<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 16, 1999.
REGISTRATION NO. 333-85569
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
VERITAS DGC INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE (State or Other Jurisdiction of 76-0343152 (I.R.S. Employer Identification
Incorporation or Organization) No.)
</TABLE>
3701 KIRBY DRIVE, SUITE 112
HOUSTON, TEXAS 77098-3982
(713) 512-8300
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
<TABLE>
<S> <C>
Name, Address, Including Zip Code, and Copy of Communications to: T. WILLIAM PORTER
Telephone Number, Including Area Code, of PORTER & HEDGES, L.L.P. 700 LOUISIANA, 35TH
Agent for Service: ANTHONY TRIPODO 3701 KIRBY FLOOR HOUSTON, TEXAS 77002-2764 (713)226-0600
DRIVE, SUITE 112 HOUSTON, TEXAS 77098-3982
(713) 512-8300
</TABLE>
Approximate date of commencement of proposed sale to the public: From time
to time pursuant to Rule 415 after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with a dividend or
interest reinvestment plan, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
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If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED REGISTERED(1) SHARE(2) PRICE(2) REGISTRATION FEE(2)
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<S> <C> <C> <C> <C>
Common Stock, par value $.01 per
share......................... 250,553 shs. $7.30 $1,829,037 $509
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</TABLE>
(1) Based upon the number of common shares of Enertec Resource Services Inc.
exchangeable upon closing the combination of Enertec Resource Services Inc.,
Veritas Energy Services Inc., a wholly-owned subsidiary of Veritas DGC Inc.,
and Veritas DGC Inc. (7,749,436) multiplied by 0.345, the exchange ratio in
the combination, less the amount previously registered (7,023,196)
multiplied by 0.345.
(2) Pursuant to Rule 457(f), the registration fee was computed on the basis of
the market value of the Enertec common shares to be received by Veritas
Energy Services in the combination, computed in accordance with Rule 457(c)
on the basis of the average of the high and low price per share of the
Enertec common shares reported on The Toronto Stock Exchange. The $4,197 fee
related to 7,023,196 Enertec common shares was calculated as of August 17,
1999 (US$6.23 (C$9.20 multiplied by the applicable exchange rate of
0.67719)) and was previously paid. The $509 fee related to an additional
726,240 Enertec common shares was calculated as of September 13, 1999
(US$7.30 (C$10.73 multiplied by the applicable exchange rate of 0.68069))
and is paid herewith.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SEC IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND WE ARE
NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
PRELIMINARY PROSPECTUS
2,673,556 SHARES
VERITAS DGC INC.
COMMON STOCK
The 2,673,556 shares of Veritas DGC common stock are issuable upon exchange
or redemption of Veritas Energy Services Inc. class A exchangeable shares,
series 1. Veritas Energy Services is a wholly-owned subsidiary of Veritas DGC.
Veritas Energy Services issued the Veritas Energy Services series 1 exchangeable
shares in exchange for Enertec Resource Services Inc. common shares in
connection with the combination of Veritas DGC, Veritas Energy Services and
Enertec.
This prospectus is part of a registration statement that we filed with the
SEC using a shelf registration process. This means we may issue the Veritas DGC
common stock covered by this prospectus from time to time when the holders of
Veritas Energy Services series 1 exchangeable shares present their securities
for exchange. Upon exchange, holders of Veritas Energy Services series 1
exchangeable shares will receive for each Veritas Energy Services series 1
exchangeable share one share of Veritas DGC common stock.
The Veritas DGC common stock trades on the New York Stock Exchange under
the symbol "VTS" and on The Toronto Stock Exchange under the symbol "VER."
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 4 OF THIS PROSPECTUS.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Subject to completion, dated September 16, 1999.
<PAGE> 3
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-3 registering
the exchange of the Veritas Energy Services series 1 exchangeable shares for
Veritas DGC common stock. This prospectus, which is a part of the registration
statement, omits certain information included in the registration statement.
You may read and copy the registration statement, including the attached
exhibits, and any reports, statements or other information that we file at the
SEC's public reference room in Washington, D.C. You may also obtain information
about Veritas DGC from the following regional offices of the SEC: Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and
7 World Trade Center, 13th Floor, New York, New York 10048. Veritas DGC
maintains an Internet site at http://www.veritasdgc.com that contains
information about its business.
We file annual reports, quarterly reports, proxy statements, and other
information with the SEC. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference rooms. Copies of such
material can be obtained by mail from the Public Reference Section of the SEC at
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 at prescribed
rates. Our SEC filings are also available to the public on the SEC's home page
on the Internet at http://www.sec.gov.
FORWARD-LOOKING STATEMENTS
The statements included in this prospectus, other than statements of
historical facts, are 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. Forward-looking statements include, among other things, the discussions
of the trading markets and market price of the Veritas Energy Services series 1
exchangeable shares. Forward-looking statements generally can be identified by
the use of terminology such as "may," "will," "expect," "intend," "estimate,"
"anticipate" or "believe" or the negative thereof or variations thereon or
similar terminology.
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 prospectus. 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 to differ materially from the forward-looking statements.
Important factors that could cause actual results to differ materially from our
expectations are disclosed under the caption Risk Factors and elsewhere in this
prospectus.
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RISK FACTORS
You should carefully consider the following factors, in addition to other
information contained in this prospectus, in evaluating your decision to
exchange Veritas Energy Services series 1 exchangeable shares for shares of
Veritas DGC common stock.
EXCHANGE OF VERITAS ENERGY SERVICES SERIES 1 EXCHANGEABLE SHARES IS TAXABLE
The exchange of Veritas Energy Services series 1 exchangeable shares for
shares of Veritas DGC common stock is generally a taxable event in Canada and
the United States. A holder's tax consequences can vary depending on a number of
factors, including the residency of the holder, the method of the exchange
(retraction or redemption) and the length of time that the Veritas Energy
Services series 1 exchangeable shares were held prior to exchange.
MARKET PRICE OF VERITAS ENERGY SERVICES SERIES 1 EXCHANGEABLE SHARES MAY NOT BE
EQUIVALENT TO MARKET PRICE OF VERITAS DGC COMMON STOCK
The Toronto Stock Exchange has approved the listing of the Veritas Energy
Services series 1 exchangeable shares and the Veritas DGC common stock is listed
on the New York Stock Exchange and The Toronto Stock Exchange. We do not plan to
list the Veritas Energy Services series 1 exchangeable shares or Veritas DGC
common stock on any other stock exchange in Canada or the United States. The
Veritas Energy Services series 1 exchangeable shares will trade at a price based
upon the market for such shares on The Toronto Stock Exchange and the shares of
Veritas DGC common stock will trade at prices based upon the market for such
shares on the New York Stock Exchange and The Toronto Stock Exchange. Although
we believe the market price of the Veritas Energy Services series 1 exchangeable
shares on The Toronto Stock Exchange and the market prices of the Veritas DGC
common stock on the New York Stock Exchange and The Toronto Stock Exchange
should reflect equivalent values, there can be no assurances that the market
prices of the Veritas DGC common stock will be identical, or even similar, to
the market price of the Veritas Energy Services series 1 exchangeable shares.
HOLDERS MAY HAVE TO LIMIT INVESTMENT IF VERITAS ENERGY SERVICES EXCHANGEABLE
SHARES BECOME FOREIGN PROPERTY
So long as the Veritas Energy Services series 1 exchangeable shares are
listed on The Toronto Stock Exchange and Veritas Energy Services maintains a
substantial presence in Canada, the Veritas Energy Services series 1
exchangeable shares will not be foreign property under the Income Tax Act
(Canada) for trusts governed by registered pension plans, registered retirement
savings plans, registered retirement income funds and deferred profit sharing
plans or for certain other tax-exempt persons.
Veritas DGC common stock will be foreign property for such plans or
persons, and there can be no assurances that the Veritas Energy Services series
1 exchangeable shares will continue to not be foreign property. Concerning
Veritas DGC common stock and, if the Veritas Energy Services series 1
exchangeable shares were to become foreign property, the plans, funds and
tax-exempt persons listed above would have to limit their investment in such
stock or shares or risk incurring penalties under the Income Tax Act (Canada).
HOLDERS MAY BE REQUIRED TO MAKE AN ELECTION TO AVOID FUTURE UNITED STATES TAXES
While there can be no assurance with respect to the classification, for
United States federal income tax purposes, of either Enertec or Veritas Energy
Services as a passive foreign investment company, known as "PFIC," each of
Enertec and Veritas Energy Services believes that it did not constitute a PFIC
during its taxable years ending prior to their combination. At the present time,
Enertec and Veritas DGC intend to cause Enertec and Veritas Energy Services to
avoid PFIC status in the future, although there can be no assurance that they
will be able to do so or that their intent will not change. A determination of
the foreign corporation's status as a PFIC cannot be made until the close of the
taxable year. Veritas Energy Services intends to monitor its status regularly,
and promptly following the end of each taxable year
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Veritas Energy Services will notify United States holders of Veritas Energy
Services series 1 exchangeable shares if it believes that Veritas Energy
Services was a PFIC for that taxable year.
If Veritas Energy Services becomes a PFIC during a United States holder's
holding period for Veritas Energy Services series 1 exchangeable shares, and the
United States holder does not make an election to treat Enertec as a qualified
electing fund under Section 1295 of the United States Internal Revenue Code,
then a United States holder may be subject to additional tax and penalties on
excess dividend payments with respect to, and gains from the disposition of, the
Veritas Energy Services series 1 exchangeable shares.
THE COMPANY
Veritas DGC is a leading provider of seismic data acquisition, data
processing and multi-client data surveys and information services to the oil and
gas industry in selected markets worldwide. Oil and gas companies utilize
seismic data for the determination of suitable locations for drilling
exploratory wells and, increasingly, in reservoir management for the development
and production of oil and gas reserves. Veritas DGC acquires seismic data on
land and in marine and transition zone environments, and processes data acquired
by its own crews and crews of other operators. Veritas DGC acquires seismic data
both on an exclusive contractual basis for its customers and on its own behalf
for licensing to multiple customers on a non-exclusive basis. Veritas DGC was
incorporated in Texas in 1965 and was reincorporated in Delaware in 1969.
