    (ii)     pay to Employee a lump sum cash
                                             payment (the "Section 6(d)(4)(ii)
                                             Payment") equal to the sum of:

                                             (A)      an amount equal to (I)
                                                      eighteen (18), multiplied
                                                      by (II) the amount of the
                                                      applicable monthly COBRA
                                                      premium (determined based
                                                      upon the applicable COBRA
                                                      premium rate in effect
                                                      immediately after the
                                                      Date of Termination)
                                                      Employee would pay if
                                                      Employee elected under
                                                      COBRA to maintain
                                                      coverage identical to the
                                                      coverage Employee (and,
                                                      if applicable, his spouse
                                                      and/or dependents) had
                                                      under such plan
                                                      immediately prior to the
                                                      Date of Termination; plus

                                             (B)      an amount equal to the
                                                      excess of (I) an amount
                                                      determined by dividing
                                                      (x) the amount determined
                                                      under Section 6(d)(4)(ii)
                                                      (A) above, by (y) one (1)
                                                      minus the sum of the
                                                      following which shall be
                                                      determined for the
                                                      calendar year that
                                                      includes the date of
                                                      payment of the Section
                                                      6(d)(4)(ii) Payment and
                                                      shall be expressed as a
                                                      decimal: (i) the highest
                                                      marginal U.S. federal
                                                      income tax rate
                                                      applicable to individuals
                                                      for such calendar year,
                                                      plus (ii) the highest
                                                      foreign, state,
                                                      provincial and/or local
                                                      individual income tax
                                                      rate or rates, if any, to
                                                      which the Section 6(d)(4)
                                                      (ii) Payment is subject
                                                      for such calendar year
                                                      (which shall be
                                                      determined based on

                                      -13-



                                                      the assumption that
                                                      Employee pays income tax
                                                      to any such foreign,
                                                      state, provincial or local
                                                      jurisdiction at the
                                                      highest marginal rate of
                                                      income tax imposed by
                                                      such jurisdiction on
                                                      individuals), plus, (iii)
                                                      the Hospital (Medicare)
                                                      Insurance tax rate under
                                                      Section 3101(b) of the
                                                      Code (or any corresponding
                                                      successor statute) for
                                                      such calendar year, over
                                                      (II) the amount
                                                      determined under Section
                                                     6(d)(4)(ii)(A) above; and

                           (5)      the following shall occur immediately upon
                  the occurrence of such Change in Control:

                                    (i)      each option to acquire Common Stock
                                             or other equity securities of
                                             Employer held by Employee
                                             immediately prior to such Change in
                                             Control shall become fully
                                             exercisable, regardless of whether
                                             or not the vesting conditions set
                                             forth in the relevant stock option
                                             agreement have been satisfied in
                                             full, and shall remain fully
                                             exercisable for the remainder of
                                             the five-year term of such option;
                                             and

                                    (ii)     all restrictions on any restricted
                                             Common Stock or other equity
                                             securities of Employer granted to
                                             Employee prior to such Change in
                                             Control shall be removed and such
                                             Common Stock or other equity
                                             securities shall be freely
                                             transferable (subject to applicable
                                             securities laws), regardless of
                                             whether the conditions set forth in
                                             the relevant restricted stock
                                             agreements have been satisfied in
                                             full.

As a condition to making the payments and providing the benefits specified in
this Section 6(d), Employer will require that Employee execute a release of all
claims Employee may have against Employer at the time of Employee's termination.
Such release will be in substantially the same form as Exhibit B attached
hereto.

                  (e)      Notwithstanding anything contained in this Agreement
to the contrary, if following the commencement of any discussion with a third
person or the initiation of any tender offer that ultimately results in a Change
in Control, (i) Employee's employment with Employer is terminated by Employer
for no reason or for any reason other than Cause, (ii) Employee is removed from
any material duties or position with Employer, or (iii) Employer fails to comply
with any of the provisions of Section 2 of this Agreement, then for all purposes
of this Agreement, such Change in Control shall be deemed to have occurred on
the date immediately prior to the date of such termination, removal, or failure.

                  (f)      For purposes of this Agreement, a "Change in Control"
shall mean the occurrence of any of the following after the Effective Date:

                                      -14-



                           (1)      the acquisition by any individual, entity or
                  group (within the meaning of Section 13(d)(3) or 14(d)(2) of
                  the Securities Exchange Act of 1934, as amended from time to
                  time (the "Exchange Act"), or any successor statute) (a
                  "Covered Person") of beneficial ownership (within the meaning
                  of Rule 13d-3 promulgated under the Exchange Act) of 25% or
                  more of either (i) the then outstanding shares of Common Stock
                  (the "Outstanding Company Common Stock"), or (ii) the combined
                  voting power of the then outstanding voting securities of
                  Employer entitled to vote generally in the election of
                  directors (the "Outstanding Company Voting Securities");
                  provided, however, that for purposes of this Section 6(f)(1),
                  the following acquisitions shall not constitute a Change in
                  Control: (i) any acquisition directly from Employer, (ii) any
                  acquisition by Employer, (iii) any acquisition by any employee
                  benefit plan (or related trust) sponsored or maintained by
                  Employer or any entity controlled by Employer, or (iv) any
                  acquisition by any corporation pursuant to a transaction which
                  complies with Section 6(f)(3)(i), (ii) or (iii); or

                           (2)      individuals who, as of the Effective Date,
                  constitute the Board (the "Incumbent Board") cease for any
                  reason to constitute at least a majority of the Board;
                  provided, however, that any individual becoming a director
                  subsequent to the Effective Date whose election, or nomination
                  for election by Employer's stockholders, was approved by a
                  vote of at least two-thirds of the directors then comprising
                  the Incumbent Board shall be considered as though such
                  individual were a member of the Incumbent Board, but
                  excluding, for this purpose, any such individual whose initial
                  assumption of office occurs as a result of an actual or
                  threatened election contest with respect to the election or
                  removal of directors or other actual or threatened
                  solicitation of proxies or consents by or on behalf of a
                  Covered Person other than the Board; or

                           (3)      consummation of (xx) a reorganization,
                  merger, amalgamation, consolidation, sale or other form of
                  business combination of Employer or any subsidiary of
                  Employer, or (yy) a sale, lease, exchange, disposition or
                  other transfer of all or substantially all of the assets of
                  Employer (a "Business Combination"), in each case, unless,
                  following such Business Combination, (i) all or substantially
                  all of the individuals and entities who were the beneficial
                  owners, respectively, of the Outstanding Company Common Stock
                  and Outstanding Company Voting Securities immediately prior to
                  such Business Combination beneficially own, directly or
                  indirectly, more than 75% of, respectively, the then
                  outstanding shares of common stock and the combined voting
                  power of the then outstanding voting securities entitled to
                  vote generally in the election of directors, as the case may
                  be, of the corporation resulting from such Business
                  Combination (including, without limitation, a corporation
                  which as a result of such transaction owns Employer or all or
                  substantially all of Employer's assets either directly or
                  through one or more subsidiaries) in substantially the same
                  proportions as their ownership immediately prior to such
                  Business Combination of the Outstanding Company Common Stock
                  and Outstanding Company Voting Securities, as the case may be,
                  (ii) no Covered Person (excluding any employee benefit plan
                  (or related trust) of Employer or such corporation resulting
                  from such Business

                                      -15-



                  Combination) beneficially owns, directly or indirectly, 25% or
                  more of, respectively, the then outstanding shares of common
                  stock of the corporation resulting from such Business
                  Combination or the combined voting power of the then
                  outstanding voting securities of such corporation, except to
                  the extent that such ownership existed prior to the Business
                  Combination, and (iii) at least a majority of the members of
                  the board of directors of the corporation resulting from such
                  Business Combination, were members of the Incumbent Board at
                  the time of the execution of the initial agreement, or of the
                  action of the Board of Directors, providing for such Business
                  Combination; or

                           (4)      approval by the stockholders of Employer of
                  a complete liquidation or dissolution of Employer.

Section 7. Excise Tax

                  (a)      Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by, or benefit from, Employer or any of its affiliates to or for
the benefit of Employee, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise (any such payments,
distributions or benefits being individually referred to herein as a "Payment,"
and any two or more of such payments, distributions or benefits being referred
to herein as "Payments"), would be subject to the excise tax imposed by Section
4999 of the Code (such excise tax, together with any interest thereon, any
penalties, additions to tax, or additional amounts with respect to such excise
tax, and any interest in respect of such penalties, additions to tax or
additional amounts, being collectively referred herein to as the "Excise Tax"),
then Employee shall be entitled to receive an additional payment or payments
(individually referred to herein as a "Gross-Up Payment" and any two or more of
such additional payments being referred to herein as "Gross-Up Payments") in an
amount such that after payment by Employee of all taxes (as defined in Section
7(k)) imposed upon the Gross-Up Payment, Employee retains an amount of such
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

                  (b)      Subject to the provisions of Section 7(c) through
(i), any determination (individually, a "Determination") required to be made
under this Section 7(b), including whether a Gross-Up Payment is required and
the amount of such Gross-Up Payment, shall initially be made, at Employer's
expense, by nationally recognized tax counsel selected by Employer ("Tax
Counsel"). Tax Counsel shall provide detailed supporting legal authorities,
calculations, and documentation both to Employer and Employee within 15 business
days of the termination of Employee's employment, if applicable, or such other
time or times as is reasonably requested by Employer or Employee. If Tax Counsel
makes the initial Determination that no Excise Tax is payable by Employee with
respect to a Payment or Payments, it shall furnish Employee with an opinion
reasonably acceptable to Employee that no Excise Tax will be imposed with
respect to any such Payment or Payments. Employee shall have the right to
dispute any Determination (a "Dispute") within 15 business days after delivery
of Tax Counsel's opinion with respect to such Determination. The Gross-Up
Payment, if any, as determined pursuant to such Determination shall, at
Employer's expense, be paid by Employer to or for the benefit of Employee within
five business days of Employee's receipt of such Determination. The existence of
a Dispute shall not in any way affect Employee's right to receive the Gross-Up
Payment in accordance with such

                                      -16-



Determination. If there is no Dispute, such Determination shall be binding,
final and conclusive upon Employer and Employee, subject in all respects,
however, to the provisions of Section 7(c) through (i) below. As a result of the
uncertainty in the application of Sections 4999 and 280G of the Code, it is
possible that Gross-Up Payments (or portions thereof) which will not have been
made by Employer should have been made ("Underpayment"), and if upon any
reasonable written request from Employee or Employer to Tax Counsel, or upon Tax
Counsel's own initiative, Tax Counsel, at Employer's expense, thereafter
determines that Employee is required to make a payment of any Excise Tax or any
additional Excise Tax, as the case may be, Tax Counsel shall, at Employer's
expense, determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by Employer to or for the benefit of
Employee.

                  (c)      Employer shall defend, hold harmless, and indemnify
Employee on a fully grossed-up after tax basis from and against any and all
claims, losses, liabilities, obligations, damages, impositions, assessments,
demands, judgments, settlements, costs and expenses (including reasonable
attorneys', accountants', and experts' fees and expenses) with respect to any
tax liability of Employee resulting from any Final Determination (as defined in
Section 7(j)) that any Payment is subject to the Excise Tax.

                  (d)      If a party hereto receives any written or oral
communication with respect to any question, adjustment, assessment or pending or
threatened audit, examination, investigation or administrative, court or other
proceeding which, if pursued successfully, could result in or give rise to a
claim by Employee against Employer under this Section 7 ("Claim"), including,
but not limited to, a claim for indemnification of Employee by Employer under
Section 7(c), then such party shall promptly notify the other party hereto in
writing of such Claim ("Tax Claim Notice").

