<PAGE> 1
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________ TO ________
COMMISSION FILE NUMBER 1-7427
VERITAS DGC INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 76-0343152
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)
3701 KIRBY DRIVE, SUITE #112
HOUSTON, TEXAS 77098
(Address of principal executive offices) (Zip Code)
</TABLE>
(713) 512-8300(Registrant's telephone number, including area code)
NO CHANGES
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
The number of shares of the Company's common stock (the "Common Stock"), $.01
par value, outstanding at February 29, 2000 was 25,831,666 (including 2,315,001
Veritas Energy Services Inc. exchangeable which are identical to the Common
Stock in all material respects).
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<PAGE> 2
VERITAS DGC INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
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<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
PART I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Income and Comprehensive Income -
For the Three and Six Months Ended January 31, 2000 and 1999 1
Consolidated Balance Sheets - January 31, 2000 and July 31, 1999 2
Consolidated Statements of Cash Flows -
For the Six Months Ended January 31, 2000 and 1999 3
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 11
PART II. Other Information
Item 2. Changes in Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 18
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VERITAS DGC INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JANUARY 31, JANUARY 31,
---------------------- ----------------------
2000 1999 2000 1999
--------- --------- --------- ---------
(In thousands)
<S> <C> <C> <C> <C>
REVENUES $ 91,023 $ 101,652 $ 159,700 $ 248,451
COSTS AND EXPENSES:
Cost of services
Operating expenses 60,584 68,294 103,325 170,061
Research and development 2,078 1,721 4,040 3,465
Depreciation and amortization 18,460 17,734 36,838 34,584
Selling, general & administrative 4,267 4,501 7,710 9,057
Interest expense 3,499 3,551 6,990 5,603
Other income (196) (2,630) (1,175) (2,403)
--------- --------- --------- ---------
Total costs and expenses 88,692 93,171 157,728 220,367
Income before provision for income taxes and equity in
loss of joint venture 2,331 8,481 1,972 28,084
Provision for income taxes 1,078 3,057 1,063 8,939
Equity in (earnings) loss of joint venture 83 (12) 319 87
--------- --------- --------- ---------
Net income before extraordinary charge 1,170 5,436 590 19,058
Extraordinary loss on debt repurchase (net of tax, $95) 187
--------- --------- --------- ---------
Net income $ 1,170 $ 5,436 $ 403 $ 19,058
Other comprehensive income (loss) (net of tax - $0 in both periods)
Foreign currency translation adjustments 1,665 (2,898) 2,237 (3,253)
Unrealized gain (loss) on investments-available for sale 68 (1,279)
--------- --------- --------- ---------
Comprehensive income $ 2,903 $ 2,538 $ 1,361 $ 15,805
========= ========= ========= =========
PER SHARE:
BASIC
Net income per common share before extraordinary item $ .05 $ .24 $ .02 $ .84
Net loss per common share from extraordinary item (.01)
--------- --------- --------- ---------
Net income per common share $ .05 $ .24 $ .02 $ .84
========= ========= ========= =========
Weighted average common shares 24,474 22,712 24,554 22,704
========= ========= ========= =========
DILUTED
Net income per common share before extraordinary item $ .05 $ .24 $ .02 $ .83
Net loss per common share from extraordinary item (.01)
--------- --------- --------- ---------
Net income per common share $ .05 $ .24 $ .02 $ .83
========= ========= ========= =========
Weighted average common shares 25,893 22,830 25,049 22,852
========= ========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements
1
<PAGE> 4
VERITAS DGC INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JANUARY 31, JULY 31,
2000 1999
------------ ------------
unaudited
(In thousands)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 31,259 $ 73,447
Restricted cash investments 198 300
Accounts and notes receivable (net of allowance for doubtful accounts:
January $3,339; July $3,038) 124,262 113,761
Materials and supplies inventory 4,040 4,417
Prepayments and other 9,825 8,259
Investments-available for sale 3,284 3,671
------------ ------------
Total current assets 172,868 203,855
Property and equipment 388,767 357,397
Less accumulated depreciation 239,795 201,026
Plus assets held for sale (see Note 2) 14,000
------------ ------------
Property and equipment - net 162,972 156,371
Multi-client data library 193,532 138,753
Investment in and advances to joint venture 2,321 2,640
Goodwill (net of accumulated amortization: January $5,731; July $3,683) 12,225 2,159
Deferred tax asset 29,521 23,120
Long term notes receivable (net of allowance: $1,000) 4,066 3,696
Other assets 8,804 11,252
------------ ------------
Total $ 586,309 $ 541,846
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 226 $ 240
Accounts payable - trade 28,992 26,243
Accrued interest 3,857 4,010
Other accrued liabilities 58,174 48,640
Income taxes payable 1,439 5,472
------------ ------------
Total current liabilities 92,688 84,605
Non-current liabilities:
Long-term debt - less current maturities 135,082 135,011
Other non-current liabilities 10,717 6,672
------------ ------------
Total non-current liabilities 145,799 141,683
Stockholders' equity:
Preferred stock, $.01 par value; authorized: 1,000,000 shares; none issued
Common stock, $.01 par value; authorized: 40,000,000 shares; issued:
23,275,126 shares at January and 21,470,938 shares at July
(excluding exchangeable shares of 2,468,064 at January
and 1,505,595 at July) 233 214
Additional paid-in capital 239,350 208,749
Accumulated earnings (from August 1, 1991 with respect to Digicon Inc.) 115,055 114,652
Accumulated comprehensive income
Cumulative foreign currency translation adjustment (2,115) (4,352)
Unrealized loss on investments-available for sale (1,836) (557)
Unearned compensation (892) (602)
Treasury stock, at cost; 116,388 shares at January and 150,068 shares at July (1,973) (2,546)
------------ ------------
Total stockholders' equity 347,822 315,558
------------ ------------
Total $ 586,309 $ 541,846
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE> 5
VERITAS DGC INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JANUARY, 31
------------------------
2000 1999
---------- ----------
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 403 $ 19,058
Non-cash items included in net income:
Depreciation and amortization 36,838 34,584
Net loss on disposition of property and equipment 108 319
Equity in loss of joint venture 319 87
Amortization of multi-client data library 471 670
Deferred taxes (3,983) 2,357
Amortization of unearned compensation 319 168
Change in operating assets/liabilities:
Accounts and notes receivable (6,545) (12,010)
Materials and supplies inventory 444 139
Prepayments and other (2,186) 7,929
Multi-client data library (53,999) (42,469)
Other 2,007 112
Accounts payable and other accrued liabilities 4,632 12,037
Income taxes payable (5,750) (10,551)
Other non-current liabilities 3,889 (51)
---------- ----------
Total cash provided (used ) by operating activities (23,033) 12,379
FINANCING ACTIVITIES:
Net borrowings from long-term debt 39 (146)
Senior notes issue costs (34) (1,737)
Net proceeds from sale of common stock 3,859 947
Purchase of treasury stock (2,869)
---------- ----------
Total cash provided by financing activities 3,864 56,195
INVESTING ACTIVITIES:
Increase (decrease) in restricted cash investments 102 (94)
Decrease in investment in and advances to joint venture 1,183
Purchase of Time Seismic Exchange Ltd., net of cash received (704)
Purchase of Guardian Data Seismic, net of cash received (1,409)
Purchase of Enertec Resource Services Inc., net of cash received (1,538)
Purchase of property and equipment (22,994) (30,870)
Sale of property and equipment 2,880 131
---------- ----------
Total cash used by investing activities (22,959) (30,354)
Currency loss on foreign cash (60) (3,253)
---------- ----------
Change in cash and cash equivalents (42,188) 34,967
Beginning cash and cash equivalents balance 73,447 40,089
---------- ----------
Ending cash and cash equivalents balance $ 31,259 $ 75,056
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE> 6
VERITAS DGC INC. AND SUBSIDIARIES
SUPPLEMENTARY SCHEDULES TO CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
SIX MONTH ENDED
JANUARY 31,
--------------------
2000 1999
-------- --------
(In thousands)
<S> <C> <C>
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Increase in property and equipment for accounts payable - trade $ 3,108 $ 373
Utilization of net operating loss carryforwards existing prior to the
quasi-reorganization resulting in an increase (decrease) in:
Deferred tax asset valuation allowance (1,088) (2,887)
Additional paid-in capital 1,088 2,887
Treasury stock issued for purchase of Time Seismic Exchange Ltd. 664
Treasury stock issued in lieu of cash for bonuses payable 383
Restricted stock issued for future services resulting in an increase in additional
paid-in capital and unearned compensation 42
Treasury stock issued for future services resulting in an increase in
Additional paid-in-capital 37
Unearned compensation 610
Stock and options issued for purchase of Enertec Resource Services Inc. (net of cash
received) 25,189
Settlement of accounts receivable and interest payments from investments-available
for sale 892
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for:
Interest -
Senior notes 6,581 3,656
Equipment purchase obligations 3 22
Other 559 325
Income taxes 9,389 16,501
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE> 7
VERITAS DGC INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION
Veritas DGC Inc. ("Veritas DGC") provides seismic data acquisition, data
processing, multi-client data sales and exploration and development information
services to the petroleum industry in selected markets worldwide. The
accompanying consolidated financial statements include the accounts of Veritas
DGC and all majority-owned domestic and foreign subsidiaries. Investment in a
joint venture is accounted for on the equity method. All material intercompany
balances and transactions have been eliminated. All material adjustments
consisting only of normal recurring adjustments that, in the opinion of
management are necessary for a fair statement of the results for the interim
periods, have been reflected. These interim financial statements should be read
in conjunction with the annual consolidated financial statements of Veritas DGC.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NEW ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This standard requires companies to record
derivative financial instruments on the balance sheet as assets or liabilities,
as appropriate, at fair value. Gains or losses resulting from changes in the
fair values of those derivatives are accounted for depending on the use of the
derivative and whether it qualifies for hedge accounting. Veritas DGC will be
required to implement this statement in its first quarter of fiscal year 2001.
Veritas DGC believes that the implementation of this standard will not have a
material effect on its consolidated financial position, results of operations or
liquidity.
2. PURCHASE OF ENERTEC RESOURCE SERVICES INC.
On September 30, 1999, Veritas DGC, Veritas Energy Services Inc. ("VESI") and
Enertec Resource Services Inc. ("Enertec"), a Canadian company, consummated a
business combination (the "Combination") whereby Enertec became a wholly owned
subsidiary of VESI. As a result of the Combination, each share of Enertec stock
was converted into the right to receive VESI Class A Exchangeable Series 1 stock
(the "Exchangeable" shares) at an exchange ratio of 0.345 of a share of the
Exchangeable stock for each share of Enertec. All of the holders of Enertec
common shares became holders of Exchangeable shares and accordingly, 2,437,527
shares of Exchangeable stock were issued. Each Exchangeable share is
convertible, at the option of the shareholder, into one share of Veritas DGC's
common stock. Outstanding options to purchase shares of Enertec stock were
converted into options to purchase approximately 236,000 shares of Veritas DGC's
common stock at the exchange ratio of 0.345 of a Veritas DGC stock option for
each Enertec option.
The total purchase price of Enertec is approximately $28.0 million, which is
comprised of approximately $24.8 million of stock, $0.9 million of Veritas DGC
options and $2.3 million of business combination costs. The acquisition is
accounted for as a purchase with the preliminary allocation of purchase price,
in accordance with APB 16, yielding approximately $5.2 million of current
assets, $19.9 million of property and long-term assets, $6.5 million of
liabilities and $9.4 million of goodwill. Goodwill will be amortized over no
more than ten years. This allocation is subject to adjustment over the current
fiscal year.
5
<PAGE> 8
VERITAS DGC INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
Certain seismic acquisition assets obtained through the Enertec transaction are
being held for sale. These assets have been assigned an estimated fair market
value of $14.0 million based on the current sales prices of equivalent equipment
in the marketplace and offers received for specific groups of equipment. This
amount has been reclassified from property and equipment to assets held for sale
on the balance sheet. Veritas DGC anticipates that most of the equipment will be
disposed of within one year of its acquisition. The operating losses associated
with these assets have been excluded from income and have been accounted for as
an adjustment to the carrying value of the assets. The after tax losses excluded
for the quarter and six months ended January 31, 2000 are $0.6 million and $0.7
million respectively.
Pro forma revenue, net income before extraordinary item, net income and earnings
per share of the combined Veritas DGC / Enertec entity, presented as if the
Combination had occurred on August 1, 1999 and 1998, is shown below. This pro
forma financial information is not necessarily indicative of the actual results
that would have been achieved had the Combination occurred at the beginning of
the periods presented.
<TABLE>
<CAPTION>
Three months ended Six months ended
January 31, January 31,
------------------------- -------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Revenue $ 91,023 $ 110,551 $ 165,069 $ 266,093
Net income before extraordinary item $ 1,170 $ 5,068 $ 823 $ 18,237
Net income $ 1,170 $ 5,068 $ 636 $ 18,237
Earnings per share:
Basic
Net income per common share before
extraordinary item 0.05 0.20 0.03 0.73
Net income per common share 0.05 0.20 0.03 0.72
Diluted
Net income per common share before
extraordinary item 0.05 0.20 0.03 0.73
Net income per common share 0.05 0.20 0.02 0.72
</TABLE>
3. INVESTMENT IN INDONESIAN JOINT VENTURE
Veritas DGC owns 80% of an Indonesian joint venture (P.T. Digicon Mega Pratama).
The joint venture is accounted for under the equity method due to provisions in
the joint venture agreement that gives minority shareholders the right to
exercise control. Summarized financial information is as follows:
6
<PAGE> 9
VERITAS DGC INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
UNAUDITED
<TABLE>
<CAPTION>
January 31, July 31,
2000 1999
---------- ----------
(In thousands)
<S> <C> <C>
Current assets $ 1,724 $ 1,380
Property and equipment, net 161 314
Multi-client data library 1,085
---------- ----------
Total assets $ 2,970 $ 1,694
========== ==========
Current liabilities $ 489 $ 438
Advances from affiliates 14,056 12,479
Stockholders' deficit:
Common stock 2,576 2,576
Accumulated deficit (14,151) (13,799)
---------- ----------
Total stockholders' deficit (11,575) (11,223)
---------- ----------
Total liabilities and stockholders' deficit $ 2,970 $ 1,694
========== ==========
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31, January 31,
------------------------ ------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
(In thousands)
<S> <C> <C> <C> <C>
Revenues $ 841 $ 386 $ 949 $ 784
Cost and expenses:
Cost of services 786 289 1,060 614
Depreciation and amortization 83 84 170 170
Other (income) expense 55 1 38 87
---------- ---------- ---------- ----------
Total costs and expenses 924 374 1,268 871
---------- ---------- ---------- ----------
Net income (loss) $ (83) $ 12 $ (319) $ (87)
========== ========== ========== ==========
</TABLE>
4. LONG-TERM DEBT
Long-term debt is as follows:
<TABLE>
<CAPTION>
January 31, July 31,
2000 1999
------------ ------------
(In thousands)
<S> <C> <C>
Senior notes due October 2003, at 9 3/4% $ 135,000 $ 135,000
Equipment purchase obligations maturing through
September 2000, at a weighted average rate of 10% 135 251
Equipment purchase obligations maturing through
July 2001, at 9% 173
------------ ------------
Total $ 135,308 $ 135,251
Less current maturities 226 240
------------ ------------
Due after one year $ 135,082 $ 135,011
============ ============
</TABLE>
The senior notes are due in October 2003 with interest payable semi-annually at
9 3/4% per annum. The senior notes are unsecured and are effectively
subordinated to secured debt of Veritas DGC with respect to the assets securing
such debt and to all debt of its subsidiaries whether secured or unsecured. The
indenture relating to the senior notes contains certain covenants that limit
Veritas DGC's ability to, among other things, incur additional debt, pay
dividends and complete mergers, acquisitions and sales of assets. Upon a change
in control of Veritas DGC, as defined in the indenture, the holders of the
senior notes have the right to require Veritas DGC to purchase all or a portion
of such holder's senior note at a price equal to 101% of the aggregate principal
amount. Veritas DGC has the right to redeem the senior notes, in whole or part,
on or after October 15, 2000. On September 24, 1999, Veritas DGC repurchased
$5.6 million of 9 3/4% senior notes on the open market at a price of $5.7
million, resulting in an
7
<PAGE> 10
VERITAS DGC INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
UNAUDITED
extraordinary loss of $0.2 million, net of tax. On December 3, 1999, Veritas DGC
reissued $1.0 million of 9 3/4% senior notes at a price of $1.0 million. On
December 10, 1999, Veritas DGC reissued $4.6 million of 9 3/4% senior notes at a
price of $4.7 million.
Veritas DGC maintains a revolving credit agreement due July 2001 with commercial
lenders that provides advances up to $50.0 million. Advances are limited by a
borrowing base, which is in excess of the credit limit at January 31, 2000 and
bears interest, at Veritas DGC's election, at LIBOR plus a margin or prime rate
based on certain financial ratios maintained by Veritas DGC. Advances are
secured by certain accounts receivable. Covenants in the agreement limit, among
other things, Veritas DGC's right to take certain actions, including creating
indebtedness. In addition, the agreement requires Veritas DGC to maintain
certain financial ratios. No advances were outstanding at January 31, 2000 and
July 31, 1999 under the credit agreement, although $5.8 million in letters of
credit had been issued under the facility.
Veritas DGC's equipment purchase obligations represent installment loans and
capitalized lease obligations primarily related to computer and seismic
equipment.
5. OTHER ACCRUED LIABILITIES
Other accrued liabilities include the following:
<TABLE>
<CAPTION>
January 31, July 31,
1999 1999
---------- ----------
(In thousands)
<S> <C> <C>
Accrued payroll and benefits $ 7,816 $ 5,518
Deferred revenues $ 23,512 $ 10,717
Accrued taxes other than income $ 4,158 $ 12,086
</TABLE>
6. OTHER INCOME
Other income consists of the following:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31, January 31,
------------------------ ------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
(In thousands)
<S> <C> <C> <C> <C>
Interest income $ (498) $ (1,177) $ (1,543) $ (1,454)
Net loss on disposition of property and equipment 110 21 108 319
Net foreign currency exchange losses (gains) 170 (1,301) 238 (1,129)
Other 22 (173) 22 (139)
---------- ---------- ---------- ----------
Total $ (196) $ (2,630) $ (1,175) $ (2,403)
========== ========== ========== ==========
</TABLE>
8
<PAGE> 11
VERITAS DGC INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
UNAUDITED
7. EARNINGS PER COMMON SHARE
Earnings (losses) per common share - basic and diluted are computed as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Ended January 31, January 31,
---------------------------- ---------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
(In thousands, except per per share amounts)
<S> <C> <C> <C> <C>
Net income before extraordinary item $ 1,170 $ 5,436 $ 590 $ 19,058
Extraordinary loss on debt repurchase 187
------------ ------------ ------------ ------------
Net income $ 1,170 $ 5,436 $ 403 $ 19,058
============ ============ ============ ============
Weighted average common shares 24,474 22,712 24,554 22,704
Basic
Net income per common share before extraordinary item $ .05 $ .24 $ .02 $ .84
Net loss per common share from extraordinary item (.01)
------------ ------------ ------------ ------------
Net income per common share $ .05 $ .24 $ .02 $ .84
============ ============ ============ ============
Weighted average common shares - assuming dilution:
Weighted average common shares 25,474 22,712 24,554 22,704
Shares issuable from assumed conversion of:
Options 419 118 495 148
Warrants
------------ ------------ ------------ ------------
Total 25,893 22,830 25,049 22,852
============ ============ ============ ============
Diluted
Net income per common share before extraordinary item $ .05 $ .24 $ .02 $ .83
Net loss per common share from extraordinary item (.01)
------------ ------------ ------------ ------------
Net income per common share $ .05 $ .24 $ .02 $ .83
============ ============ ============ ============
</TABLE>
VESI exchangeable shares, which were issued in business combinations and may be
exchanged for Veritas DGC's common stock and are identical to Veritas DGC's
common stock in all material respects, are included in both computations.
