Document:

Exhibit 10.1

 

VERITAS DGC INC.

KEY CONTRIBUTOR INCENTIVE PLAN

(As amended and restated March 3, 2003)

 

A.            Plan
Objectives

 

The overall objective of
the Key Contributor Incentive Plan (herein after referred to as the “Plan”) is
to provide short-term rewards paid as incentives to designated Key
Contributors.  Key Contributors are those
individuals who have the responsibility of leading a diverse or complex team or
function.  The work produced from that
team or function significantly impacts the operations of the Company up to and
including bottom line results.  Within
the overall objectives, the following are the specific goals of the Plan:

 

•                  Reward
Key Contributors for achieving Veritas DGC Inc.’s business strategies in the
area of net income before taxes (NIBT)

 

•                  Focus
participants on key business goals that they can directly impact

 

•                  Create
payout opportunities that balance the appropriate return to the Company with
reward to the participants

 

B.            Eligibility

 

Eligibility for
participation in the Plan is recommended by managers and approved by the
respective division executive.  Plan
participants must meet the following eligibility criteria:

 

•                  A
minimum annual base salary of $50,000

 

•                  Job
responsibilities that have a major impact on the accomplishment of Veritas DGC
Inc.’s business strategies

 

•                  Regular
full-time employment with Veritas DGC Inc.

 

Variations from the
guidelines may be made for individuals as recommended by Corporate or Division
executives and approved by the CEO.

 

C.            Plan
Year

 

The Plan year for the Key Contributor Incentive Plan
coincides with the Veritas DGC Inc. fiscal year:  August 1 through July 31.

 

Annex 1

 

 

D.  Performance Measures and Payout Targets

Performance
Measures and Weights

 

Seventy-five percent
(75%) of the payment will be based upon attainment of net income before taxes
(hereinafter referred to as “NIBT”). NIBT is based on the profit plan for VDGC
Consolidated and for each division as approved by Veritas DGC Inc.’s Board of
Directors.

 

Twenty-five percent (25%)
of the award will be based on equally weighted strategic individual objectives
as determined by the participant’s immediate supervisor.  These individual objectives are to be in
addition to the participant’s day-to-day responsibilities and shall present a
challenge to the participant.

 

The following incentive
weights apply for both Corporate and Division participants:

 

	
   

  	
   

  	
  VDGC

  Consolidated

  NIBT

  	
   

  	
  Division

  NIBT

  	
   

  	
  Individual

  Objectives

  	
   

  
	
  Corporate

  	
   

  	
  75

  	
  %

  	
   

  	
   

  	
  25

  	
  %

  
	
  Division

  	
   

  	
  25

  	
  %

  	
  50

  	
  %

  	
  25

  	
  %

  

 

The impact level of the
participant’s position determines incentive target payout percentage as
follows:

 

Bonus Levels Prior to FY
2004:

 

	
  Base Salary (in thousands)

  	
   

  	
  Target

  Payout*

  	
   

  
	
  CEO

  	
   

  	
  50

  	
  %

  
	
  $150+ (Corporate leadership and Division Sr.
  Executive Mgt. Only)

  	
   

  	
  40

  	
  %

  
	
  $100+

  	
   

  	
  30

  	
  %

  
	
  $75-$99

  	
   

  	
  20

  	
  %

  
	
  $50-$74

  	
   

  	
  10

  	
  %

  

 

2

 

Bonus Levels as of FY
2004:

 

	
  Base Salary/Position

  	
   

  	
  Target

  Payout*

  	
   

  
	
  CEO

  	
   

  	
  60

  	
  %

  
	
  Executive Officers

  	
   

  	
  50

  	
  %

  
	
  $150+ (Other Corporate Officers & Division
  Presidents Only)

  	
   

  	
  45

  	
  %

  
	
  $100+

  	
   

  	
  35

  	
  %

  
	
  $75-$99

  	
   

  	
  25

  	
  %

  
	
  $50-$74

  	
   

  	
  15

  	
  %

  

 

$ reported in thousands

 

*Target
payout is the percentage of base salary that the Plan intends to pay to the
participant assuming that the profit and strategic individual objectives are
met for the corporation and his/her division.

 

E.              Award
Calculation

 

The actual incentive
award calculation will be comprised of the following components:

 

•                  Financial
Results:  Incentive payouts will
increase or decrease from target as dictated by NIBT.  Maximum payout is two times (2X) target.

 

•                  Individual
Objectives:  This portion of the
incentive award will be increased or decreased from target as determined by
financial results.

 

NOTE:  If the annual NIBT plan as submitted to and
approved by the Board (either Veritas DGC Inc. or a division plan) generates an
NIBT plan of $0 or less, the following then applies:

 

a)                          If
planned negative NIBT is attained, a maximum of target incentive will be
earned.

 

Employment
Status

 

Participants must be
actively employed on the dates that the award payments are made; otherwise the
award is forfeited. In addition, if the participant leaves before the award
payment date, all moneys previously paid will be retained by the participant;
however, no additional bonuses will be calculated or paid.  The CEO must approve any exceptions to this
rule.