Veritas DGC's principal offices are located at 3701 Kirby Drive, Houston, Texas
77098, and its telephone number is (713) 512-8300.
USE OF PROCEEDS
Because the shares of Veritas DGC common stock will be issued on exchange
or redemption of the Veritas Energy Services series 1 exchangeable shares,
Veritas DGC will receive no net cash proceeds on such issuance.
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DESCRIPTION OF VERITAS DGC CAPITAL STOCK
Our restated certificate of incorporation authorizes 40,000,000 ordinary
shares, par value $0.01 per share. Ordinary shares consist of Veritas DGC common
stock, a series of Veritas Energy Services special voting stock, and a series of
Enertec special voting stock. Our restated certificate of incorporation also
authorizes 1,000,000 shares of preferred stock, par value $0.01 per share.
COMMON STOCK
Voting Rights. The holders of the Veritas DGC common stock are entitled to
one vote for each share held of record in the election of directors and on all
other matters submitted to a vote of stockholders. No pre-emptive rights,
conversion rights, redemption rights or sinking fund provisions are applicable
to the Veritas DGC common stock. The Veritas DGC common stock does not have
cumulative voting rights. Accordingly, the holders of more than 50% of the
shares may elect all of the directors and, in that event, the holders of the
remaining shares will not be able to elect any directors.
Dividends. Veritas DGC common stockholders may receive dividends when
declared by the board of directors. Dividends may be paid in cash, stock or
another form. However, certain of our existing debt agreements contain covenants
that currently restrict us from paying dividends.
Fully Paid. All outstanding shares of Veritas DGC common stock are fully
paid and non-assessable. Any additional Veritas DGC common stock we issue will
also be fully paid and non-assessable.
Other. We will notify Veritas DGC common stockholders of any stockholders'
meetings according to applicable law. If we liquidate, dissolve or wind up our
business, either voluntarily or not, Veritas DGC common stockholders will share
equally in the assets remaining after we pay our creditors and preferred
stockholders.
Transfer Agent and Registrar. Our transfer agent and registrar is
ChaseMellon Shareholder Services, L.L.C., Dallas, Texas.
SPECIAL VOTING STOCK
Single shares of Veritas Energy Services special voting stock and Enertec
special voting stock are each authorized and outstanding as a series of ordinary
shares. The Veritas Energy Services special voting share was issued in
connection with the combination of Digicon Inc. (Veritas DGC's former name) and
Veritas Energy Services in August of 1996. The Enertec special voting share was
issued in connection with the combination of Veritas DGC, Veritas Energy
Services and Enertec Resources Inc. in September 1999.
These special voting shares possess a number of votes equal to the number
of outstanding Veritas Energy Services exchangeable shares and Veritas Energy
Services series 1 exchangeable shares that are not owned by Veritas DGC or any
of its subsidiaries. In any matter submitted to Veritas DGC stockholders for a
vote, each holder of a Veritas Energy Services exchangeable share has the right
to instruct a trustee as to the manner of voting for one of the votes comprising
the Veritas Energy Services special voting share for each Veritas Energy
Services exchangeable share owned by the holder. Likewise, in any matter
submitted to Veritas DGC stockholders for a vote, each holder of a Veritas
Energy Services series 1 exchangeable share has the right to instruct a trustee
as to the manner of voting for one of the votes comprising the Enertec special
voting share for each Veritas Energy Services series 1 exchangeable share owned
by the holder. The Veritas Energy Services exchangeable shares and the Veritas
Energy Services series 1 exchangeable shares are convertible on a one-for-one
basis into shares of the Veritas DGC common stock and have rights identical to
the Veritas DGC common stock.
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PREFERRED STOCK
There are no shares of Veritas DGC preferred stock presently outstanding. A
series of 400,000 shares of preferred stock has been designated for use in
connection with the rights plan (the rights plan is explained below). The
Veritas DGC board of directors can, without our stockholders approval, issue one
or more series of Veritas DGC preferred stock. The board establishes the number
of shares to be included in each series, fixes the designation, powers,
preferences and rights of the shares of each series, and provides any
qualifications, limitations or restrictions of each series. In some cases, the
issuance of Veritas DGC preferred stock could delay a change in control of
Veritas DGC and make it harder to remove present management. Under certain
circumstances, Veritas DGC preferred stock could also restrict dividend payments
to holders of Veritas DGC common stock.
RIGHTS PLAN
General. Under the rights plan, each share of Veritas DGC common stock has
attached to it one right. The right is represented by a certificate which is the
same certificate representing the Veritas DGC common stock. Each right entitles
the registered holder to purchase from Veritas DGC one one-thousandth of a share
of series A junior participating preferred stock of Veritas DGC. The series A
preferred stock has a par value of $0.01 per share and is sold at a purchase
price of $100. The purchase price is subject to adjustment. Until the
distribution date, the rights will be transferred with and only with the Veritas
DGC common stock certificates. The rights are not exercisable until after the
distribution date and are subject to termination of any extended redemption
periods described below. The rights expire at the close of business on May 15,
2007, unless they are earlier redeemed by Veritas DGC. The holder of unexercised
rights has no rights as a stockholder of Veritas DGC, including, without
limitation, the right to vote or to receive dividends.
Separation of Rights from Veritas DGC Common Stock. The rights will
separate from Veritas DGC common stock and a distribution date will occur upon
the earlier of two possible times. The first such time is 10 business days
following a public announcement that a person or group of affiliated or
associated persons (an "acquiring person") has acquired, or has the right to
acquire, the ownership of 15% or more of the outstanding shares of Veritas DGC
common stock (the "stock acquisition date"). The second possible time is 10
business days following the commencement of a tender or exchange offer which
would result in a person or group owning 15% or more of such outstanding shares
of the Veritas DGC common stock (the "tender offer date"). The board of
directors of Veritas DGC may set a later tender offer date if a majority of the
continuing directors agree to do so and there are five continuing directors then
in office.
Continuing Director. A continuing director is any member of the board of
directors of Veritas DGC who was a member of the board on May 15, 1997, or who
was elected to the board after May 15, 1997 and was recommended or approved by a
majority of at least five continuing directors. An acquiring person, or an
affiliate or associate of an acquiring person, or such representative is not a
continuing director.
Triggering Events. Each holder of a right (other than the acquiring person,
certain related parties and transferees) will have the right to purchase, upon
exercise of a right, a one-thousandth fractional share interest in series A
preferred stock if, among other things:
- Veritas DGC is the surviving corporation in a merger or other business
combination with an acquiring person; or
- any person shall become the beneficial owner of more than 15% of the
outstanding shares of the Veritas DGC common stock, except:
- pursuant to certain consolidations or mergers involving Veritas DGC or
sales or transfers of the combined assets or earning power of Veritas
DGC and its subsidiaries; or
- pursuant to an offer for all outstanding shares of the Veritas DGC
common stock at a price and upon terms and conditions which a majority
of the continuing directors determines to be in the best interests of
Veritas DGC and its stockholders.
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Each of the one-thousandth fractional share interests in series A preferred
stock is equivalent to a share of Veritas DGC common stock (or, in certain
circumstances, cash, property or other securities of Veritas DGC) having a value
equal to two times the exercise price of the right. For example, at the exercise
price of $100 per right, each right not owned by an acquiring person (or by
certain related parties and transferees) following a triggering event set forth
above would entitle its holder to purchase $200 worth of series A preferred
stock (or other consideration, as noted above) for $100. Assuming that the
series A preferred stock had a per share market price of $40 at such time (with
each one-thousandth share of series A preferred stock valued at one share of
common stock), the holder of each valid right would be entitled to purchase five
one-thousandths shares of the series A preferred stock for $100. Rights are not
exercisable following the occurrence of any of the triggering events described
above until the rights are no longer redeemable by Veritas DGC as described
below. Notwithstanding any of the foregoing, following the occurrence of any of
the triggering events described in this paragraph, all rights that are, or
(under certain circumstances specified in the rights plan) were, beneficially
owned by any acquiring person will be null and void.
If at any time following the stock acquisition date:
- Veritas DGC is acquired in a merger or other business combination
transaction in which Veritas DGC is not the surviving corporation;
- Veritas DGC is the surviving corporation in a consolidation or merger
pursuant to which all or part of the outstanding shares of Veritas DGC
common stock are changed into or exchanged for stock or other securities
of any other person or cash or any other property; or
- more than 50% of the combined assets or earning power of Veritas DGC and
its subsidiaries is sold or transferred (in each case other than certain
consolidations with, mergers with and into, or sales of assets or earning
power by or to subsidiaries of Veritas DGC as specified in the rights
agreement).
Each holder of a right (except rights that previously have been voided as set
forth above) will have the right to exercise and receive common stock of the
acquiring company having a value equal to two times the exercise price of the
right. The events described in this paragraph and in the preceding paragraph are
referred to as the triggering events.
Redemption of Rights. At any time until ten business days following the
stock acquisition date, Veritas DGC may redeem the rights in whole, but not in
part, at a price of $0.001 per right. The Veritas DGC board may set a later date
to redeem the rights if a majority of the continuing directors then in office
agree. Redemption of the rights is payable in cash, shares of Veritas DGC common
stock or other consideration deemed appropriate by the board of directors.
Rights may not be redeemed during the 180 day period after any person becomes an
acquiring person unless the redemption is approved by a majority of continuing
directors.
Anti-takeover Effects. The rights have certain anti-takeover effects. They
may reduce or eliminate:
- two-tiered or other partial offers that do not offer fair value for all
Veritas DGC common stock;
- the accumulation by a third party of 15% or more of the Veritas DGC
common stock in open-market or private purchases in order to influence or
control the business and affairs of Veritas DGC without paying an
appropriate premium for a controlling position in Veritas DGC; and
- the accumulation of shares of Veritas DGC common stock by third parties
in market transactions for the primary purpose of attempting to cause
Veritas DGC to be sold.