The following options to purchase common shares have been excluded from the
computation assuming dilution because the options' exercise prices exceeded the
average market price of the underlying common shares.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31, January 31,
---------------------------------------- ----------------------------------------
2000 1999 2000 1999
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Number of options 823,470 810,501 828,667 801,635
Exercise price range $15 5/8 - $55 1/8 $17 7/8 - $56 1/2 $16 7/8 - $55 1/8 $15 5/8 - $56 1/2
Expiring through November 2008 November 2008 November 2008 November 2008
</TABLE>
9
<PAGE> 12
VERITAS DGC INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
UNAUDITED
8. UNREALIZED LOSS ON INVESTMENTS-AVAILABLE FOR SALE
In April 1999, Veritas DGC exchanged a $4.7 million account receivable from
Miller Exploration Company ("Miller"), a publicly traded company, for a long
term note receivable paying 18% interest. Interest is paid in common stock
warrants, with an exercise price of $0.01 per share, in advance, at six month
intervals. The common stock underlying these warrants was registered with the
SEC in August 1999. In addition, Veritas DGC exchanged a $4.1 million account
receivable from Brigham Exploration Company ("Brigham"), a publicly traded
company, for 1,211,580 shares of Brigham common stock. The cost basis of the
investments available for sale is determined by the fair market value on the
date received.
<TABLE>
<CAPTION>
January 31, 2000 July 31, 1999
-------------------------------------- --------------------------------------
Unrealized Unrealized
Cost Basis (Loss) Fair Value Cost Basis (Loss)/Gain Fair Value
-------------------------------------- --------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Brigham common stock $ 4,099 $ (1,676) $ 2,423 $ 3,809 $ (1,143) $ 2,666
Miller Warrants 1,021 (160) 861 419 586 1,005
---------- ---------- ---------- ---------- ---------- ----------
$ 5,120 $ (1,836) $ 3,284 $ 4,228 $ (557) $ 3,671
========== ========== ========== ========== ========== ==========
</TABLE>
9. INCOME TAXES
The effective tax rate results from unbenefitted losses in certain countries and
the inability to use foreign tax credits in the current year.
10
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This report contains forward-looking statements that involve risks and
uncertainties. Veritas DGC's actual results could differ materially from those
anticipated in the forward-looking statements as a result of certain factors
which are more fully described in other reports filed with the Securities and
Exchange Commission and which include changes in market conditions in the oil
and gas industry as well as declines in prices of oil and gas.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JANUARY 31, 2000 COMPARED WITH THREE MONTHS ENDED JANUARY 31,
1999
Revenues. Revenues decreased 11%, from $101.7 million to $91.0 million.
Multi-client revenue increased 14%, from $42.8 million to $48.7 million. This is
a reflection of Veritas DGC's expansion of its multi-client business into new
markets, particularly Brazil, Nigeria and Canada. Contract revenue decreased
28%, from $58.9 million to $42.3 million. This is due to the continuing downturn
in exploration spending which began in the second quarter of fiscal year 1999.
Cost of services. Cost of services decreased 10%, from $70.0 million to $62.7
million, commensurate with the decrease in revenue.
Depreciation and amortization. Depreciation and amortization expense increased
by 5%, from $17.7 million to $18.5 million, due to capital spending and the
Enertec acquisition. Gross property and equipment, excluding assets held for
sale, increased by $34.1 million, or 10% between the comparative income
statement period ending dates.
Selling, general and administrative. Selling, general and administrative expense
remained relatively the same as a percentage of revenue.
Interest expense. Interest expense remained essentially flat, with long term
debt being the same in both quarters.
Other income. Other income decreased from $2.6 million to $0.2 million. Interest
income in the current period was $.5 million, versus $1.2 million last year, due
to a decrease in cash between the comparative period ending dates. A currency
gain of $1.3 in the prior comparative quarter contributed most of the remaining
difference.
Income taxes. Income taxes decreased from a provision of $3.1 million to $1.1
million as a result of Veritas DGC's lower earnings in the current quarter. The
increase in the effective tax rate from 36% to 46% is due to unbenefitted losses
in certain countries and the inability to use foreign tax credits in the current
year.
Equity in (earnings) loss. Equity in (earnings) loss is related to the
Indonesian joint venture. Decrease in marine contract work accounts for the
decreased profitability in the current quarter.
SIX MONTHS ENDED JANUARY 31, 2000 COMPARED WITH SIX MONTHS ENDED JANUARY 31,
1999
Revenues. Revenues decreased 36%, from $248.5 million to $159.7 million.
Multi-client revenue decreased 14%, from $95.5 million to $82.2 million, while
contract revenue decreased 49%, from $153.0 million to $77.5 million. The
decrease is due to the continuing downturn in exploration spending which began
in the second quarter of fiscal year 1999 .
Cost of services. Cost of services decreased 38%, from $173.5 million to $107.4
million. However, cost of services as a percent of revenues decreased from 70%
to 67%. This is due to the relatively smaller decline in the more profitable
multi-client business as compared to the contract business.
11
<PAGE> 14
Depreciation and amortization. Depreciation and amortization expense increased
by 6%, from $34.6 million to $36.8 million, due to capital spending and the
Enertec acquisition. Gross property and equipment, excluding assets held for
sale, increased by $34.1 million, or 10%, between the comparative income
statement period ending dates.
Selling, general and administrative. Selling, general and administrative expense
decreased by 15%, from $9.1 million to $7.7 million. The termination of a
process improvement project in fiscal year 1999 and lower property tax accruals
in the first quarter of fiscal year 2000, among other items, generated the
reduction.
Interest expense. Interest expense increased from $5.6 million to $7.0 million
due to the addition of $60.0 million of 9 3/4% senior notes at the end of
October 1998.
Other income. Other income decreased from $2.4 million to $1.2 million due to
net foreign currency exchange gains in Canada in the previous fiscal year.
Income taxes. Income taxes decreased from a provision of $8.9 million to $1.1
million as a result of Veritas DGC's lower earnings in the current quarter. The
increase in the effective tax rate from 32% to 54% is due to unbenefitted losses
in certain countries and the inability to use foreign tax credits in the current
year.
Equity in loss. Equity in loss is related to the Indonesian joint venture.
Decrease in marine contract work accounts for the decreased profitability in the
current fiscal year.
Extraordinary loss on debt repurchase. On September 24, 1999, Veritas DGC
repurchased $5.5 million of its 9 3/4% senior notes on the open market at a
price of $5.7 million. The excess of purchase price over face value and the
write off of the pro rata debt issuance costs associated with the notes are
reported as an extraordinary item, net of tax.
LIQUIDITY AND CAPITAL RESOURCES
SOURCES AND USES
Veritas DGC's internal sources of liquidity are cash, cash equivalents and cash
flow from operations. External sources include public and private financing, the
unutilized portion of a revolving credit facility, equipment financing and trade
credit.
As of January 31, 2000, Veritas DGC had approximately $135.1 million in senior
notes outstanding due in October 2003. Veritas DGC also has a revolving credit
facility due July 2001 from commercial lenders that provides advances up to
$50.0 million. Advances are limited by a borrowing base, which is in excess of
the credit limit at January 31, 2000 (when calculated in accordance with the new
credit agreement effective November 1, 1999) and bear interest, at Veritas DGC's
election, at LIBOR plus a margin or prime rate based on certain financial ratios
maintained by Veritas DGC. Advances are secured by certain accounts receivable.
As of January 31, 2000, there are no outstanding advances under the credit
facility, but $5.8 million of the credit facility has been utilized for letters
of credit, therefore, $44.2 million is available for borrowings.
Veritas DGC requires significant amounts of working capital to support its
operations and fund capital spending and research and development programs.
Veritas DGC's current capital expenditure forecast for fiscal 2000 is
approximately $70.0 million, which includes expenditures of approximately $25.0
million to maintain or replace current operating equipment. Research and
development expenditures for fiscal 2000 are budgeted at $8.3 million. Veritas
DGC has also increased its multi-client activity and significantly expanded its
multi-client data library. Because of the elapsed time between survey execution,
sale and ultimate cash receipt, multi-client work generally requires greater
amounts of working capital than contract work. Depending upon the timing of the
sales of the multi-client surveys and the
12
<PAGE> 15
contract terms relating to the collection of the proceeds from such sales,
Veritas DGC's liquidity may be affected. Veritas DGC seeks pre-funding
commitments from customers for a portion of the cost of these surveys. However,
because of market conditions, purchase commitment levels are currently much
lower than in past years. Veritas DGC believes that these multi-client surveys
have good long-term sales, earnings and cash flow potential, but there is no
assurance that Veritas DGC will recover the costs of these surveys. In addition
to the capital expenditure budget, the planned net investment in the
multi-client data library (the change in the balance sheet account) for fiscal
2000 is $81.0 million.
Veritas DGC will require substantial cash flow to continue operations on a
satisfactory basis, complete its capital expenditure and research and
development programs and meet its principal and interest obligations with
respect to outstanding indebtedness. While management believes that Veritas DGC
has adequate sources of funds to meet its liquidity needs, its ability to meet
its obligations depends on its future performance, which, in turn, is subject to
general economic conditions, business and other factors beyond Veritas DGC's
control. Key factors affecting future results will include utilization levels of
acquisition and processing assets and the level of multi-client data library
sales, all of which are driven by exploration spending and, ultimately, by
underlying commodity prices.
If Veritas DGC is unable to generate sufficient cash flow from operations or
otherwise to comply with the terms of its revolving credit facility or
indentures, it may be required to refinance all or a portion of its existing
debt or obtain additional financing. Veritas DGC cannot make any assurances that
it would be able to obtain such refinancing or financing, or any refinancing or
financing would result in a level of net proceeds required.
To ensure that Veritas DGC has available as many financing options as possible,
it has filed a shelf registration allowing the issuance of up to $200 million in
debt, preferred stock or common stock. On October 26, 1999 Veritas DGC filed a
prospectus supplement relating to the sale of up to 2.0 million shares of
Veritas DGC common stock, from time to time through ordinary brokerage
transactions, under the currently effective shelf registration. As of January
31, 2000, Veritas DGC has issued 0.2 million shares under this prospectus
supplement.
YEAR 2000
Year 2000 Issue. Some software applications, hardware, equipment and embedded
chip systems identify dates using only the last two digits of the year. These
products may be unable to distinguish between dates in the year 2000 and dates
in the year 1900. That inability (referred to as the "Year 2000" issue), if not
addressed, could cause applications, equipment or systems to fail or provide
incorrect information after December 31, 1999, or when using dates after
December 31, 1999.
Compliance Program. Veritas DGC prepared a formal plan to address Year 2000
issues as they relate to Veritas DGC's business and its operations. In
accordance with that plan, Veritas DGC evaluated all internal hardware and
software used in its operations, including those used to support Veritas DGC's
activities, such as geophysical data acquisition and processing equipment and
accounting and payroll systems.
Costs to Address Year 2000 Compliance Issues. Cost of compliance was
approximately $125,000, and Veritas DGC is not aware of any material
contingencies or costs that will be incurred in the future.
Risk of Non-Compliance. Veritas DGC's Year 2000 compliance program substantially
reduced the risks associated with the Year 2000 issue and no significant
problems related to the issue have been encountered since January 1, 2000.
13
<PAGE> 16
OTHER
Since Veritas DGC's quasi-reorganization with respect to Digicon Inc. on July
31, 1991, the tax benefits of net operating loss carryforwards existing at the
date of the quasi-reorganization have been recognized through a direct addition
to paid-in capital, when realization is more likely than not. Additionally, the
utilization of the net operating loss carryforwards existing at the date of the
quasi-reorganization is subject to certain limitations. During the six months
ended January 31, 2000, Veritas DGC recognized $1.1 million of these benefits,
due to increased profitability of Veritas DGC's U.K. operations.
Veritas DGC maintains operations in Europe, which are predominately conducted
from its U.K. offices. Although the U.K. has not currently elected to convert to
the new "euro" currency, Veritas DGC does have transactions with companies in
countries that have adopted the new currency. Veritas DGC has made a preliminary
assessment and does not anticipate any material effect to the consolidated
financial statements as a result of the new currency.
See Note 1 of Notes to Consolidated Financial Statements regarding new
accounting pronouncements not yet adopted.
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
On September 21, 1999 the Veritas DGC Restated Certificate of Incorporation was
amended to designate a new series of special voting stock and to delete a
restriction which prohibits the Veritas DGC Board from designating a new series
of ordinary share without the unanimous approval of all the outstanding ordinary
shares. (See Item 4.)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On September 21, 1999 the shareholders of Veritas DGC held a special meeting and
approved a proposal to amend Veritas DGC's Restated Certificate of Incorporation
to authorize a new series of special voting stock and to eliminate provisions
that restrict the issuance of a new series of ordinary shares, both required to
complete the acquisition of Enertec Resource Services Inc. The votes on the
amendments were as follows: For - 12,404,041, Against - 4,031,980, Abstaining
21,017.
On December 7, 1999 at the Annual Meeting of Stockholders of Veritas DGC,
stockholders voted to elect eight directors nominated as follows:
<TABLE>
<CAPTION>
For Withheld
<S> <C> <C>
Clayton P. Cormier 18,839,288 63,510
Lawrence C. Fichtner 18,856,872 45,926
James R. Gibbs 18,854,406 48,392
Steven J. Gilbert 18,498,871 403,927
Stephen J. Ludlow 18,856,131 46,667
Brian F. MacNeill 18,856,472 46,326
David B. Robson 18,854,372 48,426
Jan Rask 18,850,610 52,188
</TABLE>
14
<PAGE> 17
INVESTMENTS IN OIL, GAS OR OTHER MINERAL EXPLORATION OR DEVELOPMENT PROGRAMS.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) EXHIBITS FILED WITH THIS REPORT:
Exhibit
------------
3-A) Restated Certificate of Incorporation with amendments of Digicon
Inc. dated August 30, 1996. (Exhibit 3.1 to Veritas DGC Inc.'s
Current Report on Form 8-K dated September 16, 1996 is incorporated
herein by reference.)
3-B) Certificate of Ownership and Merger of New Digicon Inc. and Digicon
Inc. (Exhibit 3-B to Digicon Inc.'s Registration Statement No.
33-43873 dated November 12, 1991 is incorporated herein by
reference.)
3-C) By-laws of new Digicon Inc. dated June 24, 1991. (Exhibit 3-C to
Digicon Inc.'s Registration Statement No. 33-43873 dated November
12, 1991 is incorporated herein by reference.)
3-D) Certificate of Amendment to Restated Certificate of Incorporation of
Veritas DGC Inc. dated September 30, 1999. (Exhibit 3-D to Veritas
DGC Inc.'s Form 10-K for the year ended July 31, 1999 is
incorporated herein by reference.)
*3-E) By-laws of Veritas DGC Inc. dated March 7, 2000.
4-A) Specimen certificate for Senior Notes (Series A). (Included as part
of Section 2.2 Exhibit 4-B to Veritas DGC Inc.'s Registration
Statement No. 333-12481 dated September 20, 1996 is incorporated
herein by reference.)
4-B) Form of Trust Indenture relating to the 9 3/4% Senior Notes due 2003
of Veritas DGC Inc. between Veritas DGC Inc. and Fleet National
Bank, as trustee. (Exhibit 4-B to Veritas DGC Inc.'s Registration
Statement No. 333-12481 dated September 20, 1996 is incorporated
herein by reference.)
4-C) Specimen Veritas DGC Inc. Common Stock certificate. (Exhibit 4-C to
Veritas DGC Inc.'s Form 10-K for the year ended July 31, 1996 is
incorporated herein by reference.)
4-D) Rights Agreement between Veritas DGC Inc. and ChaseMellon
Shareholder Services, L.L.C. dated May 15, 1997. (Exhibit 4.1 to
Veritas DGC Inc.'s Current Report on Form 8-K dated May 27, 1997 is
incorporated herein by reference.)
4-E) Form of Restricted Stock Grant Agreement. (Exhibit 4.8 to Veritas
DGC Inc.'s Registration Statement No. 333-48953 dated March 31, 1998
is incorporated herein by reference.)
4-F) Restricted Stock Plan as Amended and Restated September 14, 1999.
(Exhibit 4.8 to Veritas DGC Inc.'s Registration Statement No.
333-87223 dated September 16, 1999 is incorporated herein by
reference.)
4-G) Key Contributor Incentive Plan as Amended and Restated dated March
9, 1999. (Exhibit 4.9 to Veritas DGC Inc.'s Registration Statement
No. 333-74305 dated March 12, 1999 is incorporated herein by
reference.)
4-H) Specimen for Senior Notes (Series C). (Exhibit 4-K to Veritas DGC
Inc.'s Form 10-Q for the quarter ended January 31, 1999 is
incorporated herein by reference.)
4-I) Indentures relating to the 9 3/4% Senior Notes due 2003, Series B
and Series C of Veritas DGC Inc. between Veritas DGC Inc. and State
Street Bank and Trust Company dated
15
<PAGE> 18
October 28, 1998. (Exhibit 4.3 to Veritas DGC Inc.'s Current Report
on Form 8-K dated November 12, 1998 is incorporated herein by
reference.)
9-A) Voting and Exchange Trust Agreement dated August 30, 1996 among
Digicon Inc., Veritas Energy Services Inc. and the R-M Trust Company
dated August 30, 1996. (Exhibit 9.1 to Veritas DGC Inc.'s Current
Report on Form 8-K dated September 16, 1996 is incorporated herein
by reference.)
9-B) Voting and Exchange Trust Agreement dated September 30, 1999 among
Veritas DGC Inc., Veritas Energy Services Inc. and the CIBC Mellon
Trust Company. (Exhibit 9-B to Veritas DGC Inc.'s Form 10-K for the
year ended July 31, 1999 is incorporated herein by reference.)
10-A) Support Agreement between Digicon Inc. and Veritas Energy Services
Inc. dated August 30, 1996. (Exhibit 10.1 to Veritas DGC Inc.'s
Current Report on Form 8-K dated August 30, 1996 is incorporated
herein by reference.)
10-B) Second Amended and Restated 1992 Non-Employee Director Stock Option
Plan as Amended and Restated dated December 9, 1998. (Exhibit 10-B
to Veritas DGC Inc.'s Form 10-Q for the quarter ended October 31,
1998 is incorporated herein by reference.)