                  (e)      If a Claim is asserted against Employee ("Employee
Claim"), Employee shall take or cause to be taken such action in connection with
contesting such Employee Claim as Employer shall reasonably request in writing
from time to time, including the retention of counsel and experts as are
reasonably designated by Employer (it being understood and agreed by the parties
hereto that the terms of any such retention shall expressly provide that
Employer shall be solely responsible for the payment of any and all fees and
disbursements of such counsel and any experts) and the execution of powers of
attorney, provided that:

                           (1)      within 30 calendar days after Employer
                  receives or delivers, as the case may be, the Tax Claim Notice
                  relating to such Employee Claim (or such earlier date that any
                  payment of the taxes claimed is due from Employee, but in no
                  event sooner than five calendar days after Employer receives
                  or delivers such Tax Claim Notice), Employer shall have
                  notified Employee in writing ("Election Notice") that Employer
                  does not dispute its obligations (including, but not limited
                  to, its indemnity obligations) under this Agreement and that
                  Employer elects to contest, and to control the defense or
                  prosecution of, such Employee Claim at Employer's sole risk
                  and sole cost and expense; and

                           (2)      Employer shall have advanced to Employee on
                  an interest-free basis, the total amount of the tax claimed in
                  order for Employee, at Employer's

                                      -17-



                  request, to pay or cause to be paid the tax claimed, file a
                  claim for refund of such tax and, subject to the provisions of
                  the last sentence of Section 7(g), sue for a refund of such
                  tax if such claim for refund is disallowed by the appropriate
                  taxing authority (it being understood and agreed by the
                  parties hereto that Employer shall only be entitled to sue for
                  a refund and Employer shall not be entitled to initiate any
                  proceeding in, for example, United States Tax Court) and shall
                  indemnify and hold Employee harmless, on a fully grossed-up
                  after tax basis, from any tax imposed with respect to such
                  advance or with respect to any imputed income with respect to
                  such advance; and

                           (3)      Employer shall reimburse Employee for any
                  and all costs and expenses resulting from any such request by
                  Employer and shall indemnify and hold Employee harmless, on
                  fully grossed-up after-tax basis, from any tax imposed as a
                  result of such reimbursement.

                  (f)      Subject to the provisions of Section 7(e) hereof,
Employer shall have the right to defend or prosecute, at the sole cost, expense
and risk of Employer, such Employee Claim by all appropriate proceedings, which
proceedings shall be defended or prosecuted diligently by Employer to a Final
Determination; provided, however, that (i) Employer shall not, without
Employee's prior written consent, enter into any compromise or settlement of
such Employee Claim that would adversely affect Employee, (ii) any request from
Employer to Employee regarding any extension of the statute of limitations
relating to assessment, payment, or collection of taxes for the taxable year of
Employee with respect to which the contested issues involved in, and amount of,
Employee Claim relate is limited solely to such contested issues and amount, and
(iii) Employer's control of any contest or proceeding shall be limited to issues
with respect to Employee Claim and Employee shall be entitled to settle or
contest, in his sole and absolute discretion, any other issue raised by the
Internal Revenue Service or any other taxing authority. So long as Employer is
diligently defending or prosecuting such Employee Claim, Employee shall provide
or cause to be provided to Employer any information reasonably requested by
Employer that relates to such Employee Claim, and shall otherwise cooperate with
Employer and its representatives in good faith in order to contest effectively
such Employee Claim. Employer shall keep Employee informed of all developments
and events relating to any such Employee Claim (including, without limitation,
providing to Employee copies of all written materials pertaining to any such
Employee Claim), and Employee or his authorized representatives shall be
entitled, at Employee's expense, to participate in all conferences, meetings and
proceedings relating to any such Employee Claim.

                  (g)      If, after actual receipt by Employee of an amount of
a tax claimed (pursuant to an Employee Claim) that has been advanced by Employer
pursuant to Section 7(e)(2) hereof, the extent of the liability of Employer
hereunder with respect to such tax claimed has been established by a Final
Determination, Employee shall promptly pay or cause to be paid to Employer any
refund actually received by, or actually credited to, Employee with respect to
such tax (together with any interest paid or credited thereon by the taxing
authority and any recovery of legal fees from such taxing authority related
thereto), except to the extent that any amounts are then due and payable by
Employer to Employee, whether under the provisions of this Agreement or
otherwise. If, after the receipt by Employee of an amount advanced by Employer
pursuant to Section 7(e)(2), a determination is made by the Internal Revenue
Service

                                      -18-



or other appropriate taxing authority that Employee shall not be entitled to any
refund with respect to such tax claimed and Employer does not notify Employee in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of any Gross-Up Payments and other payments
required to be paid hereunder.

                  (h)      With respect to any Employee Claim, if Employer fails
to deliver an Election Notice to Employee within the period provided in Section
7(e)(1) hereof or, after delivery of such Election Notice, Employer fails to
comply with the provisions of Section 7(e)(2) and (3) and (f) hereof, then
Employee shall at any time thereafter have the right (but not the obligation),
at his election and in his sole and absolute discretion, to defend or prosecute,
at the sole cost, expense and risk of Employer, such Employee Claim. Employee
shall have full control of such defense or prosecution and such proceedings,
including any settlement or compromise thereof. If requested by Employee,
Employer shall cooperate, and shall cause its Affiliates to cooperate, in good
faith with Employee and his authorized representatives in order to contest
effectively such Employee Claim. Employer may attend, but not participate in or
control, any defense, prosecution, settlement or compromise of any Employee
Claim controlled by Employee pursuant to this Section 7(h) and shall bear its
own costs and expenses with respect thereto. In the case of any Employee Claim
that is defended or prosecuted by Employee, Employee shall, from time to time,
be entitled to current payment, on a fully grossed-up after tax basis, from
Employer with respect to costs and expenses incurred by Employee in connection
with such defense or prosecution.

                  (i)      In the case of any Employee Claim that is defended or
prosecuted to a Final Determination pursuant to the terms of this Section 7(i),
Employer shall pay, on a fully grossed-up after tax basis, to Employee in
immediately available funds the full amount of any taxes arising or resulting
from or incurred in connection with such Employee Claim that have not
theretofore been paid by Employer to Employee, together with the costs and
expenses, on a fully grossed-up after tax basis, incurred in connection
therewith that have not theretofore been paid by Employer to Employee, within
ten calendar days after such Final Determination. In the case of any Employee
Claim not covered by the preceding sentence, Employer shall pay, on a fully
grossed-up after tax basis, to Employee in immediately available funds the full
amount of any taxes arising or resulting from or incurred in connection with
such Employee Claim at least ten calendar days before the date payment of such
taxes is due from Employee, except where payment of such taxes is sooner
required under the provisions of this Section 7(i), in which case payment of
such taxes (and payment, on a fully grossed-up after tax basis, of any costs and
expenses required to be paid under this Section 7(i)) shall be made within the
time and in the manner otherwise provided in this Section 7(i).

                  (j)      For purposes of this Agreement, the term "Final
Determination" shall mean (A) a decision, judgment, decree or other order by a
court or other tribunal with appropriate jurisdiction, which has become final
and non-appealable; (B) a final and binding settlement or compromise with an
administrative agency with appropriate jurisdiction, including, but not limited
to, a closing agreement under Section 7121 of the Code; (C) any disallowance of
a claim for refund or credit in respect to an overpayment of tax unless a suit
is filed on a timely basis; or (D) any final disposition by reason of the
expiration of all applicable statutes of

                                      -19-



limitations.

For purposes of this Agreement, the terms "tax" and "taxes" mean any and all
taxes of any kind whatsoever (including, but not limited to, any and all Excise
Taxes, income taxes, and employment taxes), together with any interest thereon,
any penalties, additions to tax, or additional amounts with respect to such
taxes and any interest in respect of such penalties, additions to tax, or
additional amounts.

                  (l)      Nothing in this Section is intended to violate the
Sarbanes-Oxley Act and to the extent that any advance or repayment obligation
hereunder would do so, such obligation shall be deemed modified so as to make
the advance a nonrefundable payment to Employee and the repayment obligation
null and void.

Section 8. Expenses of Enforcement.

         Upon demand by Employee made to Employer, Employer shall reimburse
Employee for the reasonable expenses (including attorneys' fees and expenses)
incurred by Employee after a Change in Control in enforcing or seeking to
enforce the payment of any amount or other benefit to which Employee shall have
become entitled under this Agreement as a result of the termination of
Employee's employment with Employer within three (3) years after such Change in
Control, including, but not limited to, those incurred in connection with any
arbitration concerning same initiated pursuant to Section 14 (regardless of the
outcome of such arbitration). To the extent that any such reimbursement would be
subject to the Excise Tax, then Employee shall be entitled to receive Gross-Up
Payments in an amount such that after payment by Employee of all taxes imposed
on such Gross-Up Payments, Employee retains an amount equal to the Excise Tax
imposed upon the reimbursement, and the other provisions of Section 7 hereof
shall also apply to such circumstance unless the context thereof otherwise
indicates.

Section 9. No Obligation to Mitigate; No Rights of Offset.

                  (a)      Employee shall not be required to mitigate the amount
of any payment or other benefit required to be paid to Employee pursuant to this
Agreement, whether by seeking other employment or otherwise, nor shall the
amount of any such payment or other benefit be reduced on account of any
compensation earned by Employee as a result of employment by another person.

                  (b)      Employer's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which Employer may have against Employee or others.

Section 10. No Effect on Other Rights.

         Nothing in this Agreement shall prevent or limit Employee's future
participation in any plan, program, policy or practice of or provided by
Employer or any of its affiliates and for which Employee may qualify, nor shall
anything herein limit or otherwise affect such rights as Employee may attain
under any stock option or other agreements that he may hereafter enter into with
Employer or any of its affiliates. Amounts which are vested benefits or which
Employee is

                                      -20-



otherwise entitled to receive under any plan, program, policy or practice of or
provided by, or any other contract or agreement with, Employer or any of its
affiliates at or subsequent to the Date of Termination shall be payable or
otherwise provided in accordance with such plan, program, policy or practice or
contract or agreement except as explicitly modified by this Agreement.

Section 11. Successors; Binding Agreement.

                  (a)      This Agreement is personal to Employee and without
the prior written consent of Employer shall not be assignable by Employee. This
Agreement shall inure to the benefit of and be enforceable by Employee's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.

                  (b)      This Agreement shall inure to the benefit of and be
binding upon Employer and those successors and assigns permitted in accordance
with Section 11(c).

                  (c)      Employer will require any successor (whether direct
or indirect, by purchase, merger, amalgamation, consolidation or otherwise) to
all or substantially all of the business and/or assets of Employer, by agreement
in form and substance reasonably satisfactory to Employee, to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that Employer would be required to perform it if no such succession had taken
place. As used in this Agreement, "Employer" shall mean Employer as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by execution and delivery of the
agreement provided for in this Section 11(c) or which otherwise becomes bound by
the terms and provisions of this Agreement by operation of law or otherwise.

Section 12. Non-Competition; Non-Solicitation; No Hire.

