COGNIZANT
RETIREMENT EXCESS PLAN
Effective as of January 1, 1997
COGNIZANT CORPORATION
RETIREMENT EXCESS PLAN
Effective as of January 1, 1997
INTRODUCTION
Effective as of January 1, 1997, the Cognizant Corporation Retirement Excess
Plan (the "Plan") is established by Cognizant Corporation (the "Company") to
provide participating employees with retirement benefits in excess of those
permitted to be paid under the Cognizant Retirement Plan (the "Qualified Plan")
due to the limitations imposed by Sections 401(a)(17) and 415 of the Internal
Revenue Code of 1986, as amended (the "Code"). For purposes of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), this Plan is
intended to be unfunded and maintained primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees.
1
SECTION I--PARTICIPATION IN THE PLAN
All participants in the Qualified Plan shall participate in this Plan whenever
their benefits under the Qualified Plan as from time to time in effect would
have exceeded the limitations on benefits imposed by Sections 401(a)(17) and 415
of the Code if such benefits were determined as though no provision were
contained in the Qualified Plan incorporating such limitations.
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SECTION II -- BENEFITS
The Corporation shall pay to each participant in the Qualified Plan (or his or
her beneficiaries designated to receive benefits from the Qualified Plan) a
benefit equal to the excess of (a) over (b), where:
(a) equals the amount that would be payable to the participant (or his or
her beneficiaries) under the Qualified Plan in the absence of any
provision reducing benefits due to the benefit limitations imposed by
Sections 401(a)(17) and 415 of the Code; and
(b) equals the sum of (i) the actual benefits payable to the participant
(or his or her beneficiaries) from the Qualified Plan and (ii) the
benefits payable to the participant (or his or her beneficiaries) from
the Pension Benefit Equalization Plan of The Dun & Bradstreet
Corporation (as in effect on October 31, 1996), as determined by the
Company in accordance with the methods and assumptions specified in
Appendix A of this Plan.
Notwithstanding the foregoing, no benefits shall be payable hereunder unless the
participant has a nonforfeitable right to benefits under the Qualified Plan.
Benefits hereunder shall be payable at the same time and in the same form as the
participant's (or his or her beneficiaries') benefits under the Qualified Plan;
provided, however, if an Election (as defined in Section IV of this Plan) has
been made and becomes effective prior to the date when benefits under this Plan
would otherwise be payable to the participant, the form of payment of benefits
under this Plan shall be in the form so elected pursuant to such Election. If an
Election becomes effective prior to the date when benefits would be payable and
the participant dies prior to the date when benefits would be payable, his or
her beneficiaries designated to receive benefits from the Qualified Plan shall
receive benefits in the form so elected pursuant to such Election. If the
participant has not designated a beneficiary under the Qualified Plan, or if no
such beneficiary is living at the time of the participant's death, the amount,
if any, payable hereunder upon his or her death shall be distributed to the
person or persons who would otherwise be entitled to receive a distribution of
the participant's Qualified Plan benefits.
Notwithstanding any Election, if the lump sum value, determined in the same
manner as provided under Section IV below, of the benefits payable to the
participant (or his or her beneficiaries) under this Plan is $10,000 or less at
the time such benefits are payable under this Plan, such benefits shall be
payable as a lump sum.
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Any portion of the benefits payable under this Plan as a lump sum shall be paid
commencing at the same time as benefits payable in any other form hereunder
would otherwise be paid.
4
SECTION III--UNFUNDED STATUS
Participants hereunder shall have the status of general unsecured creditors of
the Company and this Plan constitutes a mere promise by the Company to make
benefit payments at the time or times required hereunder. It is the intention of
the Company that this Plan be unfunded for tax purposes and for purposes of
Title I of ERISA, and any trust created by the Company and any assets held by
such trust to assist the Company in meeting its obligations under the Plan shall
meet the requirements necessary to retain such unfunded status.
5
SECTION IV--ELECTION OF FORM OF PAYMENT
(a) A participant under this Plan may elect to receive all, none, or a
specified portion, as provided below, of his benefits hereunder as a
lump sum and to receive any balance of such benefits in the form of an
annuity (an "Election"); provided that any such Election shall be
effective for purposes of this Plan only if (i) such participant remains
in the employment of the Company or an Affiliate, as the case may be,
for a period not less than the full 12 calendar months immediately
following the Election Date of such Election (except in the case of such
participant's death or disability as provided below), and (ii) such
participant complies with the administrative procedures set forth by the
Committee with respect to the making of an Election. "Affiliate" shall
mean the Company and any other employer which is a member of a
"controlled group of corporations," a group under "common control," or
an "affiliated service group," all as determined under Code Sections
414(b), (c), (m), (o).