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The rights will also cause the substantial dilution of shareholder voting
strength to a person or group that attempts to acquire Veritas DGC in a manner
defined as a triggering event. This is not so if the acquiring person's offer is
conditioned on a substantial number of rights being acquired. The rights should
not affect any prospective offeror who is willing:
- to make an offer for all outstanding shares of Veritas DGC common stock
and other voting securities at a price and terms that are in the best
interests of Veritas DGC and its stockholders as determined by the board
of directors; or
- to negotiate with the board of directors because as part of any
negotiated transaction the rights would either be redeemed or otherwise
made inapplicable to the transaction.
The rights should also not interfere with any merger or other business
combination approved by the board of directors since the board may, at its
option, choose to redeem all, but not less than all, of the then outstanding
rights at the $0.001 redemption price. The board may exercise this option at any
time until ten business days following the stock acquisition date.
PLAN OF DISTRIBUTION
Under the terms of a plan of arrangement and in connection with the
combination of Enertec, Veritas Energy Services and Veritas DGC, Veritas Energy
Services issued .345 of a series 1 exchangeable share for each existing Enertec
common share on September 23, 1999. Enertec common shareholders who properly
exercised their rights of dissent were not issued any Veritas Energy Services
series 1 exchangeable shares and have been or will be paid fair value for their
Enertec common shares. Veritas DGC common stock may be issued to holders of
Veritas Energy Services series 1 exchangeable shares through the holder's
election, Veritas Energy Services' redemption, or Veritas Energy Services' or
Veritas DGC's liquidation.
ELECTION OF HOLDERS TO RETRACT SERIES 1 EXCHANGEABLE SHARES
Holders of Veritas Energy Services series 1 exchangeable shares may elect
at any time to have any or all Veritas Energy Services series 1 exchangeable
shares owned by them exchanged for an equal number of shares of Veritas DGC
common stock, plus an additional amount equivalent to all declared and unpaid
dividends on such Veritas Energy Services series 1 exchangeable shares. The
holder's exercise of this election right is called a retraction. Holders of the
Veritas Energy Services series 1 exchangeable shares may retract by presenting
to Veritas Energy Services or its transfer agent the certificates representing
the number of Veritas Energy Services series 1 exchangeable shares the holder
desires to retract, together with a signed notice of retraction specifying the
number of Veritas Energy Services series 1 exchangeable shares the holder wishes
to retract and the date the holder desires to receive the Veritas DGC common
stock. This retraction date must be between five and ten business days after the
notice of retraction is received by Veritas Energy Services. The transfer agent
may require the holder to submit additional documents to complete the retraction
of the Veritas Energy Services series 1 exchangeable shares.
Upon receipt of the Veritas Energy Services series 1 exchangeable shares
certificates, the notice of retraction and other required documentation from the
holder, Veritas Energy Services must immediately notify Veritas DGC of such
retraction request. Veritas DGC will then have two business days to decide to
exercise its retraction call right to purchase all of the Veritas Energy
Services series 1 exchangeable shares submitted by the holder. If Veritas DGC
does not advise Veritas Energy Services within such two business day period of
its decision to exercise this retraction call right, Veritas Energy Services
will notify the holder as soon as possible thereafter that Veritas DGC will not
exercise such right. A holder may revoke his or her notice of retraction at any
time before the close of business on the business day before the retraction
date. If the holder does not revoke his or her notice of retraction, on the
retraction date the Veritas Energy Services series 1 exchangeable shares that
the holder has requested Veritas Energy Services to redeem will be acquired by
Veritas DGC (assuming Veritas DGC exercises its retraction call right) or
redeemed by Veritas Energy Services, as the case may be. In each case the holder
will receive one share
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of Veritas DGC common stock for each Veritas Energy Services series 1
exchangeable share retracted, plus an additional amount equivalent to all
declared and unpaid dividends on such Veritas Energy Services series 1
exchangeable shares. Veritas DGC or Veritas Energy Services, as the case may be,
is entitled to liquidate some of the Veritas DGC common stock otherwise
deliverable to the holder to fund any statutory withholding tax obligation.
REDEMPTION OF VERITAS ENERGY SERVICES SERIES 1 EXCHANGEABLE SHARES
Subject to the redemption call right of Veritas DGC described below,
Veritas Energy Services must redeem all of the then outstanding Veritas Energy
Services series 1 exchangeable shares in exchange for an equal number of shares
of Veritas DGC common stock, plus an additional amount equivalent to all
declared and unpaid dividends on such Veritas Energy Services series 1
exchangeable shares on the automatic redemption date. The automatic redemption
date will be, September 23, 2009 or (i) a later date specified by the Veritas
Energy Services board of directors (no later than the September 23, 2014), or
(ii) an earlier date specified by the Veritas Energy Services board of directors
if:
- there are fewer than 10,000 Veritas Energy Services series 1 exchangeable
shares outstanding (other than Veritas Energy Services series 1
exchangeable shares held by Veritas DGC and entities controlled by
Veritas DGC); or
- at any time after September 23, 2004 there are fewer than 250,000 Veritas
Energy Services exchangeable shares outstanding (other than Veritas
Energy Services exchangeable shares held by Veritas DGC and entities
controlled by Veritas DGC) and Veritas DGC exercises its option to redeem
all of such outstanding Veritas Energy Services exchangeable shares.
Veritas DGC has a redemption call right to purchase on the automatic redemption
date all of the outstanding Veritas Energy Services series 1 exchangeable
shares. Veritas Energy Services shall, at least 120 days before the automatic
redemption date, provide the registered holders of Veritas Energy Services
series 1 exchangeable shares with written notice of its proposed redemption or
Veritas DGC's purchase of the Veritas Energy Services series 1 exchangeable
shares. This notice will specify:
- the automatic redemption date;
- the number of shares of Veritas DGC common stock and any additional
amount for all declared and unpaid dividends on the Veritas Energy
Services series 1 exchangeable shares to be received by the holder on the
automatic redemption date; and
- where the holder must present his or her share certificates and other
documents required to complete the redemption.
Veritas DGC or Veritas Energy Services, as the case may be, is entitled to
liquidate some of the Veritas DGC common stock otherwise deliverable to the
holder to fund any statutory withholding tax obligation.
LIQUIDATION OF VERITAS ENERGY SERVICES
If Veritas Energy Services liquidates, dissolves or winds up its affairs,
holders of the Veritas Energy Services series 1 exchangeable shares have
preferential rights to receive one share of Veritas DGC common stock for each
Veritas Energy Services series 1 exchangeable share they hold, plus an
additional amount equivalent to all declared and unpaid dividends on such
Veritas Energy Services series 1 exchangeable shares. If Veritas Energy Services
proposes to liquidate, dissolve or wind up its affairs, Veritas DGC has the
right to purchase all of the outstanding Veritas Energy Services series 1
exchangeable shares from the holders thereof on the last business day prior to
the effective time of any such event.
On or promptly after the effective time of any Veritas Energy Services
liquidation, dissolution or winding up, holders of the Veritas Energy Services
series 1 exchangeable shares must surrender their certificates representing such
shares, together with any other documents required by the transfer agent, to
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Veritas Energy Services' registered office or transfer agent. If Veritas DGC
exercises its purchase rights, such delivery must be made to the transfer agent.
In either case, upon receipt of the certificates and other required documents,
Veritas Energy Services or Veritas DGC, as the case may be, will deliver or
caused to be delivered to the holders one share of Veritas DGC common stock for
each outstanding Veritas Energy Services series 1 exchangeable share, plus an
additional amount equivalent to all declared and unpaid dividends on such
Veritas Energy Services series 1 exchangeable shares. Veritas Energy Services
may require the holder to pick up the Veritas DGC common stock at the Veritas
Energy Services' registered office. Veritas DGC or Veritas Energy Services, as
the case may be, is entitled to liquidate some of the Veritas DGC common stock
otherwise deliverable to the holder to fund any statutory withholding tax
obligation.
As an alternative to the exchange described in the preceding paragraph, a
holder of Veritas Energy Services series 1 exchangeable shares may exercise its
exchange right and require Veritas DGC to purchase the Veritas Energy Services
series 1 exchangeable shares. In this case, the holder must deliver to CIBC
Mellon Trust the certificates, endorsed in blank, a completed form of notice of
exercise of such exchange right, which is contained on the reverse of, or
attached to, the Veritas Energy Services series 1 exchangeable share
certificates and any other required documents.
LIQUIDATION OF VERITAS DGC
Upon the occurrence of a Veritas DGC liquidation event (as described
below), in order for the holders of the Veritas Energy Services series 1
exchangeable shares to participate on a pro rata basis with the holders of
Veritas DGC common stock, each holder of Veritas Energy Services series 1
exchangeable shares will automatically receive in exchange therefor an
equivalent number of shares of Veritas DGC common stock, plus an additional
amount equivalent to all declared and unpaid dividends on such Veritas Energy
Services series 1 exchangeable shares. A Veritas DGC liquidation event means:
(i) any determination by Veritas DGC's board of directors to institute
voluntary liquidation, dissolution, or winding-up proceedings with respect
to Veritas DGC or to effect any other distribution of assets of Veritas DGC
among its stockholders for the purpose of winding up its affairs; or
(ii) immediately upon the earlier of receipt by Veritas DGC of notice
of, and Veritas DGC becoming aware of any threatened or instituted claim,
suit or proceedings with respect to the voluntary liquidation, dissolution
or winding-up of Veritas DGC or to effect any other distribution of assets
of Veritas DGC among its stockholders for the purpose of winding up its
affairs.