 

F.              Method
of Payment

Incentive awards will be
paid in cash unless otherwise determined by the Veritas DGC Inc. Board of
Directors or the Compensation Committee of the Veritas DGC Inc. Board of
Directors.

 

3

 

Stock
in Lieu of Incentive Award

 

Prior to payment of
either the mid-year or the year-end incentive, the Veritas DGC Inc. Board of
Directors or the Compensation Committee of the Veritas DGC Inc. Board of
Directors may determine that some or all participants in the Plan shall receive
all or a portion of their mid-year or year-end incentive award in shares of
Veritas DGC Inc. Common Stock.  In those
periods when incentive payments would otherwise be made in cash, the Board of
Directors or the Compensation Committee may allow participants the opportunity
to receive all or part of their mid-year or year-end incentive in shares of
Veritas DGC Inc. Common Stock. 
Participants who receive all or a specified portion of the mid-year or
year-end incentive award in Common Stock rather than cash will receive their
shares on a date following the mid-year or year-end incentive payment.  Numbers of shares will be calculated as
follows:

 

	
   

  	
  Portion of incentive used to purchase stock ($)

  	
   

  	
  =

  	
  # of shares

  
	
   

  	
  Fair market value per share ($)

  	
   

  	
   

  	
   

  

 

For the purposes of this
Plan, “fair market value” shall be the closing price for the Common Stock on
the New York Stock Exchange on a date fixed by the Board of Directors or the
Compensation Committee.

 

G.            Award
Frequency

Incentive awards will be
made semi-annually.  The mid-year award
will be based on the achievement of the applicable NIBT plan.  The Board of Directors or the Compensation
Committee shall have the discretion to adjust some or all of the mid-year
incentive awards based on projected performance through the end of the fiscal
year.  The award at the end of the fiscal
year will be based on both achievement of applicable NIBT plan and the
attainment of individual objectives.

 

4

 

H.            Plan
Administration

The Plan is administered
by the CEO and Corporate Vice President of Human Resources in accordance with
the Key Contributor Incentive Plan Administration Document.

 

Any exceptions to the
Plan must be approved by the Board of Directors and/or the Compensation
Committee of the Board of Directors of Veritas DGC Inc.  At any time, the Board of Directors (and/or
the Compensation Committee of the Board of Directors) may, in its discretion,
adjust, amend or terminate the plan.

 

This Plan is a voluntary
incentive program and continuance of the Plan is not assumed as an obligation
of Veritas DGC Inc.  Veritas DGC Inc.
reserves the right to terminate the Plan or to amend the Plan at any time and
in any respect.  Participation in this
Plan shall not impose upon the Company any obligation whatsoever to employ or
to continue to employ any Plan participant, 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 the employee is a Plan participant.

 

5Exhibit
10.2

 

VERITAS DGC INC.

GLOBAL MANAGEMENT INCENTIVE PLAN

 

(Including all amendments through October 4, 2004)

 

 

VERITAS DGC INC.

GLOBAL MANAGEMENT INCENTIVE PLAN

 

WHEREAS, Veritas DGC
Inc. maintains the Veritas DGC Inc. Global Management Incentive Plan (the “Plan”)
for its key executives so as to offer short-term rewards to focus participants
on key business goals that they can impact, reward the participants when
outstanding financial performance is achieved and share in Veritas DGC Inc.’s
profitability; and

 

WHEREAS, it is
intended that the Plan shall constitute a program described in Department of
Labor Regulation section 2510.3-2(c) that is exempt from coverage under
the Employee Retirement Income Security Act of 1974, as amended;

 

NOW, THEREFORE,
Veritas DGC Inc. agrees as follows:

 

 

VERITAS
DGC INC.

GLOBAL
MANAGEMENT INCENTIVE PLAN

 

TABLE OF CONTENTS

 

	
   

  	
  Section

  
	
  ARTICLE I - PURPOSE

  	
   

  
	
   

  	
   

  
	
  ARTICLE II - DEFINITIONS

  	
   

  
	
   

  	
   

  
	
  Award Period

  	
  2.1

  
	
  Base Salary

  	
  2.2

  
	
  Board

  	
  2.3

  
	
  Bonus
  Percentage

  	
  2.4

  
	
  Business Goal

  	
  2.5

  
	
  Business Goal Weight

  	
  2.6

  
	
  Code

  	
  2.7

  
	
  Committee

  	
  2.8

  
	
  Company

  	
  2.9

  
	
  Disability

  	
  2.10

  
	
  Dollar or $

  	
  2.11

  
	
  Financial
  Goal

  	
  2.12

  
	
  Fiscal Year

  	
  2.13

  
	
  FMLA

  	
  2.14

  
	
  Mid-Year Financial Goals

  	
  2.15

  
	
  Overachievement Performance Level

  	
  2.16

  
	
  Participant

  	
  2.17

  
	
  PBT

  	
  2.18

  
	