10-C) Fifth Amended and Restated 1992 Employee Nonqualified Stock Option
Plan. (Exhibit 10-C to Veritas DGC Inc.'s Form 10-K for the year
ended July 31, 1999 is incorporated herein by reference.)
10-D) 1997 Employee Stock Purchase Plan. (Exhibit 4.1 to Veritas DGC
Inc.'s Registration Statement No. 333-38377 dated October 21, 1997
is incorporated herein by reference.)
10-E) Restricted Stock Agreement between Veritas DGC Inc. and Anthony
Tripodo dated April 1, 1997. (Exhibit 10-O to Veritas DGC Inc.'s
Form 10-Q for the year ended July 31, 1997 is incorporated herein by
reference.)
10-F) Employment Agreement executed by David B. Robson. (Exhibit 10-L to
Veritas DGC Inc.'s Form 10-K for the year ended July 31, 1997 is
incorporated herein by reference.)
10-G) Employment Agreement executed by Stephen J. Ludlow. (Exhibit 10-B to
Veritas DGC Inc.'s Form 10-Q for the quarter ended April 30, 1997 is
incorporated herein by reference.)
10-H) Employment Agreement executed by Anthony Tripodo. (Refer to Exhibit
10-I to Veritas DGC Inc.'s Form 10-Q for the quarter ended April 30,
1997 is incorporated herein by reference.)
10-I) Employment Agreement executed by Rene M.J. VandenBrand. (Exhibit
10-N to Veritas DGC Inc.'s Form 10-K for the year ended July 31,
1997 is incorporated herein by reference.)
10-J) Employment Agreement executed by Timothy L. Wells. (Exhibit 10-J to
Veritas DGC Inc.'s Form 10-K for the year ended July 31, 1999 is
incorporated herein by reference.)
10-K) Credit Agreement among Veritas DGC Inc., as borrower, and Bank One,
Texas, N.A., as issuing bank, as a bank and as agent for the banks,
and the banks named therein dated July 27, 1998. ( Exhibit 10-K to
Veritas DGC Inc.'s Form 10-K for the year ended July 31, 1998 is
incorporated herein by reference.)
16
<PAGE> 19
10-L) First Amendment to Credit Agreement among Veritas DGC Inc., as
borrower, and Bank One, Texas, N.A., as issuing bank, as a bank and
as agent for the banks, and the banks named therein dated October
23, 1998. (Exhibit 10-L to Veritas DGC Inc.'s Form 10-Q for the
quarter ended October 31, 1998 is incorporated herein by reference.)
10-M) Second Amendment to Credit Agreement among Veritas DGC Inc., as
borrower, and Bank One, Texas, N.A., as issuing bank, as a bank and
as agent for the banks, and the banks named therein dated November
20, 1998. (Exhibit 10-M to Veritas DGC Inc.'s Form 10-Q for the
quarter ended October 31, 1998 is incorporated herein by reference.)
10-N) Credit Agreement among Veritas DGC Inc., as borrower, and Bank One,
Texas, N.A., as issuing bank, as a bank and agent for the banks, and
the banks therein named dated November 1, 1999. (Exhibit 10-N to
Veritas DGC Inc.'s Form 10-Q for the quarter ended October 31,
1999.)
10-O) Sales agency agreement between Veritas DGC Inc. and PaineWebber
Incorporated, dated October 26, 1999. (Exhibit 1.1 to Veritas DGC
Inc.'s Form 8-K filed on October 26, 1999 is incorporated herein by
reference.)
10-P) Form of Indemnity Agreement between Veritas DGC Inc. and its
executive officers and directors. (Exhibit 10-P to Veritas DGC
Inc.'s Form 10Q for the quarter ended October 31, 1999.)
*10-Q Employment Agreement executed by Richard C. White.
*27) Financial Data Schedule
99) Audit Committee Charter of Veritas DGC Inc., approved by the Board
of Directors on December 7, 1999. (Exhibit 99 to Veritas DGC Inc.'s
Form 10Q for the quarter ended October 31, 1999.)
* Filed herewith
b) REPORTS ON FORM 8-K
Veritas DGC filed a Form 8-K on October 26, 1999 with respect to its sales
agency agreement related to its registered offering of up to 2.0 million shares
of common stock, from time to time through ordinary brokerage transactions.
17
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned; thereunto duly authorized, on the 15th day of March 2000.
VERITAS DGC INC.
By: /s/ Richard C. White
------------------------------------------
RICHARD C. WHITE
Chief Executive Officer
/s/ Anthony Tripodo
------------------------------------------
ANTHONY TRIPODO
Executive Vice President, Chief Financial
Officer and Treasurer
18
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
3-A) Restated Certificate of Incorporation with amendments of Digicon
Inc. dated August 30, 1996. (Exhibit 3.1 to Veritas DGC Inc.'s
Current Report on Form 8-K dated September 16, 1996 is incorporated
herein by reference.)
3-B) Certificate of Ownership and Merger of New Digicon Inc. and Digicon
Inc. (Exhibit 3-B to Digicon Inc.'s Registration Statement No.
33-43873 dated November 12, 1991 is incorporated herein by
reference.)
3-C) By-laws of new Digicon Inc. dated June 24, 1991. (Exhibit 3-C to
Digicon Inc.'s Registration Statement No. 33-43873 dated November
12, 1991 is incorporated herein by reference.)
3-D) Certificate of Amendment to Restated Certificate of Incorporation of
Veritas DGC Inc. dated September 30, 1999. (Exhibit 3-D to Veritas
DGC Inc.'s Form 10-K for the year ended July 31, 1999 is
incorporated herein by reference.)
*3-E) By-laws of Veritas DGC Inc. dated March 7, 2000.
4-A) Specimen certificate for Senior Notes (Series A). (Included as part
of Section 2.2 Exhibit 4-B to Veritas DGC Inc.'s Registration
Statement No. 333-12481 dated September 20, 1996 is incorporated
herein by reference.)
4-B) Form of Trust Indenture relating to the 9 3/4% Senior Notes due 2003
of Veritas DGC Inc. between Veritas DGC Inc. and Fleet National
Bank, as trustee. (Exhibit 4-B to Veritas DGC Inc.'s Registration
Statement No. 333-12481 dated September 20, 1996 is incorporated
herein by reference.)
4-C) Specimen Veritas DGC Inc. Common Stock certificate. (Exhibit 4-C to
Veritas DGC Inc.'s Form 10-K for the year ended July 31, 1996 is
incorporated herein by reference.)
4-D) Rights Agreement between Veritas DGC Inc. and ChaseMellon
Shareholder Services, L.L.C. dated May 15, 1997. (Exhibit 4.1 to
Veritas DGC Inc.'s Current Report on Form 8-K dated May 27, 1997 is
incorporated herein by reference.)
4-E) Form of Restricted Stock Grant Agreement. (Exhibit 4.8 to Veritas
DGC Inc.'s Registration Statement No. 333-48953 dated March 31, 1998
is incorporated herein by reference.)
4-F) Restricted Stock Plan as Amended and Restated September 14, 1999.
(Exhibit 4.8 to Veritas DGC Inc.'s Registration Statement No.
333-87223 dated September 16, 1999 is incorporated herein by
reference.)
4-G) Key Contributor Incentive Plan as Amended and Restated dated March
9, 1999. (Exhibit 4.9 to Veritas DGC Inc.'s Registration Statement
No. 333-74305 dated March 12, 1999 is incorporated herein by
reference.)
4-H) Specimen for Senior Notes (Series C). (Exhibit 4-K to Veritas DGC
Inc.'s Form 10-Q for the quarter ended January 31, 1999 is
incorporated herein by reference.)
4-I) Indentures relating to the 9 3/4% Senior Notes due 2003, Series B
and Series C of Veritas DGC Inc. between Veritas DGC Inc. and State
Street Bank and Trust Company dated
</TABLE>
<PAGE> 22
<TABLE>
<S> <C>
October 28, 1998. (Exhibit 4.3 to Veritas DGC Inc.'s Current Report
on Form 8-K dated November 12, 1998 is incorporated herein by
reference.)
9-A) Voting and Exchange Trust Agreement dated August 30, 1996 among
Digicon Inc., Veritas Energy Services Inc. and the R-M Trust Company
dated August 30, 1996. (Exhibit 9.1 to Veritas DGC Inc.'s Current
Report on Form 8-K dated September 16, 1996 is incorporated herein
by reference.)
9-B) Voting and Exchange Trust Agreement dated September 30, 1999 among
Veritas DGC Inc., Veritas Energy Services Inc. and the CIBC Mellon
Trust Company. (Exhibit 9-B to Veritas DGC Inc.'s Form 10-K for the
year ended July 31, 1999 is incorporated herein by reference.)
10-A) Support Agreement between Digicon Inc. and Veritas Energy Services
Inc. dated August 30, 1996. (Exhibit 10.1 to Veritas DGC Inc.'s
Current Report on Form 8-K dated August 30, 1996 is incorporated
herein by reference.)
10-B) Second Amended and Restated 1992 Non-Employee Director Stock Option
Plan as Amended and Restated dated December 9, 1998. (Exhibit 10-B
to Veritas DGC Inc.'s Form 10-Q for the quarter ended October 31,
1998 is incorporated herein by reference.)
10-C) Fifth Amended and Restated 1992 Employee Nonqualified Stock Option
Plan. (Exhibit 10-C to Veritas DGC Inc.'s Form 10-K for the year
ended July 31, 1999 is incorporated herein by reference.)
10-D) 1997 Employee Stock Purchase Plan. (Exhibit 4.1 to Veritas DGC
Inc.'s Registration Statement No. 333-38377 dated October 21, 1997
is incorporated herein by reference.)
10-E) Restricted Stock Agreement between Veritas DGC Inc. and Anthony
Tripodo dated April 1, 1997. (Exhibit 10-O to Veritas DGC Inc.'s
Form 10-Q for the year ended July 31, 1997 is incorporated herein by
reference.)
10-F) Employment Agreement executed by David B. Robson. (Exhibit 10-L to
Veritas DGC Inc.'s Form 10-K for the year ended July 31, 1997 is
incorporated herein by reference.)
10-G) Employment Agreement executed by Stephen J. Ludlow. (Exhibit 10-B to
Veritas DGC Inc.'s Form 10-Q for the quarter ended April 30, 1997 is
incorporated herein by reference.)
10-H) Employment Agreement executed by Anthony Tripodo. (Refer to Exhibit
10-I to Veritas DGC Inc.'s Form 10-Q for the quarter ended April 30,
1997 is incorporated herein by reference.)
10-I) Employment Agreement executed by Rene M.J. VandenBrand. (Exhibit
10-N to Veritas DGC Inc.'s Form 10-K for the year ended July 31,
1997 is incorporated herein by reference.)
10-J) Employment Agreement executed by Timothy L. Wells. (Exhibit 10-J to
Veritas DGC Inc.'s Form 10-K for the year ended July 31, 1999 is
incorporated herein by reference.)
10-K) Credit Agreement among Veritas DGC Inc., as borrower, and Bank One,
Texas, N.A., as issuing bank, as a bank and as agent for the banks,
and the banks named therein dated July 27, 1998. ( Exhibit 10-K to
Veritas DGC Inc.'s Form 10-K for the year ended July 31, 1998 is
incorporated herein by reference.)
</TABLE>
<PAGE> 23
<TABLE>
<S> <C>
10-L) First Amendment to Credit Agreement among Veritas DGC Inc., as
borrower, and Bank One, Texas, N.A., as issuing bank, as a bank and
as agent for the banks, and the banks named therein dated October
23, 1998. (Exhibit 10-L to Veritas DGC Inc.'s Form 10-Q for the
quarter ended October 31, 1998 is incorporated herein by reference.)
10-M) Second Amendment to Credit Agreement among Veritas DGC Inc., as
borrower, and Bank One, Texas, N.A., as issuing bank, as a bank and
as agent for the banks, and the banks named therein dated November
20, 1998. (Exhibit 10-M to Veritas DGC Inc.'s Form 10-Q for the
quarter ended October 31, 1998 is incorporated herein by reference.)
10-N) Credit Agreement among Veritas DGC Inc., as borrower, and Bank One,
Texas, N.A., as issuing bank, as a bank and agent for the banks, and
the banks therein named dated November 1, 1999. (Exhibit 10-N to
Veritas DGC Inc.'s Form 10-Q for the quarter ended October 31,
1999.)
10-O) Sales agency agreement between Veritas DGC Inc. and PaineWebber
Incorporated, dated October 26, 1999. (Exhibit 1.1 to Veritas DGC
Inc.'s Form 8-K filed on October 26, 1999 is incorporated herein by
reference.)
10-P) Form of Indemnity Agreement between Veritas DGC Inc. and its
executive officers and directors. (Exhibit 10-P to Veritas DGC
Inc.'s Form 10Q for the quarter ended October 31, 1999.)
*10-Q Employment Agreement executed by Richard C. White.
*27) Financial Data Schedule
99) Audit Committee Charter of Veritas DGC Inc., approved by the Board
of Directors on December 7, 1999. (Exhibit 99 to Veritas DGC Inc.'s
Form 10Q for the quarter ended October 31, 1999.)
</TABLE>
* Filed herewith
<PAGE> 1
EXHIBIT 3-E VERITAS DGC INC.
(A DELAWARE CORPORATION)
B Y L A W S
(As Amended and Restated March 7, 2000)
ARTICLE I
OFFICES
SECTION 1.1 PRINCIPAL OFFICE. The principal office of the Corporation
shall be in the City of Houston, Texas.
SECTION 1.2 REGISTERED OFFICE. The registered office of the Corporation
required to be maintained in the State of Delaware by the General Corporation
Laws of the State of Delaware, may be, but need not be, the same as its place of
business, and the location of the registered office in the State of Delaware may
be changed to any other place in the State of Delaware from time to time by
resolution of the Board of Directors.
SECTION 1.3 OTHER OFFICES. The Corporation may also have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
STOCKHOLDER'S MEETINGS
SECTION 2.1 ANNUAL MEETING. The annual meeting of the holders of shares
of each class or series of stock as are entitled to notice thereof and to vote
thereat pursuant to applicable
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law and the Certificate of Incorporation for the purpose of electing directors
and transacting such other proper business as may come before it shall be held
in each year at such time, on such day and at such place, within or without the
State of Delaware, as may be designated by the Board of Directors.
SECTION 2.2 SPECIAL MEETINGS. In addition to such special meetings as
are provided by law or the Certificate of Incorporation, special meetings of the
holders of any class or series or of all classes or series of the Corporation's
stock (the "Stockholders") for any purpose or purposes may be called at any time
by a majority of the entire Board of Directors and may be held on such day, at
such time and at such place, within or without the State of Delaware, as shall
be designated by the Board of Directors.
SECTION 2.3 NOTICE OF MEETINGS AND ADJOURNED MEETINGS. Except as
otherwise provided by law, written notice of any meeting of Stockholders shall
be given either by personal delivery or by mail to each Stockholder of record
entitled to vote thereat. Notice of each meeting shall be in such form as is
approved by the Board of Directors and shall state the date, place and hour of
the meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called. Except as otherwise provided by law, the business
that may be transacted at any such special meeting shall be limited to and
consist of the purpose or purposes stated in such notice. Unless otherwise
provided by law, such written notice shall be given not less than ten (10) or
more than sixty (60) days before the date of the meeting.
Except when a Stockholder attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
on the ground that the meeting is not lawfully called or convened, presence in
person or by proxy of a Stockholder shall constitute a
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waiver of notice of such meeting. Further, a written waiver of any notice
required by law or by these Bylaws, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice.
If a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken; provided, however, that if the
adjournment is for more than thirty (30) days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each Stockholder of record entitled to vote at the
meeting.
SECTION 2.4 VOTING LISTS. The officer or agent having charge of the
stock transfer books for shares of the Corporation shall make, at least ten (10)
days before each meeting of the Stockholders, a complete list of Stockholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of each and the number of shares held by
each. For a period of at least ten (10) days prior to such meeting, such list
shall be kept on file either (i) at a place within the city where the meeting is
to be held, which place shall be specified in the notice of the meeting, or, if
such place is not specified, (ii) at the place where the meeting is to be held.
Such list shall be subject to inspection by the Stockholders, for any
purpose germane to the meeting, at any time during ordinary business hours
during the ten (10) day period prior to the meeting. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any Stockholder for the duration of the meeting. The
original stock transfer books shall be prima facie evidence as to who are the
Stockholders entitled to examine such list or transfer books or to vote at any
meeting of Stockholders.
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SECTION 2.5 QUORUM. Except as otherwise provided by law or by the
Certificate of Incorporation, the holders of a majority of the shares of the
Corporation's stock issued and outstanding and entitled to vote at a meeting,
present in person or represented by proxy, without regard to class or series,
shall constitute a quorum at all meetings of the Stockholders for the
transaction of business. If, however, such quorum shall not be present or
represented at any meeting of the Stockholders, the holders of a majority of
such shares of stock, present in person or represented by proxy, may adjourn any
meeting from time to time without notice other than announcement at the meeting,
except as otherwise required by these Bylaws, until a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally called.
SECTION 2.6 ORGANIZATION. Meetings of the Stockholders shall be
presided over by the Chairman of the Board of Directors, if one shall be
elected, or in his absence, by the Vice-Chairman, if one shall be elected, the
Chief Executive Officer, the President or by any Vice President, or, in the
absence of any of such officers, by a chairman to be chosen by a majority of the
Stockholders entitled to vote at the meeting who are present in person or by
proxy. The Secretary, or, in his absence, any Assistant Secretary or any person
appointed by the individual presiding over the meeting, shall act as secretary
at meetings of the Stockholders.
SECTION 2.7 VOTING. Each Stockholder of record, as determined pursuant
to Section 2.8 hereof, who is entitled to vote in accordance with the terms of
the Certificate of Incorporation and in accordance with the provisions of these
Bylaws, shall be entitled to one vote, in person or by proxy, for each share of
stock registered in his name on the books of the Corporation.
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Every Stockholder entitled to vote at any Stockholder's meeting or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by proxy duly appointed by
instrument in writing subscribed by such Stockholder and executed not more than
three (3) years prior to the meeting, unless the proxy provides for a longer
period. A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only so long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A Stockholder's attendance at
any meeting, when such Stockholder who may have theretofore given a proxy, shall
not have the effect of revoking such proxy unless such Stockholder shall in
writing so notify the Secretary of the meeting prior to the voting of the proxy.
Unless otherwise provided by law, no vote on the election of directors
or any question brought before the meeting need be by written ballot unless (i)
the chairman of the meeting shall determine that it shall be by written ballot
or (ii) the holders of a majority of the shares of stock present in person or by
proxy and entitled to participate in such vote shall so demand. In a vote by
ballot, each ballot shall state the number of shares voted and the name of the
Stockholder or proxy voting. Except as otherwise provided by law, by the
Certificate of Incorporation or these Bylaws, all elections of directors and all
other matters before the Stockholders shall be decided by the vote of the
holders of a majority of the shares of stock present in person or by proxy at
the meeting and entitled to vote in the election or on the question. In the
election of directors, votes may not be cumulated.