To effect the automatic exchange of Veritas Energy Services series 1
exchangeable shares for shares of Veritas DGC common stock, Veritas DGC will be
deemed to have purchased each Veritas Energy Services series 1 exchangeable
share outstanding immediately prior to the Veritas DGC liquidation event. Upon a
holder's request and surrender of Veritas Energy Services series 1 exchangeable
share certificates, endorsed in blank and accompanied by such instruments of
transfer as Veritas DGC may reasonably require, Veritas DGC will deliver to such
holder, certificates representing an equivalent number of shares of Veritas DGC
common stock, plus an additional amount equivalent to all declared and unpaid
dividends on such Veritas Energy Services series 1 exchangeable shares. Veritas
DGC is entitled to liquidate some of the Veritas DGC common stock otherwise
deliverable to the holder to fund any statutory withholding tax obligation.
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INCOME TAX CONSIDERATIONS
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS TO FORMER ENERTEC SHAREHOLDERS
Subject to the qualifications and assumptions contained herein, in the
opinion of Felesky Flynn, Canadian tax counsel to Veritas Energy Services, the
following is a fair and adequate summary of the principal Canadian federal
income tax considerations, as of the date of this prospectus generally
applicable to former Enertec shareholders who at all relevant times, for
purposes of the Income Tax Act (Canada) (the "Canadian Tax Act"), hold their
Veritas Energy Services series 1 exchangeable shares and shares of Veritas DGC
common stock as capital property and deal at arm's length with, and are not
affiliated with, Enertec or Veritas DGC. This discussion does not apply to a
holder with respect to whom Veritas DGC is a foreign affiliate within the
meaning of the Canadian Tax Act. It is assumed that a former Enertec shareholder
who exchanged Enertec common shares for Veritas Energy Services series 1
exchangeable shares received no other consideration, except for cash in lieu of
a fraction of a Veritas Energy Services series 1 exchangeable share.
All former Enertec shareholders should consult their own tax advisors as to
whether, as a matter of fact, they hold their Veritas Energy Services series 1
exchangeable shares and shares of Veritas DGC common stock as capital property
for the purposes of the Canadian Tax Act. The "mark-to-market" rules of the
Canadian Tax Act relating to financial institutions (including financial
institutions, registered securities dealers and corporations controlled by one
or more of the foregoing) will preclude such financial institutions from
treating their Veritas Energy Services series 1 exchangeable shares and shares
of Veritas DGC common stock as capital property for purposes of the Canadian Tax
Act. This discussion does not take into account the mark-to-market rules, and
former Enertec shareholders that are financial institutions for the purposes of
these rules should consult their own tax advisors to determine the tax
consequences to them of the combination.
This discussion is based on the current provisions of the Canadian Tax Act
and the regulations thereunder, the current provisions of the Canada-United
States Income Tax Convention, and counsel's understanding of the current
published administrative practices of Revenue Canada. This discussion takes into
account all specific proposals to amend the Canadian Tax Act and the regulations
thereunder that have been publicly announced by or on behalf of the Canadian
Minister of Finance before the date hereof and assumes that all such proposed
amendments will be enacted in their present form. No assurances can be given
that the proposed amendments will be enacted in the form proposed, if at all;
however, the Canadian federal income tax considerations generally applicable to
a former Enertec shareholder with respect to the combination of Enertec, Veritas
Energy Services and Veritas DGC will not be different in a material adverse way
if the proposed amendments are not enacted.
Except for the foregoing, this discussion does not take into account or
anticipate any changes in law, whether by legislative, administrative or
judicial decision or action, nor does it take into account provincial,
territorial or foreign income tax legislation or considerations which may differ
from the Canadian federal income tax considerations described herein.
THIS DISCUSSION IS OF A GENERAL NATURE ONLY. THEREFORE, FORMER ENERTEC
SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THEIR
PARTICULAR CIRCUMSTANCES. NO ADVANCE INCOME TAX RULING HAS BEEN OBTAINED FROM
REVENUE CANADA TO CONFIRM THE TAX CONSEQUENCES OF ANY OF THE TRANSACTIONS
DESCRIBED HEREIN.
Conversion from U.S. Dollars to Canadian Dollars. For purposes of the
Canadian Tax Act, all amounts relating to the acquisition, holding or
disposition of shares of Veritas DGC common stock, including dividends, adjusted
cost base and proceeds of disposition, must be converted into Canadian dollars
based on the prevailing United States dollar exchange rate at the time such
amounts arise. In computing a shareholder's liability for tax under the Canadian
Tax Act, any cash amounts received by a shareholder in United States dollars
must be converted into the Canadian dollar equivalent, and the amount of any
non-share consideration received by a shareholder must be expressed in Canadian
dollars at the time such consideration is received.
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Shareholders Resident in Canada
The following portion of this discussion is generally applicable to holders
of Veritas Energy Services series 1 exchangeable shares who, for the purposes of
the Canadian Tax Act and any applicable income tax treaty or convention, are
resident or deemed to be resident in Canada at all relevant times. Certain of
such persons to whom the former Enertec common shares might not constitute
capital property may elect, in certain circumstances, to have such property
treated as capital property by making the irrevocable election permitted by
subsection 39(4) of the Canadian Tax Act.
Retraction of Veritas Energy Services Series 1 Exchangeable Shares with
Veritas Energy Services; Redemption of Veritas Energy Services Series 1
Exchangeable Shares by Veritas Energy Services. On the retraction or redemption
of a Veritas Energy Services series 1 exchangeable share with or by Veritas
Energy Services, the holder of a Veritas Energy Services series 1 exchangeable
share will be deemed to have received a dividend equal to the amount, if any, by
which the proceeds exceed the paid-up capital at the time of the Veritas Energy
Services series 1 exchangeable share redemption. For these purposes, the
proceeds will be the fair market value at the time of the retraction or
redemption, of the shares of Veritas DGC common stock received from Veritas
Energy Services plus the amount, if any, of all accrued but unpaid dividends on
the Veritas Energy Services series 1 exchangeable shares paid on the retraction
or redemption. The amount of such deemed dividend generally will be subject to
the same tax treatment accorded to dividends on the Veritas Energy Services
series 1 exchangeable shares as described below. On the retraction or
redemption, the holder of a Veritas Energy Services series 1 exchangeable share
will also be considered to have disposed of the Veritas Energy Services series 1
exchangeable share, but the amount of such deemed dividend will be excluded in
computing the shareholder's proceeds of disposition for purposes of computing
any capital gain or capital loss arising on the disposition. In the case of a
shareholder that is a corporation, in some circumstances, the amount of any such
deemed dividend may be treated as proceeds of disposition and not as a dividend.
Exchange of Veritas Energy Services Series 1 Exchangeable Shares with
Veritas DGC. Because of Veritas DGC's retraction call right and redemption call
right, an exchange with Veritas DGC results in Veritas DGC's purchase of the
Veritas Energy Services series 1 exchangeable shares. The holder will generally
realize a capital gain (or a capital loss) equal to the amount by which the
proceeds of disposition of the Veritas Energy Services series 1 exchangeable
shares, net of any reasonable costs of disposition, exceed (or are less than)
the adjusted cost base to the holder of the Veritas Energy Services series 1
exchangeable shares immediately before the exchange. For these purposes, the
proceeds of disposition will be the fair market value at the time of exchange of
the shares of Veritas DGC common stock plus any other amount received by the
holder from Veritas DGC as part of the exchange consideration.
BECAUSE OF THE EXISTENCE OF VERITAS DGC'S RETRACTION CALL RIGHT, A HOLDER
EXERCISING THE RIGHT OF RETRACTION IN RESPECT OF VERITAS ENERGY SERVICES SERIES
1 EXCHANGEABLE SHARES CANNOT CONTROL WHETHER SUCH HOLDER WILL RECEIVE SHARES OF
VERITAS DGC COMMON STOCK BY WAY OF REDEMPTION OF THE VERITAS ENERGY SERVICES
SERIES 1 EXCHANGEABLE SHARES BY VERITAS ENERGY SERVICES OR BY THE WAY OF
PURCHASE OF THE VERITAS ENERGY SERVICES SERIES 1 EXCHANGEABLE SHARES BY VERITAS
DGC. AS DESCRIBED ABOVE, THE CANADIAN FEDERAL INCOME TAX CONSEQUENCES OF A
REDEMPTION DIFFER FROM THOSE OF A PURCHASE.
Taxation of Capital Gains and Capital Losses. Three-quarters of any capital
gain ("taxable capital gain") must be included in a shareholder's income for the
year of disposition. Three-quarters of any capital loss ("allowable capital
loss") generally must be deducted by the holder from taxable capital gains for
the year of disposition. Any allowable capital losses in excess of taxable
capital gains for the year of disposition generally may be carried back up to
three taxation years or carried forward indefinitely and deducted against net
taxable capital gains (taxable capital gains less allowable capital losses) in
such other years to the extent and under the circumstances described in the
Canadian Tax Act.
Capital gains realized by an individual or trust, other than other certain
specified trusts, may give rise to alternative minimum tax under the Canadian
Tax Act.
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A shareholder that is throughout the relevant taxation year a
"Canadian-controlled private corporation" (as defined in the Canadian Tax Act)
may be liable to pay an additional refundable tax of 6 2/3% on its "aggregate
investment income" for the year which will include an amount in respect to
taxable capital gains.
If the holder of a Veritas Energy Services series 1 exchangeable share is a
corporation, the amount of any capital loss arising from a disposition or deemed
disposition of such share may be reduced by the amount of dividends received or
deemed to have been received by it on such share to the extent and under
circumstances prescribed by the Canadian Tax Act. Similar rules may apply where
a corporation is a member of a partnership or a beneficiary of a trust that owns
Veritas Energy Services series 1 exchangeable shares or where a trust or
partnership of which a corporation is a beneficiary or a member is a member of a
partnership or a beneficiary of a trust that owns Veritas Energy Services series
1 exchangeable shares. Shareholders to whom these rules may be relevant should
consult their own tax advisors.
Dividends on Veritas Energy Services Series 1 Exchangeable Shares. In the
case of a shareholder who is an individual, dividends received or deemed to be
received on the Veritas Energy Services series 1 exchangeable shares will be
included in computing the shareholder's income, and will be subject to the
gross-up and dividend tax credit rules normally applicable to taxable dividends
received from taxable Canadian corporations.