  Performance
  Award

  	
  2.19

  
	
  Performance
  Goals

  	
  2.20

  
	
  Plan

  	
  2.21

  
	
  Profit Plan

  	
  2.22

  
	
  Retirement

  	
  2.23

  
	
  ROI

  	
  2.24

  
	
  Separation From Service

  	
  2.25

  
	
  Target Bonus Percentage

  	
  2.26

  
	
  Target Performance Level

  	
  2.27

  
	
  Threshold Performance Level

  	
  2.28

  
	
   

  	
   

  
	
  ARTICLE III - ELIGIBILITY

  	
   

  
	
   

  	
   

  
	
  ARTICLE IV - PERFORMANCE AWARDS

  	
   

  
	
   

  	
   

  
	
  Grants of Performance Awards

  	
  4.1

  
	
  Establishment of Financial Goals and
  Business Goals

  	
  4.2

  
	
  Determination of Amounts Payable Under
  Performance Awards

  	
  4.3

  
	
  Form and Time of Payment Under Performance
  Awards

  	
  4.4

  
	
  Requirement of Employment on Payment Dates

  	
  4.5

  

 

iii

 

	
  Amounts Payable Upon the Death Disability
  or Retirement of the Participant

  	
  4.6

  
	
  Employment Status Changes

  	
  4.7

  
	
  No Interest on Performance Awards

  	
  4.8

  
	
  Payment on Death of Participant

  	
  4.9

  
	
   

  	
   

  
	
  ARTICLE V - ADMINISTRATION

  	
   

  
	
   

  	
   

  
	
  General

  	
  5.1

  
	
  Powers of the Committee

  	
  5.2

  
	
  Committee Discretion

  	
  5.3

  
	
  Disqualification of Committee Member

  	
  5.4

  
	
   

  	
   

  
	
  ARTICLE VI - AMENDMENT AND/OR
  TERMINATION

  	
   

  
	
   

  	
   

  
	
  ARTICLE VII - FUNDING

  	
   

  
	
   

  	
   

  
	
  Payments Under the Plan Are the Obligation
  of the Company

  	
  7.1

  
	
  Participants Must Rely Only on General Credit of the Company

  	
  7.2

  
	
  Unfunded Arrangement

  	
  7.3

  
	
   

  	
   

  
	
  ARTICLE VIII - MISCELLANEOUS

  	
   

  
	
   

  	
   

  
	
  No Employment Obligation

  	
  8.1

  
	
  Tax
  Withholding

  	
  8.2

  
	
  Indemnification of the Committee

  	
  8.3

  
	
  Gender
  and Number

  	
  8.4

  
	
  Headings

  	
  8.5

  
	
  Other Compensation Plans

  	
  8.6

  
	
  Employment Agreements

  	
  8.7

  
	
  Nonalienation of Benefits

  	
  8.8

  
	
  Governing Law

  	
  8.9

  

 

iv

 

ARTICLE 1

PURPOSE

 

The purpose of the Plan is to provide short-term rewards paid to
Participants so as to focus such Participants on key business goals that they
can impact, reward the Participants when outstanding financial performance is
achieved and share in Veritas DGC Inc.’s profitability.

 

ARTICLE 2

DEFINITIONS

 

2.1                                 “Award Period” means
the Mid-Year Award Period and the Year-End Award Period.  The “Mid-Year Award Period” means the period
commencing August 1 of each Fiscal Year and ending the following January 31,
and the “Year-End Award Period” means the period commencing February 1 of
each Fiscal Year and ending the following July 31.

 

2.2                                 “Base Salary” means a
Participant’s base compensation during the Fiscal Year as adjusted for
increases during the Fiscal Year as described below, and shall not include
overtime, bonuses, stock option income, incentive compensation, reimbursements
of expenses and allowances, fringe benefits (cash and non-cash), moving
expenses, welfare benefits and other
special payments, fees, allowances or extraordinary compensation.  A Participant’s Base Salary will be prorated
by month for purposes of the Plan.  If a
Participant’s Base Salary changes on or before the 15th of the
month, the Participant’s new Base Salary will be used for that month for
purposes of calculating the Participant’s Performance Award.  If a Participant’s Base Salary changes after
the 15th of the month, the Participant’s new Base Salary will not be
used for that month for purposes of calculating the Participant’s Performance
Award.

 

2.3                                 “Board” means the
Board of Directors of the Company.

 

2.4                                 “Bonus Percentage”
means the percentage of Base Salary that the Company uses to determine a
Participant’s Performance Award as determined under Section 4.3 hereof.

 

2.5                                 “Business Goal” means
the levels of business performance or business goals established by the Board,
Committee, or Company’s CEO or COO.  A
Business Goal must be measurable and may be assigned based on individual,
division-wide or corporate-wide criteria.

 

2.6                                 “Business Goal Weight”
shall have the meaning assigned to that phrase in Section 4.2 hereof.

 

1

 

2.7                                 “Code” means the
Internal Revenue Code of 1986, as amended from time to time.