                  (a)      Employee agrees that, effective as of the
Commencement Date and for a period that includes the term of this Agreement and
(i) eighteen (18) months thereafter in the event of a termination of Employee's
employment with Employer described in Section 6(c) or Section 6(d) (such
applicable period being referred to herein as the "Non-Compete Period"),
Employee shall not, without the prior written consent of Employer, directly or
indirectly, anywhere in the world, engage, invest, own any interest, or
participate in, consult with, render services to, or be employed by any
business, person, firm or entity that is in competition with the "Business" (as
defined in Section 12(e)) of Employer or any of its subsidiaries or affiliates,
except for the account of Employer and its subsidiaries and affiliates;
provided, however, that (i) during the Non-Compete Period Employee may acquire,
solely as a passive investment, not more than five percent (5%) of the
outstanding shares or other units of any security of any entity subject to the
requirements of Section 13 or 15(d) of the Exchange Act' and (ii) Employee may
consult with, render services to, or be employed by any business, person, firm
or entity that, solely through a subsidiary or a division, is in competition
with the Business, as long as Employee does not divulge any Confidential
Information to such competing subsidiary or division or use it for the benefit
of such competing subsidiary or division. Employee acknowledges that a remedy at
law for any breach or attempted breach of this covenant not to compete will be
inadequate and further agrees that any breach of this covenant not to compete

                                      -21-



will result in irreparable harm to Employer, and, accordingly, Employer shall,
in addition to any other remedy that may be available to it, be entitled to
specific performance and temporary and permanent injunctive and other equitable
relief (without proof of actual damage or inadequacy of legal remedy) in case of
any such breach or attempted breach. Employee acknowledges that this covenant
not to compete is being provided as an inducement to Employer to enter into this
Agreement and that this covenant not to compete contains reasonable limitations
as to time, geographical area and scope of activity to be restrained that do not
impose a greater restraint than is necessary to protect the goodwill or other
business interest of Employer. Whenever possible, each provision of this
covenant not to compete shall be interpreted in such a manner as to be effective
and valid under applicable law, but if any provision of this covenant not to
compete shall be prohibited by or invalid under applicable law, such provision
of this covenant not to compete shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remaining provisions of this
covenant not to compete. If any provision of this covenant not to compete shall,
for any reason, be judged by any court of competent jurisdiction to be invalid
or unenforceable, such judgment shall not affect, impair or invalidate the
remainder of this covenant not to compete but shall be confined in its operation
to the provision of this covenant not to compete directly involved in the
controversy in which such judgment shall have been rendered. In the event that
the provisions of this covenant not to compete should ever be deemed to exceed
the time or geographic limitations permitted by applicable laws, then such
provision shall be reformed to the maximum time or geographic limitations
permitted by applicable law.

                  (b)      If Employee's employment is terminated under
circumstances described in Section 6(c), then within ten days after Employee
signs the release required pursuant to Section 6(c), the Employer will pay to
Employee an aggregate amount (the "Non-Compete Payment") equal to one and
one-half (1.5) times Employee's Base Salary at the highest annual rate in effect
on or before the Date of Termination (but prior to giving effect to any
reduction therein which precipitated such termination), which Non-Compete
Payment will be paid to Employee in equal installments every two weeks during
such three-year period; provided, however, that at any time during such
three-year period Employer may, in its discretion, elect to pay to Employee the
then remaining balance of the Non-Compete Payment in the form of a lump sum cash
payment. If Employee's employment is terminated under circumstances described in
Section 6(d), then within ten days after Employee signs the release required
pursuant to Section 6(d), Employer will pay Employee a lump sum cash payment
equal to one and one-half (1.5) times the sum of:

                           (i)      Employee's Base Salary at the highest annual
                                    rate in effect on or before the Date of
                                    Termination (but prior to giving effect to
                                    any reduction therein which precipitated
                                    such termination), plus

                           (ii)     An amount equal to the greatest of:

                                    (A)      the average of the incentive
                                             bonuses paid to Employee for the
                                             last three (3) full fiscal years of
                                             Employer ending before the Date of
                                             Termination (or, if Employee was
                                             not employed by Employer hereunder
                                             for such last three (3) full fiscal
                                             years, the average of the incentive
                                             bonuses paid to Employee for the
                                             number of full fiscal years of
                                             Employer

                                      -22-



                                             ending before the Date of
                                             Termination during which Employee
                                             was employed by Employer
                                             hereunder);

                                    (B)      the incentive bonus paid to
                                             Employee for the last full fiscal
                                             year of Employer ending before the
                                             Date of Termination; or

                                    (C)      an amount equal to Employee's Base
                                             Salary described in Section
                                             6(d)(3)(i) multiplied by Employee's
                                             target percentage under the Key
                                             Contributor Plan or other
                                             replacement incentive or bonus plan
                                             of Employer for the fiscal year
                                             which includes the Date of
                                             Termination.

Employee must execute the release described in Section 6(c) or 6(d), as
applicable, in order to receive the payments described in this Section 12(b).

                  (c)      In addition to the restrictions set forth in Section
12(a), Employee agrees that, during the Non-Compete Period, Employee will not,
either directly or indirectly, (i) make known to any person, firm or entity that
is in competition with the Business of Employer or any of its subsidiaries or
affiliates the names and addresses of any of the suppliers or customers of
Employer or any of its subsidiaries or affiliates, potential customers of
Employer or any of its subsidiaries or affiliates upon whom Employer or any of
its subsidiaries or affiliates has called upon in the last twelve (12) months or
contacts of Employer or any of its subsidiaries or affiliates or any other
information pertaining to such persons, or (ii) call on, solicit, or take away,
or attempt to call on, solicit or take away any of the suppliers or customers of
Employer or any of its subsidiaries or affiliates, whether for Employee or for
any other person, firm or entity.

                  (d)      Regardless of the reason for any termination of
Employee's employment, effective as of the Commencement Date and for a period
that includes the term of this Agreement and twelve (12) months thereafter,
Employee will not, either on his own account or for any other person, firm,
partnership, corporation, or other entity (i) solicit any employee of Employer
or any of its subsidiaries or affiliates to leave such employment; or (ii)
induce or attempt to induce any such employee to breach her or his employment
agreement with Employer or any of its subsidiaries or affiliates.

                  (e)      As used in this Agreement, "Business" means the
business of acquiring, processing and/or interpreting geophysical data and/or
producing and/or conducting geophysical surveys for third parties, including,
but not limited to, (x) engaging in the business of conducting surface seismic
acquisition and/or surface seismic data processing and/or interpretation for the
purpose of providing and/or interpreting seismic images of the subsurface of the
earth for third parties, and (y) providing the following services to third
parties: (i) all forms of surface land, marine, ocean bottom cable and
transition zone seismic data acquisition; (ii) all forms of surface seismic data
processing, including the processing of two, three and/or four dimensional
vertical seismic profiling; (iii) recording of data from wellbore seismic arrays
performed during simultaneous acquisition of surface two, three and/or four
dimensional data; (iv) trenched in, buried near surface or seabed permanent
array installation and acquisition; (v) surface seismic acquisition, processing,
interpretation and/or sales, in each case, of multiclient surveys; (vi)

                                      -23-



maintenance of surface seismic data processing centers, including licensing and
support of surface seismic processing software; (viii) research and development
programs for any of the items described in this Section 12(e) and
seismically-assisted reservoir solutions, including software relating thereto;
(ix) surface seismic data management services; (x) interpretation activities
related to or in support of acquisition and processing activities described in
this Section 12(e); (xi) borehole seismic acquisition and installation and
acquisition of data from wellbore seismic arrays; and (xii) commercial
seismically-assisted reservoir solutions.

Section 13. Miscellaneous.

                  (a)      All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith will be in
writing and will be delivered by hand or by registered or certified mail, return
receipt requested to the addresses set forth below in this Section 13(a):

                  If to Employer, to:

                           Veritas DGC Inc.
                           10300 Town Park
                           Houston, Texas 77072
                           Attention: Secretary

                  If to Employee, to:

                           Thierry Pilenko
                           91, rue du Cherche Midi
                           75006 Paris, France

or to such other names or addresses as Employer or Employee, as the case may be,
designate by notice to the other party hereto in the manner specified in this
Section.

                  (b)      This Agreement (including the Exhibits attached
hereto) supersedes, replaces and merges all previous agreements, term sheets,
and discussions relating to the same or similar subject matters between Employee
and Employer (including any such agreements or discussions between Employee and
any past or present subsidiary or affiliate of Employer) and constitutes the
entire agreement between Employee and Employer with respect to the subject
matter of this Agreement. This Agreement may not be modified in any respect by
any verbal statement, representation or agreement made by any employee, officer,
or representative of Employer or by any written agreement unless signed by an
officer of Employer who is expressly authorized by the Board to execute such
document.

                  (c)      If any provision of this Agreement or application
thereof to anyone or under any circumstances should be determined to be invalid
or unenforceable, such invalidity or unenforceability will not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application. In addition, if any
provision of this Agreement is held by an arbitration panel or a court of
competent jurisdiction to be invalid, unenforceable, unreasonable, unduly
restrictive or overly broad, the parties intend that

                                      -24-



such arbitration panel or court modify said provision so as to render it valid,
enforceable, reasonable and not unduly restrictive or overly broad.

                  (d)      The internal laws of the State of Texas will govern
the interpretation, validity, enforcement and effect of this Agreement without
regard to the place of execution or the place for performance thereof.

Section 14. Arbitration.

                  (a)      Employer and Employee agree to submit to final and
binding arbitration any and all disputes or disagreements concerning the
interpretation or application of this Agreement. Any such dispute or
disagreement will be resolved by arbitration in accordance with the National
Rules for the Resolution of Employment Disputes of the American Arbitration
Association (the "AAA Rules"). Arbitration will take place in Houston, Texas,
unless the parties mutually agree to a different location. Within 30 calendar
days of the initiation of arbitration hereunder, each party will designate an
arbitrator. The appointed arbitrators will then appoint a third arbitrator.
Employee and Employer agree that the decision of the arbitrators will be final
and binding on both parties. Any court having jurisdiction may enter a judgment
upon the award rendered by the arbitrators. In the event the arbitration is
decided in whole or in part in favor of Employee, Employer will reimburse
Employee for his reasonable costs and expenses of the arbitration (including
reasonable attorneys' fees); provided, however, that Employer shall reimburse
Employee in accordance with Section 8 for the reasonable expenses (including
attorneys' fees and expenses) incurred by Employee in enforcing or seeking to
enforce in any arbitration the payment of any amount or other benefit described
in Section 8 regardless of the outcome of such arbitration. Regardless of the
outcome of any arbitration, Employer will pay all fees and expenses of the
arbitrators and all of Employer's costs of such arbitration.

                  (b)      Notwithstanding the provisions of Section 14(a),
Employer may, if it so chooses, bring an action in any court of competent
jurisdiction for injunctive relief to enforce Employee's obligations under
Sections 3 or 12 hereof and/or the Employee Confidentiality and Intellectual
Property Agreement between Employee and Employer (entered into pursuant to
Section 3(d) hereof).

                         [SIGNATURES ON FOLLOWING PAGE]

                                      -25-



         IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as to be effective as of the Effective Date.

                                    EMPLOYER:

                                    VERITAS DGC INC.

                                    By: ________________________________________
                                             James R. Gibbs
                                             Director

                                    EMPLOYEE:

                                    ____________________________________________
                                               Thierry Pilenko

                                      -26-

                                 [VERITAS LOGO]
                                     VERITAS
                             GEOPHYSICAL INTEGRITY

                            EMPLOYEE CONFIDENTIALITY

                                       AND

                         INTELLECTUAL PROPERTY AGREEMENT

As part of the consideration for my employment or continued employment with
Veritas DGC Inc. or any company affiliated with Veritas (collectively referred
to as "Veritas"), I agree to the following:

1.       CONFIDENTIAL INFORMATION. I understand that during my employment with
         Veritas, I will have access to Confidential Information that belongs to
         Veritas. Some examples of the types of Confidential Information I may
         receive include:

         (a).     Customer lists, customer requirements, customer contracts and
                  service agreements, customer profitability and other financial
                  information;

         (b).     Business plans, pricing and marketing techniques and
                  strategies, product information, business software and
                  computer programs, costing methodologies and allocation
                  modeling, and methods of business operation or procedure;

         (c).     Suppliers, business associates, business connections and
                  opportunities and information concerning the financial status
                  and private affairs of Veritas; and

         (d).     Trade secrets, inventions, improvements, developments,
                  technical data, test results, designs, and materials for which
                  Veritas may or may not have obtained patent, copyright or
                  trademark protection.