In the case of a shareholder that is a corporation other than a "specified
financial institution" (as defined in the Canadian Tax Act), dividends received
or deemed to be received on the Veritas Energy Services series 1 exchangeable
shares normally will be included in the corporation's income and deductible in
computing its taxable income.
A shareholder that is a "private corporation" (as defined in the Canadian
Tax Act) or any other corporation resident in Canada and controlled or deemed to
be controlled by or for the benefit of an individual or a related group of
individuals may be liable under Part IV of the Canadian Tax Act to pay a
refundable tax 33 1/3% of dividends received or deemed to be received on the
Veritas Energy Services series 1 exchangeable shares to the extent that such
dividends are deductible in computing the shareholder's taxable income.
The Veritas Energy Services series 1 exchangeable shares will be "term
preferred shares" as defined in the Canadian Tax Act. Consequently, in the case
of a shareholder that is a specified financial institution, such a dividend will
be deductible in computing its taxable income only if:
(i) the specified financial institution did not acquire the Veritas
Energy Services series 1 exchangeable shares in the ordinary course of the
business carried on by such institution; or
(ii) in any case, at the time the dividend is received by the
specified financial institution, the Veritas Energy Services series 1
exchangeable shares are listed on a prescribed stock exchange in Canada
(which currently includes The Toronto Stock Exchange) and the specified
financial institution, either alone or together with persons with whom it
does not deal at arm's length, does not receive (or is not deemed to
receive) dividends in respect of more than 10% of the issued and
outstanding Veritas Energy Services series 1 exchangeable shares.
In addition, to the extent that a deemed dividend arises on the redemption
of the Veritas Energy Services series 1 exchangeable shares by Veritas Energy
Services, a portion of the dividend may not be subject to the denial of dividend
deduction applicable in respect of term preferred shares in accordance with the
exceptions outlined above. Specified financial institutions should consult their
own tax advisors.
A shareholder that is throughout the relevant taxation year a
"Canadian-controlled private corporation" (as defined in the Canadian Tax Act)
may be liable to pay an additional refundable tax of 6 2/3% on its "aggregate
investment income" for the year which will include dividends or deemed dividends
that are not deductible in computing taxable income.
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The Veritas Energy Services series 1 exchangeable shares will be "taxable
preferred shares" and "short-term preferred shares" for purpose of the Canadian
Tax Act. Accordingly, Veritas Energy Services will be subject to a 66 2/3% tax
under Part VI.1 of the Canadian Tax Act on dividends (other than "excluded
dividends" as defined in the Canadian Tax Act) paid or deemed to be paid on the
Veritas Energy Services series 1 exchangeable shares and will be entitled to
deduct an amount equal to 9/4 of the tax so payable in computing its taxable
income for purposes of the Canadian Tax Act. Dividends received or deemed to be
received on the Veritas Energy Services series 1 exchangeable shares will not be
subject to the 10% tax under Part IV.1 of the Canadian Tax Act applicable to
certain corporations.
Dividends on Veritas DGC Common Stock. Dividends on shares of Veritas DGC
common stock will be included in the recipient's income for the purposes of the
Canadian Tax Act. Such dividends received by an individual shareholder will not
be subject to the gross-up and dividend tax credit rules in the Canadian Tax
Act. A shareholder that is a corporation will include such dividends in
computing its income and generally will not be entitled to deduct the amount of
such dividends in computing its taxable income. A shareholder that is throughout
the relevant taxation year a "Canadian-controlled private corporation" (as
defined in the Canadian Tax Act) may be liable to pay an additional refundable
tax of 6 2/3% on its "aggregate investment income" for the year which will
include such dividends. United States non-resident withholding tax on such
dividends will be eligible for foreign tax credit or deduction treatment, where
applicable, under the Canadian Tax Act. See "United States Federal Income Tax
Considerations to Former Enertec Shareholders -- Shareholders Not Resident in or
Citizens of the United States."
Disposition of Shares of Veritas DGC Common Stock. The cost of a share of
Veritas DGC common stock received on a retraction, redemption or exchange of a
Veritas Energy Services series 1 exchangeable share will be equal to the fair
market value of such share at the time of such event. The adjusted cost base to
a holder of shares of Veritas DGC common stock acquired on a retraction,
redemption or exchange of a Veritas Energy Services series 1 exchangeable share
will be determined by averaging the cost of such share with the adjusted cost
base of all other shares of Veritas DGC common stock held by such holder as
capital property immediately before the retraction, redemption or exchange, as
the case may be. A disposition or deemed disposition of a share of Veritas DGC
common stock by a holder will generally result in a capital gain (or a capital
loss) equal to the amount by which the proceeds of disposition, net of any
reasonable costs of disposition, exceed (or are less than) the adjusted cost
base to the holder of such share immediately before the disposition.
Foreign Property Information Reporting. A holder of shares of Veritas DGC
common stock, who is a "specified Canadian entity" for a taxation year or fiscal
period and whose total cost amount of "specified foreign property," including
such shares, at any time in the year or fiscal period exceeds Cdn$100,000 will
be required to file an information return for the year or period disclosing
prescribed information, including the shareholder's cost amount, any dividends
received in the year, and any gains or losses realized in the year, in respect
of such property. With some exceptions, a taxpayer resident in Canada in the
year will be a specified Canadian entity. A holder of Veritas DGC common stock
should consult its own advisors about whether it must comply with these rules.
Veritas Energy Services Series 1 Exchangeable Shares -- Eligibility for
Investment in Canada. The Veritas Energy Services series 1 exchangeable shares,
provided they are listed on a prescribed stock exchange in Canada (which
currently includes The Toronto Stock Exchange) and provided that Veritas Energy
Services maintains a substantial presence in Canada, will not be foreign
property under the Canadian Tax Act for trusts governed by registered retirement
savings plans, registered retirement income funds and deferred profit sharing
plans, for registered pension plans or for certain other persons to whom Part XI
of the Canadian Tax Act applies.
The Veritas Energy Services series 1 exchangeable shares will be qualified
investments under the Canadian Tax Act for trusts governed by registered
retirement savings plans, registered retirement income funds and deferred profit
sharing plans.
Veritas DGC has indicated that it intends to use its best efforts to cause
Veritas Energy Services to maintain the listing of the series 1 exchangeable
shares on The Toronto Stock Exchange.
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Voting Rights and Exchange Rights. The rights of the holders of Veritas
Energy Services series 1 exchangeable shares to direct the voting of the one
share of Enertec special voting stock held by the Trustee and the rights granted
to the Trustee to exchange Veritas Energy Services series 1 exchangeable shares
for Veritas DGC common stock in certain circumstances will not be qualified
investments and will be foreign property under the Canadian Tax Act. However,
each of Veritas DGC and Veritas Energy Services is of the view that the fair
market value of these rights is nominal.
Veritas DGC Common Stock. The Veritas DGC common stock will be a qualified
investment under the Canadian Tax Act for trusts governed by registered
retirement savings plans, registered retirement income funds and deferred profit
sharing plans provided such shares remain listed on the New York Stock Exchange
or another prescribed stock exchange. The Veritas DGC common stock will be
foreign property under the Canadian Tax Act.
Shareholders Not Resident in Canada
The following portion of the discussion is applicable to former Enertec
shareholders who, for purposes of the Canadian Tax Act and any applicable tax
treaty or convention, have not been and will not be resident or deemed to be
resident in Canada at any time while they have held Enertec common shares or
Veritas Energy Services series 1 exchangeable shares or will hold shares of
Veritas DGC common stock and, except as specifically discussed below, to whom
such shares are not "taxable Canadian property" (as defined in the Canadian Tax
Act and the proposed amendments) and, in the case of a non-resident of Canada
who carries on an insurance business in Canada and elsewhere, such shares are
not "designated insurance property" as defined in the Canadian Tax Act.
Generally, Veritas Energy Services series 1 exchangeable shares will not be
taxable Canadian property at a particular time provided that:
(i) such shares are listed on a prescribed stock exchange (which
exchanges currently include The Toronto Stock Exchange);
(ii) the holder does not use or hold, and is not deemed to use or
hold, the Veritas Energy Services series 1 exchangeable shares in
connection with carrying on a business in Canada; and
(iii) the holder, persons with whom such holder does not deal at arm's
length, or the holder and such persons, has not owned (or had under option)
25% or more of the issued shares of any class or series of the capital
stock of Enertec or Veritas Energy Services at any time within five years
preceding the particular time.
The shares of Veritas DGC will not be taxable Canadian property at a particular
time provided that the holder does not use or hold, and is not deemed to use or
hold, the shares of Veritas DGC common stock in connection with carrying on a
business in Canada. In the case of Veritas Energy Services, even if the holder
exceeds the 25% threshold referred to above with respect to the Veritas Energy
Services series 1 exchangeable shares, such shares may not be taxable Canadian
property. At the time of disposition such holder should consult its own tax
advisors to determine whether the Veritas Energy Services series 1 exchangeable
shares constitute taxable Canadian property at that time. The Toronto Stock
Exchange has conditionally approved the listing of the Veritas Energy Services
series 1 exchangeable shares.
Provided the Veritas Energy Services series 1 exchangeable shares or shares
of Veritas DGC common stock are not taxable Canadian property to the holder, the
holder will not be subject to tax under the Canadian Tax Act on the exchange of
a Veritas Energy Services series 1 exchangeable share for shares of Veritas DGC
common stock (except to the extent the exchange gives rise to a deemed dividend
discussed below), or on the sale or other disposition of a Veritas Energy
Services series 1 exchangeable share or share of Veritas DGC common stock.
Dividends paid or deemed to be paid on the Veritas Energy Services series 1
exchangeable shares are subject to non-resident withholding tax under the
Canadian Tax Act at the rate of 25%, although such rate may be reduced under the
provisions of an applicable income tax treaty or convention. For example, under
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the Canada-United States Income Tax Convention, the rate is generally reduced to
15% in respect of dividends paid to a person who is the beneficial owner thereof
and who is resident in the United States for purposes of the Canada-United
States Income Tax Convention.