SECTION 2.8 STOCKHOLDER ENTITLED TO VOTE. The Board of Directors may
fix a date not more than sixty (60) days nor less than ten (10) days prior to
the date of any meeting of
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Stockholders, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, or, in
the case of corporate action by written consent in accordance with the terms of
Section 2.11 hereof, not more than sixty (60) days prior to such action, as a
record date for the determination of the Stockholders entitled to notice of and
to vote at such meeting and any adjournment thereof, or to act by written
consent, and in such case such Stockholders and only such Stockholders as shall
be Stockholders of record on the date so fixed shall be entitled to notice of
and to vote at, such meeting and any adjournment thereof, or to act by written
consent, as the case may be, notwithstanding any transfer of any stock on the
books of the Corporation after such record date fixed as aforesaid.
SECTION 2.9 ORDER OF BUSINESS. The order of business at all meetings of
Stockholders shall be as determined by the chairman of the meeting or as is
otherwise determined by the vote of the holders of a majority of the shares of
stock present in person or by proxy and entitled to vote without regard to class
or series at the meeting.
SECTION 2.10 INSPECTOR OF ELECTIONS.
(a) In the event that the Corporation has a class of voting stock
that is (i) listed on a national securities exchange, (ii) authorized for
quotation on an interdealer quotation system of a registered national securities
association, or (iii) held of record by more than 2,000 Stockholders, then the
Board of Directors shall, in advance of any meeting of Stockholders, appoint one
(1) or more inspectors to act at the meeting and make a written report thereof
in accordance with Section 231 of the Delaware General Corporation Law ("DGCL").
If no inspector or alternate is able to act at a meeting of Stockholders, the
chairman of the meeting shall appoint one (1) or more inspectors to act at the
meeting. Each inspector, before entering
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upon the discharge of his duties, shall take and sign an oath faithfully to
execute the duties of inspector with strict impartiality and according to the
best of his ability.
(b) The inspectors shall (i) ascertain the number of shares
outstanding and the voting powers of each; (ii) determine the shares represented
at a meeting and the validity of proxies and ballots; (iii) count all votes and
ballots; (iv) determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspectors; and
(v) certify their determination of the number of shares represented at the
meeting, and their count of all votes and ballots. The inspectors may appoint or
retain other persons or entities to assist the inspectors in the performance of
the duties of the inspectors.
(c) The date and time of the opening and the closing of the polls
for each matter upon which the Stockholders will vote at a meeting shall be
announced at the meeting. No ballot, proxy or vote, nor any revocation thereof
or changes thereto, shall be accepted by the inspectors after the closing of the
polls unless the Court of Chancery, upon application by a Stockholder, shall
determine otherwise.
(d) In determining the validity and counting of proxies and
ballots, the inspectors shall be limited to an examination of the proxies, any
envelopes submitted with those proxies, any information provided in accordance
with Section 212(c) of the DGCL, ballots and the regular books and records of
the Corporation, except that the inspectors may consider other reliable
information for the limited purpose of reconciling proxies and ballots submitted
by or on behalf of banks, brokers, their nominees or similar persons which
represent more votes than the holder of a proxy is authorized by the record
owner to cast or more votes than the Stockholder holds of record. If the
inspectors consider other reliable information for the limited purpose
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permitted herein, the inspectors at the time they make their certification
pursuant to Section 2.10(b) hereof shall specify the precise information
considered by them including the person or persons from whom they obtained the
information, when the information was obtained, the means by which the
information was obtained and the basis for the inspectors' belief that such
information is accurate and reliable.
SECTION 2.11 ACTION BY WRITTEN CONSENT. Unless otherwise provided by
law or the Certificate of Incorporation, any action required or permitted to be
taken by the Stockholders of the Corporation may be taken without prior notice
and an actual meeting if a consent in writing setting forth the action so taken
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Except as provided above, no action shall be taken by the Stockholders by
written consent. Prompt notice of the taking of any corporate action without a
meeting by less than unanimous written consent shall be given to those
Stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
SECTION 3.1 MANAGEMENT. The property, affairs and business of the
Corporation shall be managed by or under the direction of the Board of Directors
which may exercise all powers of the Corporation and do all lawful acts and
things as are not by law, by the Certificate of Incorporation or by these Bylaws
directed or required to be exercised or done by the Stockholders.
SECTION 3.2 NUMBER AND TERM. The number of directors may be fixed from
time to time by resolution of the Board of Directors adopted by the affirmative
vote of a majority of the
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members of the entire Board of Directors, but shall consist of not less than
three (3) nor more than ten (10) members who shall be elected annually by the
Stockholders except as provided in Section 3.4 hereof. Directors need not be
Stockholders. No decrease in the number of directors shall have the effect of
shortening the term of office of any incumbent director.
SECTION 3.3 QUORUM AND MANNER OF ACTION. At all meetings of the Board
of Directors a majority of the total number of directors holding office shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the Board of Directors, except as may be otherwise specifically provided by
law, by the Certificate of Incorporation or these Bylaws. If at any meeting of
the Board of Directors there shall be less than a quorum present, a majority of
those present may adjourn the meeting from time to time until a quorum is
obtained, and no further notice thereof need be given other than by announcement
at such adjourned meeting. Attendance by a director at a meeting shall
constitute a waiver of notice of such meeting except where a director attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business on the ground that the meeting is not
lawfully called or convened.
SECTION 3.4 VACANCIES. Except as otherwise provided by law or the
Certificate of Incorporation, in the case of any increase in the authorized
number of directors or of any vacancy in the Board of Directors, however
created, the additional director or directors may be elected by the
Stockholders, or, as the case may be, the vacancy or vacancies may be filled by
majority vote of the directors remaining on the whole Board of Directors
although less than a quorum, or by a sole remaining director. In the event one
or more directors shall resign, such vacancy or vacancies shall be filled by a
majority of the remaining directors. Any director elected or chosen as provided
herein shall serve until the sooner of (i) the expiration of the unexpired term
of the directorship to which he is appointed; (ii) the election and
qualification of his successor; or (iii) his resignation or removal.
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SECTION 3.5 RESIGNATIONS. A director may resign at any time upon
written notice of resignation to the Corporation. Any resignation shall be
effective upon receipt by the Corporation, regardless of whether any other
effective date is specified therein. Acceptance of such resignation shall not be
necessary to make it effective.
SECTION 3.6 REMOVALS. Any director or the entire Board of Directors may
be removed, with or without cause, and another person or persons may be elected
to serve for the remainder of his or their term by the holders of a majority of
the shares of the Corporation entitled to vote in the election of directors. In
case any vacancy so created shall not be filled by the Stockholders at such
meeting, such vacancy may be filled by the directors as provided in Section 3.4
hereof.
SECTION 3.7 ANNUAL MEETINGS. The annual meeting of the Board of
Directors shall be held, if a quorum be present, immediately following each
annual meeting of the Stockholders at the place such meeting of Stockholders
took place, for the purpose of organization and transaction of any other
business that might be transacted at a regular meeting thereof, and no notice of
such meeting shall be necessary. If a quorum is not present, such annual meeting
may be held at any other time or place that may be specified in a notice given
in the manner provided in Section 3.9 hereof for special meetings of the Board
of Directors or in a waiver of notice thereof.
SECTION 3.8 REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held without notice at such places and times as shall be
determined from time to time by resolution of the Board of Directors. Except as
otherwise provided by law, any business may be transacted at any regular meeting
of the Board of Directors.
SECTION 3.9 SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by the Secretary at the request of the Chairman of the
Board, the Vice Chairman, if one be elected, the Chief Executive Officer, the
President or any two (2) members of the Board of Directors. Notices of special
meetings may be provided by mail, telephone, fax, electronic mail, or in person.
If notice is mailed, it shall be mailed to each director not later than two (2)
days before the day the meeting is to be held, and in all other cases, notice
shall be given not later than
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one (1) day before such meeting. Neither the business to be transacted at, nor
the purpose of, any special meeting need be specified in any notice or written
waiver of notice unless so required by the Certificate of Incorporation or by
the Bylaws and, unless limited by law, the Certificate of Incorporation or by
these Bylaws, any and all business may be transacted at a special meeting.
SECTION 3.10 ORGANIZATION OF MEETINGS. At any meeting of the Board of
Directors, business shall be transacted in such order and manner as such Board
of Directors may from time to time determine, and all matters shall be
determined by the vote of a majority of the directors present at any meeting at
which there is a quorum, except as otherwise provided by these Bylaws or
required by law.
SECTION 3.11 PLACE OF MEETINGS. The Board of Directors may hold their
meetings, have one or more offices and keep the books of the Corporation outside
the State of Delaware at any office or offices of the Corporation or at any
other place as they may from time to time by resolution determine.
SECTION 3.12 COMPENSATION OF DIRECTORS. Directors shall not receive any
stated salary for their services as directors, but by resolution of the Board of
Directors a fixed honorarium or fees and expenses, if any, of attendance may be
allowed for attendance at each meeting. Nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending committee meetings.
SECTION 3.13 ACTION BY UNANIMOUS WRITTEN CONSENT. Unless otherwise
restricted by law, the Certificate of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if prior to such action all
members of the Board of Directors or of such committee, as the case may be,
consent thereto in writing and the writing or writings are filed with the
minutes of proceedings of the Board of Directors or the committee.
SECTION 3.14 PARTICIPATION IN MEETINGS BY TELEPHONE. Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, members of the
Board of Directors or of any
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committee thereof may participate in a meeting of such Board of Directors or
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other
and participation in a meeting in such manner shall constitute presence in
person at such meeting.
SECTION 3.15 USE OF CAPITALIZED TERMS. The capitalized terms used in
this Article III and not defined herein shall have the definition and meaning
ascribed to such terms in the Certificate of Incorporation.
ARTICLE IV
COMMITTEES OF THE BOARD
SECTION 4.1 MEMBERSHIP AND AUTHORITIES. The Board of Directors may, by
resolution or resolutions passed by a majority of the whole Board of Directors,
designate three (3) or more Directors to constitute an Executive Committee and
such other committees as the Board of Directors may determine, each of which
committees to the extent provided in said resolution or resolutions or in these
Bylaws, shall have and may exercise all the powers of the Board of Directors in
the management of the business and affairs of the Corporation, except in those
cases where the authority of the Board of Directors is specifically denied to
the Executive Committee or such other committee or committees by law, the
Certificate of Incorporation or these Bylaws, and may authorize the seal of the
Corporation to be affixed to all papers that may require it. The designation of
an Executive Committee or other committee and the delegation thereto of
authority shall not operate to relieve the Board of Directors, or any member
thereof, of any responsibility imposed upon it or him by law.
SECTION 4.2 MINUTES. Each committee designated by the Board of
Directors shall keep regular minutes of its proceedings and report the same to
the Board of Directors when required.
SECTION 4.3 VACANCIES. The Board of Directors may designate one (l) or
more of its members as alternate members of any committee who may replace any
absent or disqualified member at any meeting of such committee. If no alternate
members have been appointed, the
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committee member or members thereof present at any meeting and not disqualified
from voting, whether or not he or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in the
place of any absent or disqualified member. The Board of Directors shall have
the power at any time to fill vacancies in, to change the membership of, and to
dissolve, any committee.
SECTION 4.4 TELEPHONE MEETINGS. Members of any committee designated by
the Board of Directors may participate in or hold a meeting by use of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in a meeting
pursuant to this Section 4.4 shall constitute presence in person at such
meeting, except where a person participates in the meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business on the ground that the meeting is not lawfully called or convened.
SECTION 4.5 ACTION WITHOUT MEETING. Any action required or permitted to
be taken at a meeting of any committee designated by the Board of Directors may
be taken without a meeting if a consent in writing, setting forth the action so
taken, is signed by all the members of the committee and filed with the minutes
of the committee proceedings. Such consent shall have the same force and effect
as a unanimous vote at a meeting.
ARTICLE V
OFFICERS
SECTION 5.1 NUMBER AND TITLE. The elected officers of the Corporation
shall be chosen by the Board of Directors and shall be a President, a Vice
President, a Secretary and a Treasurer. The Board of Directors may also choose
(i) a Chairman of the Board, who must be a member of the Board of Directors;
(ii) if a Chairman of the Board is chosen, the Board of Directors may also
choose a Vice Chairman, who must be a member of the Board of Directors; (iii) a
Chief Executive Officer, who need not be a member of the Board of Directors; and
(iv)
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additional Vice Presidents, Assistant Secretaries and/or Assistant Treasurers.
One person may hold any two or more of these offices.
SECTION 5.2 TERM OF OFFICE; VACANCIES. So far as is practicable, all
elected officers shall be elected by the Board of Directors at the annual
meeting of the Board of Directors in each year, and except as otherwise provided
in this Article V, shall hold office until the next such meeting of the Board of
Directors in the subsequent year and until their respective successors are
elected and qualified or until their earlier death, resignation or removal. All
appointed officers shall hold office at the pleasure of the Board of Directors.
If any vacancy shall occur in any office, the Board of Directors may elect or
appoint a successor to fill such vacancy for the remainder of the term.
SECTION 5.3 REMOVAL OF ELECTED OFFICERS. Any elected officer may be
removed at any time, with or without cause, by affirmative vote of a majority of
the whole Board of Directors, at any regular meeting or at any special meeting
called for such purpose.
SECTION 5.4 RESIGNATIONS. Any officer may resign at any time upon
written notice of resignation to the President, Secretary or Board of Directors
of the Corporation. Any resignation shall be effective immediately unless a date
certain is specified for it to take effect, in which event it shall be effective
upon such date, and acceptance of any resignation shall not be necessary to make
it effective, irrespective of whether the resignation is tendered subject to
such acceptance.
SECTION 5.5 THE CHAIRMAN OF THE BOARD. The Chairman of the Board, if
one shall be elected, shall preside at all meetings of the Stockholders and
Board of Directors; shall be ex officio a member of all standing committees; and
shall have general and active management of business of the corporation. In
addition, the Chairman of the Board shall perform whatever duties and shall
exercise all powers that are given to him by the Board of Directors. Unless
otherwise designated by the Board of Directors, the Chairman of the Board, if
one shall be elected, shall also be the chief executive officer of the
Corporation. In the absence of the Chairman, such of his duties shall be
performed and his authority exercised by either the Vice
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Chairman, if one shall be elected, or the Chief Executive Officer, if one shall
be elected, as may be designated by the Chairman with the right reserved to the
Board of Directors to designate or supersede any designation so made.
SECTION 5.6 PRESIDENT. The President shall, in the absence of the
Chairman of the Board and the Vice Chairman, if one shall be appointed, preside
at meetings of the Stockholders and Board of Directors; shall implement the
general directives, plans and policies formulated by the Board of Directors; and
shall further have such duties, responsibilities and authorities as may be
assigned to him by the Board of Directors. He may sign, with any other proper
officer, certificates for shares of the Corporation and any deeds, bonds,
mortgages, contracts and other documents which the Board of Directors has
authorized to be executed, except where required by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors or these Bylaws, to some other
officer or agent of the Corporation. In the absence of the President, his duties
shall be performed and his authority may be exercised by a Vice President of the
Corporation as may have been designated by the President with the right reserved
to the Board of Directors to designate or supersede any designation so made.
SECTION 5.7 VICE PRESIDENTS. The several Vice Presidents shall have
such powers and duties as may be assigned to them by these Bylaws and as may
from time to time be assigned to them by the Board of Directors and may sign,
with any other proper officer, certificates for shares of the Corporation.
SECTION 5.8 SECRETARY. The Secretary, if available, shall attend all
meetings of the Board of Directors and all meetings of the Stockholders and
record the proceedings of the meetings in a book to be kept for that purpose and
shall perform like duties for any committee of the Board of Directors as shall
designate him to serve. He shall give, or cause to be given, notice of all
meetings of the Stockholders and meetings of the Board of Directors and
committees thereof and shall perform such other duties incident to the office of
secretary or as may be prescribed by the Board of Directors or the Chairman,
under whose supervision he shall be. He
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shall have custody of the corporate seal of the Corporation and he, or any
Assistant Secretary, or any other person whom the Board of Directors may
designate, shall have authority to affix the same to any instrument requiring
it, and when so affixed it may be attested by his signature or by the signature
of any Assistant Secretary or by the signature of such other person so affixing
such seal.
SECTION 5.9 ASSISTANT SECRETARIES. Each Assistant Secretary shall have
the usual powers and duties pertaining to his office, together with such other
powers and duties as may be assigned to him by the Board of Directors, the
Chairman, the President or the Secretary. The Assistant Secretary or such other
person as may be designated by the President shall exercise the powers of the
Secretary during that officer's absence or inability to act.
SECTION 5.10 TREASURER. The Treasurer shall have the custody of and be
responsible for the corporate funds and securities, shall keep full and accurate
accounts of receipts and disbursements in the books belonging to the Corporation
and shall deposit all moneys and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the Board
of Directors. He shall disburse the funds of the Corporation as may be ordered
by the Board of Directors, taking proper vouchers for such disbursements, and
shall render to the President and the Board of Directors, at its regular
meetings, or when the Board of Directors so requires, an account of all his
transactions as Treasurer and of the financial condition of the Corporation, and
he shall perform all other duties incident to the position of Treasurer, or as
may be prescribed by the Board of Directors or the President. If required by the
Board of Directors, he shall give the Corporation a bond in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for the restoration to
the Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
SECTION 5.11 ASSISTANT TREASURERS. Each Assistant Treasurer shall have
the usual powers and duties pertaining to his office, together with such other
powers and duties as may be
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assigned to him by the Board of Directors, the President or the Treasurer. The
Assistant Treasurer or such other person designated by the President shall
exercise the power of the Treasurer during that officer's absence or inability
to act.
SECTION 5.12 SUBORDINATE OFFICERS. The Board of Directors may (a)
appoint such other subordinate officers and agents as it shall deem necessary
who shall hold their offices for such terms, have such authority and perform
such duties as the Board of Directors may from time to time determine, or (b)
delegate to any committee or officer the power to appoint any such subordinate
officers or agents.
SECTION 5.13 SALARIES AND COMPENSATION. The salary or other
compensation of officers shall be fixed from time to time by the Board of
Directors. The Board of Directors may delegate to any committee or officer the
power to fix from time to time the salary or other compensation of subordinate
officers and agents appointed in accordance with the provisions of Section 5.12
hereof.
ARTICLE VI
INDEMNIFICATION
SECTION 6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) The Corporation shall 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 (other than an action by or in the right of the Corporation) by
reason of the fact that such person is or was, at any time prior to or during
which this Article VI is in effect, a director, officer, employee or agent of
the Corporation, or is or was, at any time prior to or during which this Article
VI is in effect, serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, other enterprise or employee benefit plan against reasonable expenses
(including attorneys' fees), judgments, fines, penalties, amounts paid in
settlement and other liabilities actually and reasonably incurred by such person
in connection with such action, suit or
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proceeding if such person acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe that his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
such person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(b) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that such person is or was, at any
time prior to or during which this Article VI is in effect, a director, officer,
employee or agent of the Corporation, or is or was, at any time prior to or
during which this Article VI is in effect, 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), actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit if such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation; provided, that no
indemnification shall be made under this subsection (b) in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable to
the Corporation unless and only to the extent that the Delaware Court of
Chancery, or other court of appropriate jurisdiction, shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity of such expenses which the Delaware Court of Chancery, or other court
of appropriate jurisdiction, shall deem proper.