 

2.8                                 “Committee” means the
Compensation Committee of the Board.

 

2.9                                 “Company” means
Veritas DGC Inc.

 

2.10                           Disability” means the
Separation From Service of a Participant due to a medically determinable mental
or physical impairment which, in the opinion of a physician selected by the
Committee, shall prevent the Participant from engaging in any substantial
gainful activity and which can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less than
twelve months and which (a) was not contracted, suffered or incurred while
the Participant was engaged in, or did not result from having engaged in, a
felonious criminal enterprise; (b) did not result from addiction to
narcotics; (c) did not result from an injury incurred while a member of
the Armed Forces of the United States for which the Participant receives a
military pension; and (d) did not result from an intentionally
self-inflicted injury.

 

2.11                           “Dollars” or “$” means United
States dollars.

 

2.12                           “Financial Goal”
means the levels of financial performance or financial goals established by the
Board, Committee, or Company’s CEO or COO. 
A Financial Goal must be measurable and may be assigned based on
division-wide or corporate-wide criteria. 
The Financial Goal(s) shall be contained in the Profit Plan.

 

2.13                           “Fiscal Year” means August 1
through July 31.

 

2.14                           “FMLA” means the
United States Family Medical Leave Act, as it may be amended from time to time.

 

2.15                           “Mid-Year Financial Goals”
means Financial Goals based upon financial measures calculated from the first
six months of the Company’s Fiscal Plan.

 

2.16                           “Overachievement Performance Level”
means that Performance Level as described in Section 4.3.

 

2.17                           “Participant” means a
person who is granted a Performance Award.

 

2.18                           “PBT” means profit
before taxes as indicated in the Company’s consolidated financial statements
for VDGC Consolidated or a division, as applicable, for the relevant period.

 

2.19                           “Performance Award”  means
an incentive compensation opportunity granted under the Plan.

 

2

 

2.20                           “Performance Goals”
means the criteria established by the Board, the Company’s CEO or COO, as
applicable, for a Fiscal Year as the basis for determining the amount payable
to a Participant under a Performance Award.

 

2.21                           “Plan” means the
Veritas DGC Inc. Global Management Incentive Plan set forth in this document,
as amended from time to time.

 

2.22                           “Profit Plan” means
the profit plan for the Company and for each division of the Company as
approved by the Board.  Any changes to
the Profit Plan used for the calculation of Performance Awards under the Plan
must be approved by the Board.

 

2.23                           “Retirement” means
the Separation From Service of a Participant after he has attained the age of
62 years with at least 10 years of service with the Company.

 

2.24                           “ROI” means Return on
Investment as calculated from the Company’s consolidated financial statements
for the Company (referred to as “VDGC Consolidated”) for the relevant period.

 

2.25                           “Separation From Service”
means the termination of the employment relationship between the Participant
and the Company and entities that are treated as a single employer together
with the Company under section 414 of the Code for certain employee
benefit purposes.

 

2.26                           “Target Bonus Percentage”
means the percentage of Base Salary that the Company intends to pay the
Participant as set forth in Section 4.2 hereof.  If a Participant’s Target Bonus Percentage
changes during a Fiscal Year, the Target Bonus Percentage will be prorated
monthly, with the same proration rules as those used for Base Salary as set
forth in Section 2.2 hereof.

 

2.27                           “Target Performance Level”
means that Performance Level as described in Section 4.3.

 

2.28                           “Threshold Performance Level”
means that Performance Level as described in Section 4.3.

 

ARTICLE 3

ELIGIBILITY

 

The individuals who shall be eligible to receive Performance Awards
during a Fiscal Year shall be those full-time officers of the Company and such
other employees as recommended by the CEO to the Committee or as designated by
the Committee; provided, however,
that any such employee who participates in any other bonus plan maintained by
the Company shall not be eligible to participate in this Plan.

 

3

 

ARTICLE 4

PERFORMANCE AWARDS

 

4.1                                 Grants of Performance Awards.  The Board or Committee may grant a
Performance Award to an eligible Participant. 
Performance Awards may vary among Participants.  The fact that a Participant is granted a
Performance Award during a Fiscal Year shall not entitle him to have another
Performance Award granted to him during any other Fiscal Year.  The Committee shall retain documentation
relating to all Performance Awards and the applicable Performance Goals.

 

4.2                                 Establishment of Financial Goals and
Business Goals.  The Board
shall assign a percentage weight of importance for the Financial Goals (“Financial
Goal Percentage”) and the Business Goal(s) (“Business Goal Percentage”) taken
into account under a Performance Award.  
Until changed by the Committee, the following weights apply:

 

	
   

  	
   

  	
  Financial

  Goal 1

  	
   

  	
  Financial

  Goal 2

  	
   

  	
  Business

  Goals

  	
   

  
	
  Officers of
  the Company

  	
   

  	
  37.5

  	
  %

  	
  37.5

  	
  %

  	
  25

  	
  %

  
	
  Division
  Participants

  	
   

  	
  37.5

  	
  %

  	
  37.5

  	
  %

  	
  25

  	
  %

  

 

The Business Goal portion of a Performance
Award will be calculated separately from Financial Goal portion of a
Performance Award, unless the average achievement of the Financial Goals is
above 100%.  If this is the case, the
portion of the Performance Award based on Business Goals will be paid at the
level of achievement of the Financial Goals.