A HOLDER WHOSE VERITAS ENERGY SERVICES SERIES 1 EXCHANGEABLE SHARES ARE
REDEEMED BY VERITAS ENERGY SERVICES (EITHER UNDER VERITAS ENERGY SERVICES'
REDEMPTION RIGHT OR PURSUANT TO THE HOLDER'S RETRACTION RIGHTS) WILL BE DEEMED
TO RECEIVE A DIVIDEND AS DESCRIBED ABOVE UNDER "-- SHAREHOLDERS RESIDENT IN
CANADA -- RETRACTION OF VERITAS ENERGY SERVICES SERIES 1 EXCHANGEABLE SHARES
WITH VERITAS ENERGY SERVICES; REDEMPTION OF VERITAS ENERGY SERVICES SERIES 1
EXCHANGEABLE SHARES BY VERITAS ENERGY SERVICES." ANY SUCH DEEMED DIVIDEND WILL
BE SUBJECT TO WITHHOLDING TAX AS DESCRIBED ABOVE. HOLDERS OF VERITAS ENERGY
SERVICES SERIES 1 EXCHANGEABLE SHARES CANNOT CONTROL WHETHER THEY WILL REALIZE A
DEEMED DIVIDEND OR PROCEEDS OF DISPOSITION ON AN EXCHANGE OF THE VERITAS ENERGY
SERVICES SERIES 1 EXCHANGEABLE SHARES FOR SHARES OF VERITAS DGC COMMON STOCK.
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS TO FORMER ENERTEC SHAREHOLDERS
In the opinion of Porter & Hedges, L.L.P., United States counsel to Veritas
Energy Services, the following is a summary of the material United States
federal income tax considerations generally applicable to former Enertec
shareholders that are United States holders and that own Veritas Energy Services
series 1 exchangeable shares and Veritas DGC common stock as capital assets. For
purposes of this summary, United States holders are United States citizens or
residents (including certain former citizens and residents), corporations or
partnerships organized under the laws of the United States or any state thereof,
any estate subject to United States federal income tax on its income regardless
of source, and any trust if a United States court is able to exercise primary
supervision over the administration of the trust and one or more United States
persons have authority to control all substantial decisions of the trust.
This summary is based on United States federal income tax law in effect as
of the date of this prospectus. No statutory, judicial, or administrative
authority exists which directly addresses certain of the United States federal
income tax consequences of the issuance and ownership of instruments and rights
comparable to the Veritas Energy Services series 1 exchangeable shares and the
related rights. Consequently, some aspects of the United States federal income
tax treatment of the transactions, including the ownership of Veritas Energy
Services series 1 exchangeable shares and the exchange of Veritas Energy
Services series 1 exchangeable shares for shares of Veritas DGC common stock,
are not certain. No advance income tax ruling has been sought or obtained from
the United States Internal Revenue Service regarding the tax consequences of any
of the transactions described herein.
This summary does not address aspects of United States taxation other than
United States federal income taxation, nor does it address all aspects of United
States federal income taxation that may be applicable to particular United
States holders, including, without limitation, former holders of Enertec common
shares acquired as a result of the exercise of employee stock options. In
addition, this summary does not address (i) the United States state or local tax
consequences, or (ii) the foreign tax consequences of the combination of
Enertec, Veritas Energy Services and Veritas DGC.
UNITED STATES HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT
TO THE UNITED STATES FEDERAL, STATE, AND LOCAL TAX CONSEQUENCES AND THE FOREIGN
TAX CONSEQUENCES OF THE COMBINATION OF ENERTEC, VERITAS ENERGY SERVICES AND
VERITAS DGC INCLUDING THE RECEIPT AND OWNERSHIP OF VERITAS ENERGY SERVICES
SERIES 1 EXCHANGEABLE SHARES AND THE RELATED RIGHTS.
Exchange or Redemption of Veritas Energy Services Series 1 Exchangeable
Shares. It is anticipated that a United States holder that exercises such
holder's rights to exchange or upon a redemption of the Veritas Energy Services
series 1 exchangeable shares and the related rights for shares of Veritas DGC
common stock generally will recognize gain or loss on the receipt of the shares
of Veritas DGC common stock in exchange for such Veritas Energy Services series
1 exchangeable shares and the related rights. Such gain or loss will be equal to
the difference between the fair market value of the shares of Veritas DGC common
stock at the time of the exchange and the United States holder's tax basis in
the Veritas Energy Services series 1 exchangeable shares and the related rights
exchanged. The gain or loss will be
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capital gain or loss, except that, with respect to any declared but unpaid
dividends on the Veritas Energy Services series 1 exchangeable shares, ordinary
income may be recognized by the holder. Capital gain or loss will be long-term
capital gain or loss if the Veritas Energy Services series 1 exchangeable shares
have been held as capital assets for more than one year at the time of the
exchange. The United States holder's tax basis in the shares of Veritas DGC
common stock will be the fair market value of the shares of Veritas DGC common
stock received by the United States holder in the exchange. Such holder's
holding period will begin on the day after the United States holder received the
shares of Veritas DGC common stock.
In the event that a United States holder of series 1 exchangeable shares
owns other shares of Veritas Energy Services at the time of a redemption of the
series 1 exchangeable shares by Veritas Energy Services, the Internal Revenue
Service could take the position that the redemption is treated as a dividend.
The amount of any such dividend can be the entire amount of money or the value
of property received in the redemption. The redemption proceeds would be taxed
as ordinary income to the extent of the allocable earnings and profits of
Veritas Energy Services in the year of the redemption, with any excess treated
next as a recovery of basis and then as a capital gain. In determining whether a
United States holder owns other shares of Veritas Energy Services, a holder's
directly-owned shares and shares that the holder owns constructively under
Section 318 of the Code must be considered. The rules of constructive ownership
are complex and can produce unexpected results, and depend on each shareholder's
specific facts. Holders of Veritas Energy Services stock other than the series 1
exchangeable shares, or holders who believe that a person or entity to whom they
are related may hold such shares, should consult their tax advisors in this
regard.
For United States federal income tax purposes, gain realized on the
exchange of Veritas Energy Services series 1 exchangeable shares for shares of
Veritas DGC common stock generally will be treated as United States source gain,
except that, under the terms of the applicable tax treaty or convention, such
gain may be treated as sourced in Canada. Any Canadian tax imposed on the
exchange generally will be available as a credit against United States federal
income taxes, subject to applicable limitations. A United States holder that is
ineligible for a foreign tax credit with respect to any Canadian tax paid may be
entitled to a deduction therefor in computing United States taxable income.
Distributions on the Veritas Energy Services Series 1 Exchangeable
Shares. A United States holder of Veritas Energy Services series 1 exchangeable
shares generally will be required to include dividends paid on the Veritas
Energy Services series 1 exchangeable shares in gross income as ordinary income
to the extent the dividends were paid out of the current or accumulated earnings
and profits of Veritas Energy Services, as determined under United States
federal income tax principles. Such dividends generally will be treated as
foreign source passive income for foreign income tax credit limitation purposes.
Under the applicable tax treaty, such distributions will be subject to Canadian
withholding tax at a maximum rate of 15%. Subject to certain limitations of
United States federal income tax law, a United States holder generally should be
entitled to credit such withholding tax against such holder's United States
federal income tax liability or to deduct such tax in computing United States
taxable income.
Passive Foreign Investment Company Considerations. For United States
federal income tax purposes, a foreign corporation generally will be classified
as a passive foreign investment company, known as a "PFIC," for any taxable year
during which either (i) 75% or more of its gross income is passive income (as
defined for United States federal income tax purposes) or (ii) on average for
such taxable year, 50% or more of its assets produce or are held for the
production of passive income. For purposes of applying the foregoing tests, the
assets and gross income of corporations with respect to which the foreign
corporation owns at least 25% of the value of the stock will be attributed to
the foreign corporation.
While there can be no assurance with respect to the classification of
either Enertec or Veritas Energy Services as a PFIC, each of Enertec and Veritas
Energy Services believes that it did not constitute a PFIC during its taxable
years ending prior to their combination. At the present time, Enertec and
Veritas DGC intend to endeavor to cause Enertec and Veritas Energy Services to
avoid PFIC status in the future, although there can be no assurance that they
will be able to do so or that their intent will not change.
15
<PAGE> 19
Moreover, because a determination of the foreign corporation's status as a PFIC
cannot be made until the close of the taxable year, United States counsel will
not be rendering an opinion with regard to the status of Veritas Energy Services
or Enertec as a PFIC. Veritas Energy Services intends to monitor its status
regularly, and promptly following the end of each taxable year Veritas Energy
Services will notify United States holders of Veritas Energy Services series 1
exchangeable shares if it believes that Veritas Energy Services was a PFIC for
that taxable year.
If Veritas Energy Services becomes a PFIC during a United States holder's
holding period for Veritas Energy Services series 1 exchangeable shares, and the
United States holder does not make an election to treat Enertec as a qualified
electing fund under Section 1295 of the United States Internal Revenue Code,
then:
(i) the United States holder would be required to allocate income
recognized upon receiving certain excess dividends with respect to, and
gain recognized upon the disposition of, such United States holder's
Veritas Energy Services series 1 exchangeable shares (including upon the
exchange of Veritas Energy Services series 1 exchangeable shares for shares
of Veritas DGC common stock) ratably over the United States holder's
holding period for such Veritas Energy Services series 1 exchangeable
shares;
(ii) the amount allocated to each year other than:
(A) the year of the excess dividend payment or disposition of the
Veritas Energy Services series 1 exchangeable shares or
(B) any year prior to the beginning of the first taxable year of
Veritas Energy Services for which it was a PFIC, would be subject to tax
at the highest rate applicable to individuals or corporations, as the
case may be, for the taxable year to which such income is allocated, and
an interest charge would be imposed upon the resulting tax attributable
to each such year (which charge would accrue from the due date of the
return for the taxable year to which such tax was allocated); and
(iii) amounts allocated to periods described in (A) and (B) will be
taxable to the United States holder as ordinary income.