(c) To the extent that a director, officer, employee or agent of
the Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding
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referred to in subsections (a) and (b) of this section, or in defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under subsections (a) or (b) (unless
ordered by the Delaware Court of Chancery or other court of appropriate
jurisdiction) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of such person is proper
in the circumstances because he has met the applicable standard of conduct set
forth in sub-sections (a) and (b). Such determination shall be made (1) by the
Board of Directors by a majority vote of a quorum consisting of directors not
parties to such action, suit or proceeding; or (2) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel, in a written opinion, selected by the
Board of Directors; or (3) by the Stockholders. In the event a determination is
made under this subsection (d) that the director, officer, employee or agent has
met the applicable standard of conduct as to some matters but not as to others,
amounts to be indemnified may be reasonably prorated.
(e) Expenses (including attorneys' fees) incurred by a person who
is or was a director or officer of the Corporation in appearing at,
participating in or defending any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative, shall
be paid by the Corporation at reasonable intervals in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of the director or officer to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized by this Article VI. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as the Board of Directors deems appropriate.
(f) It is the intention of the Corporation to indemnify the
persons referred to in this Article VI to the fullest extent permitted by law
and with respect to any action, suit or proceeding arising from events which
occur at any time prior to or during which this Article VI
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is in effect. The indemnification and advancement of expenses provided by this
Article VI shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be or become entitled
under any law, the Certificate of Incorporation, these Bylaws, agreement, the
vote of Stockholders or disinterested directors or otherwise, or under any
policy or policies of insurance purchased and maintained by the Corporation on
behalf of any such person, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such person.
(g) The indemnification provided by this Article VI shall be
subject to all valid and applicable laws, and, in the event this Article VI or
any of the provisions hereof or the indemnification contemplated hereby are
found to be inconsistent with or contrary to any such valid laws, the latter
shall be deemed to control and this Article VI shall be regarded as modified
accordingly, and, as so modified, to continue in full force and effect.
ARTICLE VII
CAPITAL STOCK
SECTION 7.1 CERTIFICATES OF STOCK. Certificates of stock shall be
issued to each Stockholder certifying the number of shares owned by him in the
Corporation and shall be in a form not inconsistent with the Certificate of
Incorporation and as approved by the Board of Directors. The certificates shall
be signed by the Chairman of the Board, the President or a Vice President and by
the Secretary or an Assistant Secretary, or the Treasurer or an Assistant
Treasurer and may be sealed with the seal of the Corporation or a facsimile
thereof. Any or all of the signatures on the certificate may be a facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by
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the Corporation with the same effect as if he were such officer, transfer agent
or registrar at the date of issue.
If the Corporation shall be authorized to issue more than one (1) class
of stock or more than one (1) series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the Corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided by statute, in lieu of the foregoing requirements, there may
be set forth on the face or back of the Certificate which the Corporation shall
issue to represent such class or series of stock, a statement that the
Corporation will furnish without charge to each Stockholder who so requests the
powers, designations, preferences and relative, participating, optional or other
special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
SECTION 7.2 LOST CERTIFICATES. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the owner of such certificate, or his legal
representative. When authorizing the issuance of a new certificate, the Board of
Directors may in its discretion, as a condition precedent to the issuance
thereof, require the owner, or his legal representative, to give a bond in such
form and substance with such surety as it may direct, to indemnify the
Corporation against any claim that may be made on account of the alleged loss,
theft or destruction of such certificate or the issuance of such new
certificate.
SECTION 7.3 FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD FOR
CERTAIN PURPOSES.
(a) In order that the Corporation may determine the Stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of capital stock or for the
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purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than sixty (60) days prior to the date of
payment of such dividend or other distribution or allotment of such rights or
the date when any such rights in respect of any change, conversion or exchange
of stock may be exercised or the date of such other action. In such a case, only
Stockholders of record on the date so fixed shall be entitled to receive any
such dividend or other distribution or allotment of rights or to exercise such
rights or for any other purpose, as the case may be, notwithstanding any
transfer of any stock on the books of the Corporation after any such record date
fixed as aforesaid.
(b) If no record date is fixed, the record date for determining
Stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
SECTION 7.4 DIVIDENDS. Subject to the provisions of the Certificate of
Incorporation, if any, and except as otherwise provided by law, the directors
may declare dividends upon the capital stock of the Corporation as and when they
deem it to be expedient. Such dividends may be paid in cash, in property or in
shares of the Corporation's capital stock. Before declaring any dividend there
may be set apart out of the funds of the Corporation available for dividends,
such sum or sums as the directors from time to time in their discretion think
proper for working capital or as a reserve fund to meet contingencies or for
equalizing dividends, or for such other purposes as the directors shall think
conducive to the interests of the Corporation and the directors may modify or
abolish any such reserve in the manner in which it was created.
SECTION 7.5 REGISTERED STOCKHOLDERS. Except as expressly provided by
law, the Certificate of Incorporation and these Bylaws, the Corporation shall be
entitled to treat registered Stockholders as the only holders and owners in fact
of the shares standing in their respective names and the Corporation shall not
be bound to recognize any equitable or other claim to or interest in such shares
on the part of any other person, regardless of whether it shall have express or
other notice thereof.
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SECTION 7.6 TRANSFER OF STOCK. Transfers of shares of the capital stock
of the Corporation shall be made only on the books of the Corporation by the
registered owners thereof, or by their legal representatives or their duly
authorized attorneys. Upon any such transfers the old certificates shall be
surrendered to the Corporation by the delivery thereof to the person in charge
of the stock transfer books and ledgers, by whom they shall be cancelled and new
certificates shall thereupon be issued.
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ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 8.1 CORPORATE SEAL. If one be adopted, the corporate seal shall
have inscribed thereon the name of the Corporation and shall be in such form as
may be approved by the Board of Directors. Said seal may be used by causing it
or a facsimile thereof to be impressed or affixed or in any manner reproduced.
SECTION 8.2 FISCAL YEAR. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
SECTION 8.3 CHECKS, DRAFTS, NOTES. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or officers, agent or
agents of the Corporation, and in such manner as shall from time to time be
determined by resolution (whether general or special) of the Board of Directors
or may be prescribed by any officer or officers, or any officer and agent
jointly, thereunto duly authorized by the Board of Directors.
SECTION 8.4 NOTICE AND WAIVER OF NOTICE. Whenever notice is required to
be given to any director or Stockholder under the provisions of applicable law,
the Certificate of Incorporation or of these Bylaws it shall not be construed to
only mean personal notice, rather, such notice may also be given in writing, by
mail, addressed to such director or Stockholder at his address as it appears on
the records of the Corporation, with postage thereon prepaid (unless prior to
the mailing of such notice he shall have filed with the Secretary of the
Corporation a written request that notices intended for him be mailed to some
other address in which case, such notice shall be mailed to the address
designated in the request), and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram, cable or other form of recorded
communication, by personal delivery, by telephone, by facsimile or by electronic
mail. Whenever notice is required to be given under any provision of law, the
Certificate of Incorporation or these Bylaws, a waiver thereof in writing, by
telegraph, cable or other form of recorded communication, signed by the
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person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice. Attendance of a person at
a meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting at the beginning
of the meeting, to the transaction of any business on the ground that the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
Stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice unless so required by the Certificate
of Incorporation or these Bylaws.
SECTION 8.5 EXAMINATION OF BOOKS AND RECORDS. The Board of Directors
shall determine from time to time whether, and if allowed, when and under what
conditions and regulations the accounts and books of the Corporation (except
such as may by statute be specifically opened to inspection) or any of them
shall be open to inspection by the Stockholders, and the Stockholders' rights in
this respect are and shall be restricted and limited accordingly.
SECTION 8.6 VOTING UPON SHARES HELD BY THE CORPORATION. Unless
otherwise provided by law or by the Board of Directors, the Chairman of the
Board; the Vice Chairman in the absence of the Chairman of the Board; or the
President in the absence of the Chairman and the Vice Chairman; acting on behalf
of the Corporation, shall have full power and authority to attend and to act and
to vote at any meeting of Stockholders of any corporation in which the
Corporation may hold stock and, at any such meeting, shall possess and may
exercise any and all of the rights and powers incident to the ownership of such
stock which, as the owner thereof, the Corporation might have possessed and
exercised, if present. The Board of Directors by resolution from time to time
may confer like powers upon any person or persons.
ARTICLE IX
AMENDMENTS
SECTION 9.1 AMENDMENT. Except as otherwise expressly provided in the
Certificate of Incorporation, the directors, by the affirmative vote of a
majority of the entire Board of Directors
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and without the assent or vote of the Stockholders, may at any meeting, provided
the substance of the proposed amendment shall have been stated in the notice of
the meeting, make, repeal, alter, amend or rescind any of the provisions of
these Bylaws.
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EXHIBIT 10-Q EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into by
and between Veritas DGC Inc., a Delaware corporation (hereinafter referred to as
"Employer"), and Richard C. White, an individual currently resident in Harris
County, Texas (hereinafter referred to as "Employee") effective as of
January 24, 2000.
Attendant to Employee's employment by Employer, Employer and Employee wish
for there to be a complete understanding and agreement between Employer and
Employee with respect to, among other terms, Employee's duties and
responsibilities to Employer; the compensation and benefits owed to Employee;
the fiduciary duties owed by Employee to Employer; Employee's obligation to
avoid conflicts of interest, disclose pertinent information to Employer, and
refrain from using or disclosing Employer's information; and the term of
employment.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Employer and Employee agree as follows:
Section 1. General Duties of Employer and Employee.
a. Employer agrees to employ Employee, and Employee agrees to accept employment
by Employer and to serve Employer in an executive capacity as its Chief
Executive Officer. At the commencement of this Agreement, Employee shall report
to the Chairman of the Board of Employer. The powers, duties and
responsibilities of Employee as Chief Executive Officer include those duties
that are the usual and customary powers, duties and responsibilities of such
office and such other and further duties appropriate to such position as may
from time to time be assigned to Employee by the Chairman or the Board of
Directors of Employer (hereinafter referred to as the "Board").
b. Employer agrees that Employee shall be nominated as a candidate for election
to the Board at the next annual meeting of stockholders of Employer (such annual
meeting is expected to be held in December 2000). If elected, Employee shall
have all powers and obligations associated with such position as a director,
subject to all policies and guidelines as may be established by the Board,
Employers certificate of incorporation and By-laws and applicable law.
c. While employed hereunder, Employee shall devote substantially all reasonable
and necessary time, efforts, skills and attention for the benefit of and with
his primary attention to the affairs of Employer in order that he shall
faithfully perform his duties and obligations. The preceding sentence shall not,
however, be deemed to restrict Employee from attending to matters or engaging in
activities not directly related to the business of Employer, provided that (i)
such activities or matters are reasonable in scope and time commitment and not
otherwise in violation of this Agreement, and (ii) Employee shall not become a
director of any corporation or other entity (excluding charitable or other
non-profit organizations) without prior written disclosure to, and consent of,
Employer.
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d. At the commencement of Employee's employment by Employer, Employee shall be
based at Employer's headquarters located at 3701 Kirby Drive, Houston, Texas and
upon relocation of Employer's headquarters to western Harris County, Texas,
currently scheduled for October or November, 2000, Employee shall be based at
such relocated headquarters (Employer's Kirby Drive headquarters and after
relocation its western Harris County headquarters are referred to herein as the
"Place of Employment).
e. Employee agrees and acknowledges that during the term of this Agreement, he
owes a fiduciary duty of loyalty, fidelity and allegiance to act at all times in
the best interests of Employer and to do no act knowingly which would injure
Employer's business, its interests or its reputation.
Section 2. Compensation and Benefits.
a. Employer shall pay to Employee during the term of this Agreement a base
salary of $27,500 per month. The Compensation Committee of the Board will review
Employee's base salary at least once each fiscal year and, during the term of
this Agreement, may increase, but may not decrease Employee's base salary. The
base salary, including any increase thereof, shall be paid to Employee in equal
installments every two weeks or on such other schedule as Employer may establish
from time to time for its management personnel.
b. Employee will be eligible to participate in the fiscal year 2000 (8/01/99
through 7/31/99) Key Contributor Incentive Compensation Plan with a target of
50% of Employee's annual base salary. Any incentive earned in fiscal year 2000
will be prorated based on Employee's actual period of employment during the
fiscal year. During each subsequent fiscal year during the term of this
Agreement, Employee shall be eligible to participate in that year's Key
Contributor Incentive Plan or other replacement incentive or bonus plan Employer
establishes for its key executives with at least a target of 50% of Employee's
annual base salary, but in no event less than other key executives of Employer.
c. Employer shall grant to Employee effective March 11, 2000, an option (the
"Stock Option") to purchase such number of shares of Employer's common stock,
$.01 par value ("Common Stock") equal to 1.0 times Employee's annual base salary
divided by the market price as of the date of grant pursuant to Employer's
Non-qualified Employee's Stock Option Plan and the Stock Option Agreements in
the form attached hereto as Exhibit A. Employee will be eligible for future
option grants under Employer's Key Contributor Incentive Compensation Plan (or
other replacement incentive or bonus plan Employer establishes for its key
executives) on a basis at least as favorable as grants made to other key
executives of Employer. In the event that Employee's employment is terminated at
any time prior to January 23, 2002 for any reason other than for Cause (as
hereinafter defined), all Stock Options held by Employee on the date of such
termination shall automatically be fully vested.
d. Employer shall award to Employee, effective as of the date of this Agreement,
25,000 shares of restricted Common Stock of Employer in accordance with the
terms of the Restricted Stock Agreement attached hereto as Exhibit B and made a
part hereof.
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e. Employee will be entitled to paid vacation of not less than four weeks each
year. Vacation may be taken by Employee at the time and for the periods as may
be mutually agreed upon between Employer and Employee.
f. Employer will pay or reimburse Employee for all membership fees (other than
initiation fees), dues, assessments and expenses relating to Employee's current
golf club membership at Willow Fork Country Club, Katy, Texas.
g. Employee shall be reimbursed in accordance with Employer's normal expense
reimbursement policy for all of the actual and reasonable costs and expenses
incurred by him in the performance of his services and duties hereunder,
including, but not limited to, travel and entertainment expenses. Employee shall
furnish Employer with all invoices and vouchers reflecting amounts for which
Employee seeks Employer's reimbursement.
h. Employee shall be entitled to participate in all insurance and retirement
plans, incentive compensation plans (at a level appropriate to his position) and
such other benefit plans or programs as may be in effect from time-to-time for
the key management employees of Employer including, without limitation, those
related to savings and thrift, retirement, welfare, medical, dental, disability,
salary continuance, accidental death, travel accident, life insurance, incentive
bonus, membership in business and professional organizations, and reimbursement
of business and entertainment expenses.
i. In addition to those benefit plans and programs referred to in Section 2.h.
above, Employer shall, in the event of Employee's Short-Term Disability, pay to
Employee an amount equal to the following: (i) for the first three months of
such Short-Term Disability, 100% of the amount Employee would have received as
base salary had he been able to work; and (ii) for the next three months of such
Short-Term Disability, 66 2/3 % of the amount Employee would have received as
base salary had he been able to work. Such payments shall be made to Employee in
equal installments every two weeks or on such other schedule as Employer may
establish from time to time for payment of salaries to its management personnel.
A "Short-Term Disability" as used in this Section 2.i. shall mean any continuous
period longer than one day and continuing for a period of up to and including
180 days during which time Employee is unable to perform, due to physical or
mental illness, injury or incapacity, the duties assigned to him under this
Agreement.
j. Employer, during the term of this Agreement and thereafter without limit of
time, shall indemnify Employee for claims and expenses to the extent provided in
Employer's Certificate of Incorporation and Bylaws. Employer shall also provide
Employee coverage under Employer's policies of directors' and officers'
liability insurance to the same extent as other executive officers of the
Company during the term of this Agreement and for a period of six years
thereafter, so long as such coverage is available on a commercially reasonable
basis. Employer shall In addition, effective as of the effective date of this
Agreement, Employer agrees to enter into that one certain Indemnity Agreement
with Employee, a copy of which is attached hereto as Exhibit C.
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k. All salary, bonus and other payments made by Employer to Employee pursuant to
this Agreement shall be subject to such payroll and withholding deductions as
may be required by law and other deductions applied generally to employees of
Employer for insurance and other employee benefit plans in which Employee
participates.
Section 3. Fiduciary Duty; Confidentiality.
a. In keeping with Employee's fiduciary duties to Employer, Employee agrees that
he shall not knowingly take any action which would create a conflict of interest
with Employer, or upon discovery thereof, allow such a conflict to continue. In
the event that Employee discovers that such a conflict exists, Employee agrees
that he shall disclose to the Board any facts which might involve a conflict of
interest that has not been approved by the Board.
b. As part of Employee's fiduciary duties to Employer, Employee agrees to
protect and safeguard Employer's information, ideas, concepts, improvements,
discoveries, and inventions and any proprietary, confidential and other
information relating to Employer or its business (collectively, "Confidential
Information") and, except as may be required by Employer, Employee shall not
knowingly, either during his employment by Employer or thereafter, directly or
indirectly, use for his own benefit or for the benefit of another, or disclose
to another, any Confidential Information, except (i) with the prior written
consent of the Employer; (ii) in the course of the proper performance of the
Employee's duties under this Agreement; (iii) for information that becomes
generally available to the public other than as a result of the unauthorized
disclosure by the Employee; (iv) for information that becomes available to
Employee on a nonconfidential basis from a source other than Employer or its
affiliated companies who is not bound by a duty of confidentiality to Employer;
or (v) as may be required by any applicable law, rule, regulation or order.
c. Upon termination of his employment with Employer, Employee shall immediately
deliver to Employer all documents in the possession or under the control of
Employee embodying any of Employer's Confidential Information.