 

If the Board or Committee, in its sole
discretion, determines that a Business Goal cannot be attained because of
circumstances beyond the individual Participant’s control, the portion of the
Participant’s Performance Award based on that Business Goal shall be calculated
based on Financial Goals.

 

4.3                                 Determination of Amounts Payable
Under Performance Awards. 
The potential amount payable under a Performance Award granted to a
Participant for a Fiscal Year, if any, shall be determined by the Committee in
its sole discretion based upon the attainment of Performance Goals established by
the Committee.

 

(a)                                  Amount of Performance Award.  A Participant’s Performance Award under the
Plan shall be calculated by multiplying the Participant’s Bonus Percentage (as
determined under this section 4.3) times the Participant’s Base Salary.

 

4

 

(i)                                     Mid-Year
Period Performance Awards.  A Mid-Year
Period Performance Award shall be based solely on Mid-Year Financial
Goals.  The maximum amount that may be
paid under a Mid-Year Period Performance Award is 50% of the target amount
applicable to the Financial Goals.  If
the planned PBT for the Mid-Year Period is $0 or less, no Mid-Year Period
Performance Award relating to the PBT Goal shall be awarded.

 

(ii)                                  Year-End
Period Performance Awards.  A Year-End
Period Performance Award shall be based on achievement of Financial and the
Business Goals.  A Year-End Period
Performance Award shall be determined by calculating a Participant’s
Performance Award for the Fiscal Year and subtracting the amount of the
Participant’s Mid-Year Period Performance Award, if any.

 

(b)                                 Bonus Percentage.  Until the Board or Committee determines
otherwise, the following Target Bonus Percentages shall apply to the
Participants who hold the following positions:

 

	
  Target Bonus

  Percentage

  	
   

  	
  Position

  	
   

  
	
  75%

  	
   

  	
  CEO

  	
   

  
	
  60%

  	
   

  	
  COO &
  CFO

  	
   

  
	
  50%

  	
   

  	
  Other
  Participants

  	
   

  

 

As soon as administratively practicable after
the relevant Award Period, the Committee will ascertain the extent to which the
Performance Goals applicable to Performance Awards made for that Award Period
have been achieved.  The Company shall
retain with the records of the Company documentation of its conclusions, and
the basis for its conclusions, concerning the extent to which Performance Goals
were achieved.  Subject to
Sections 4.5 and 4.6, if the Committee certifies that a Participant has
achieved his Performance Goals he shall be entitled to receive a Performance
Award with respect to such Performance Goals in an amount determined as
follows:

 

(i)                                     PBT Goals. 
A Participant’s Bonus Percentage will increase or decrease based on the
attainment of the relevant PBT Goal in accordance with the following schedule:

 

5

 

	
  PBT Goal

  	
   

  	
  Threshold

  Performance

  Level

  (PBT)

  	
   

  	
  Target

  Performance

  Level

  (PBT)

  	
   

  	
  Overachievement

  Performance Level

  (2 X Target)

  (PBT)

  	
   

  
	
  $0 - $10,000,000

  	
   

  	
  75

  	
  %

  	
  100

  	
  %

  	
  175

  	
  %

  
	
  $10,000,000 - $20,000,000

  	
   

  	
  75

  	
  %

  	
  100

  	
  %

  	
  150

  	
  %

  
	
  >$20,000,000

  	
   

  	
  75

  	
  %

  	
  100

  	
  %

  	
  125

  	
  %

  

 

The Threshold Performance Level must be must
be attained for a Participant to be entitled to receive a Performance Award
based on the Financial Goals.  If the
Threshold Performance Level is attained, a Participant will earn 25% of their
Target Bonus as it relates to that portion of their Performance Award.  The portion of a Performance Award based on a
PBT Goal is earned separately from the attainment of the ROI Goal. The maximum
payout under a Performance Award is two times (2X) the Target Bonus.

 

If the relevant annual PBT Goal as submitted
to and approved by the Board is $0 or less, the following rules shall apply:

 

(1)                                  the
PBT Goal must be earned before any Performance Award related to the relevant
PBT Goal is paid, and

 

(2)                                  the
maximum payout is the Target Bonus.

 

(ii)                                  ROI Goals. 
The portion of a Performance Award based on the ROI Goal will increase
or decrease based on the attainment of the relevant ROI Goal, as determined by
the Board or the Committee.  The
Threshold Performance Level must be attained for a Participant to be entitled
to receive a Performance Award based on the ROI Goal.  If the Threshold Performance Level is
attained, a Participant will earn 25% of their Target Bonus as it relates to
that portion of their Performance Award. 
The portion of a Performance Award based on an ROI Goal is earned
separately from the attainment of the PBT Goal(s). The maximum payout under a
Performance Award is two times (2X) the Target Bonus.