(b) Any portion of the benefit payable to the participant (or his or her
beneficiaries) in the form of an annuity shall be paid at the same time
and in the same form as his or her benefits under the Qualified Plan.
Any portion of the benefit payable to the participant (or his or her
beneficiaries) in the form of a lump sum shall be paid in full at the
same time as the benefits commence under the Qualified Plan, and no
subsequent lump sum benefits will be paid.
(c) A participant may elect a payment form different than the payment form
previously elected by him or her by filing a revised election form;
provided that any such new Election shall be effective only if the
conditions in clauses (i) and (ii) of Section IV(a) above are satisfied
with respect to such new Election. Any prior Election made by a
participant that has satisfied such conditions remains effective for
purposes of this Plan until such participant has made a new Election
satisfying such conditions.
(d) A participant making an election under this Section IV may specify the
portion of his benefits under this Plan to be received in a lump sum as
follows: 0 percent, 25 percent, 50 percent, 75 percent or 100 percent.
(e) In the event a participant who has made an Election dies or becomes
disabled within the meaning of the Company's long-term disability plan
while employed by the Company or an affiliate and such death or
disability occurs during the 12-calendar-month period immediately
following the Election Date of such Election, the condition that such
participant remain employed with the Company or an affiliate for such
12-
6
month period shall be deemed to be satisfied and such Election shall be
effective with respect to benefits payable to such participant or
participant's beneficiaries under this Plan.
(f) The amount of any portion of the benefits payable as a lump sum under
this Section IV will equal the present value of such portion of such
benefits, and the present value shall be determined (i) based on a
discount rate equal to the average of 85% of the 15-year non-callable
U.S. Treasury bond yields as of the close of business on the last
business day of each of the three months immediately preceding the date
the annuity value is determined and (ii) using the 1983 Group Annuity
Mortality Table.
(g) "Election Date" for purposes of this Plan means the date that a properly
completed election form with respect to an Election is received by the
Company.
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SECTION V--CESSATION OF BENEFITS
(a) Notwithstanding any other provision of the Plan (except as provided
below in this Section V), no benefits or no further benefits, as the
case may be, shall be paid to a participant (or his or her beneficiary)
if the participant has:
(i) become a stockholder (unless such stock is listed on a national
securities exchange or traded on a daily basis in the
over-the-counter market and the participant's ownership interest
is not in excess of 2% of the company of which the shares are
being purchased), employee, officer, director or consultant of
or to a Company, or a member or an employee of or a consultant
to a partnership or any other business or firm, which competes
with any of the businesses owned or operated by the Company, or
if the participant becomes associated with a company,
partnership or individual which company, partnership or
individual acts as a consultant to businesses in competition
with the Company, such participant provided services to such
competing businesses, whether or not, in any of the foregoing
cases, such participant accepts any form of compensation from
such competing entity or consultant; or
(ii) been discharged from employment with the Company or any
affiliate for "cause." "Cause" means (1) willful malfeasance or
willful misconduct by the participant in connection with his or
her employment, (2) continuing failure to perform such duties as
are requested by any employee to whom the participant reports or
the board of directors of the Company, or (3) the commission by
a participant of (I) any felony or (II) any misdemeanor
involving moral turpitude.
(b) In any case described in this Section V, the participant (or his or her
beneficiary) shall be given prior written notice that no benefits or no
further benefits, as the case may be, will be paid to such participant
(or his or her beneficiary). Such written notice shall specify the
particular act(s), or failures to act, on the basis of which the
decision to cease paying his or her benefits has been made.
(c) Notwithstanding any other provision of the Plan, a participant who
receives in a lump sum any portion of his or her benefits hereunder
shall receive such lump sum portion of such benefits subject to the
condition that if such participant engages in any of the acts described
in this Section V, then such participant shall within 60
8
days after written notice by the Company repay to the Company the amount
described in the immediately succeeding sentence. The amount described
in this sentence shall equal the amount of the participant's lump sum
benefit under this Plan to which such participant would not have been
entitled, if such lump sum benefit had instead been payable in the form
of an annuity under this Plan and such annuity payments were subject to
the provisions of this Section V.