Section 4. Term and Termination.
a. The term of Employee's employment hereunder shall be for a period of two
years, commencing January 24, 2000 and ending January 23, 2002, unless earlier
terminated in accordance with the terms of this Agreement; provided, that
beginning January 24, 2002 and on each January 24th thereafter, such term of
employment shall be extended automatically for an additional one-year period
unless Employer or Employee gives the other written notice of intent to
terminate this Agreement at least thirty days prior to such January 24th.
b. Employee's employment under this Agreement shall terminate upon Employee's
death.
c. Employer may terminate this Agreement by reason of Employee's Disability (as
hereinafter defined) after such condition of Disability has existed for at least
180 consecutive days. Employer shall give Employee sixty days notice of its
intention to effect such termination pursuant to this Section 4.c. As used in
this Agreement, except for Section 2.i., "Disability" shall
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mean a physical or mental illness, injury or incapacity lasting longer than 180
consecutive days which renders Employee unable to perform the duties assigned to
him under this Agreement.
d. Employer may terminate this Agreement upon the determination by a majority of
the entire Board that Cause (as hereinafter defined) exists therefor. As used in
this Agreement, "Cause" means (i) the willful and continued failure by Employee
substantially to perform his obligations under this Agreement (other than any
such failure resulting from his Short Term Disability, as defined in Section
2.i. or his Disability) after a demand for substantial performance has been
delivered to him by the Board which specifically identifies the manner in which
the Board believes Employee has not substantially performed such provisions,
(ii) Employee's willfully engaging in conduct materially and demonstrably
injurious to the property or business of Employer, including without limitation,
fraud, misappropriation of funds or other property of Employer, other willful
misconduct, gross negligence or conviction of a felony or other crime of moral
turpitude, or (iii) Employee's material breach of this Agreement which breach
has not been remedied by Employee within ten (10) days after receipt by Employee
of written notice from Employer that he is in material breach of the Agreement,
specifying the particulars of such breach. If the Board determines that Cause
exists, Employer may (A) terminate this Agreement effective immediately or at a
subsequent date or (B) condition Employee's continued employment upon such
considerations or requirements as may be reasonable under the circumstances and
place a reasonable limitation upon the time within which Employee shall comply
with such considerations or requirements.
e. Employee shall have the right to terminate this Agreement and his employment
hereunder for "Good Reason," which for purposes of this Agreement means (i)
Employer's failure to comply with any of the provisions of Section 2 of this
Agreement and which failure is not remedied within ten (10) days after receipt
of written notice from Employee specifying the particulars of such breach; (ii)
Employer's breach of any other material provision of this Agreement which is not
remedied within ten (10) days after receipt by Employer of written notice from
Employee specifying the particulars of such breach; (iii) the assignment to
Employee of any duties inconsistent with Employee's position (including status,
offices, titles, and reporting requirement), duties, functions responsibilities,
or authority as contemplated by Section 1 of this Agreement or other action by
the Employer that results in a diminution (other than an isolated,
inconsequential or insubstantial diminution which is remedied by Employer
promptly after receipt of written notice thereof given by Employee) in such
position, functions, responsibilities or authority; or (iv) the relocation of
the Place of Employment to a location more than fifty miles (50) miles from the
Place of Employment.
f. Employee shall also have the right to terminate his employment and this
Agreement in the event that the stockholders of Employer fail to elect Employee
to the Board at the next annual meeting of stockholders of Employer (currently
expected to be held in December 2000) or any adjournment thereof. In the event
Employee fails to exercise such right to terminate within sixty (60) calendar
days after the date such election is held, such right is waived. Any such
termination by Employee under this Section 4.f. shall be deemed a termination by
Employee for "Good Reason."
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Section 5. Effect of Termination.
a. Upon termination of this Agreement by Employer for Cause; or by Employee
other than for Good Reason, all compensation and benefits shall cease upon the
date of termination other than: (i) those benefits that are provided by
retirement and benefit plans and programs specifically adopted and approved by
Employer for Employee that are earned and vested by the date of termination,
(ii) the pro rata annual salary through the date of termination; (ii) any
incentive compensation due Employee if, under the terms of the relevant
incentive compensation arrangement, such incentive compensation was due and
payable to Employee on or before the date of termination; and (iii) medical and
similar benefits the continuation of which is required by applicable law or
provided by the applicable benefit plan.
b. Upon termination of this Agreement by Employer due to the death or Disability
of Employee, all compensation and benefits shall cease upon the date of
termination other than: (i) those benefits that are provided by retirement and
benefit plans and programs specifically adopted and approved by Employer for
Employee that are earned and vested by the date of termination, (ii) the pro
rata annual salary through the date of termination; (ii) any incentive
compensation due Employee if, under the terms of the relevant incentive
compensation arrangement, such incentive compensation was due and payable to
Employee on or before the date of termination; and (iii) medical and similar
benefits the continuation of which is required by applicable law or provided by
the applicable benefit plan. In addition, Employer shall pay to Employee or, in
the event of Employee's death, his surviving spouse or minor child or children,
or their legal representative, on a monthly basis an amount equal to the premium
payable by Employee, such spouse and/or child or children for health and dental
insurance offered by Employer or on its behalf under COBRA. Such payments shall
continue for a period of eighteen months.
c. Upon termination of (i) this Agreement by Employer by not extending the term
of this Agreement upon giving notice to Employee to terminate this Agreement in
accordance with Section 4.a.; (ii) Employee's employment by Employer at any time
for any reason other than for Cause or due to Employee's death or Disability; or
(iii) this Agreement by Employee for Good Reason during the term hereof, the
obligations of Employer and Employee under Sections 1 and 2 shall terminate as
of the date this Agreement is terminated, and Employer shall pay or provide to
Employee:
i. Employee's pro rata annual salary through the date of termination;
ii. incentive compensation due Employee, if any, under the terms of the
relevant incentive compensation arrangement; and
iii. within thirty days of said termination, a severance benefit equal to
two years of Employee's annual base salary.
All other compensation and benefits shall cease upon the date of termination
other than the following: (i) those benefits that are provided by retirement and
benefit plans and programs specifically adopted and approved by Employer for
Employee that are earned and vested by the
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<PAGE> 7
date of termination, (ii) any rights Employee or his survivors may have under
the Restricted Stock Agreement or under any grants of options to purchase
Employer's Common Stock made in accordance with Section 2.c. hereof; and (iii)
medical and similar benefits the continuation of which is required by applicable
law or as provided by the applicable benefit plan.
The payments and benefits provided under this Section 5 shall be payable without
regard to Employee's other income or his ability to obtain other employment and
Employee shall be under not duty to mitigate the amount payable under this
section.
As a condition to making the payments and providing the benefits specified in
Section 5.c., Employer will require that Employee execute a release of certain
contractual and statutory claims Employee may have against Employer at the time
of Employee's termination. Such release shall be in substantially the same form
as Exhibit D attached hereto.
Section 6. Miscellaneous.
a. For a period of one year after the termination of Employee's employment with
Employer, Employee shall not, either on his own account or for any person, firm,
partnership, corporation, or other entity (i) solicit any employee of Employer
or its affiliates to leave his or her employment; or (ii) induce or attempt to
induce any such employee to breach her or his employment agreement with
Employer; provided, however, that these restrictions shall not apply with
respect to any such employee who (i) was personally recruited to the Employer or
its affiliate by Employee and (ii) became an employee of Employer or its
affiliate on or before January 23, 2001.
b. All notices and other communications required or permitted hereunder or
necessary or convenient in connection herewith shall be in writing and shall be
delivered by hand or by registered or certified mail, return receipt requested
to the addresses set forth below in this Section 6.
If to Employer, to:
Veritas DGC Inc.
3701 Kirby Drive, Suite 630
Houston, Texas 77098
Attention: David B. Robson
If to Employee, to:
Mr. Richard C. White
19822 Timberwind
Houston, Texas 77094
or to such other names or addresses as Employer or Employee, as the case may be,
shall designate by notice to the other party hereto in the manner specified in
this Section.
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<PAGE> 8
c. This Agreement shall be binding upon and inure to the benefit of Employer,
its successors, legal representatives and permitted assigns, and upon Employee,
his heirs, executors, administrators, representatives and permitted assigns.
Neither Party may assign its or his rights, duties and obligations hereunder
without the express written consent of Employer, which consent may be withheld
for any or no reason; provided, however, that Employer may assign this Agreement
without Employee's consent in the event of a bona fide corporate reorganization
of Employer in which Employer transfers all or substantially all of its assets
to a corporation owned by substantially the same shareholders as owned Employer
immediately prior to the transaction.
d. This Agreement supersedes, replaces and merges all previous agreements and
discussions relating to the same or similar subject matters between Employee and
Employer and constitutes the entire agreement between Employee and Employer with
respect to the subject matter of this Agreement. This Agreement may not be
modified in any respect by any verbal statement, representation or agreement
made by any employee, officer, or representative of Employer or by any written
agreement unless signed by an officer of Employer who is expressly authorized by
the Board to execute such document.
e. Except as expressly provided herein, the provisions of this Agreement, and
any payment or benefits provided for under this Agreement, shall not reduce any
amounts or benefits otherwise payable to or due Employee, or exclude or limit
Employee's participation in other benefits available to the Employer's executive
personnel generally, or in any way diminish the Employee's rights as an
employee, whether existing as of the date of this Agreement or thereafter, under
any employee benefit plan, program or arrangement or other contract or agreement
of the Employer providing benefits to the Employee.
f. If any provision of this Agreement or application thereof to anyone or under
any circumstances shall be determined to be invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provisions or
applications of this Agreement which can be given effect without the invalid or
unenforceable provision or application. In addition, if any provision of this
Agreement is held by an arbitration panel or a court of competent jurisdiction
to be invalid, unenforceable, unreasonable, unduly restrictive or overly broad,
the parties intend that such arbitration panel or court modify said provision so
as to render it valid, enforceable, reasonable and not unduly restrictive or
overly broad.
g. The internal laws of the State of Texas will govern the interpretation,
validity, enforcement and effect of this Agreement without regard to the place
of execution or the place for performance thereof.
Section 7. Arbitration.
a. Employer and Employee agree to submit to final and binding arbitration any
and all disputes or disagreements concerning the interpretation or application
of this Agreement. Any such dispute or disagreement shall be resolved by
arbitration in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association (the "AAA Rules").
Arbitration shall take place in Houston, Texas, unless the parties mutually
agree to a different location. Within 30 calendar days of the initiation of
arbitration hereunder, each
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<PAGE> 9
party shall designate an arbitrator. The appointed arbitrators shall then
appoint a third arbitrator. Employee and Employer agree that the decision of the
arbitrators shall be final and binding on both parties. Any court having
jurisdiction may enter a judgment upon the award rendered by the arbitrators. In
the event the arbitration is decided in whole or in part in favor of Employee,
Employer shall reimburse Employee for his reasonable costs and expenses of
arbitration, including reasonable attorneys' fees. Regardless of the outcome of
the arbitration, Employer shall pay all fees and expenses of the arbitrators and
all of Employer's costs of arbitration.
b. Notwithstanding the provisions of Section 7.a., Employer may, if it so
chooses, bring an action in any court of competent jurisdiction for injunctive
relief to enforce Employee's obligations under Sections 3.b., 3.c., or 6.a.
hereof.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first written above.
EMPLOYER:
VERITAS DGC INC.
By:
----------------------------------------
David B. Robson
Chairman
EMPLOYEE:
-------------------------------------------
Richard C. White
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<PAGE> 10
EXHIBIT A
10
<PAGE> 11
March 12, 2000
Richard C. White
19822 Timberwood
Houston, Texas 77094
Dear Richard:
Pursuant to the terms and conditions of the company's 1992 Employee Nonqualified
(the "Plan"), you have been granted a Non-Qualified Stock Option to purchase
______ shares (the "Option") of stock as outlined below.
<TABLE>
<S> <C>
Granted To: Richard C. White
SSN: _____________
Grant Date: March 12, 2000
Options Granted: _____________
Option Price per Share: $____________
Expiration Date: March 12, 2010
Vesting Schedule:
25% on 3/12/2000 (25% vested upon grant)
25% on 3/12/2001
25% on 3/12/2002
25% on 3/12/2003
</TABLE>
By my signature below, I hereby acknowledge receipt of this Option granted on
the date shown above, which has been issued to me under the terms and conditions
of the Plan. I further acknowledge receipt of the copy of the Plan and agree to
conform to all of the terms and conditions of the Option and the Plan.
Signature:________________________________ Date:__________________
Richard C. White
Note: If there are any discrepancies in the name or address shown above, please
make the appropriate corrections on this form.
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<PAGE> 12
VERITAS DGC INC.
FIFTH AMENDED AND RESTATED
1992 EMPLOYEE NONQUALIFIED STOCK OPTION PLAN
(AS AMENDED AND RESTATED SEPTEMBER 30, 1999)
1. PURPOSE.
The purpose of this 1992 Employee Nonqualified Stock Option Plan (the
"Plan") of Veritas DGC Inc. (the "Company") (formerly known as Digicon Inc.) is
to provide officers and other key employees with a continuing proprietary
interest in the Company. The Plan is intended to advance the interests of the
Company by enabling it (i) to increase the interest in the Company's welfare of
those employees who share the primary responsibility for the management, growth,
and protection of the business of the Company, (ii) to furnish an incentive to
such persons to continue their services to the Company, (iii) to provide a means
through which the Company may continue to induce able management and operating
personnel to enter its employ, and (iv) to provide a means through which the
Company may effectively compete with other organizations offering similar
incentive benefits in obtaining and retaining the services of competent
management and operating personnel.
2. STOCK SUBJECT TO THE PLAN.
The Company may grant from time to time options to purchase shares of the
Company's authorized but unissued common stock, par value $.01 per share, or
treasury shares of the common stock. Subject to adjustment as provided in
Section 11 hereof, the aggregate number of shares which may be issued or covered
by options pursuant to the Plan is 3,954,550 shares, as adjusted for the one for
three reverse stock split effective January 17, 1995. Shares of common stock
applicable to options which have expired unexercised or terminated for any
reason may again be subject to an option or options under the Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Compensation Committee of the
Company's board of directors (the "Committee"). The board of directors may, from
time to time, remove members from or add members to the Committee. Vacancies in
the Committee, however caused, shall be filled by the board of directors. No
member of the Committee shall be eligible to receive options under the Plan. The
Committee shall select one of its members chairman and shall hold meetings at
such times and places as it may determine. The Committee may appoint a secretary
and, subject to the provisions of the Plan and to policies determined by the
board of directors, may make such rules and regulations for the conduct of its
business as it shall deem advisable. A majority of the Committee shall
constitute a quorum. All action of the Committee shall be taken by a majority of
its members. Any action may be taken by a written instrument signed by a
majority of the members, and action so taken shall be fully as effective as if
it had been taken by a vote of the majority of the members at a meeting duly
called and held.
(b) Subject to the express terms and conditions of the Plan, the Committee
shall have
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<PAGE> 13
full power to construe or interpret the Plan, to prescribe, amend, and rescind
rules and regulations relating to it and to make all other determinations
necessary or advisable for its administration.
(c) Subject to the provisions of Sections 4 and 5 hereof, the Committee
may, from time to time, determine which employees of the Company or subsidiary
corporations shall be granted options under the Plan, the number of shares
subject to each option, and the time or times at which options shall be granted.
(d) The Committee shall report to the board of directors the names of
employees granted options, and the number of option shares subject to, and the
terms and conditions of, each option; provided, however that no option may be
granted to an otherwise eligible employee if, after giving effect to the
proposed grant, such employee would then hold options covering more than 500,000
shares of common stock under the Plan.
(e) No member of the board of directors or of the Committee shall be liable
for any action or determination made in good faith with respect to the Plan or
any option.
4. ELIGIBILITY.
All full-time salaried employees of the Company and of its majority-owned
subsidiaries shall be eligible to participate in the Plan, and options may be
granted by the Committee to eligible employees designated by the Committee,
either at the Committee's own initiative or upon the recommendation of
management. In determining the employees to whom options shall be granted and
the number of shares to be covered by each option, the Committee may take into
account the nature of the services rendered by the respective employees, their
present and potential contributions to the success of the Company, and such
other factors as the Committee in its discretion shall deem relevant. The
Company shall effect the granting of options under the Plan in accordance with
the determination made by the Committee.
5. PRICE OF OPTIONS.
The option price per share shall be not less than the lesser of (i) fair
market value of the common stock on the date the option is granted or (ii) the
average fair market value for the common stock during the thirty trading days
ending on the trading day next preceding the date the option is granted. Fair
market value on any day shall be deemed to be the last reported sale price of
the common stock on the principal stock exchange on which the Company's common
stock is traded on that date. If no trading occurred on such date, or, if at the
time the common stock shall not be listed for trading, fair market value shall
be deemed to be the mean between the quoted bid and asked prices for the common
stock on such exchange or in the over-the-counter market, as the case may be, on
that date.
6. TERM OF OPTION.
No option shall be exercisable after the expiration of ten years from the
date the option is granted.
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<PAGE> 14
7. EXERCISE OF OPTIONS.
(a) General. Except as provided below, each option may be exercised at such
times and in such amounts as the Committee in its discretion may provide.
(b) Manner of Exercising Options. Shares of common stock purchased under
options shall at the time of purchase be paid for in full. To the extent that
the right to purchase shares has accrued hereunder, options may be exercised
from time to time by written notice to the Company stating the full number of
shares with respect to which the option is being exercised, and the time of
delivery thereof, which shall be at least 15 days after the giving of such
notice unless an earlier date shall have been mutually agreed upon. At such
time, the Company shall, without transfer or issue tax to the optionee (or other
person entitled to exercise the option) deliver to the optionee (or to such
other person) at the principal office of the Company, or such other place as
shall be mutually acceptable, a certificate or certificates for such shares
against prior payment of the option price in full on the date of notice of
exercise for the number of shares to be delivered by certified or official bank
check or the equivalent thereof acceptable to the Company; provided, however,
that the time of such issuance and delivery may be postponed by the Company for
such period as may be required for it with reasonable diligence to comply with
any requirements of law, the listing requirements of the New York Stock Exchange
or any other exchange on which the common stock may then be listed. If the
optionee (or other person entitled to exercise the option) fails to pay for all
or any part of the number of shares specified in such notice or to accept
delivery of such shares upon tender of delivery thereof, the right to exercise
the option with respect to such undelivered shares shall be terminated.
8. NON-ASSIGNABILITY OF OPTION RIGHTS.
No option granted under the Plan shall be assignable or transferable
otherwise than by will or by the laws of descent and distribution. During the
lifetime of an optionee, the option shall be exercisable only by him.
9. TERMINATION OF EMPLOYMENT.
Except as otherwise provided in this paragraph, options shall terminate 90
days following the termination of the optionee's employment with the Company for
any reason, but shall be exercisable following termination only to the extent
that the option had become vested on the termination date. In the event that the
optionee retires from the Company (at or after age 65) the optionee shall have
the right, subject to the provisions of Section 6, to exercise his option at any
time within one year after such termination, to the extent that such option had
become vested on the termination date. If, however, the optionee shall die in
the employment of the Company, then for the lesser of the maximum period during
which such option might have been exercisable or one year after the date of
death, his estate, personal representative, or beneficiary shall have the same
right to exercise the option of such employee as he would have had if he had
survived and remained in the employment of the Company. For purposes of this
Section 9, employment by any majority-owned subsidiary corporation of the
Company shall be deemed employment by the Company.
In the discretion of the Committee, a leave of absence approved in writing
by the board of
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<PAGE> 15
directors of the Company shall not be deemed a termination of employment;
however, no option may be exercised during such leave of absence.
10. CHANGE OF CONTROL.
If, at any time, a person, entity or group (including, in each case, all
other persons, entities or groups controlling, controlled by, or under common
control with or acting in concert or concurrently with, such person, entity or
group) shall hold, purchase or acquire beneficial ownership (including without
limitation power to vote) of 50% or more of the then outstanding shares of the
Company's common stock, then any portion of the Options which have not yet
become exercisable shall thereupon become immediately exercisable.
11. ADJUSTMENT OF OPTIONS ON RECAPITALIZATION OR REORGANIZATION.
The aggregate number of shares of common stock on which options may be
granted to persons participating under the Plan, the aggregate number of shares
of common stock on which options may be granted to any one such person, the
number of shares thereof covered by each outstanding option, and the price per
share thereof in each such option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of common stock of the
Company resulting from the subdivision or combination of shares or other capital
adjustments, or the payment of a stock dividend after the effective date of this
Plan, or other increase or decrease in such shares effected without receipt of
consideration by the Company; provided, however, that no adjustment shall be
made unless the aggregate effect of all such increases and decreases occurring
in any one fiscal year after the effective date of this Plan will increase or
decrease the number of issued shares of common stock of the Company by 5% or
more; and, provided, further, that any options to purchase fractional shares
resulting from any such adjustment shall be eliminated.