         I may receive Confidential Information in writing, orally, or
electronically.

2.       CONFIDENTIALITY AGREEMENT. I agree to hold all Confidential Information
         in confidence during and following my employment. I will not divulge it
         to anyone without the express written authorization of the Company. I
         further agree that if my employment ceases, I will not take any
         Confidential Information with me or disclose it to anyone not
         authorized by the Company. To the extent that any provision of this
         Section 2 conflicts with my Employment Agreement dated effective
         January 26, 2004, the terms of my Employment

                                   EXHIBIT A

CONFIDENTIALITY AND INTELLECTUAL PROPERTY AGREEMENT

                                                                          PAGE 1



         Agreement shall control.

3.       ASSIGNMENT OF INTELLECTUAL PROPERTY. I assign to Veritas all
         inventions, novel ideas (including ideas relating to new products, new
         services, or new methods of doing business), improvements or
         discoveries which I conceive or make, either alone or with others: (a)
         with the use of Veritas' time, materials, or facilities; or (b)
         resulting from or suggested by my work for Veritas; or (c) in any way
         related to any business Veritas is engaged in or plans to engage in.
         All such inventions, improvements, and developments will automatically
         become the property of Veritas immediately as I make them or conceive
         them. I agree to assign to Veritas the rights to such inventions,
         improvements and developments at any time Veritas requests, even after
         my employment terminates.

4.       EXECUTION OF DOCUMENTS. At any time Veritas requests, either during my
         employment or after termination, and without charge to Veritas, but at
         its expense, I agree to execute, acknowledge, and deliver all
         additional papers (including applications for patents and assignments
         of patents) and to perform such other lawful acts as Veritas may deem
         reasonably necessary to obtain or maintain patents for such inventions
         in any country and to vest title to such inventions in Veritas.

5.       This Agreement may not be modified, released, discharged, abandoned or
         terminated, except as agreed in writing between Veritas and the
         undersigned employee.

IN WITNESS WHEREOF this Agreement has been signed and delivered this ________
day of ____________________, 20___.

______________________________________      ___________________________________
WITNESS                                     EMPLOYEE SIGNATURE

______________________________________      ___________________________________
PRINTED NAME                                PRINTED NAME

CONFIDENTIALITY AND INTELLECTUAL PROPERTY AGREEMENT

                                                                          PAGE 2



                       AGREEMENT AND RELEASE OF ALL CLAIMS

         This Agreement, entered into as of the date written by Employee's
signature below, is by and between Veritas DGC Inc. ("Veritas"), a Delaware
corporation, and _______________ ("Employee"). (As used in this Agreement, the
term "Veritas" includes Veritas DGC Inc., and all of its subsidiary and
affiliated companies).

         Veritas and Employee agree as follows:

         Section 1. Within 5 business days after the Separation Date, as defined
in Section 3 below, and whether or not Employee executes and returns this
Agreement, Veritas will pay Employee the following amounts:

         -        Employee's regular base salary prorated through the Separation
                  Date;

         -        Employee's incentive bonus, if any is due;

         -        Employee's vacation pay accrued as of the Separation Date; and

         -        any expense reimbursement owed to Employee under Veritas
                  policy.

All of the above amounts will be REDUCED by applicable taxes and withholding.

         Section 2. [Insert, if applicable in accordance with Section 6(c)(2)(i)
of the Employment Agreement: Veritas shall pay Employee an amount equal to the
incentive bonus compensation which would have been due him but for the
termination of his employment, which incentive compensation shall be pro rated
through the Date of Termination. Such payment or payments shall be made to
Employee at the time other participants in the Key Contributor Plan or the
relevant incentive plan receive their payments.]

         [Insert Option A or Option B, whichever is applicable:

         [Option A: In accordance with Section 6(c) of the Employment Agreement
between Employer and Employee dated January 26, 2004 (the "Employment
Agreement"), during the

                                    EXHIBIT B



three-year period ending on the third anniversary of the Separation Date,
Employer shall pay to Employee an aggregate amount (the "Severance Payment")
equal to one and one-half (1.5) times Employee's Base Salary (as defined in the
Employment Agreement) at the highest annual rate in effect on or before the
Separation Date (but prior to giving effect to any reduction therein which
precipitated such termination), which Severance Payment will be paid to Employee
in equal installments every two weeks during such three-year period; provided,
however, that at any time during such three-year period Employer may, in its
discretion, elect to pay to Employee the then remaining balance of the Severance
Payment in the form of a lump sum cash payment. Further, in accordance with
Section 12(b) of the Employment Agreement, Employer will also pay employee an
amount equal to the Severance Payment, payable in the same method described
above, in respect of his agreements pursuant to Section 12 of the Employment
Agreement. All amounts so paid will be REDUCED by applicable taxes and
withholding.

         In addition, Employer will pay or provide for Employee's medical,
dental, health, and hospital coverage for one year or pay Employee a lump cash
payment in lieu of such coverage, in accordance with Section 6(c)(4) of the
Employment Agreement].

         [Option B: In accordance with Section 6(d) of the Employment Agreement
between Employer and Employee dated January 26, 2004 (the "Employment
Agreement"), within 30 calendar days after the Effective Date, as defined in
Section 15 below, Veritas will pay to Employee a lump sum (the "Severance
Payment") equal to one and one-half (1.5) times Employee's Base Salary (as
defined in the Employment Agreement) at the highest annual rate in effect on or
before the Separation Date (but prior to giving effect to any reduction therein
which precipitated such termination) plus (y) the payment relating to Employee's
incentive bonus provided for in Section 6(d)(3) of the Employment Agreement.
Further, in accordance with

                                      -2-



Section 12(b) of the Employment Agreement, Employer will also pay employee an
amount equal to the Severance Payment, payable in the same method described
above, in respect of his agreements pursuant to Section 12 of the Employment
Agreement. All amounts so paid will be REDUCED by applicable taxes and
withholding.

         In addition, Employer will pay or provide for Employee's medical,
dental, health, and hospital coverage for eighteen months or pay Employee a lump
cash payment in lieu of such coverage, in accordance with Section 6(d)(4) of the
Employment Agreement].

         Section 3. Employee's termination from employment will be effective at
the close of business on the Separation Date. The SEPARATION DATE as used in
this Agreement means _________.

         Section 4. Employee agrees to release Veritas DGC Inc., all of its
subsidiary and affiliated companies and parent companies, partnerships, and each
of their respective present and former directors, officers, employees, agents,
managers, advisors, representatives, partners, predecessors and successors in
such capacity, and all employee benefit plans sponsored by any of them (the
"Released Parties") from any and all claims he has or may have against the
Release Parties, individually and collectively, as of the date he signs this
Agreement. The claims he is releasing include (but are not limited to) all of
the following:

         -        any claims under any equity compensation, bonus or incentive
                  plans;

         -        any claims for tortious action or inaction of any sort
                  ("tortious action or inaction" means, among other things,
                  claims for such things as negligence, fraud, libel, or
                  slander);

         -        any claims arising under the Age Discrimination in Employment
                  Act of 1967 as amended (29 U.S.C. Section 621, et seq.) (the
                  Age Discrimination in Employment Act

                                      -3-



                  of 1967 prohibits, in general, discrimination against
                  employees on the basis of age);

         -        any claims arising under Title VII of the Civil Rights Act of
                  1964 as amended (42 U.S.C. Section 2000e, et seq.), or the
                  Texas Commission on Human Rights Act (Texas Labor Code Section
                  21.001, et seq.) (both of these statutes, in general, prohibit
                  discrimination in employment on the basis of race, religion,
                  national origin or gender);

         -        any claims arising under the Americans with Disabilities Act
                  of 1990, as amended (42 U.S.C. Section 12101, et seq.) (the
                  Americans with Disabilities Act of 1990 prohibits, in general,
                  discrimination in employment on the basis of an employee's or
                  applicant's disability);

         -        any claims arising under Texas Labor Code Sections 451.001, et
                  seq. for retaliation or discrimination in connection with a
                  claim for workers' compensation benefits; and,

         -        any claims for breach of contract, wrongful discharge,
                  promissory estoppel, violation of public policy, constructive
                  discharge, retaliation, or conspiracy;

         -        any claims relating to Employee's employment or termination of
                  his employment including any and all claims for damages,
                  costs, salary, wages, termination pay, severance pay, vacation
                  pay, bonuses, commissions, expenses, allowances, insurance, or
                  any other benefit arising out of Employee's employment with
                  Veritas, with the exception of those benefits specifically
                  excluded below in this Section 4;

         -        any claims arising under any other local, state, federal or
                  foreign law, regulation

                                      -4-



                  or ordinance;

         -        any and all rights, benefits or claims Employee may have under
                  any employment, severance or retention agreement with or
                  incentive compensation plan, bonus plan, stock option plan,
                  retention plan, or severance plan or policy of Veritas or to
                  any ownership interest in Veritas;

         -        any other claim of any kind whatsoever, whether or not
                  expressly set forth in this Agreement;

         -        any claims for costs, fees or other expenses (including
                  attorneys' fees) in connection with the claims described
                  above.

         The release contained in this Section 4 WILL NOT affect any of the
         following:

         -        Any rights or claims that may arise after the date of
                  Employee's signature below;

         -        Employee's rights or benefits under Veritas' 401(k) retirement
                  savings plan, Veritas' Employee Stock Purchase Plan, or any
                  pension or retirement plan in which Employee is a participant
                  on the Separation Date (Employee's rights and benefits will be
                  determined by the applicable plan documents);

         -        Employee's right to elect continued health and/or dental
                  benefits under the Consolidated Omnibus Budget Reconciliation
                  Act of 1985 ("COBRA");

         -        Employee's right to exercise any options to purchase Veritas
                  DGC Inc. common stock in accordance with the terms of the
                  applicable stock option grant, including any terms of the
                  grant modified by Section 6(c)(4) or Section 6(d)(5) of the
                  Employment Agreement;

         -        Employee's rights under any restricted stock agreement between
                  Employee and Veritas DGC Inc. under the terms of which
                  Employee has been granted Veritas

                                      -5-



                  DGC Inc. restricted stock, including any terms of the grant
                  modified by Section 6(d)(5) of the Employment Agreement;

         -        Employee's rights under any other plan or agreement between
                  Employee and Veritas DGC Inc. under the terms of which
                  Employee has been granted any other equity interest in Veritas
                  DGC Inc. or equity-based interest such as stock appreciation
                  rights;

         -        Employee's rights under that one certain Indemnity Agreement
                  between Veritas and Employee dated __________, 2004, or any
                  other indemnity arrangement between Veritas and Employee;

         -        Employee's rights under any director's and officer's policies
                  of insurance issued to Veritas, including any replacement
                  policies or renewals;

         -        Employee's right to claim and receive reimbursement for or
                  indemnity from excise taxes in accordance with Section 7 of
                  the Employment Agreement;

         -        Any other benefit to which Employee may be entitled under any
                  other health or benefit plan in accordance with the applicable
                  plan documents; or

         -        Employee's rights under any workers' compensation statute; the
                  Jones Act, 46 U.S.C. Appx. Section 688, as amended; general
                  maritime law or similar laws; and any other right Employee may
                  have with respect to bodily injury incurred in the course and
                  scope of employment.

         Section 5. Veritas and Employee agree that this Agreement is a binding
contract. The purpose of the Agreement is to compromise doubtful or disputed
claims, avoid litigation, and buy peace. Employee agrees that although Veritas
is making payment to Employee in exchange for a release of claims, Veritas does
not admit any wrongdoing of any kind.

