--Stockholders who exchange Veritas common stock solely for cash in the merger generally will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference between the amount of cash received and the stockholder's tax basis in the Veritas stock surrendered. --Stockholders who exchange Veritas common stock solely for CGG ADSs in the merger will not recognize any gain or loss for U.S. federal income tax purposes, except to the extent of the cash received in lieu of a fractional CGG ADS. --Stockholders who exchange Veritas common stock for a combination of cash and CGG ADSs in the merger generally will recognize gain (but not loss) for U.S. federal income tax purposes equal to the lesser of (1) the excess of the sum of the cash and the fair market value of the CGG ADSs received over the stockholder's tax basis in the Veritas common stock surrendered or (2) the amount of cash received. --A stockholder's holding period for U.S. federal income tax purposes for the CGG ADSs received in the merger generally will include the holding period for the Veritas common stock surrendered in the merger.
It should be noted that with respect to a Veritas stockholder who holds shares of Veritas common stock and will own directly, indirectly or constructively through attribution rules, at least five percent of either the total voting power or total value of the combined company's ordinary shares immediately after the merger, the exception provided by the ruling will only apply if the stockholder files a gain recognition agreement satisfying the requirements of Section 1.367(a)-8 of the U.S. Income Tax Regulations. If you believe you could become a five-percent transferee stockholder of the combined company, you should consult your tax advisor about the applicable special rules and time-sensitive tax procedures.
The information in this press release is only a summary and does not contain all of the information that may be material to a Veritas stockholder. Please refer to "The Merger - Certain Material U.S. Federal Income Tax Consequences" of the proxy statement/prospectus dated November 30, 2006 for a more complete discussion of the U.S. federal income tax consequences of the merger. Determining the actual tax consequences of the merger to a particular stockholder may be complex and will depend on the stockholder's specific situation. Veritas stockholders are encouraged to consult their own tax advisor for a full understanding of the tax consequences of the merger.
On September 5, 2006, Veritas and CGG announced that they entered into a definitive agreement for the merger. Completion of the merger remains subject to receipt of shareholders' approval, as well as the satisfaction of other customary closing conditions.
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