(d) Notwithstanding anything to the contrary contained herein, the
provisions of this Section V shall be of no further force or effect from
and after a "Change in Control" with respect to participants then
employed by the Company or its Affiliates. For this purpose, a "Change
in Control" shall mean:
(i) any "Person," as such term is used for purposes of Section 13(d)
or 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of
the Company, or any company owned, directly or indirectly, by
the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company), becomes
the "Beneficial Owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of
the Company's then-outstanding securities;
(ii) during any period of 24 months (not including any period prior
to the effective date of this Plan), individuals who at the
beginning of such period constitute the board of directors of
the Company (the "Board"), and any new director (other than (a)
a director nominated by a Person who has entered into an
agreement with the Company to effect a transaction described in
paragraphs (i), (iii) or (iv) of this Section V(d), (b) a
director nominated by any Person (including the Company) who
publicly announces an intention to take or to consider taking
actions (including, but not limited to, an actual or threatened
proxy contest) which if consummated would constitute a Change in
Control or (c) a director nominated by any Person who is the
Beneficial Owner, directly or indirectly, of securities of the
Company representing 10% or more of the combined voting power of
the Company's securities) whose election by the Board or
nomination for election by the Company's stockholders was
approved in advance by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute at least a majority thereof;
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(iii) the stockholders of the Company approve any transaction or
series of transactions under which the Company is merged or
consolidated with any other company, other than a merger or
consolidation (1) which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 66_%
of the combined voting powers of the voting securities of the
Company or such surviving entity outstanding immediately after
such merger or consolidation and (2) after which no Person holds
20% or more of the combined voting power of the then-outstanding
securities of the Company or such surviving entity; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets.
10
SECTION VI--FUNDING
Benefits payable under this Plan shall not be funded and shall be made out of
the general funds of the Company; provided, however, that the Company reserves
the right to establish one or more trusts to provide alternate sources of
benefit payments under this Plan, provided, further, however, that upon the
occurrence of a "Potential Change in Control" of the Company, as defined below,
the appropriate officers of the Company are required to make contributions to
such a trust fund, established as an alternate source of benefits payable under
the Plan, as are necessary to fund the lump sum payments to Plan participants
required pursuant to Section V of this Plan in the event of a Change in Control
of the Company; provided, further, however, that if payments are made from such
trust fund, such payments will satisfy the Company's obligations under this Plan
to the extent made from such trust fund.
In determining the amount of the necessary contribution to the trust fund in the
event of a Potential Change in Control, the following actuarial assumptions
shall be used: (i) the interest rate used shall be the interest rate used by the
Pension Benefit Guaranty Corporation for determining the value of immediate
annuities as of January 1st of the year of the occurrence of the Potential
Change in Control, (ii) the 1983 Group Annuity Mortality Table shall be used;
and (iii) it shall be assumed that all participants will retire or terminate
employment with the Company as soon as practicable after the occurrence of the
Potential Change in Control.
For the purpose of this Plan, "Potential Change in Control" means:
(a) the Company enters into an agreement, the consumption of which would
result in the occurrence of a Change in Control of the Company;
(b) any person (including the Company) publicly announces its intention to
take or to consider taking actions which if consummated would constitute
a Change in Control of the Company;
(c) any person, other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company (or a corporation owned,
directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the
Company), who is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 9.5% or more of
the combined voting power of the Company's then outstanding securities,
increases his or her beneficial ownership of such securities by
11
5% or more over the percentage so owned by such person; or
(d) The Board of Directors of the Company adopts a resolution to the effect
that, for purposes of this Plan, a Potential Change in Control of the
Company has occurred.
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SECTION VII--MISCELLANEOUS
(a) The Compensation and Benefits Committee of the board of directors of the
Company shall be responsible for the administration of the Plan and may
delegate to any management committee, employee, director or agent its
responsibility to perform any act hereunder, including without
limitation those matters involving the exercise of discretion, provided
that such delegation shall be subject to revocation at any time at the
Committee's discretion. The Committee shall have the authority to
determine all questions arising in connection with the Plan, to
interpret the provisions of the Plan and construe all of its terms, to
adopt, amend, and rescind rules and regulations for the administration
of the Plan, and generally to conduct and administer the Plan and to
make all determinations in connection with the Plan as may be necessary
or advisable. All such actions of the Committee shall be conclusive and
binding upon all participants and beneficiaries.
(b) The Committee may, in its sole discretion, terminate, suspend or amend
this Plan at any time or from time to time, in whole or in part;
provided, however, that in the event of termination, the rights of
participants to their accrued benefits hereunder shall become
nonforfeitable. No termination, suspension or amendment of the Plan may
adversely affect a participant's or beneficiary's benefit to which he or
she is entitled under the Plan as in effect on the date immediately
preceding the date of such termination, suspension or amendment.
(c) Nothing contained herein will confer upon any participant the right to
be retained in the service of the Company or any affiliate, nor will it
interfere with the right of the Company or any affiliate to discharge or
otherwise deal with participants with respect to matters of employment.
(d) A participant's right to benefit payments under the Plan shall not be
subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment or garnishment by creditors
of such participant or his or her beneficiary.
(e) The Company may withhold from any benefit under the Plan an amount
sufficient to satisfy its tax withholding obligations.