 

The Target Performance Level for ROI will be
equal to the ROI planned in the Profit Plan, but the Threshold and
Overachievement Performance Levels for ROI will be set by the Board.

 

If the planned ROI is 0% or less, the
Committee may:

 

6

 

(1)                                  eliminate
the ROI goal and replace it by increasing the weighting of the PBT goal, or

 

(2)                                  establish
a ROI target higher than the planned percentage, and establish related
Threshold and Overachievement levels.

 

(iii)                               Business Goals.  The portion of a Performance Award based on a
Business Goal is earned separately from the attainment of the Financial Goals
unless the Financial Goals are exceeded. 
If the Financial Goals are exceeded, the portion of the Performance
Award based on the Business Goals will be calculated based on the level of
achievement of the Financial Goals.

 

4.4                                 Form and Time of Payment Under a
Performance Award.

 

(a)                                  Form of Payment.  Except as provided below, Performance Awards
shall be paid in a single sum in cash unless otherwise determined by the Board
or the Committee.  The Board or Committee
may determine that some or all Participants shall receive all or a portion of
their Performance Award in shares of the Company’s common stock.  For those periods when Performance Awards
would otherwise be made in cash, the Board or Committee may permit Participants
the opportunity to receive all or part of their Performance Award in shares of
the Company’s common stock.  The number
of shares distributed under a Performance Award shall be calculated by dividing
the dollar amount of that portion of the Performance Award that is awarded in
shares by the fair market value of a share of the Company’s common stock
rounded down to whole shares.  For these
purposes, the fair market value of a share of the Company’s common stock shall
be the closing price for such stock on the New York Stock Exchange on the last
trading day prior to the date fixed by the Board or the Committee, in their
sole discretion.

 

(b)                                 Time of Payment.  Except with respect to the portion of a
Performance Award that is paid in shares of the Company’s common stock, if the
Committee certifies that a Participant is entitled to a Performance Award for
an Award Period, the Company shall pay the award no later than the following
dates:  (1) for a Performance Award
relating to a Mid-Year Award Period, at such time following the end of such
Mid-Year Award Period as the Committee shall determine, or (2) for a
Performance Award relating to a Year-End Award Period, at such time following
the end of such Year-End Award Period as the Committee shall determine.  Payment of all or a portion of a Performance
Award in shares of the Company’s common stock shall be made as soon as
administratively practicable following the dates provided in the first sentence
of this Section 4.4.

 

4.5                                 Requirement of Employment on Payment
Dates.  Subject to Section 8.7,
no amount is payable under a Performance Award to a Participant who has
incurred a Separation From Service prior to the date the Performance Award is
paid, unless the Separation From Service is due to the death, Disability or
Retirement of the Participant.

 

7

 

4.6                                 Amounts Payable Upon the Death,
Disability or Retirement of the Participant.  Subject to Section 8.7, if a Participant
incurs a Separation From Service due to his death, Disability or Retirement
during a Fiscal Period for which a Performance Award was granted to him, the
amount payable to the Participant or his estate shall be the amount determined
under Section 4.3 above multiplied by a fraction, the numerator of which
is the number of days during the Fiscal Year that have elapsed prior to his
Separation From Service and the denominator of which is 365.

 

4.7                                 Employment Status Changes.  Subject to Section 8.7,
the following rules shall apply with regard to an employment status change:

 

(a)                                  Leaves of Absence.  Any United States Participant who is on a
paid leave of absence or a leave of absence covered under FMLA will earn
Performance Award dollars during the leave period.  Any Participant on an unpaid leave of absence
not covered under FMLA, will not earn Performance Award dollars during the
leave period.  Awards and training hours
will be calculated on a pro-rata basis for the period of time actually worked
for each Award Period.  The Company CEO
must approve any exceptions to these rules in advance.

 

(b)                                 New Hires or Promotions.  Participants who are hired or
promoted into positions that would qualify for the Plan will be eligible to
participate in the Plan on a pro-rata basis depending on their month of hire or
promotion.

 

A Participant who is hired after the start of
a Fiscal Year will be eligible to participate in the Plan with the approval of
the Company’s CEO.  The Performance Award
will be calculated on a pro-rata basis depending on their month of hire.  Participants who enter the Plan on or before
the 15th of the month will receive full credit for that month.
Participants who enter the Plan after the 15th of the month will
receive no credit for that month.  If a
Participant enters the Plan during the last quarter of the Fiscal Year, the
requirement of such Participant to achieve any Business Goals shall be
determined by the Committee.  If not
Business Goals are established for the Participant, the portion of such
Participant’s Performance Award related to Business Goals will be calculated
based on Financial Goals.