Subject to any required action by the stockholders and to Section 10
hereof, if the Company shall be the surviving or resulting corporation in any
merger or consolidation, any option granted hereunder shall pertain to and apply
to the securities to which a holder of the number of shares of common stock
subject to option would have been entitled had such option been exercised
immediately preceding such merger or consolidation; but a dissolution or
liquidation of the Company, or a merger or consolidation in which the Company is
not the surviving or resulting corporation (except for a change in Control as
defined in Section 10 hereof in which case Section 10 shall govern then
outstanding options) shall cause every option outstanding hereunder to
terminate, except that the surviving or resulting corporation may, in its
absolute and uncontrolled discretion, tender an option or options to purchase
its shares on its terms and conditions, both as to the number of shares and
otherwise.
Adjustments under this Section shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive.
12. AGREEMENTS BY OPTIONEE.
Each individual optionee shall agree:
15
<PAGE> 16
(a) If requested by the Company, at the time of exercise of any option, to
execute an agreement stating that he is purchasing the shares subject to option
for investment purposes and not with a view to the resale or distribution
thereof;
(b) To authorize the Company to withhold from his gross pay any tax which
it believes is required to be withheld with respect to any benefit under the
Plan, and to hold as security for the amount to be withheld any property
otherwise distributable to the optionee under the Plan until the amounts
required to be withheld have been so withheld.
13. RIGHTS AS A SHAREHOLDER.
The optionee shall have no rights as a stockholder with respect to any
shares of common stock of the Company held under option until the date of
issuance of the stock certificates to him for such shares.
14. EFFECTIVE DATE.
The Plan was effective as of September 1, 1992, upon approval by the
holders of a majority of the shares of outstanding capital stock present at the
December 17, 1992 annual meeting of the Company's stockholders. The Plan was
amended by the board of directors on August 29, 1997, amended and restated by
the board of directors on March 10, 1997, and December 9, 1998, and amended by
the board of directors on March 9, 1999.
15. AMENDMENTS.
(a) The board of directors may, from time to time, alter, suspend or
terminate the Plan, or alter or amend any and all option agreements granted
thereunder but only for one or more of the following purposes:
(1) To modify the administrative provisions of the Plan or options;
(2) To make any other amendment which does not materially alter the
intent or benefits of the Plan; or
(3) Increase the maximum number of shares as to which options may be
granted under the Plan either to all persons participating in the Plan or
to any one such person.
(b) It is expressly provided that no such action of the board of directors
may, without the approval of the stockholders, alter the provisions of the Plan
or option agreements granted thereunder so as to:
(1) Decrease the option price applicable to any options granted under
the Plan, provided, however, that the provisions of this clause (1) shall
not prevent the granting, to any person holding an option under the Plan,
of additional options under the Plan
16
<PAGE> 17
exercisable at a lower option price; or
(2) Alter any outstanding option agreement to the detriment of the
optionee, without his consent.
16. EMPLOYMENT OBLIGATION.
The granting of any option under this Plan shall not impose upon the
Company any obligation whatsoever to employ or to continue to employ any
optionee, and the right of the Company to terminate the employment of any
officer or other employee shall not be diminished or affected by reason of the
fact that an option has been granted to him under the Plan.
17. VES OPTIONS.
In order to carry out the terms of (i) the Combination Agreement dated May
10, 1996, between the Company and Veritas Energy Services Inc. ("VES") which was
approved by the Company's stockholders at a special meeting held on August 20,
1996 and (ii) the Plan of Arrangement under Part 15 of the Business Corporations
Act (Alberta) relating to the combination of the Company and VES which, pursuant
to an interim order of the Court of Queen's Bench of Alberta date July 18, 1996,
was approved at special meetings of VES optionholders and shareholders held
August 20, 1996, this Plan shall include under its terms each of the options
(the "VES Options") outstanding on the Effective Date (as defined in the
Combination Agreement) (which includes all outstanding options granted under
VES' Stock Option Plan for Directors, Officers and Key Employees (the "VES
Option Plan")) without any further action on the part of any holder thereof
(each a "VES Optionholder"). Effective as of the Effective Time, each VES Option
will be exercisable to purchase that number of shares of the Company's common
stock determined by multiplying the number of VES common shares (the "VES Common
Shares") subject to such VES Option at the Effective Time by the Exchange Ratio
(as defined in the Combination Agreement), at an exercise price per share of
such VES Option immediately prior to the Effective Time, divided by the Exchange
Ratio. On the Effective Date (as defined in the Combination Agreement), such
option price shall be converted into a United States dollar equivalent based on
the noon spot rate of exchange of the Bank of Canada on such date. If the
foregoing calculation results in an exchanged VES Option being exercisable for a
fractional share of the Company's common stock, then the number of shares of the
Company's common stock subject to such option will be rounded down to the
nearest whole number of shares and the total exercise price for the option will
be reduced by the exercise price of the fractional share. The term,
exercisability, vesting schedule and all other terms and conditions of the VES
Options will otherwise be unchanged and shall operate in accordance with their
terms, notwithstanding anything to the contrary contained herein.
18. ENERTEC OPTIONS
In order to carry out the terms of (i) the Combination Agreement dated as
of March 30, 1999, which was approved by the Company's stockholders at a special
meeting held on September 21, 1999, and (ii) the Plan of Arrangement under Part
15 of the Business Corporations Act (Alberta) relating to the combination of the
Company and Enertec Resource Services Inc.,
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<PAGE> 18
which, pursuant to an amended interim order of the Court of Queen's Bench of
Alberta dated August 11, 1999, was approved at special meetings of Enertec
option holders and shareholders held September 22, 1999, this Plan shall include
under its terms each of the options (the "Enertec Options") outstanding on the
Effective Date (as defined in the Combination Agreement)(which includes all
outstanding options granted under Enertec's stock option plans for directors,
officers and employees (collectively, the "Enertec Option Plan")) without any
further action on the part of any holder thereof (each a "Enertec
Optionholder"). Effective as of the Effective Time, each Enertec Option will be
exercisable to purchase that number of shares of the Company's common stock
determined by multiplying the number of Enertec common shares (the "Enertec
Common Shares") subject to such Enertec Option at the Effective Time by the
Exchange Ratio (as defined in the Combination Agreement), at an exercise price
per share of the Company's common stock equal to the exercise price per share of
such Enertec Option immediately prior the Effective Time, divided by the
Exchange Ratio. On the Effective Date (as defined in the Combination Agreement),
such option price shall be converted into a United States dollar equivalent
based on the rate of exchange as stated in The Wall Street Journal next
published after the Effective Time. If the foregoing calculation results in an
exchanged Enertec Option being exercisable for a fractional share of the
Company's common stock, then the number of shares of the Company's common stock
subject to such option will be rounded down to the nearest whole number of
shares and the total exercise price for the option will be reduced by the
exercise price of the fractional share. Each exchanged Enertec Option shall be:
(a) fully vested immediately after the Effective Time; and
(b) for a term commencing at the Effective Time and ending as follows:
(1) for each optionholder who:
(i) is an Enertec director, officer or employee as at the
Effective Time (a "Current Optionholder"); and
(ii) after the Effective Time is employed or retained by the
Company, Enertec or one of their Subsidiaries, on the date
as set forth in subsections 5(b) and (d) of the Enertec
Option Plan;
(2) for each Current Optionholder who at the Effective Time is not
retained as a director, officer or employee of the Company,
Enertec or one of their subsidiaries, on the date that is the
first business day on or immediately after the date that is 90
days after the later of the Effective Date and the date such
director, officer or employee is terminated; or
(3) notwithstanding the provisions of (1) and (2) above, the Enertec
Option Plan or the Plan, for each Current Optionholder with an
Executive Termination Contract (as defined in the Combination
Agreement), on the current expiry date of such option (the sixth
anniversary date).
The term, exerciseability, and all other terms and conditions of the
Enertec Options will otherwise be unchanged and shall operate in accordance with
their terms, notwithstanding anything to the contrary contained herein."
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EXHIBIT B
19
<PAGE> 20
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT (the "AGREEMENT") is made and entered into by
and between Veritas DGC Inc., a Delaware corporation (the "COMPANY") and Richard
C. White, an employee of the Company ("EMPLOYEE") on this 24th day of January,
2000 pursuant to the Company's Restricted Stock Plan (the "PLAN"), which is
incorporated by reference herein in its entirety.
WHEREAS, Employee is employed by Veritas DGC Inc., and in connection with such
employment as part of Employee's compensation, the Company desires to grant to
Employee twenty-five thousand (25,000) shares of the Company's common stock, par
value $.01 per share (the "COMMON STOCK"), subject to the terms and conditions
of this Agreement, with a view to increasing Employee's equity interest in the
Company and
WHEREAS, Employee desires to have the opportunity to hold shares of Common Stock
subject to the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms shall
have the meanings indicated:
a. "Forfeiture Restrictions" shall mean any prohibitions and
restrictions set forth herein with respect to the sale or other
disposition of shares of Common Stock issued to Employee
hereunder and the obligation to forfeit and surrender such shares
to the Company.
b. "Restricted Shares" shall mean shares of Common Stock that are
subject to the Forfeiture Restrictions under this Agreement.
Capitalized terms not otherwise defined in this Agreement shall
have the meanings given to such terms in the Plan.
2. GRANT OF RESTRICTED SHARES. On the date of this Agreement, the Company
shall cause to be issued in Employee's name twenty-five thousand
(25,000) shares of Common Stock as Restricted Shares. A certificate
evidencing the Restricted Shares shall be issued by Company in
Employee's name, pursuant to which Employee shall have, except for the
Forfeiture Restrictions, all of the rights of a stockholder of Company
with respect to such Restricted Shares, including, without limitation,
the right to receive any dividends or distributions allocable thereto.
The certificate shall be delivered upon issuance to the Secretary of
Company or to such other depository as may be designated by the
Committee under the Plan as a depository for safekeeping until the
forfeiture of such Restricted Shares occurs or the Forfeiture
Restrictions lapse. On the date of this Agreement, Employee shall
deliver to the Company all stock powers, endorsed in blank, relating
to the Restricted Shares. Upon the lapse of the Forfeiture
Restrictions
20
<PAGE> 21
without forfeiture, the Company shall cause a new certificate or
certificates to be issued without legend in the name of Employee in
exchange for the certificate evidencing the Restricted Shares.
3. TRANSFER RESTRICTIONS. The Restricted Shares may not be sold,
assigned, pledged, exchanged, hypothecated or otherwise transferred,
encumbered or disposed of to the extent then subject to the Forfeiture
Restrictions. Further, the Restricted Shares may not be sold or
otherwise disposed of in any manner which would constitute a violation
of any applicable federal or state securities laws. Employee also
agrees (i) that Company may refuse to register the transfer of the
Restricted Shares on the stock transfer records of Company if such
proposed transfer would in the opinion of counsel satisfactory to the
Company constitute a violation of any applicable securities law and
(ii) that the Company may give related instructions to its transfer
agent, if any, to stop registration of the transfer of the Restricted
Shares. The Forfeiture Restrictions shall be binding upon and
enforceable against any transferee of the Restricted Shares.
Certificates representing the Restricted Shares shall be legended as
follows to reflect the Forfeiture Restrictions and to assure
compliance with any applicable federal or state securities laws:
THE TRANSFERABILITY OF THIS CERTIFICATE AND THE
SHARES REPRESENTED HEREBY ARE SUBJECT TO THE
RESTRICTIONS, TERMS AND CONDITIONS (INCLUDING
FORFEITURE AND RESTRICTIONS AGAINST TRANSFER)
CONTAINED IN THE VERITAS DGC INC. RESTRICTED STOCK
PLAN AND A RESTRICTED STOCK AGREEMENT DATED
JANUARY 24, 2000 BETWEEN THE REGISTERED OWNER OF
SUCH SHARES AND VERITAS DGC INC. RESTRICTIONS ON
THE RIGHT TO OWN OR TRANSFER THE SHARES OF STOCK
REPRESENTED BY THIS CERTIFICATE HAVE BEEN IMPOSED
PURSUANT TO SAID RESTRICTED STOCK AGREEMENT. A
COPY OF THE RESTRICTED STOCK AGREEMENT IS ON FILE
AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE
FURNISHED WITHOUT CHARGE TO THE HOLDER OF THIS
CERTIFICATE UPON RECEIPT BY THE COMPANY AT ITS
PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE
OF A WRITTEN REQUEST FROM THE HOLDER REQUESTING
SUCH COPY.
4. VESTING. The Forfeiture Restrictions shall lapse as to the Restricted
Shares in accordance with the following schedule provided that
Employee has been employed, as defined in the plan, from the date of
this Agreement through the lapse date:
<TABLE>
<CAPTION>
NUMBER OF
RESTRICTED SHARES AS TO
WHICH FORFEITURE
LAPSE DATE RESTRICTIONS LAPSE
---------- -------------------------
<S> <C>
January 24, 2001 8,333
January 24, 2002 8,333
January 24, 2003 8,334
</TABLE>
Notwithstanding the foregoing provisions of this Section 4, in the
event Employee's employment with Company is terminated prior to the
lapse dates (i) by Company without Cause, as defined in the employment
agreement dated January 24, 2000 between Employee and the Company (the
"Employee Agreement"), (ii) due to the death or Disability, as defined
in the Employment Agreement, of Employee, or (iii) due to a Change in
Control of the Company, as defined in Section 3.7 of the Plan, then,
in any such event, all remaining Forfeiture Restrictions shall
immediately lapse and the Restricted Shares shall then be transferable
free of restrictions.
21
<PAGE> 22
5. CAPITAL ADJUSTMENTS AND REORGANIZATIONS. The existence of the
Restricted Shares shall not affect in any way the right or power of
Company to make or authorize any adjustment, recapitalization,
reorganization or other change in Company's capital structure or its
business, any merger or consolidation of Company, any issue of debt or
equity securities, the dissolution or liquidation of Company, or any
sale, lease, exchange or other disposition of all or any part of its
assets or business, or any other corporate act or proceeding. The
prohibitions of this Section 5 shall not apply to the transfer of
Restricted Shares pursuant to a plan of reorganization of Company, but
the stock, securities or other property received in exchange therefor
shall also become subject to the Forfeiture Restrictions and
provisions governing the lapsing of such Forfeiture Restrictions
applicable to the original Restricted Shares for all purposes of this
Agreement and the certificates representing such stock, securities or
other property shall be legended to show such restrictions.
6. TAX WITHHOLDING. To the extent that the receipt of the Restricted
Shares or the lapse of any Forfeiture Restrictions results in
compensation income to Employee for federal, state or local income tax
purposes, Employee shall deliver to Company at the time of such
receipt or lapse, as the case may be, such amount of money as Company
may require to meet its obligation under applicable tax laws or
regulations, and, if such Employee fails to do so, Company is
authorized to withhold from any cash or stock remuneration then or
thereafter payable to Employee any tax required to be withheld by
reason of such resulting compensation income.
7. CONSIDERATION PAID FOR SHARES. As consideration for the issuance of
the Restricted Shares, Employee shall pay Company the par value of
such Restricted Shares.
8. EMPLOYMENT RELATIONSHIP. For purposes of this Agreement, Employee
shall be considered to be in the employment of Company as long as
Employee remains in Employment (as defined in the Plan). The Committee
shall determine any questions as to whether and when there has been a
termination of such Employment, and the cause of such termination,
under the Plan and its determination shall be final. In each case,
however, the cause of termination shall be treated the same under the
Plan and under the Employment Agreement.
9. CERTAIN TRANSFERS VOID. Any purported transfer of shares of Restricted
Shares in breach of any provision of this Agreement shall be void and
ineffectual, and shall not operate to transfer any interest or title
in the purported transferee.
10. NO FRACTIONAL SHARES. All provisions of this Agreement concern whole
shares of Common Stock. If the application of any provision hereunder
would yield a fractional share, such fractional share shall be rounded
down to the next whole share if it is less than 0.5 and rounded up to
the next whole share if it is 0.5 or more.
11. NOT AN EMPLOYMENT AGREEMENT. This Agreement is not an employment
agreement, and no provision of this Agreement shall be construed or
interpreted to create an employment relationship between Employee and
the Company, or otherwise effect any at-will employment relationship
between Employee and the Company or guarantee the right to Employment
for any specified term.
12. NOTICES. Any notice, instruction, authorization, request or demand
required hereunder shall be in writing, and shall be delivered either
by personal delivery, by telegram, telex, telecopy or similar
22
<PAGE> 23
facsimile means, by certified or registered mail, return receipt
requested, or by courier or delivery service, addressed to the Company
at the address indicated beneath its signature on the execution page
of this Agreement, and to Employee at Employee's address indicated on
the Company's stock records, or at such other address and number as a
party shall have previously designated by written notice given to the
other party in the manner hereinabove set forth. Notices shall be
deemed given when received.
13. AMENDMENT AND WAIVER. This Agreement may be amended, modified or
superseded only by written instrument executed by the Company and
Employee. Only a written instrument executed and delivered by the
party waiving compliance hereof shall make any waiver of the terms or
conditions. Any waiver granted by the Company shall be effective only
if executed and delivered by a duly authorized executive officer of
the Company other than Employee. The failure of any party at any time
or times to require performance of any provisions hereof shall in no
manner effect the right to enforce the same. No waiver by any party of
any term or condition, or the breach of any term or condition
contained in this Agreement, in one or more instances, shall be
construed as a continuing waiver of any such condition or breach, a
waiver of any other condition, or the breach of any other term or
condition.
14. GOVERNING LAW AND SEVERABILITY. This Agreement shall be governed by
the laws of the State of Texas without regard to its conflicts of law
provisions. The invalidity of any provision of this Agreement shall
not affect any other provision of this Agreement, which shall remain
in full force and effect.
15. SUCCESSORS AND ASSIGNS. Subject to the limitations which this
Agreement imposes upon transferability of shares of Common Stock, this
Agreement shall bind, be enforceable by and inure to the benefit of
the Company and its successors and assigns, and to Employee, his
permitted assigns and upon his death, his estate and beneficiaries
thereof (whether by will or the laws of descent and distribution),
executors, administrators, agents, legal and personal representatives.
16. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original for all purposes but
all of which taken together shall constitute but one and the same
instrument.
23
<PAGE> 24
IN WITNESS WHEREOF, Company has caused this Agreement to be duly executed by an
officer thereunto duly authorized, and the Employee has executed this Agreement,
all as of the date first above written.
COMPANY:
VERITAS DGC INC.