(f) The Plan shall be governed by and construed in accordance with the laws
of the State of New York
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applicable to contracts made and to be performed in such state to the
extent not preempted by federal law.
In witness whereof, the Company has caused this document to be executed by its
officer effective January 1, 1997.
Cognizant Corporation
By:_____________________________
Its:____________________________
Date:___________________________
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APPENDIX A
The benefits payable from the Pension Benefit Equalization Plan of The Dun &
Bradstreet Corporation (the "PBEP") to participants of this Plan shall be
determined as amounts payable monthly in the form of a single life annuity
commencing on the first day of the month coincident with or next following the
date the participant attains age 65 (the "Normal Retirement Date").
In the event a participant's benefit from this Plan is paid in a form other than
a single life annuity, however, the benefits payable from the PBEP shall be
adjusted to equal the actuarial equivalent value of the single life annuity
amount computed on the basis of mortality rates shown in Appendix B of this Plan
and 6.75% interest. In the event a participant's benefit from this Plan
commences prior to the participant's Normal Retirement Date, and the participant
terminated employment with the Company on or after he or she attained age 55,
the benefits payable from the PBEP commencing on the first day of the month
coincident with or next following the participant's Normal Retirement Date shall
be reduced by 3/12% for each month prior to the Normal Retirement Date (or age
60 if the participant has 35 years of service on his or her Early Retirement
Date) that benefits commence. In the event a participant's benefit from this
Plan commences prior to the participant's Normal Retirement Date, and the
participant terminated employment with the Company before he or she attained age
55, the benefits payable from the PBEP as determined in accordance with the
provisions set forth above shall be adjusted to equal the actuarial equivalent
value of such amount computed on the basis of mortality rates shown in Appendix
B of this Plan and 6.75% interest.
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APPENDIX B
MORTALITY RATES
Age Participant Beneficiary Age Participant Beneficiary
- - --- ----------- ----------- --- ----------- -----------
25 .000581 .000470 68 .024559 .018359
26 .000610 .000497 69 .026871 .020335
27 .000644 .000526 70 .029559 .022766
28 .000681 .000557 71 .032952 .025919
29 .000720 .000591 72 .036762 .029529
30 .000763 .000629 73 .040907 .033496
31 .000811 .000669 74 .045427 .037808
32 .000866 .000714 75 .050298 .042428
33 .000923 .000762 76 .055809 .047551
34 .000988 .000814 77 .062080 .053217
35 .001059 .000873 78 .069068 .059419
36 .001136 .000936 79 .076746 .066152
37 .001223 .001077 80 .084955 .073330
38 .001318 .001084 81 .093582 .080901
39 .001423 .001168 82 .102603 .088868
40 .001539 .001261 83 .111984 .097236
41 .001682 .001369 84 .121754 .106074
42 .001869 .001497 85 .131910 .115436
43 .002097 .001647 86 .142522 .125403
44 .002364 .001815 87 .153693 .136075
45 .002670 .002005 88 .165518 .147557
46 .003011 .002216 89 .178093 .159954
47 .003388 .002449 90 .191529 .173397
48 .003797 .002705 91 .203702 .185997
49 .004241 .002983 92 .216646 .199614
50 .004717 .003289 93 .230478 .214387
51 .005216 .003594 94 .245331 .230463
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Age Participant Beneficiary Age Participant Beneficiary
- - --- ----------- ----------- --- ----------- -----------
52 .005746 .003926 95 .261353 .248008
53 .006310 .004288 96 .278704 .267202
54 .006907 .004683 97 .297562 .288242
55 .007538 .005112 98 .318124 .311344
56 .008206 .005588 99 .340598 .336741
57 .008916 .006123 100 .365204 .364688
58 .009679 .006729 101 .392179 .395460
59 .010510 .007415 102 .421772 .429358
60 .011426 .008190 103 .455805 .467222
61 .012449 .009063 104 .496440 .510917
62 .013608 .010042 105 .545840 .562310
63 .014928 .011131 106 .606167 .623265
64 .016449 .012338 107 .679585 .695646
65 .018207 .013671 108 .768255 .781319
66 .020245 .015129 109 .874340 .882150
67 .022388 .016662 110 .999999 .999999
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TABLE OF CONTENTS PAGE
- - ----------------- ----
INTRODUCTION...................................................................1
SECTION I -- PARTICIPATION IN THE PLAN.........................................2
SECTION II -- BENEFITS.........................................................3
SECTION III -- UNFUNDED STATUS.................................................5
SECTION IV -- ELECTION OF FORM OF PAYMENT......................................6
SECTION V -- CESSATION OF BENEFITS.............................................8
SECTION VI -- FUNDING.........................................................11
SECTION VII -- MISCELLANEOUS..................................................13