 

(c)                                  Transfers. 
A Participant who is transferred to another division will automatically
participate in the new division’s Performance Award.  Such transferred Participants will
participate in their old division Performance Award based on the percentage of
the Fiscal Year worked in the old division, and will participate in their new
division Performance Award based on the percentage of the Fiscal Year worked in
the new division.  An employee who is
transferred to a new division but was not a Participant while in his old
division will be governed by the rules for new hires or promotions as set out
in Section 4.7(b).

 

A Participant who is transferred from a
division to a corporate-wide position will automatically participate in the
corporate-wide Performance Award.  Such transferred
Participants will participate in their old division Performance Award

 

8

 

based on the percentage of the Fiscal Year
worked in the old division, and will participate in the corporate-wide
Performance Award based on the percentage of the Fiscal Year worked at the
corporate-wide position.  An employee who
is transferred to a corporate-wide position but was not a Participant while at
his old division will be governed by the rules for new hires or promotions as
set out in Section 4.7(b).

 

A Participant who is transferred from a
corporate-wide position to a division presidency will automatically participate
in the division Performance Award.  Such
transferred Participants will participate in their old corporate-wide
Performance Award based on the percentage of the Fiscal Year worked at the
corporate-level, and will participate in the division Performance Award based
on the percentage of the Fiscal Year worked at the division position.

 

4.8                                 No Interest on Performance
Awards.  No interest shall
be credited with respect to amounts payable under any Performance Awards.

 

4.9                                 Payment on Death of
Participant.  Upon the
death of a Participant before he has been paid his entire benefits under his
Performance Award, his benefits under his Performance Award shall be paid to
the Participant’s estate.

 

ARTICLE 5

ADMINISTRATION

 

5.1                                 General.  The Plan shall be administered by the
Committee.  All questions of
interpretation and application of the Plan and Performance Awards shall be
subject to the determination of the Committee. 
A majority of the members of the Committee shall constitute a
quorum.  All determinations of the
Committee shall be made by a majority of its members.  Any decision or determination reduced to writing
and signed by a majority of the members shall be as effective as if it had been
made by a majority vote at a meeting properly called and held.

 

5.2                                 Powers of Committee.

 

(a)                                  The
Committee shall have the exclusive responsibility for the general administration
of the Plan according to the terms and provisions of the Plan and will have all
the powers necessary to accomplish those purposes, including but not by way of
limitation the right, power and authority:

 

(i)                                     to
make rules and regulations for the administration of the Plan;

 

(ii)                                  to
construe all terms, provisions, conditions and limitations of the Plan;

 

9

 

(iii)                               to
correct any defect, supply any omission or reconcile any inconsistency that may
appear in the Plan in the manner and to the extent it deems expedient to carry
the Plan into effect for the greatest benefit of all parties at interest;

 

(iv)                              to
determine all controversies relating to the administration of the Plan,
including but not limited to:

 

(1)                                  differences
of opinion arising between the Company and a Participant; and

 

(2)                                  any
question it deems advisable to determine in order to promote the uniform
administration of the Plan for the benefit of all parties at interest; and

 

(3)                                  the
terms and conditions, if any, not inconsistent with the terms of the Plan that
are to be placed upon the Performance Award granted to a particular
Participant.

 

(v)                                 to
select Participants;

 

(vi)                              to
determine the target bonus percentages for each Participant;

 

(vii)                           to
calculate each Performance Award;

 

(viii)                        to define
business goals; and

 

(ix)                                to
determine if business goals have been achieved.

 

5.3                                 Committee Discretion.  The Committee in exercising any power or
authority granted under the Plan or in making any determination under the Plan
shall perform or refrain from performing those acts in its sole discretion and
judgment.  Any decision made by the
Committee or any refraining to act or any act taken by the Committee in good faith
shall be final and binding on all parties. 
The Committee’s decisions shall never be subject to de novo review, but
instead shall only be overturned if found to be arbitrary or capricious by an
arbitrator or a court of law.

 

5.4                                 Disqualification of Committee
Member.   A member of the Committee shall not vote or
act on any Plan matter with respect to which the member has a conflict of
interest.

 

ARTICLE 6

AMENDMENT AND/OR TERMINATION

 

The Board or the Committee may amend or terminate the Plan at any time
by a  written resolution.

 

10

 

ARTICLE 7

FUNDING

 

7.1                                 Payments Under This Agreement Are
the Obligation of the Company.  When a benefit is due under the Plan, the
benefit will be paid by the Company.

 

7.2                                 Participants Must Rely Only on
General Credit of the Company. 
The Plan is only a general corporate commitment and each Participant
must rely upon the general credit of the Company for the fulfillment of its
obligations hereunder.  Under all
circumstances the rights of Participants to any asset held by the Company will
be no greater than the rights expressed in this agreement.  Nothing contained in this agreement will
constitute a guarantee by the Company that the assets of the Company will be
sufficient to pay any benefits under the Plan or would place the Participant in
a secured position ahead of general creditors of the Company; the Participants
are only unsecured creditors of the Company with respect to their Plan benefits
and the Plan constitutes a mere promise by the Company to make benefit payments
in the future.  No specific assets of the
Company have been or will be set aside, or will be pledged in any way for the
performance of the Company’s obligations under the Plan which would remove such
assets from being subject to the general creditors of the Company.