                                      -6-



         Section 6. Employee agrees to assist Veritas in defending any legal
proceedings against Veritas arising out of matters which occurred on or prior to
the Separation Date. Veritas agrees to reimburse Employee for his time and
expense or costs he may incur in that regard.

         Section 7. Employee confirms that after the Effective Date he remains
subject to and agrees to comply with:

         -        those obligations of confidentiality contained in Section 3(b)
                  and 3(c) of the Employment Agreement;

         -        the provisions relating to non-competition with Employer and
                  non-solicitation of Employer's employees contained in Section
                  12 of the Employment Agreement;

         -        the provisions relating to solicitation or hiring of
                  Employer's employees contained in Section 12 of the Employment
                  Agreement; and

         -        the terms of the Employee Confidentiality and Intellectual
                  Property Agreement with Employer which Employee signed
                  effective ____________, 2004.

         Section 8. This Agreement has been delivered to Employee on
_____________.

         -        Employee will have 21 calendar days from ___________ or until
                  the close of business on ___________ to decide whether to sign
                  and return this Agreement and be bound by its terms. In the
                  event Employee has not signed and returned this Agreement to
                  Veritas on or before __________, this Agreement will become
                  null and void.

         -        Veritas and Employee agree that if they agree to change the
                  terms of this Agreement in any manner after it is delivered to
                  Employee, even if the changes are material, the 21-day period
                  specified in the previous paragraph will not restart or be
                  extended.

                                      -7-



         -        After signing this Agreement, Employee will have the right to
                  revoke the Agreement for a period of 7 calendar days after
                  signing it by notifying Veritas in writing that Employee
                  revokes the Agreement. In the event Employee revokes the
                  Agreement, it will become null and void.

         -        Employer will provide the benefits described in Section 2
                  above only beginning after the expiration of the revocation
                  period described above (assuming Employee has not timely
                  revoked this Agreement).

         Section 9. Employee acknowledges that he has read this Agreement and
has had reasonable opportunity consider it and consult with an attorney about
it. Employee acknowledges that the only promises made to him to sign this
Agreement are those stated in this Agreement. He understands that, except for
the exceptions set out in Section 4 above, this Agreement will have the effect
of waiving any claim he may pursue against the Released Parties.

         Section 10. Employee acknowledges that he makes this Agreement
knowingly and voluntarily and that he agrees to each of its terms. Employee
understands that by signing this Agreement, he will become entitled to receive
payments and other benefits to which he is not otherwise entitled.

         Section 11. This Agreement constitutes the entire understanding between
Veritas and Employee with respect to the subject matter hereof.

         Section 12. This Agreement will benefit and be binding upon Veritas and
its successors and assigns and Employee and his successors and legal
representatives. Employee will not assign or attempt to assign any of his rights
under this Agreement.

         Section 13. If a court determines that any provision of this Agreement
is invalid, the other provisions will remain in effect.

                                      -8-



         Section 14. This Agreement will be governed by, construed under, and
enforced in accordance with the laws of the State of Texas, not including,
however, its conflicts of law rules that might otherwise refer to the law of
another forum or jurisdiction.

         Section 15. This Agreement will become effective and enforceable only
after a period of 7 days has expired following Employee's execution and delivery
of this Agreement to Veritas (this date is referred to in this Agreement as the
"EFFECTIVE DATE"), assuming Employee has not timely revoked this Agreement.

                   THIS AGREEMENT IS SUBJECT TO ARBITRATION IN
                      ACCORDANCE WITH THE FOLLOWING SECTION

         Section 16. Employer and Employee agree to submit to final and binding
arbitration any and all disputes or disagreements concerning the interpretation
or application of this Agreement. Any such dispute or disagreement will be
resolved by arbitration in accordance with the National Rules for the Resolution
of Employment Disputes of the American Arbitration Association (the "AAA
Rules"). Arbitration will take place in Houston, Texas, unless the parties
mutually agree to a different location. Within 30 calendar days of the
initiation of arbitration hereunder, each party will designate an arbitrator.
The appointed arbitrators will then appoint a third arbitrator. Employee and
Employer agree that the decision of the arbitrators will be final and binding on
both parties. Any court having jurisdiction may enter a judgment upon the award
rendered by the arbitrators. In the event the arbitration is decided in whole or
in part in favor of Employee, Employer will reimburse Employee for his
reasonable costs and expenses of the arbitration (including reasonable
attorneys' fees). Regardless of the outcome of any arbitration, Employer will
pay all fees and expenses of the arbitrators and all of Employer's costs of such
arbitration.

                                      -9-



         Notwithstanding the provisions of the previous paragraph, Employer may,
if it so chooses, bring an action in any court of competent jurisdiction for
injunctive relief to enforce Employee's obligations under Section 7 of this
Agreement.

         IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the Effective Date.

                                        VERITAS:

                                        VERITAS DGC INC.
                                        and subsidiary and affiliated companies

                                        By: ________________________________

                               NOTICE TO EMPLOYEE

BY SIGNING THIS DOCUMENT, YOU MAY BE GIVING UP IMPORTANT LEGAL RIGHTS. YOU ARE
ADVISED TO CONSULT WITH AN ATTORNEY PRIOR TO SIGNING AND RETURNING THIS DOCUMENT
TO VERITAS.

                                                     EMPLOYEE:

                                                     THIERRY PILENKO
                                                     ___________________________

                                                     Date:______________________

STATE OF _________________        Section
COUNTY OF _______________         Section

    Subscribed and sworn to before me, this _____ day of ____________, 20__.


                                             NOTARY PUBLIC in and for

                                             The State of_______________________

                                             My Commission Expires:_____________

                                      -10-

EX-10.4

                                                                    EXHIBIT 10.4
                              RETIREMENT AGREEMENT

         This Retirement Agreement (this "Agreement") is made and entered into
by and between Veritas DGC Inc., a Delaware corporation ("Veritas"), and David
B. Robson, an individual currently resident in Calgary, Alberta ("Robson"),
effective as of January 1, 2004 (the "Effective Date").

                                  WITNESSETH:

         WHEREAS, Robson has served as an employee and a director of Veritas and
its predecessors for a number of years, most recently as a director and as
chairman & chief executive officer;

         WHEREAS, Robson has notified the Board of Directors of Veritas (the
"Board") that he intends to retire;

         WHEREAS, the Board and Robson have agreed that Robson will continue to
serve Veritas as a director and as chairman & chief executive officer and a
director until the Board appoints a successor chief executive officer (a
"successor chief executive officer") and that successor chief executive officer
actually commences his employment at Veritas;

         WHEREAS, attendant to Robson's retirement, Veritas and Robson wish for
there to be a complete understanding and agreement between Veritas and Robson
with respect to the compensation and benefits to be provided Robson upon his
retirement and, in the case of certain health insurance, after his retirement;
and,

         WHEREAS, Veritas and Robson have previously entered into that certain
Amended and Restated Employment Agreement effective as of December 1, 2003 (the
"Prior Employment Agreement");

         NOW, THEREFORE, in consideration of the mutual promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Veritas and Robson agree as
follows:

Section 1. General Duties of Veritas and Robson.

                  (a)      Robson has indicated that he intends to retire as a
director and as chairman and chief executive officer of Veritas at such time as
a successor chief executive officer actually commences his employment at
Veritas. It is both parties' intention that the Board appoint a successor chief
executive officer as soon as is reasonably possible. Until the date when the
successor chief executive officer actually commences his employment at Veritas,
Veritas agrees to continue to employ Robson and Robson agrees to continue to
serve Veritas as its chairman & chief executive officer reporting to the Board.
The powers, duties and responsibilities of Robson as chairman and chief
executive officer include those duties that are the usual and customary powers,
duties and responsibilities of such office, including those powers, duties and
responsibilities specified in Veritas's Bylaws, and such other and further
duties appropriate to



such position as may from time to time be assigned to Robson by the Board or by
any committee of the Board authorized to make such assignments.

                  (b)      On that date when a successor chief executive officer
actually commences his employment at Veritas, Robson will retire as chairman and
chief executive officer and as a director of Veritas.

Section 2. Compensation and Benefits.

                  (a)      For the period beginning on the Effective Date and
ending on the Date of Termination:

                           (1)      Veritas will pay Robson a base salary of
         $450,000 per annum (the "CEO's Salary"). The CEO's Salary will be paid
         to Robson in equal installments every two weeks or on such other
         schedule as Veritas may establish from time to time for its management
         personnel.

                           (2)      Robson will be eligible to participate in
         the Key Contributor Incentive Compensation Plan or other replacement
         incentive or bonus plan Employer establishes for its key executives,
         subject to all of the terms and conditions of such plan.

                           (3)      Robson will be entitled to receive options
         ("Options") to purchase the same number of shares of Veritas common
         stock as are granted to continuing non-employee directors of Veritas on
         the same date, at the same price and on the same terms as such Options
         are granted to such continuing non-employee directors.

                           (4)      Robson will be entitled to paid vacation of
         not less than four (4) weeks each year. Vacation may be taken by Robson
         at the time and for such periods as may be mutually agreed upon between
         Veritas and Robson.

                           (5)      Robson will be reimbursed in accordance with
         Veritas's expense reimbursement policy as in effect on January 1, 2004
         for all of the actual and reasonable costs and expenses incurred by him
         in the performance of his services and duties hereunder, including, but
         not limited to, travel and entertainment expenses. Notwithstanding any
         provision in Veritas's expense reimbursement policy to the contrary,
         Robson will also be reimbursed for first-class airline travel in the
         performance of his services and duties. Robson will furnish Veritas
         with all invoices and vouchers reflecting amounts for which Robson
         seeks Veritas's reimbursement.

                           (6)      Robson will be entitled to participate in
         all insurance and retirement plans, and such other benefit plans or
         programs as may be in effect from time to time for the key management
         employees of Veritas (other than incentive compensation plans),
         including, without limitation, those related to savings and thrift,
         retirement, welfare, medical, dental, disability, salary continuance,
         accidental death, travel accident, life insurance, incentive bonus,
         membership in business and professional organizations, and
         reimbursement of business and entertainment expenses.

                                      -2-



                  (b)      The CEO's Salary and any other amount Veritas pays
Robson pursuant to this Agreement will be subject to such payroll and
withholding deductions as may be required by law and such other deductions as
are applied generally to employees of Veritas for insurance and other employee
benefit plans in which Robson participates.

                  (c)      The CEO's Salary and any other cash amounts Veritas
is obligated to pay Robson pursuant to this Agreement are denominated in U.S.
dollars but shall actually be paid to Robson in Canadian dollars converted on
the date of payment.

Section 3. Fiduciary Duty; Confidentiality.

                  (a)      In keeping with Robson's fiduciary duties to Veritas,
Robson agrees that he will not knowingly take any action that would create a
conflict of interest with Veritas, or upon discovery thereof, allow such a
conflict to continue. In the event that Robson discovers that such a conflict
exists, Robson agrees that he will disclose to the Board any facts which might
involve a conflict of interest that has not been approved by the Board.

                  (b)      As part of Robson's fiduciary duties to Veritas,
Robson agrees to protect and safeguard Veritas's information, ideas, concepts,
improvements, discoveries, and inventions and any proprietary, confidential and
other information relating to Veritas or its business (collectively,
"Confidential Information") and, except as may be required by Veritas, Robson
will not knowingly, either during his employment by Veritas or thereafter,
directly or indirectly, use for his own benefit or for the benefit of another,
or disclose to another, any Confidential Information, except (i) with the prior
written consent of Veritas; (ii) in the course of the proper performance of
Robson's duties under this Agreement; (iii) for information that becomes
generally available to the public other than as a result of the unauthorized
disclosure by Robson; (iv) for information that becomes available to Robson on a
nonconfidential basis from a source other than Veritas or its affiliated
companies who is not bound by a duty of confidentiality to Veritas; or (v) as
may be required by any applicable law, rule, regulation or order.