If the United States holder of Veritas Energy Services series 1
exchangeable shares makes a qualified electing fund election, then the United
States holder generally will be currently taxable on such holder's pro rata
share of Veritas Energy Services' ordinary earnings and net capital gains (at
ordinary income and capital gains rates, respectively) for each taxable year of
Veritas Energy Services in which Veritas Energy Services is classified as a
PFIC, even if no dividend distributions are received by such United States
holder, unless such United States holder makes an election to defer such taxes.
If Veritas Energy Services believes that it was a PFIC for a taxable year, it
will provide United States holders of Veritas Energy Services series 1
exchangeable shares with information sufficient to allow eligible holders to
make a qualified electing fund election and report and pay any current or
deferred taxes due with respect to their pro rata shares of Veritas Energy
Services' ordinary earnings and profits and net capital gains for such taxable
year. United States holders should consult their tax advisors concerning the
merits and mechanics of making a qualified electing fund election and other
relevant tax considerations if either Enertec or Veritas Energy Services is a
PFIC for any applicable taxable year.
The foregoing summary of the possible application of the PFIC rules to
Enertec and Veritas Energy Services and the United States former holders of
Enertec common shares is only a summary of certain material aspects of those
rules. Because the United States federal income tax consequences to a United
States former holder of Enertec common shares under the PFIC provisions are
significant, United States former holders of Enertec common shares are urged to
discuss those consequences with their tax advisors.
16
<PAGE> 20
SHAREHOLDERS NOT RESIDENT IN OR CITIZENS OF THE UNITED STATES
The following summary is applicable to former holders of Enertec common
shares that are not United States holders.
A non-United States holder generally will not be subject to United States
federal income tax on gain (if any) recognized on the sale or exchange of the
Veritas Energy Services series 1 exchangeable shares, or on the receipt of or
sale of shares of Veritas DGC common stock unless such gain is effectively
connected with a United States trade or business or, in the case of gains
recognized by an individual, such individual is present in the United States for
183 days or more and has a "tax home," as defined in the United States Internal
Revenue Code, during the taxable year.
Dividends received by a non-United States holder with respect to the
Veritas Energy Services series 1 exchangeable shares should not be subject to
United States withholding tax, and Veritas DGC and Enertec do not intend that
Veritas DGC, Veritas Energy Services or Enertec will withhold any amounts in
respect of such tax from such dividends. There is some possibility, however,
that the Internal Revenue Service may assert that United States withholding tax
is payable with respect to dividends paid on the Veritas Energy Services series
1 exchangeable shares to non-United States holders. In such case, holders of
Veritas Energy Services series 1 exchangeable shares could be subject to United
States withholding tax at a rate of 30 percent, which rate may be reduced by an
income tax treaty in effect between the United States and the non-United States
holder's country of residence. This reduction would result in a withholding tax
of 15 percent on dividends paid to residents of Canada under the applicable tax
treaty.
Dividends received by non-United States holders with respect to the Veritas
DGC common stock generally will be subject to United States withholding tax at a
rate of 30 percent, which rate may be subject to reduction by an applicable
income tax treaty. This reduction would result in a withholding tax of 15
percent on dividends paid to residents of Canada under the applicable tax
treaty.
LEGAL MATTERS
Certain legal matters in connection with the validity of the Veritas DGC
Common Stock offered hereby will be passed on for Veritas DGC by Porter &
Hedges, L.L.P., Houston, Texas. Certain federal U.S. and Canadian tax
consequences have been passed on for Veritas DGC by Porter & Hedges, L.L.P.,
Houston, Texas and by Felesky Flynn, Calgary, Alberta, respectively.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K of Veritas DGC Inc. for the two
years ended July 31, 1998, have been so incorporated in reliance on the report
of PricewaterhouseCoopers LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
The consolidated financial statements of Veritas DGC Inc. for the year
ended July 31, 1996 incorporated by reference from the Veritas DGC Inc. Annual
Report on Form 10-K for the year ended July 31, 1998 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which is
incorporated by reference, and has been so incorporated in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
The consolidated financial statements of Veritas Energy Services Inc., as
of and for the nine months ended July 31, 1996, not separately incorporated by
reference in this prospectus, have been audited by PricewaterhouseCoopers LLP,
Chartered Accountants, whose report thereon is incorporated in this prospectus
by reference to the Veritas DGC Inc. Annual Report on Form 10-K for the year
ended July 31, 1998. Such consolidated financial statements, to the extent they
have been included in the consolidated financial statements of Veritas DGC Inc.
as of and for the year ended July 31, 1996, have been so included in reliance on
the report of such independent accountants given on the authority of said firm
as experts in auditing and accounting.
17
<PAGE> 21
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This prospectus incorporates documents by reference which are not presented
in or delivered with it. This means that Veritas DGC can disclose certain
information by referring a reader to certain documents. These documents (other
than exhibits to such documents unless specifically incorporated by reference)
are available, without charge, upon written or oral request directed to Larry L.
Worden, Veritas DGC Inc., at Veritas DGC's principal executive offices located
at 3701 Kirby Drive, Suite 112, Houston, Texas 77098-3982; telephone (713)
512-8300.
The following documents, which have been filed by Veritas DGC with the SEC
pursuant to the Exchange Act (File No. 1-7427), are incorporated in this
prospectus by reference and shall be deemed to be a part hereof:
(a) Annual Report on Form 10-K for the year ended July 31, 1998;
(b) Current Report on Form 8-K, dated November 12, 1998;
(c) Quarterly Reports on Form 10-Q for the quarters ended October 31,
1998, January 31, 1999, and April 30, 1999; and
(d) All documents filed by Veritas DGC with the SEC pursuant to
sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the
date of this prospectus and prior to the termination of the Offer to
Exchange.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained herein
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus.
18
<PAGE> 22
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
SEC Registration Fee....................................... $ 4,706
Printing Expenses.......................................... 4,500
Legal Fees and Expenses.................................... 26,000
Accounting Fees and Expenses............................... 20,000
Miscellaneous.............................................. 1,794
-------
Total............................................ $57,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits a corporation
to indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action.
In a suit brought to obtain a judgment in the corporation's favor, whether
by the corporation itself or derivatively by a stockholder, the corporation may
only indemnify for expenses, including attorney's fees, actually and reasonably
incurred in connection with the defense or settlement of the case, and the
corporation may not indemnify for amounts paid in satisfaction of a judgment or
in settlement of the claim. In any such action, no indemnification may be paid
in respect of any claim, issue or matter as to which such persons shall have
been adjudged liable to the corporation except as otherwise provided by the
Delaware Court of Chancery or the court in which the claim was brought. In any
other type of proceeding, the indemnification may extend to judgments, fines and
amounts paid in settlement, actually and reasonably incurred in connection with
such other proceeding, as well as to expenses (including attorneys' fees).
The statute does not permit indemnification unless the person seeking
indemnification has acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interest of the corporation and, in the
case of criminal actions or proceedings, the person had no reasonable cause to
believe his conduct was unlawful. There are additional limitations applicable to
criminal actions and to actions brought by or in the name of the corporation.
The determination as to whether a person seeking indemnification has met the
required standard of conduct is to be made (i) by a majority vote of a quorum of
disinterested members of the board of directors, or (ii) by independent counsel
in a written opinion, if such a quorum does not exist or if the disinterested
directors so direct, or (iii) by the stockholders.
The Restated Certificate of Incorporation (with Amendments) and Bylaws of
Veritas DGC require Veritas DGC to indemnify Veritas DGC's directors and
officers to the fullest extent permitted under Delaware law. Veritas DGC's
Restated Certificate of Incorporation (with Amendments) limits the personal
liability of a director to Veritas DGC or its stockholders to damages for breach
of the director's fiduciary duty.
Veritas DGC has purchased insurance on behalf of its directors and officers
against certain liabilities that may be asserted against, or incurred by, such
persons in their capacities as directors or officers of the Registrant, or that
may arise out of their status as directors or officers of the registrant,
including liabilities under the federal and state securities laws.
II-1
<PAGE> 23
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
3.1 -- Restated Certificate of Incorporation (with Amendments)
of Digicon Inc. dated August 30, 1996 (Incorporated by
reference to Exhibit 2.1 of Digicon Inc.'s Current Report
on Form 8-K filed September 16, 1996).
3.2 -- Certificate of Ownership and Merger of New Digicon Inc.
and Digicon Inc. (Incorporated by reference to Exhibit
3-B to Digicon's Registration Statement No. 33-43873,
dated November 12, 1991).
3.3 -- Bylaws of New Digicon Inc. dated June 24, 1991.
(Incorporated by referenced to Exhibit 3-C to Digicon's
Registration Statement No. 33-43873, dated November 12,
1991).
3.4+ -- Form of Restated Certificate of Incorporation (with
Amendments) of Veritas DGC Inc.
4.1 -- Specimen Veritas DGC Inc. Common Stock certificate.
(Incorporated by reference to Exhibit 4-C to Veritas DGC
Inc.'s Annual Report on Form 10-K for the year ended July
31, 1996).
4.2 -- Rights Agreement between Veritas DGC Inc. and ChaseMellon
Shareholder Services, L.L.C. dated as of May 15, 1997.
(Incorporated by reference to Exhibit 4.1 of Veritas DGC
Inc.'s Current Report on Form 8-K filed May 27, 1997).
5.1* -- Opinion of Porter & Hedges, L.L.P., with respect to the
legality of the securities filed herewith.
8.1* -- Opinion of Felesky Flynn regarding tax matters.
8.2+ -- Opinion of Porter & Hedges, L.L.P. regarding tax matters.
23.1* -- Consent of PricewaterhouseCoopers LLP.
23.2* -- Consent of PricewaterhouseCoopers LLP, Chartered
Accountants.
23.3* -- Consent of Deloitte & Touche LLP.