By:
-------------------------------------
THOMAS SCOTT SMITH
Corporate Vice President of Human Resources
3701 Kirby Drive, Suite 112
Houston, Texas 77098-3982
EMPLOYEE:
---------------------------------------------
Richard C. White
Address:
19822 Timberwind
Houston, Texas 77094
24
<PAGE> 25
IRREVOCABLE STOCK POWER
KNOW ALL MEN BY THESE PRESENTS, THAT the undersigned, FOR VALUE RECEIVED, has
bargained, sold, assigned and transferred and by these presents does bargain,
sell, assign and transfer unto Veritas DGC Inc., a Delaware Corporation (the
"Company"), twenty-five thousand (25,000) shares of common stock, $.01 par
value, of the Company, Standing in the undersigned's name on the books of the
Company represented by Certificate No. _____; AND subject to and in accordance
with The Restricted Stock Agreement dated January 24, 2000 between the
undersigned and the Company, the undersigned does hereby constitute and appoint
_____________________________________ its true and lawful attorney, IRREVOCABLY,
for the undersigned and in its name and stead, to sell assign, transfer,
hypothecate, pledge and make over all or any part of the said stock and for that
purpose to make and execute all necessary acts of assignment and transfer
thereof, and to substitute one or more persons with like full power, hereby
ratifying and confirming all that said Attorney or his substitutes shall
lawfully do by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set its hand on this 24th day
of January, 2000.
----------------------------------------
Richard C. White
25
<PAGE> 26
EXHIBIT C
26
<PAGE> 27
INDEMNITY AGREEMENT
THIS AGREEMENT made this 24th day of January, 2000, between Veritas DGC
Inc., a Delaware corporation ("Company"), and Richard C. White, ("Indemnitee")
WHEREAS, the Company and Indemnitee desire that Indemnitee continue to
serve as a director and/or executive officer of the Company; and
WHEREAS, the Company desires and intends hereby to provide
indemnification (including advancement of expenses) against any and all
liabilities asserted against Indemnitee to the fullest extent permitted by the
General Corporation Law of the State of Delaware,
NOW, THEREFORE,
W I T N E S S E T H:
THAT for and in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
1. Continued Service. Indemnitee will continue to serve, at the will of
the Company and under separate contract, if such exists, as a director and/or
executive officer so long as he is duly elected and qualified in accordance with
the Bylaws of the Company or until he tenders his resignation.
2. Indemnification. The Company shall indemnify Indemnitee as follows:
(a) The Company shall indemnify Indemnitee when he 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
(other than an action by or in the right of the Company) by reason of the fact
that he is or was a director, executive officer, employee or
27
<PAGE> 28
agent of the Company, or is or was serving at the request of the Company as a
director, executive officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, executive 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 settlements actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the Company, and, with respect to any criminal action or proceeding had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that Indemnitee failed to act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
(b) The Company shall indemnify Indemnitee when he is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Company to procure a judgment in its favor by
reason of the fact that he is or was a director, executive officer, employee or
agent of the Company, or is or was serving at the request of the Company as a
director, executive officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Company and except that no indemnification shall be made
in
28
<PAGE> 29
respect of any claim, issue or matter as to which Indemnitee shall have been
adjudged to be liable to the Company unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, Indemnitee is fairly and reasonably
entitled to indemnification for such expenses which the Court of Chancery or
such other court shall deem proper.
(c) Any indemnification under paragraphs (a) and (b) of this Section
2 (unless ordered by a court) shall be made by the Company only as authorized in
the specific case upon a determination (in accordance with Section 3 hereof)
that indemnification of Indemnitee is proper in the circumstances because he has
met the applicable standard of conduct set forth in paragraphs (a) and (b) of
this Section 2. Such determination shall be made (1) by a majority vote of the
board of directors who were not parties to such action, suit or proceeding, even
though less than a quorum, or (2) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion, or (3)
by the stockholders.
(d) Expenses (including attorneys' fees) incurred by Indemnitee in
defending a civil, criminal, administrative or investigative action, suit or
proceeding shall be paid by the Company in advance of the final disposition of
such action, suit or proceeding as authorized (in accordance with Section 4
hereof) by the board of directors in the specific case upon receipt of an
undertaking by or on behalf of Indemnitee to repay such amount if it is
ultimately determined that he is not entitled to be indemnified by the Company
under this Agreement or otherwise.
(e) The indemnification and advancement of expenses provided by this
Agreement shall not be deemed exclusive of any other rights to which Indemnitee
may be
29
<PAGE> 30
entitled under any statute, bylaw, insurance policy, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue after Indemnitee has ceased to be a director,
executive officer, employee or agent and shall inure to the benefit of his
heirs, executors and administrators.
3. Determination of Right to Indemnification. For purposes of making
the determination in a specific case under paragraph (c) of Section 2 hereof
whether to make indemnification, the board of directors, independent legal
counsel, or stockholders, as the case may be, shall make such determination in
accordance with the following procedure:
(a) Indemnitee may submit to the board of directors a sworn
statement of request for indemnification substantially in the form of Exhibit 1
attached hereto and made a part hereof ("Indemnification Statement") averring
that he has met the applicable standard of conduct set forth in paragraphs (a)
and (b) of Section 2 hereof;
(b) Submission of the Indemnification Statement to the board of
directors shall create a rebuttable presumption that Indemnitee is entitled to
indemnification under this Agreement, and the board of directors, independent
legal counsel, or stockholders, as the case may be, shall within 60 days after
submission of the Indemnification Statement specifically determine that
Indemnitee is so entitled, unless it or they shall possess sufficient evidence
to rebut the presumption that Indemnitee has met the applicable standard of
conduct set forth in paragraph (a) or (b) of Section 2 hereof, which evidence
shall be disclosed to Indemnitee with particularity in a sworn written statement
signed by all persons who participated in the determination and voted to deny
indemnification.
30
<PAGE> 31
4. Authorization of Advancement of Expenses. For purpose of determining
whether to authorize advancement of expenses in a specific case pursuant to
paragraph (d) of Section 2 hereof, the board of directors shall make such
determination in accordance with the following procedure:
(a) Indemnitee may submit to the board of directors a sworn
statement of request for advancement of expenses substantially in the form of
Exhibit 2 attached hereto and made a part hereof ("Undertaking"), averring that
(i) he has reasonably incurred or will reasonably incur actual expenses in
defending a civil or criminal action, suit or proceedings, and (ii) he
undertakes to repay such amount if it is ultimately determined that he is not
entitled to be indemnified by the Company under this Agreement or otherwise;
(b) Upon receipt of the Undertaking the board of directors shall
within 14 days authorize immediate payment of the expenses stated in the
Undertaking.
5. Merger, Consolidation or Change in Control. In the event that the
Company shall be a constituent corporation in a consolidation or merger, whether
the Company is the resulting or surviving corporation or is absorbed, or if
there is a change in control of the Company as defined in Section 6 hereof,
Indemnitee shall stand in the same position under this Agreement with respect to
the resulting, surviving or changed corporation as he would have with respect to
the Company if its separate existence had continued or if there had been no
change in the control of the Company.
6. Certain Definitions. For purposes of this Agreement, the following
definitions apply herein:
31
<PAGE> 32
"other enterprises" shall include employee benefit plans, and civic,
non-profit, or charitable organizations, whether or not incorporated;
"fines" shall include any excise taxes assessed on Indemnitee with
respect to any employee benefit plan;
"serving at the request of the Company" shall include any service at
the request or with the express or implied authorization of the Company, as a
director, executive officer, employee or agent of the Company which imposes
duties on, or involves services by, Indemnitee with respect to a corporation or
"other enterprises," its participants or beneficiaries; and if Indemnitee acted
in good faith and in a manner he reasonably believed to be in the interest of
the participants and beneficiaries of such "other enterprises," he shall be
deemed to have acted in a manner "not opposed to the best interests of the
Company" as referred to in this Agreement; and
"change of control" shall include any change in the ownership of a
majority of the capital stock of the Company or in the composition of a majority
of the members of the board of directors of the Company.
7. Attorneys' Fees. In the event that Indemnitee institutes any legal
action to enforce his rights under, or to recover damages for breach of this
Agreement, Indemnitee, if he prevails in whole or in part, shall be entitled to
recover from the Company all attorneys' fees and disbursements incurred by him.
8. Severability. If any provision of this Agreement or the application
of any provision hereof to any person or circumstances is held invalid, the
remainder of this Agreement and the application of such provision to other
persons or circumstances shall not be affected.
32
<PAGE> 33
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to its conflict
of laws rules.
10. Modification; Survival. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof. This Agreement
may be modified only by an instrument in writing signed by both parties hereto.
The provisions of this Agreement shall survive the termination of Indemnitee's
service as a director and/or executive officer of the Company.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement and the Company has set its seal as of the date first above written.
Veritas DGC Inc.
By:
------------------------
David B. Robson
Chairman
(Corporate Seal)
33
<PAGE> 34
EXHIBIT 1
STATEMENT OF REQUEST FOR INDEMNIFICATION
STATE OF TEXAS )
)
COUNTY OF HARRIS )
I, _________________, being first duly sworn do depose and say as
follows:
1. This Statement is submitted pursuant to the Indemnity Agreement
dated ________________, between Veritas DGC Inc., a Delaware corporation
("Company"), and the undersigned.
2. I am requesting indemnification against expenses (including
attorneys' fees) and, with respect to any action not by or in the right of the
Company, judgments, fines and amounts paid in settlement, all of which have been
actually and reasonably incurred by me in connection with a certain action, suit
or proceeding to which I am a party or am threatened to be made a party by
reason of the fact that I am or was a director and/or executive officer of the
Company.
3. With respect to all matters related to any such action, suit or
proceeding, I acted in good faith and in a manner I reasonably believed to be or
not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, I had no reason to believe that my conduct was
unlawful.
4. I am requesting indemnification against the following liabilities
________________________________________________________________________________
-----------------------------------
Subscribed and sworn to before me this ___ day of _____________, 20__.
-------------------------------------------
Notary Public in and for the State of Texas
My Commission expires:
---------------------
34
<PAGE> 35
EXHIBIT 2
STATEMENT OF UNDERTAKING
STATE OF TEXAS )
)
COUNTY OF HARRIS )
I, _______________, being first duly sworn do depose and say as
follows:
1. This Statement is submitted pursuant to the Indemnity Agreement
dated ________________, between Veritas DGC Inc., a Delaware corporation
("Company"), and the undersigned.
2. I am requesting advancement of certain actual expenses which I have
reasonably incurred or will reasonably incur in defending a civil, criminal,
administrative or investigative action, suit or proceeding.
3. I hereby undertake to repay this advancement of expenses if it is
ultimately determined that I am not entitled to be indemnified by the Company.
4. The expenses for which advancement is requested are as follows:
___________________________________________________________________________.
-----------------------------------
Subscribed and sworn to before me this ___ day of _____________, 20__.
-------------------------------------------
Notary Public in and for the State of Texas
My Commission expires:
---------------------
35
<PAGE> 36
EXHIBIT D
36
<PAGE> 37
AGREEMENT AND RELEASE OF ALL CLAIMS
This Agreement, entered into as of the date written by Employee's
signature below, is by and between Veritas DGC Inc. ("Veritas"), a Delaware
corporation, and Richard C. White ("Employee"). (As used in this Agreement, the
term "Veritas" includes Veritas DGC Inc. and its subsidiaries).
Veritas and Employee agree as follows:
Section 1. On the Effective Date, as defined below, Veritas shall pay
Employee the following amounts:
o a lump sum equal to __________ (This amount represents two
years of Employee's annual base salary);
o a lump sum equal to ___________ [This amount represents the
incentive compensation due Employee, if any, in accordance
with Section 5.c.ii of the Employment Agreement between
Veritas and Employee effective January 24, 2000 (the
"Employment Agreement")] ;
o Employee's regular base salary prorated through the Effective
Date;
o Employee's vacation pay accrued as of the Effective Date; and
o any expense reimbursement owed to Employee under Section 2.g.
of the Employment Agreement.
All of the above amounts shall be REDUCED by applicable taxes and withholding.
Section 2. Employee's termination from employment shall be effective at
the close of business on the Effective Date. The EFFECTIVE DATE as used in this
Agreement means _________.
37
<PAGE> 38
Section 3. Employee agrees to release Veritas from certain claims he
has or may have against Veritas as of the date he signs this Agreement. The
claims he is releasing are the following:
o any claims under any bonus or incentive plans except as
otherwise provided in Section 1 of this Agreement;
o any claims arising under the Age Discrimination in Employment
Act of 1967 as amended (29 U.S.C. Section 621, et seq.) (the
Age Discrimination in Employment Act of 1967 prohibits, in
general, discrimination against employees on the basis of
age);
o any claims arising under Title VII of the Civil Rights Act of
1964 as amended (42 U.S.C. Section 2000e, et seq.), or the
Texas Commission on Human Rights Act (Texas Labor
Codess.21.001, et seq.) (both of these statutes, in general,
prohibit discrimination in employment on the basis of race,
religion, national origin or gender);
o any claims arising under the Americans with Disabilities Act
of 1990, as amended (42 U.S.C. Section 12101, et seq.) (the
Americans with Disabilities Act of 1990 prohibits, in general,
discrimination in employment on the basis of an employee's or
applicant's disability);
o any claims arising under Texas Labor Code Sections 451.001, et
seq. for retaliation or discrimination in connection with a
claim for workers' compensation benefits;
38
<PAGE> 39
o any claims for breach of contract by Veritas under the
Employment Agreement, wrongful discharge or constructive
discharge; and
o any claims under any other statutes prohibiting discrimination
on the basis of age, sex, national origin, citizenship,
religion, veteran status, or disability arising prior to the
Effective Date.
The release contained in this Section 3 SHALL NOT affect any of the following:
o Employee's rights or benefits under Veritas' 401(k) retirement
savings plan, Veritas' Employee Stock Purchase Plan, or any
pension or retirement plan in which Employee is a participant
on the Effective Date (Employee's rights and benefits shall be
determined by the applicable plan documents);
o Employee's right to elect continued health and/or dental
benefits under the Consolidated Omnibus Budget Reconciliation
Act of 1985 ("COBRA");
o Employee's rights to exercise any options to purchase Veritas
DGC Inc. common stock in accordance with the terms of the
applicable stock option grant;
o Employee's rights under the Restricted Stock Agreement (as
defined in the Employment Agreement) or any subsequent
agreement granting Employee restricted stock;
o Any other benefit to which Employee may be entitled under any
other health or benefit plan (in accordance with the
applicable plan documents);
o Employee's rights under any workers' compensation statue
(except as otherwise specifically provided in this Section 3);
under the Jones Act, 46 U.S.C. Appx.
39
<PAGE> 40
Section 688, as amended; general maritime law or similar laws;
and any other right Employee may have with respect to personal
injury;
o Employee's rights with respect to any claims for tortious
action or inaction of any sort, including but not limited to,
negligence, fraud, libel or slander, except as specifically
provided in this Section 3; or
o Any rights to indemnity to which Employee, as a former
director, officer or employee of Veritas, may be entitled
under the Certificate of Incorporation or By-laws of Employer,
any policy of officers' and directors' liability insurance or
any contract with Veritas.
Section 4. Veritas and Employee agree that this Agreement is a binding
contract. The purpose of the Agreement is to compromise certain doubtful or
disputed claims, avoid litigation, and buy peace with respect to those claims.
Employee agrees that although Veritas is making payment to Employee in exchange
for a release of claims, Veritas does not admit any wrongdoing of any kind.
Section 5. Employee agrees to assist Veritas in defending any legal
proceedings against Veritas arising out of matters which occurred prior to the
Effective Date and Veritas agrees to reimburse Employee for his time and expense
or costs he may incur in that regard.
Section 6. Veritas agrees to release Employee from claims it has
against Employee as of the date of this Agreement in connection with his
Employment Agreement (other than any claims arising under Sections 3 and 6(a) of
such Agreement), or any other claim it may have against Employee in connection
with his employment by Veritas or his position with Veritas whether as a
director, officer, employee or agent.
40
<PAGE> 41
Section 7. This Agreement has been delivered to Employee on
_____________. Employee shall have twenty-one (21) calendar days from
___________ or until the close of business on ___________ to decide whether to
sign the Agreement and be bound by its terms. In the event Employee has not
signed and returned this Agreement to Veritas on or before that date, this
Agreement shall become null and void. In addition, the parties agree that even
after signing this Agreement, Employee shall have the right to revoke or cancel
it within seven (7) calendar days after signing it. In the event Employee
revokes his acceptance of this Agreement, this Agreement shall become null and
void.
Section 8. Employee acknowledges that he has read this Agreement. He
understands that, except for the exceptions enumerated in Section 3 above, this
Agreement will have the effect of waiving any contractual claim under his
Employment Agreement he may pursue against Veritas. This waiver also includes
claims for wrongful discharge, breach of the Employment Agreement, and statutory
claims (as set forth in Section 3 hereof) for discrimination on the basis of
age, race, sex, national origin, citizenship, religion, veteran status, or
disability or any other similar claims arising prior to the Effective Date.
Section 9. Employee acknowledges that he makes this Release knowingly
and voluntarily.
Section 10. This Agreement constitutes the entire understanding between
Veritas and Employee with respect to the subject matter hereof.
Section 11. This Agreement shall benefit and be binding upon Veritas
and its successors and assigns and Employee and his successors and legal
representatives. Employee shall not assign or attempt to assign any of his
rights under this Agreement.
Section 12. If a court determines that any provision of this Agreement
is invalid, the
41
<PAGE> 42
other provisions shall remain in effect.
Section 13. This Agreement shall be governed by, construed under, and
enforced in accordance with the laws of the State of Texas, not including,
however, its conflicts of law rules that might otherwise refer to the law of
another forum or jurisdiction.
THIS AGREEMENT IS SUBJECT TO ARBITRATION IN
ACCORDANCE WITH THE FOLLOWING SECTION
Section 14. Veritas and Employee agree to submit to final and binding
arbitration any and all disputes or disagreements concerning the interpretation
or application of this Agreement. Any such dispute or disagreement shall be
resolved by arbitration in accordance with the National Rules for the Resolution
of Employment Disputes of the American Arbitration Association (the "AAA
Rules"). Arbitration shall take place in Houston, Texas, unless the parties
mutually agree to a different location. Within 30 calendar days of the
initiation of arbitration hereunder, each party shall designate an arbitrator.
The appointed arbitrators shall then appoint a third arbitrator. Employee and
Veritas agree that the decision of the arbitrators shall be final and binding on
both parties. Any court having jurisdiction may enter a judgment upon the award
rendered by the arbitrators. In the event the arbitration is decided in whole or
in part in favor of Employee, Veritas shall reimburse Employee for his
reasonable costs and expenses of arbitration, including reasonable attorneys'
fees. Regardless of the outcome of the arbitration, Veritas shall pay all fees
and expenses of the arbitrators and all of Veritas' costs of arbitration.
42
<PAGE> 43
[THIS SPACE INTENTIONALLY LEFT BLANK]
43
<PAGE> 44
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the Effective Date.
VERITAS:
VERITAS DGC INC.
and subsidiaries
By:
----------------------------
NOTICE TO EMPLOYEE
BY SIGNING THIS DOCUMENT, YOU MAY BE GIVING UP IMPORTANT LEGAL RIGHTS. YOU ARE
ADVISED TO CONSULT WITH AN ATTORNEY PRIOR TO SIGNING AND RETURNING THIS DOCUMENT
TO VERITAS.
EMPLOYEE:
-------------------------------
Richard C. White
Date:
--------------------------
44
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