                  (c)      Upon termination of his employment with Veritas,
Robson will immediately deliver to Veritas all documents in Robson's possession
or under his control which embody any of Veritas's Confidential Information.

                  (d)      Robson acknowledges that he has entered into a
Confidentiality and Intellectual Property Agreement with Veritas, effective
October 22, 2001, which agreement remains in effect.

Section 4. Term.

                  Robson's employment with Veritas, having previously commenced,
will continue until terminated in accordance with Section 5.

Section 5. Termination.

                  (a)      Unless earlier terminated in accordance with Section
5(b), Robson's employment will automatically terminate effective with
adjournment of the next annual meeting

                                      -3-



of Veritas stockholders (the "Effective Time"). Such annual meeting is
tentatively scheduled for December 7, 2004 but will not be formally called by
the Board until September or October 2004.

                  (b)      Robson's employment will terminate prior to the
Effective Time, upon the first to occur of the following:

                           (1)      The successor chief executive officer
         actually commences his employment at Veritas. Robson's employment will
         immediately terminate on that date and time when a successor chief
         executive officer actually commences his employment at Veritas. In the
         event of such termination, Robson will immediately tender his written
         resignation as a director of Veritas.

                           (2)      Robson elects to terminate. At any time on
         or after April 1, 2004, Robson may terminate his employment for any or
         no reason by (i) giving the chairman of the Compensation Committee of
         the Board ten days' written notice that he elects to terminate his
         employment and (ii) tendering his written resignation as a director of
         Veritas effective upon the Date of Termination.

                           (3)      Veritas elects to terminate. At any time on
         or after April 1, 2004, the Board may terminate Robson's employment for
         any or no reason by giving him ten days' written notice of such
         termination. In the event of such termination, Robson agrees to tender
         to the Secretary of Veritas his written resignation as a director of
         Veritas effective upon the Date of Termination.

                           (4)      Robson's death.

                  (c)      As used in this Agreement, "Date of Termination"
means:

                           (1)      If Robson's employment with Veritas is
terminated in accordance with Section 5(a), that date on which the Effective
Time occurs;

                           (2)      If Robson's employment with Veritas is
terminated by Veritas in accordance with Section 5(b)(1), that date when the
successor chief executive officer actually commences his employment at Veritas;

                           (3)      If Robson's employment with Veritas is
terminated by Robson in accordance with Section 5(b)(2), that date which is ten
(10) days after Veritas's receipt of Robson's notice of termination and letter
of resignation as a director;

                           (4)      If Robson's employment with Veritas is
terminated by Veritas in accordance with Section 5(b)(3), that date which is ten
(10) days after Robson's receipt of the Board's written notice of termination;
or

                           (5)      If Robson's employment is terminated as a
result of his death, his date of death.

                                      -4-



Section 6. Effects of Termination.

                  (a)      Upon termination of Robson's employment in accordance
with any provision of Section 5, the obligations of Veritas and Robson under
Sections 1 and 2 will terminate as of the Date of Termination, and Veritas will
thereafter pay or provide to Robson (or to his legal representative, in the case
of his death) the following listed items.

                           (1)      Veritas will pay Robson (or his legal
representative, in the case of his death):

                                    (i)      The CEO's Salary through the Date
                                             of Termination;

                                    (ii)     If the Date of Termination is on or
                                             after the date incentive payments
                                             are made to other executives under
                                             the Key Contributor Plan, any
                                             incentive compensation then due him
                                             under Section 2(a)(2); and

                                    (iii)    During the three-year period ending
                                             on the third anniversary of the
                                             Date of Termination, an aggregate
                                             amount (the "Severance Payment")
                                             equal to three (3) times the CEO's
                                             Salary, which Severance Payment
                                             will be paid to Robson in equal
                                             installments every two weeks during
                                             such three-year period; provided,
                                             however, that at any time during
                                             such three-year period Veritas may,
                                             in its discretion, elect to pay to
                                             Robson the then remaining balance
                                             of the Severance Payment in the
                                             form of a lump sum cash payment.

                           (2)      Veritas will provide, at its expense, to
         Robson and his wife, Val, the following insurance coverage in the U.S.
         and Canada for each of their respective lifetimes, subject to the
         limitations set forth below:

                                    (i)      In the U.S.: group health insurance
                                             (currently including group medical,
                                             hospitalization and prescription
                                             drug benefits) of the same type
                                             Veritas makes available to
                                             executive officers of Veritas
                                             located in the United States; and,

                                    (ii)     In Canada:

                                            (A)  Provincial health care coverage
                                                 for of Robson and his wife, Val
                                                 ,until they reach age 70; and

                                            (B)  Private group health insurance
                                                 of the same type Veritas makes
                                                 available to its key management
                                                 employees located in the
                                                 Province of Alberta, Canada
                                                 (such coverage is currently
                                                 provided by

                                      -5-



                                                 Great Western and includes
                                                 hospitalization and
                                                 prescription drug insurance in
                                                 excess of provincial health
                                                 coverage).

                                    (iii)    The amounts and types of group
                                             insurance coverage Veritas will
                                             provide under Sections 6(a)(2)(i)
                                             and 6(a)(2)(ii) may vary from time
                                             to time and some or all of the
                                             coverage may be modified, reduced
                                             or eliminated at any time -
                                             Veritas's sole obligation is to
                                             provide the same types and amounts
                                             of group health coverage made
                                             available during the period in
                                             question to executive officers of
                                             Veritas in the U.S. with respect to
                                             U.S. insurance coverage and to key
                                             management employees of Veritas in
                                             the province of Alberta, Canada
                                             with respect to Canadian insurance
                                             coverage. Robson acknowledges and
                                             agrees that he and his wife will
                                             provide such information and
                                             complete such forms as Veritas or
                                             its insurance providers may
                                             reasonably request in connection
                                             with such insurance.

                           (3)      Each Option Robson holds that is not vested
         on the Date of Termination will terminate on the Date of Termination.
         Each vested Option Robson holds on the Date of Termination will, except
         in the event of Robson's subsequent death, terminate on the earlier of
         the expiration of the original term of the Option or three years. In
         the event of Robson's death after the Date of Termination all
         outstanding Options he then holds will terminate on the earlier of the
         date of expiration of the term of the Option as specified in the
         relevant Option grant letter or the first anniversary of the date of
         Robson's death.

                           (4)      For a period of nine (9) months following
         the Date of Termination, Veritas will provide Robson with reasonable
         secretarial and administrative assistance to aid him in winding up his
         personal affairs in Houston, moving his personal effects out of his
         Houston residence, and selling that residence. Such Veritas personnel
         will be made available for reasonable amounts of time during Veritas's
         regular business hours and only in Houston.

                  (b)      As a condition to making the payments and providing
the benefits specified in this Section 6, Veritas will require (i) that Robson
(or his legal representative, in the event of his earlier death) execute a
release of all claims Robson may have against Veritas on the Date of Termination
(such release will be in substantially the same form as Exhibit A attached
hereto modified to take into account the actual circumstances); and (ii) in the
case of termination in accordance with Sections 5(b)(1), 5(b)(2) or 5(b)(3),
that Robson execute and deliver to Veritas his written resignation as a director
of Veritas.

Section 7. No Obligation to Mitigate; No Rights of Offset.

                  (a)      Robson shall not be required to mitigate the amount
of any payment or other benefit required to be paid to Robson pursuant to this
Agreement, whether by seeking other

                                      -6-



employment or otherwise, nor shall the amount of any such payment or other
benefit be reduced on account of any compensation earned by Robson as a result
of employment by another person.

                  (b)      Veritas's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which Veritas may have against Robson or others.

Section 8. No Effect on Other Rights.

         Nothing in this Agreement shall prevent or limit Robson's continuing or
future participation in any plan, program, policy or practice of or provided by
Veritas or any of its affiliates and for which Robson may qualify, nor shall
anything herein limit or otherwise affect such rights as Robson may have under
any stock option or other agreements with Veritas or any of its affiliates.
Amounts which are vested benefits or which Robson is otherwise entitled to
receive under any plan, program, policy or practice of or provided by, or any
other contract or agreement with, Veritas or any of its affiliates at or
subsequent to the Date of Termination shall be payable or otherwise provided in
accordance with such plan, program, policy or practice or contract or agreement
except as explicitly modified by this Agreement.

Section 9. Successors; Binding Agreement.

                  (a)      This Agreement is personal to Robson and without the
prior written consent of Veritas shall not be assignable by Robson otherwise
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by Robson's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.

                  (b)      This Agreement shall inure to the benefit of and be
binding upon Veritas and its successors and assigns.

                  (c)      Veritas will require any successor (whether direct or
indirect, by purchase, merger, amalgamation, consolidation or otherwise) to all
or substantially all of the business and/or assets of Veritas, by agreement in
form and substance reasonably satisfactory to Robson, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
Veritas would be required to perform it if no such succession had taken place.
As used in this Agreement, "Veritas" shall mean Veritas as hereinbefore defined
and any successor to its business and/or assets as aforesaid.

Section 10. Non-Competition; Non-Solicitation; No Hire.

                  (a)      Robson agrees that during the Non-Compete Period (as
defined below), Robson shall not, without the prior written consent of Veritas,
directly or indirectly, anywhere in the world, engage, invest, own any interest,
or participate in, consult with, render services to, or be employed by any
business, person, firm or entity that is in competition with the "Business" [as
defined in Section 10(d)(1)] of Veritas or any of its subsidiaries or
affiliates, except for the account of Veritas and its subsidiaries and
affiliates; provided, however, that during the Non-Compete Period Robson may
acquire, solely as a passive investment, not more than five percent

                                      -7-



(5%) of the outstanding shares or other units of any security of any entity
subject to the requirements of Section 13 or 15(d) of the Exchange Act. Robson
acknowledges that a remedy at law for any breach or attempted breach of this
covenant not to compete will be inadequate and further agrees that any breach of
this covenant not to compete will result in irreparable harm to Veritas, and,
accordingly, Veritas shall, in addition to any other remedy that may be
available to it, be entitled to specific performance and temporary and permanent
injunctive and other equitable relief (without proof of actual damage or
inadequacy of legal remedy) in case of any such breach or attempted breach.
Robson acknowledges that this covenant not to compete is being provided as an
inducement to Veritas to enter into this Agreement and that this covenant not to
compete contains reasonable limitations as to time, geographical area and scope
of activity to be restrained that do not impose a greater restraint than is
necessary to protect the goodwill or other business interest of Veritas.
Whenever possible, each provision of this covenant not to compete shall be
interpreted in such a manner as to be effective and valid under applicable law
but if any provision of this covenant not to compete shall be prohibited by or
invalid under applicable law, such provision of this covenant not to compete
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remaining provisions of this covenant not to compete. If any
provision of this covenant not to compete shall, for any reason, be judged by
any court of competent jurisdiction to be invalid or unenforceable, such
judgment shall not affect, impair or invalidate the remainder of this covenant
not to compete but shall be confined in its operation to the provision of this
covenant not to compete directly involved in the controversy in which such
judgment shall have been rendered. In the event that the provisions of this
covenant not to compete should ever be deemed to exceed the time or geographic
limitations permitted by applicable laws, then such provision shall be reformed
to the maximum time or geographic limitations permitted by applicable law.