 

7.3                                 Unfunded Arrangement.  It is intended that the Plan shall be
unfunded for tax purposes and for purposes of Title 1 of the Employee
Retirement Income Security Act of 1974, as amended.

 

ARTICLE 8

 

MISCELLANEOUS

 

8.1                                 No Employment Obligation.  The granting of any Performance Award shall
not constitute an employment contract, express or implied, nor impose upon the
Company any obligation to employ or continue to employ the Participant.  The right of the Company to terminate the
employment of any person shall not be diminished or affected by reason of the
fact that a Performance Award has been granted to him.

 

8.2                                 Tax Withholding.  The Company shall be entitled to deduct from
amounts payable under a Performance Award or other compensation payable to each
Participant any sums required by federal, state, or local tax law to be
withheld with respect to payments under a Performance Award.

 

8.3                                 Indemnification of the Committee.  The Company shall indemnify each present and
future member of the Committee and each officer of the Company (an “Indemnitee”)
against, and each Indemnitee shall be entitled without further act on his part
to indemnity from the Company for, all expenses (including attorney’s fees, the
amount of judgments and the amount of approved settlements made with a view to
the curtailment of costs of litigation, other than amounts paid to the Company
itself) reasonably incurred by

 

11

 

him in
connection with or arising out of any action, suit, or proceeding in which he
may be involved by reason of his being or having been a member of the Committee
or by reason of his having provided any information, opinions as to
Participants’ performance, or assistance, in connection with the Plan, whether
or not he continues to be a member of the Committee or an officer of the
Company at the time of incurring the expenses—including, without limitation,
matters as to which he shall be finally adjudged in any action, suit or
proceeding to have been found to have been negligent in the performance of his
duty as a member of the Committee or an officer of the Company. However, this
indemnity shall not include any expenses incurred by any Indemnitee in respect
of matters as to which he shall be finally adjudged in any action, suit or
proceeding to have been guilty of gross negligence or willful misconduct in the
performance of his duty as a member of the Committee or an officer of the
Company.  In addition, no right of indemnification
under the Plan shall be available to or enforceable by any Indemnitee unless,
within 60 days after institution of any action, suit or proceeding, he shall
have offered the Company, in writing, the opportunity to handle and defend same
at its own expense.  This right of
indemnification shall inure to the benefit of the heirs, executors or
administrators of each Indemnitee and shall be in addition to all other rights
to which the Indemnitee may be entitled as a matter of law, contract, or
otherwise.

 

8.4                                 Gender and Number.  If the context requires, words of one gender
when used in the Plan shall include the other and words used in the singular or
plural shall include the other.

 

8.5                                 Headings.  Headings of Articles and Sections are
included for convenience of reference only and do not constitute part of the
Plan and shall not be used in construing the terms of the Plan.

 

8.6                                 Other Compensation Plans.  The adoption of the Plan shall not affect any
other stock option, incentive or other compensation or benefit plans in effect
for the Company, nor shall the Plan preclude the Company from establishing any
other forms of incentive or other compensation for employees of the Company.

 

8.7                                 Employment Agreements.  If a Participant has entered into an
employment agreement with the Company, to the extent the provisions of such
employment agreement and this Plan are inconsistent, the provisions of such
employment agreement shall govern.

 

8.8                                 Nonalienation of Benefits.  No benefit provided under the
Plan shall be transferable by the Participant except pursuant to a State
domestic relations order.  No right or
benefit under the Plan shall be subject to anticipation, alienation, sale,
assignment, pledge, encumbrance or charge. 
Any attempt to anticipate, alienate, sell, assign, pledge, encumber or
charge any right or benefit under the Plan shall be void.  No right or benefit under the Plan shall, in
any manner, be liable for or subject to any debts, contracts, liabilities or
torts of the person entitled to the right or benefit.  If any Participant becomes bankrupt or
attempts to anticipate, alienate, assign, pledge, sell, encumber or charge any
right or benefit under the Plan then the right or benefit shall, in the
discretion of the Committee, cease.  In
that event, the Company may hold or apply the right or benefit or any part of
the right or

 

12

 

benefit for
the benefit of the Participant, his or her spouse, children or other dependents
or any of them in the manner and in the proportion that the Committee shall
deem proper, in its sole discretion, but is not required to do so.  The restrictions in this Section 8.8
shall not apply to State domestic relations orders.

 

8.9                                 Governing Law.  The validity, interpretation, construction
and enforceability of the Plan shall be governed by the laws of the State of
Texas.

 

13

 

IN WITNESS WHEREOF,
the Company  has caused this document to
be executed by its authorized officer on this 5th day of October, 2004,
effective as of October 4, 2004, subject to the approval of a majority of
the shareholders of the Company.

 

 

	
   

  	
  VERITAS DGC INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Title: Vice
  President of Human Resources

  

 

14

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