23.4* -- Consent of Porter & Hedges, L.L.P. (included in Exhibits
5.1 and 8.2).
23.5* -- Consent of Felesky Flynn (included in Exhibit 8.1).
24.1+ -- Power of Attorney.
</TABLE>
- ---------------
+ Previously filed.
* Filed herewith.
ITEM 17. UNDERTAKINGS
A. Undertaking to Update
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to:
(i) include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information in the
Registration Statement; and
(iii) include any material information with respect to the plan for
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
II-2
<PAGE> 24
Provided, however, that paragraph (A)(1)(i) and (A)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated
by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
B. Undertaking With Respect to Documents Incorporated by Reference
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
C. Undertaking With Respect to Indemnification
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, State of Texas on September 16, 1999.
VERITAS DGC INC.
By: /s/ DAVID B. ROBSON
------------------------------------
David B. Robson
Chairman of the Board,
Chief Executive Officer and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the 16th day of September, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ DAVID B. ROBSON Chairman of the Board, Chief Executive Officer
- ----------------------------------------------------- and Director
David B. Robson
* /s/ STEPHEN J. LUDLOW Vice Chairman of the Board and Director
- -----------------------------------------------------
Stephen J. Ludlow
* /s/ TIMOTHY L. WELLS President and Chief Operating Officer
- -----------------------------------------------------
Timothy L. Wells
* /s/ ANTHONY TRIPODO Executive Vice President, Chief Financial
- ----------------------------------------------------- Officer and Treasurer (principal financial
Anthony Tripodo and accounting officer)
* /s/ CLAYTON P. CORMIER Director
- -----------------------------------------------------
Clayton P. Cormier
Director
- -----------------------------------------------------
Ralph M. Eeson
Director
- -----------------------------------------------------
Lawrence C. Fichtner
* /s/ JAMES R. GIBBS Director
- -----------------------------------------------------
James R. Gibbs
* /s/ STEVEN J. GILBERT Director
- -----------------------------------------------------
Steven J. Gilbert
</TABLE>
II-4
<PAGE> 26
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
* /s/ BRIAN F. MACNEILL Director
- -----------------------------------------------------
Brian F. MacNeill
* /s/ JAN RASK Director
- -----------------------------------------------------
Jan Rask
*By /s/ DAVID B. ROBSON
-------------------------------------------------
David B. Robson
(Individually and as Attorney-in-fact)
</TABLE>
II-5
<PAGE> 27
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
3.1 -- Restated Certificate of Incorporation (with Amendments)
of Digicon Inc. dated August 30, 1996 (Incorporated by
reference to Exhibit 2.1 of Digicon Inc.'s Current Report
on Form 8-K filed September 16, 1996).
3.2 -- Certificate of Ownership and Merger of New Digicon Inc.
and Digicon Inc. (Incorporated by reference to Exhibit
3-B to Digicon's Registration Statement No. 33-43873,
dated November 12, 1991).
3.3 -- Bylaws of New Digicon Inc. dated June 24, 1991.
(Incorporated by referenced to Exhibit 3-C to Digicon's
Registration Statement No. 33-43873, dated November 12,
1991).
3.4+ -- Form of Restated Certificate of Incorporation (with
Amendments) of Veritas DGC Inc.
4.1 -- Specimen Veritas DGC Inc. Common Stock certificate.
(Incorporated by reference to Exhibit 4-C to Veritas DGC
Inc.'s Annual Report on Form 10-K for the year ended July
31, 1996).
4.2 -- Rights Agreement between Veritas DGC Inc. and ChaseMellon
Shareholder Services, L.L.C. dated as of May 15, 1997.
(Incorporated by reference to Exhibit 4.1 of Veritas DGC
Inc.'s Current Report on Form 8-K filed May 27, 1997).
5.1* -- Opinion of Porter & Hedges, L.L.P., with respect to the
legality of the securities filed herewith.
8.1* -- Opinion of Felesky Flynn regarding tax matters.
8.2+ -- Opinion of Porter & Hedges, L.L.P. regarding tax matters.
23.1* -- Consent of PricewaterhouseCoopers LLP.
23.2* -- Consent of PricewaterhouseCoopers LLP, Chartered
Accountants.
23.3* -- Consent of Deloitte & Touche LLP.
23.4* -- Consent of Porter & Hedges, L.L.P. (included in Exhibits
5.1 and 8.2).
23.5* -- Consent of Felesky Flynn (included in Exhibit 8.1).
24.1+ -- Power of Attorney.
</TABLE>
- ---------------
+ Previously filed
* Filed herewith.
<PAGE> 1
EXHIBIT 5.1
September 16, 1999
Veritas DGC Inc.
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Re: Veritas DGC Inc. -- Registration Statement on Form S-3
Gentlemen:
We have acted as counsel to Veritas DGC Inc., a Delaware corporation
("Company"), in connection with the preparation for filing with the Securities
and Exchange Commission of a Registration Statement on Form S-3 (the
Registration Statement") under the Securities Act of 1933, as amended. The
Registration Statement relates to an aggregate of 2,673,556 shares (the
"Shares") of the Company's common stock, par value $.01 per share (the "Common
Stock"), issuable on exchange of the class A exchangeable shares, series 1 of
Veritas Energy Services Inc., an Alberta corporation, as described in the
Registration Statement.
We have examined such corporate records, documents, instruments and
certificates of the Company, and have reviewed such questions of law as we have
deemed necessary, relevant or appropriate to enable us to render the opinion
expressed herein. In such examination, we have assumed without independent
investigation the authenticity of all documents submitted to us as originals,
the genuineness of all signatures, the legal capacity of all natural persons,
and the conformity of any documents submitted to us as copies to their
respective originals. As to certain questions of fact material to this opinion,
we have relied without independent investigation upon statements or certificates
of public officials and officers of the Company.
Based upon such examination and review, we are of the opinion that the
Shares have been duly and validly authorized and will, upon issuance and
delivery as described in the Registration Statement, be validly issued, fully
paid and nonassessable outstanding shares of the Common Stock.
This Firm consents to the filing of this opinion as an exhibit to the
Registration Statement and further consents to all references to this Firm in
Registration Statement.
Very truly yours,
/s/ PORTER & HEDGES, L.L.P.
PORTER & HEDGES, L.L.P.
<PAGE> 1
EXHIBIT 8.1
August 19, 1999
Veritas Energy Services Inc.
2200, 715 - 5th Avenue S.W.
Calgary, Alberta
T2P 5A2
Dear Sirs:
RE: CANADIAN INCOME TAX OPINION
PROSPECTUS (AUGUST 19, 1999) AND FORM S-3
We are Canadian tax counsel to Veritas Energy Services, Inc. ("VESI").
The arrangement of Enertec Resource Services Inc. ("Enertec") and VESI
provides that each issued and outstanding common share of Enertec (the "Enertec
Common Share") will be transferred to VESI and the sole consideration received
therefor will be 0.345 of a Class A Exchangeable Share, Series 1 of VESI (the
"Series 1 Exchangeable Shares"). The holders of the Series 1 Exchangeable Shares
will have the right to later exchange such shares for the same number of common
shares of Veritas DGC Inc. ("Veritas DGC Common Stock").
We have been engaged to express an opinion on the Canadian federal
income tax implications that will arise on the exchange of the Series 1
Exchangeable Shares for the Veritas DGC Common Stock.
In forming our opinion, we have relied upon the Income Tax Act (Canada)
(the "Canadian Tax Act"), income tax regulations ("Regulations") enacted
thereunder, proposed amendments to the Canadian Tax Act and Regulations, and our
understanding of the current administrative practices of Revenue Canada,
Customs, Excise and Taxation ("Revenue Canada"). Our opinion takes into account
any amendments to the Canadian Tax Act and Regulations publicly announced prior
to the date hereof and assumes that all such proposed amendments will be enacted
in their present form, although no assurance can be given that such will be the
case. Our Opinion does not take into account or anticipate any changes in law,
whether by legislative, administrative or judicial decision or action.
Our opinion is based on information provided in the Prospectus of
Veritas DGC Inc. dated August 19, 1999 (the "Prospectus") that is attached to
the Form S-3 dated August 19, 1999. We assume that all transactions will be
implemented as described in the Prospectus.
In our opinion, the exchange by holders of a Series 1 Exchangeable
Shares for Veritas DGC Common Stock will not be a tax-deferred event for
purposes of the Canadian Tax Act. The liability for, and amount of Canadian
income taxes exigible on, the exchange will depend on a variety of
circumstances, including the residency of the holder and the method of the
exchange. The particulars are more fully set out in the Prospectus under "INCOME
TAX CONSIDERATIONS - Canadian Federal Income Tax Considerations to Former
Enertec Shareholders."
We hereby consent to the use of our firm name in the Prospectus under
the subheading "Canadian Federal Income Tax Considerations to Former Enertec
Shareholders."
Yours very truly,
/s/ FELESKY FLYNN
FELESKY FLYNN
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated October 1, 1998 relating to the
consolidated financial statements, which appear in Veritas DGC Inc.'s Annual
Report on Form 10-K for the year ended July 31, 1998. We also consent to the
reference to us under the heading "Experts" in such Registration Statement.
PricewaterhouseCoopers LLP
Houston, Texas
September 14, 1999
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated September 20, 1996 relating to the
consolidated financial statements of Veritas Energy Services Inc., as of and for
the nine months ended July 31, 1996. Our report appears in Veritas DGC Inc.'s
Annual Report on Form 10-K for the year ended July 31, 1998. We also consent to
the reference to us under the heading "Experts" in such Registration Statement.
PricewaterhouseCoopers LLP
Chartered Accountants
Calgary, Alberta
September 14, 1999
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EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Veritas DGC Inc. on Form S-3 of our report dated October 10, 1996, appearing in
the Annual Report on Form 10-K of Veritas DGC Inc. for the year ended July 31,
1996. We also consent to the reference to us under the heading "Experts" in such
Registration Statement.
DELOITTE & TOUCHE LLP
Houston, Texas
September 14, 1999