                  (b)      In addition to the restrictions set forth in Section
10(a), Robson agrees that, effective as of the Effective Date and for a period
that includes the term of this Agreement and one (1) year thereafter, Robson
will not, either directly or indirectly, (i) make known to any person, firm or
entity that is in competition with the Business of Veritas or any of its
subsidiaries or affiliates the names and addresses of any of the suppliers or
customers of Veritas or any of its subsidiaries or affiliates, potential
customers of Veritas or any of its subsidiaries or affiliates upon whom Veritas
or any of its subsidiaries or affiliates has called upon in the last twelve (12)
months or contacts of Veritas or any of its subsidiaries or affiliates or any
other information pertaining to such persons, or (ii) call on, solicit, or take
away, or attempt to call on, solicit or take away any of the suppliers or
customers of Veritas or any of its subsidiaries or affiliates, whether for
Robson or for any other person, firm or entity.

                  (c)      Effective as of the Effective Date and for a period
that includes the term of this Agreement and one year (1) year thereafter,
Robson will not, either on his own account or for any other person, firm,
partnership, corporation, or other entity (i) solicit any Key Employee of
Veritas or any of its subsidiaries or affiliates to leave such employment; or
(ii) induce or attempt to induce any such Key Employee to breach her or his
employment agreement with Veritas or any of its subsidiaries or affiliates.

                  (d)      The following definitions apply to this Section 10:

                                      -8-



                           (1)      "Business" means the business of acquiring,
         processing and/or interpreting geophysical data and/or producing and/or
         conducting geophysical surveys, including, but not limited to, (x) the
         business of surface seismic acquisition and/or surface seismic data
         processing and/or interpretation for the purpose of providing and/or
         interpreting seismic images of the subsurface of the earth, and (y) the
         following activities and services: (i) all forms of surface land,
         marine, ocean bottom cable and transition zone seismic data
         acquisition; (ii) all forms of surface seismic data processing,
         including the processing of two, three and/or four dimensional vertical
         seismic profiling; (iii) recording of data from wellbore seismic arrays
         performed during simultaneous acquisition of surface two, three and/or
         four dimensional data; (iv) trenched in, buried near surface or seabed
         permanent array installation and acquisition; (v) surface seismic
         acquisition, processing, interpretation and/or sales, in each case, of
         multiclient surveys; (vi) maintenance of surface seismic data
         processing centers, including licensing and support of surface seismic
         processing software; (vii) equipment design and manufacture for surface
         seismic acquisition, processing and interpretation; (viii) research and
         development programs for any of the items described in this Section
         10(d)(1) and seismically-assisted reservoir solutions, including
         software relating thereto; (ix) surface seismic data management
         services; (x) interpretation activities related to or in support of
         acquisition and processing activities described in this Section
         10(d)(1); (xi) borehole seismic acquisition and installation and
         acquisition of data from wellbore seismic arrays; (xii) reservoir
         management; (xiii) commercial seismically-assisted reservoir solutions;
         and (xiv) non-seismic data management and non-seismic dynamic reservoir
         characterization and performance prediction.

                           (2)      "Key Employee" means an individual employed
         by Veritas or one of its affiliates who is involved directly in seismic
         acquisition activities, seismic data processing, seismic technology
         development or other research and development.

                           (3)      "Non-Compete Period" means that period of
         time commencing on the Effective Date and continuing for eighteen (18)
         months after the Date of Termination.

Section 11. Miscellaneous.

                  (a)      All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith will be in
writing and will be delivered by hand; by overnight courier; by electronic mail;
or by registered or certified mail, return receipt requested to the addresses
set forth below in this Section 11(a):

                  If to Veritas, to:

                            Veritas DGC Inc.
                            10300 Town Park
                            Houston, Texas 77072
                            Attention:  Scott Smith
                                        Vice President, Human Resources
                            Email:  scott_smith@veritasdgc.com

                                      -9-



                  If to Robson, to:

                           Mr. David B. Robson
                           No. 903, 200 La Caille Place S.W. Calgary, Alberta
                           T2P 5E2
                           Email: dave_robson@veritasdgc.com

or to such other names or addresses as Veritas or Robson, as the case may be,
designate by notice to the other party hereto in the manner specified in this
Section.

                  (b)      With the exception of the Indemnity Agreement by and
between Veritas and Robson dated as of March 7, 2000 which is specifically not
superceded or replaced by or merged into this Agreement, this Agreement
(including the Exhibits attached hereto) supersedes, replaces and merges all
previous agreements and discussions relating to the same or similar subject
matters between Robson and Veritas (including any such agreements or discussions
between Robson and any past or present subsidiary or affiliate of Veritas) and
constitutes the entire agreement between Robson and Veritas with respect to the
subject matter of this Agreement. Specifically, this Agreement supercedes and
replaces the Prior Employment Agreement. This Agreement may not be modified in
any respect by any verbal statement, representation or agreement made by any
employee, officer, or representative of Veritas or by any written agreement
unless signed by an officer of Veritas who is expressly authorized by the Board
to execute such document.

                  (c)      If any provision of this Agreement or application
thereof to anyone or under any circumstances should be determined to be invalid
or unenforceable, such invalidity or unenforceability will not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application. In addition, if any
provision of this Agreement is held by an arbitration panel or a court of
competent jurisdiction to be invalid, unenforceable, unreasonable, unduly
restrictive or overly broad, the parties intend that such arbitration panel or
court modify said provision so as to render it valid, enforceable, reasonable
and not unduly restrictive or overly broad.

                  (d)      The internal laws of the State of Texas will govern
the interpretation, validity, enforcement and effect of this Agreement without
regard to the place of execution or the place for performance thereof.

Section 12. Arbitration.

                  (a)      Veritas and Robson agree to submit to final and
binding arbitration any and all disputes or disagreements concerning the
interpretation or application of this Agreement. Any such dispute or
disagreement will be resolved by arbitration in accordance with the National
Rules for the Resolution of Employment Disputes of the American Arbitration
Association (the "AAA Rules"). Arbitration will take place in Houston, Texas,
unless the parties mutually agree to a different location. Within 30 calendar
days of the initiation of arbitration hereunder, each party will designate an
arbitrator. The appointed arbitrators will then appoint a third arbitrator.
Robson and Veritas agree that the decision of the arbitrators will be final and
binding on both parties. Any court having jurisdiction may enter a judgment upon
the award rendered by the

                                      -10-



arbitrators. In the event the arbitration is decided in whole or in part in
favor of Robson, Veritas will reimburse Robson for his reasonable costs and
expenses of the arbitration (including reasonable attorneys' fees). Regardless
of the outcome of any arbitration, Veritas will pay all fees and expenses of the
arbitrators and all of Veritas's costs of such arbitration.

                  (b)      Notwithstanding the provisions of Section 12(a),
Veritas may, if it so chooses, bring an action in any court of competent
jurisdiction for injunctive relief to enforce Robson's obligations under
Sections 3(b), 3(c), 3(d) or 10 hereof.

         IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as to be effective as of the Effective Date.

                                             VERITAS:

                                             VERITAS DGC INC.

                                             By:
                                                 _______________________________
                                                    James R. Gibbs
                                                    Director

                                             ROBSON:
                                             _______________________________

                                                    David B. Robson

                                      -11-



                       AGREEMENT AND RELEASE OF ALL CLAIMS

         This Agreement, entered into as of the date written by Employee's
signature below, is by and between Veritas DGC Inc. ("Veritas"), a Delaware
corporation, and David B. Robson ("Employee"). (As used in this Agreement, the
term "Veritas" includes Veritas DGC Inc. and all of its subsidiary and
affiliated companies).

         Veritas and Employee agree as follows:

         Section 1. Within 5 business days after the Date of Termination, as
defined in Section 3 below, and whether or not Employee executes and returns
this Agreement, Veritas will pay Employee the following amounts:

         -        The CEO's Salary [as defined in Section 2(a)(1) of the
                  Retirement Agreement between Employer and Employee dated
                  effective January 10, 2004, the "Retirement Agreement"]
                  prorated through the Date of Termination;

         -        Employee's vacation pay accrued as of the Date of Termination;
                  and

         -        Any expense reimbursement owed to Employee under Section
                  2(b)(3) of the Retirement Agreement.

All of the above amounts will be REDUCED by applicable taxes and withholding.

         Section 2. In addition, Veritas will:

         -        During the three-year period ending on the third anniversary
                  of the Date of Termination, pay Employee an aggregate amount
                  (the "Severance Payment") equal to three (3) times the CEO's
                  Salary (as defined in Section 2(a)(1) of the Retirement
                  Agreement) which Severance Payment will be paid to Employee in
                  equal installments every two weeks during such three-year
                  period; provided, however, that at any time during such
                  three-year period Veritas may, in its

                                    EXHIBIT A



                  discretion, elect to pay to Employee the then remaining
                  balance of the Severance Payment in the form of a lump sum
                  cash payment; and

         -        Provide Employee and his wife, Val, for each of their
                  respective lifetimes group health insurance in accordance with
                  Section 6(a)(2) of the Retirement Agreement.

         -        Provide Robson with secretarial and administrative assistance
                  in accordance with Section 6(a)(4) of the Retirement
                  Agreement.

         Section 3. Employee's termination from employment will be effective at
the close of business on the Date of Termination. The DATE OF TERMINATION as
used in this Agreement means _________.

         Section 4. Employee agrees to release Veritas from any claims he has or
may have against Veritas as of the date he signs this Agreement. The claims he
is releasing include all of the following:

         -        any claims under any bonus or incentive plans;

         -        any claims for tortious action or inaction of any sort
                  ("tortious action or inaction" means, among other things,
                  claims for such things as negligence, fraud, libel, or
                  slander);

         -        any claims arising under the Age Discrimination in Employment
                  Act of 1967 as amended (29 U.S.C. Section 621, et seq.) (the
                  Age Discrimination in Employment Act of 1967 prohibits, in
                  general, discrimination against employees on the basis of
                  age);

         -        any claims arising under Title VII of the Civil Rights Act of
                  1964 as amended (42 U.S.C. Section 2000e, et seq.), or the
                  Texas Commission on Human Rights Act (Texas Labor Code Section
                  21.001, et seq.) (both of these statutes, in general, prohibit

                                      -2-



                  discrimination in employment on the basis of race, religion,
                  national origin or gender);

         -        any claims arising under the Americans with Disabilities Act
                  of 1990, as amended (42 U.S.C. Section 12101, et seq.) (the
                  Americans with Disabilities Act of 1990 prohibits, in general,
                  discrimination in employment on the basis of an employee's or
                  applicant's disability);

         -        any claims arising under Texas Labor Code Sections 451.001, et
                  seq. for retaliation or discrimination in connection with a
                  claim for workers' compensation benefits; and,

         -        any claims for breach of contract, wrongful discharge,
                  constructive discharge, retaliation, or conspiracy; and

         -        any claims relating to Employee's employment or termination of
                  his employment including any and all claims for damages,
                  costs, salary, wages, termination pay, severance pay, vacation
                  pay, commissions, expenses, allowances, insurance, or any
                  other benefit arising out of Employee's employment with
                  Veritas, with the exception of those benefits specifically
                  excluded below in this Section 4.

         Employee acknowledges that the execution of this Agreement and Release
of All Claims has the effect of precluding the consideration of any complaint by
the Alberta Human Rights Commission pursuant to the Alberta Human Rights,
Citizenship and Multicultualism Act, or any other applicable human rights
legislation.

         The release contained in this Section 4 WILL NOT affect any of the
         following:

         -        Any claim by Employee under this Agreement;

                                      -3-



         -        Employee's rights or benefits under Veritas's 401(k)
                  retirement savings plan, Veritas's Employee Stock Purchase
                  Plan, or any pension or retirement plan in which Employee is a
                  participant on the Date of Termination (Employee's rights and
                  benefits will be determined by the applicable plan);

         -        Employee's right to elect continued health and/or dental
                  benefits under the Consolidated Omnibus Budget Reconciliation
                  Act of 1985 ("COBRA");

         -        Employee's right to exercise any options to purchase Veritas
                  DGC Inc. common stock in accordance with the terms of the
                  applicable stock option grant, as such terms are modified by
                  Section 6(a)(3) of the Retirement Agreement;

         -        Employee's rights to indemnity under that (i) one certain
                  Indemnity Agreement effective March 7, 2000, by and between
                  Employer and Employee, (ii) the certificate of incorporation,
                  bylaws or other organizational documents of Veritas (x) as in
                  effect on December 3, 2003, or (y) as the same may be
                  subsequently changed, but in the case of this clause (y) only
                  to the extent any such changes shall enlarge the rights of a
                  party seeking indemnity;

         -        Any other benefit to which Employee may be entitled under any
                  other health or benefit plan in accordance with the applicable
                  plan documents; or

         -        Employee's rights under any workers' compensation statue; the
                  Jones Act, 46 U.S.C. Appx. Section 688, as amended; general
                  maritime law or similar laws; and any other right Employee may
                  have with respect to bodily injury.

         Section 5. Veritas and Employee agree that this Agreement is a binding
contract. The purpose of the Agreement is to compromise doubtful or disputed
claims, avoid litigation, and

                                      -4-


buy peace. Employee agrees that although Veritas is making payment to Employee
in exchange for a release of claims, Veritas does not admit any wrongdoing of
any kind.

         Section 6. Employee agrees to assist Veritas in defending any legal
proceedings against Veritas arising out of matters which occurred on or prior to
the Date of Termination. Veritas agrees to reimburse Employee for his time and
expense or costs he may incur in that regard.

         Section 7. Employee confirms that after the Effective Date he remains
subject to and agrees to comply with:

         -        those obligations of confidentiality contained in Section 3(b)
                  and 3(c) of the Retirement Agreement;

         -        the provisions relating to competition with Employer contained
                  in Section 10 of the Retirement Agreement;

         -        the provisions relating to solicitation or hiring of
                  Employer's employees contained in Section 10 of the Retirement
                  Agreement; and

         -        the terms of the Employee Confidentiality and Intellectual
                  Property Agreement with Employer which Employee signed
                  effective October 22, 2001.

         Section 8. This Agreement has been delivered to Employee on
         _____________.

         -        Employee will have 21 calendar days from ___________ or until
                  the close of business on ___________ to decide whether to sign
                  and return this Agreement and be bound by its terms. In the
                  event Employee has not signed and returned this Agreement to
                  Veritas on or before __________, this Agreement will become
                  null and void.

         -        Veritas and Employee agree that if they agree to change the
                  terms of this Agreement in any manner after it is delivered to
                  Employee, even if the changes

                                      -5-



         are material, the 21-day period specified in the previous paragraph
         will not restart or be extended.

         -        After signing this Agreement, Employee will have the right to
                  revoke the Agreement for a period of 7 calendar days after
                  signing it by (a) notifying Veritas in writing that Employee
                  revokes the Agreement and (b) returning to Veritas any
                  consideration paid Employee under Section 2 above. In the
                  event Employee revokes the Agreement, it will become null and
                  void.

         Section 9. Employee acknowledges that he has read this Agreement. He
understands that, except for the exceptions set out in Section 4 above, this
Agreement will have the effect of waiving any claim he may pursue against
Veritas.

         Section 10. Employee acknowledges that he makes this Agreement
knowingly and voluntarily.

         Section 11. This Agreement constitutes the entire understanding between
Veritas and Employee with respect to the subject matter hereof.

         Section 12. This Agreement will benefit and be binding upon Veritas and
its successors and assigns and Employee and his successors and legal
representatives. Employee will not assign or attempt to assign any of his rights
under this Agreement.

         Section 13. If a court determines that any provision of this Agreement
is invalid, the other provisions will remain in effect.

         Section 14. This Agreement will be governed by, construed under, and
enforced in accordance with the laws of the State of Texas, not including,
however, its conflicts of law rules that might otherwise refer to the law of
another forum or jurisdiction.

         Section 15. This Agreement will become effective and enforceable only
after a period of

                                      -6-



7 days has expired following Employee's execution and delivery of this Agreement
to Veritas (this date is referred to in this Agreement as the "EFFECTIVE DATE").

                   THIS AGREEMENT IS SUBJECT TO ARBITRATION IN
                      ACCORDANCE WITH THE FOLLOWING SECTION

         Section 16. Employer and Employee agree to submit to final and binding
arbitration any and all disputes or disagreements concerning the interpretation
or application of this Agreement. Any such dispute or disagreement will be
resolved by arbitration in accordance with the National Rules for the Resolution
of Employment Disputes of the American Arbitration Association (the "AAA
Rules"). Arbitration will take place in Houston, Texas, unless the parties
mutually agree to a different location. Within 30 calendar days of the
initiation of arbitration hereunder, each party will designate an arbitrator.
The appointed arbitrators will then appoint a third arbitrator. Employee and
Employer agree that the decision of the arbitrators will be final and binding on
both parties. Any court having jurisdiction may enter a judgment upon the award
rendered by the arbitrators. In the event the arbitration is decided in whole or
in part in favor of Employee, Employer will reimburse Employee for his
reasonable costs and expenses of the arbitration (including reasonable
attorneys' fees). Regardless of the outcome of any arbitration, Employer will
pay all fees and expenses of the arbitrators and all of Employer's costs of such
arbitration.

         Notwithstanding the provisions of the previous paragraph, Employer may,
if it so chooses, bring an action in any court of competent jurisdiction for
injunctive relief to enforce Employee's obligations under Section 7 of this
Agreement.

                                      -7-


         IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the Effective Date.

                                                 VERITAS:

                                                 VERITAS DGC INC.
                                                   and subsidiary and affiliated
                                                   companies

                                                 By:
                                                    ___________________________
                               NOTICE TO EMPLOYEE

BY SIGNING THIS DOCUMENT, YOU MAY BE GIVING UP IMPORTANT LEGAL RIGHTS. YOU ARE
ADVISED TO CONSULT WITH AN ATTORNEY PRIOR TO SIGNING AND RETURNING THIS DOCUMENT
TO VERITAS.

                                                 EMPLOYEE:

                                                 _______________________________

                                                 Date:
                                                      _________________________

                                      -8-

EX-31.1

EXHIBIT 31.1

                    SARBANES-OXLEY SECTION 302 CERTIFICATION

                        CERTIFICATION OF VERITAS DGC INC.

I, Thierry Pilenko, the Chief Executive Officer, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Veritas DGC Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of
    a material fact or omit to state a material fact necessary to make the
    statements made, in light of the circumstances under which such statements
    were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial
    information included in this report, fairly present in all material respects
    the financial condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officer(s) and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

          a)   Designed such disclosure controls and procedures, or caused such
               disclosure controls and procedures to be designed under our
               supervision, to ensure that material information relating to the
               registrant, including its consolidated subsidiaries, is made
               known to us by others within those entities, particularly during
               the period in which this report is being prepared;

          b)   Evaluated the effectiveness of the registrant's disclosure
               controls and procedures and presented in this report our
               conclusions about the effectiveness of the disclosure controls
               and procedures, as of the end of the period covered by this
               report based on such evaluation; and

          c)   Disclosed in this report any change in the registrant's internal
               control over financial reporting that occurred during the
               registrant's most recent fiscal quarter (the registrant's fourth
               fiscal quarter in the case of an annual report) that has
               materially affected, or is reasonably likely to materially
               affect, the registrant's internal control over financial
               reporting; and

5.  The registrant's other certifying officer(s) and I have disclosed, based on
    our most recent evaluation of internal control over financial reporting, to
    the registrant's auditors and the audit committee of registrant's board of
    directors (or persons performing the equivalent functions):

          a)   All significant deficiencies and material weaknesses in the
               design or operation of internal controls over financial reporting
               which are reasonably likely to adversely affect the registrant's
               ability to record, process, summarize and report financial
               information; and

          b)   Any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls over financial reporting.

March 12, 2004

                                                  /s/ THIERRY PILENKO
                                                -------------------------
                                                      Thierry Pilenko
                                                 Chief Executive Officer

EX-31.2

EXHIBIT 31.2

                    SARBANES-OXLEY SECTION 302 CERTIFICATION

                        CERTIFICATION OF VERITAS DGC INC.

I, Vincent M. Thielen, the principal financial officer, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Veritas DGC Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of
    a material fact or omit to state a material fact necessary to make the
    statements made, in light of the circumstances under which such statements
    were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial
    information included in this report, fairly present in all material respects
    the financial condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officer(s) and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

          a)   Designed such disclosure controls and procedures, or caused such
               disclosure controls and procedures to be designed under our
               supervision, to ensure that material information relating to the
               registrant, including its consolidated subsidiaries, is made
               known to us by others within those entities, particularly during
               the period in which this report is being prepared;

          b)   Evaluated the effectiveness of the registrant's disclosure
               controls and procedures and presented in this report our
               conclusions about the effectiveness of the disclosure controls
               and procedures, as of the end of the period covered by this
               report based on such evaluation; and

          c)   Disclosed in this report any change in the registrant's internal
               control over financial reporting that occurred during the
               registrant's most recent fiscal quarter (the registrant's fourth
               fiscal quarter in the case of an annual report) that has
               materially affected, or is reasonably likely to materially
               affect, the registrant's internal control over financial
               reporting; and

5.  The registrant's other certifying officer(s) and I have disclosed, based on
    our most recent evaluation of internal control over financial reporting, to
    the registrant's auditors and the audit committee of registrant's board of
    directors (or persons performing the equivalent functions):

          a)   All significant deficiencies and material weaknesses in the
               design or operation of internal controls over financial reporting
               which are reasonably likely to adversely affect the registrant's
               ability to record, process, summarize and report financial
               information; and

          b)   Any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls over financial reporting.

March 12, 2004


                                                     /s/ VINCENT M. THIELEN
                                                    ---------------------------
                                                         Vincent M. Thielen
                                                    principal financial officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Veritas DGC Inc. (the
"Company") for the period ended January 31, 2004 as filed with the Securities
and Exchange Commission on the date hereof (the "Form 10-Q"), I, Thierry
Pilenko, Chief Executive Officer of the Company, certify, pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, that:

1.   The Form 10-Q fully complies with the requirements of Section 13(a) or
     15(d) of the Securities Exchange Act of 1934;

2.   The information contained in the Form 10-Q fairly presents, in all material
     respects, the financial condition and results of operations of the Company
     as of the dates and for the periods presented as required by such Report.

March 12, 2004


                                                  /s/ THIERRY PILENKO
                                                -------------------------
                                                      Thierry Pilenko
                                                 Chief Executive Officer


A signed original of this written statement required by Section 906 has been
provided to Veritas DGC Inc. and will be retained by Veritas DGC Inc. and
furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Veritas DGC Inc. (the
"Company") for the period ended January 31, 2004 as filed with the Securities
and Exchange Commission on the date hereof (the "Form 10-Q"), I, Vincent M.
Thielen, principal financial officer of the Company, certify, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.   The Form 10-Q fully complies with the requirements of Section 13(a) or
     15(d) of the Securities Exchange Act of 1934;

2.   The information contained in the Form 10-Q fairly presents, in all material
     respects, the financial condition and results of operations of the Company
     as of the dates and for the periods presented as required by such report.

March 12, 2004

                                                   /s/ VINCENT M. THIELEN
                                              --------------------------------
                                                      Vincent M. Thielen
                                                 principal financial officer



A signed original of this written statement required by Section 906 has been
provided to Veritas DGC Inc. and will be retained by Veritas DGC Inc. and
furnished to the Securities and Exchange Commission or its staff upon request.