1996 COGNIZANT CORPORATION
NON-EMPLOYEE DIRECTORS' STOCK INCENTIVE PLAN
1. Purpose of the Plan
The purpose of the Plan is to aid the Company in attracting, retaining and
compensating non-employee directors and to enable them to increase their
ownership of Shares. The Plan will be beneficial to the Company and its
stockholders since it will allow non-employee directors of the Board to have a
greater personal financial stake in the Company through the ownership of Shares,
in addition to underscoring their common interest with stockholders in
increasing the value of the Shares on a long-term basis.
2. Definitions
The following capitalized terms used in the Plan have the respective
meanings set forth in this Section:
(a) Act: The Securities Exchange Act of 1934, as amended, or any successor
thereto.
(b) Award: An Option or Share of Restricted Stock granted pursuant to the
Plan.
(c) Beneficial Owner: As such term is defined in Rule 13d-3 under the Act
(or any successor rule thereto).
(d) Board: The Board of Directors of the Company.
(e) Change in Control: The occurrence of any of the following events:
(i) any Person (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, 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 twenty-four months (not including any period
prior to the Effective Date), individuals who at the beginning of such
period constitute 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
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effect a transaction described in Sections 2(e)(i), (iii) or (iv) of
the Plan, (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 (2/3) 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;
(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 (A) 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 2/3% of the combined
voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation and
(B) 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.
(f) Code: The Internal Revenue Code of 1986, as amended, or any successor
thereto.
(g) Committee: The Compensation and Benefits Committee of the Board.
(h) Company: Cognizant Corporation, a Delaware corporation.
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(i) D&B: The Dun & Bradstreet Corporation, a Delaware corporation.
(j) Disability: Inability to continue to serve as a non-employee director
of the Board due to a medically determinable physical or mental
impairment which constitutes a permanent and total disability, as
determined by the Committee (excluding any member thereof whose own
Disability is at issue in a given case) based upon such evidence as it
deems necessary and appropriate. A Participant shall not be considered
disabled unless he or she furnishes such medical or other evidence of
the existence of the Disability as the Committee, in its sole
discretion, may require.
(k) Effective Date: The date on which the Plan takes effect, as defined
pursuant to Section 13 of the Plan.
(l) Fair Market Value: On a given date, the arithmetic mean of the high
and low prices of the Shares as reported on such date on the Composite
Tape of the principal national securities exchange on which such
Shares are listed or admitted to trading, or, if no Composite Tape
exists for such national securities exchange on such date, then on the
principal national securities exchange on which such Shares are listed
or admitted to trading, or, if the Shares are not listed or admitted
on a national securities exchange, the arithmetic mean of the per
Share closing bid price and per Share closing asked price on such date
as quoted on the National Association of Securities Dealers Automated
Quotation System (or such market in which such prices are regularly
quoted), or, if there is no market on which the Shares are regularly
quoted, the Fair Market Value shall be the value established by the
Committee in good faith. If no sale of Shares shall have been reported
on such Composite Tape or such national securities exchange on such
date or quoted on the National Association of Securities Dealers
Automated Quotation System on such date, then the immediately
preceding date on which sales of the Shares have been so reported or
quoted shall be used.
(m) Option: A stock option granted pursuant to Section 6 of the Plan.
(n) Option Price: The purchase price per Share of an Option, as determined
pursuant to Section 6(b) of the Plan.
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(o) Participant: Any director of the Company who is not an employee of the
Company or any Subsidiary of the Company as of the date that an Award
is granted.
(p) Person: As such term is used for purposes of Section 13(d) or 14(d) of
the Act (or any successor section thereto).
(q) Plan: The 1996 Cognizant Corporation Non-Employee Directors' Stock
Incentive Plan.
(r) Restricted Stock: A Share of restricted stock granted pursuant to
Section 7 of the Plan.
(s) Retirement: Termination of service with the Company after such
Participant has attained age 70, regardless of the length of such
Participant's service; or, with the prior written consent of the
Committee (excluding any member thereof whose own Retirement is at
issue in a given case), termination of service at an earlier age after
the Participant has completed six or more years of service with the
Company.
(t) Shares: Shares of common stock, par value $0.01 per share, of the
Company.
(u) Spinoff Date: The date on which the Shares that are owned by D&B are
distributed to the holders of record of shares of D&B.
(v) Subsidiary: A subsidiary corporation, as defined in Section 424(f) of
the Code (or any successor section thereto).
3. Shares Subject to the Plan
The total number of Shares which may be issued under the Plan is 130,000.
The Shares may consist, in whole or in part, of unissued Shares or treasury
Shares. The issuance of Awards or the payment of cash upon exercise of an Award
shall reduce the total number of Shares available under the Plan, as applicable.
Shares which are (a) withheld pursuant to Section 6(d)(iv) of the Plan or (b)
subject to Awards which terminate or lapse may be granted again under the Plan.
4. Administration
The Plan shall be administered by the Committee, which may delegate its
duties and powers in whole or in part to any subcommittee thereof consisting
solely of at least two "non-
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employee directors" within the meaning of Rule 16b-3 under the Act (or any
successor rule thereto). The Committee is authorized to interpret the Plan, to
establish, amend and rescind any rules and regulations relating to the Plan, and
to make any other determinations that it deems necessary or desirable for the
administration of the Plan. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan in the manner and to the
extent the Committee deems necessary or desirable. Any decision of the Committee
in the interpretation and administration of the Plan, as described herein, shall
lie within its sole and absolute discretion and shall be final, conclusive and
binding on all parties concerned (including, but not limited to, Participants
and their beneficiaries or successors).
5. Eligibility
All Participants shall be eligible to participate under this Plan.
6. Terms and Conditions of Options
Options granted under the Plan shall be non-qualified stock options for
federal income tax purposes, as evidenced by the related Option agreements, and
shall be subject to the foregoing and the following terms and conditions and to
such other terms and conditions, not inconsistent therewith, as the Committee
shall determine:
(a) Grants. A Participant may receive, on such dates as determined by the
Committee in its sole discretion, grants consisting of such number of Options as
determined by the Committee in its sole discretion.
(b) Option Price. The Option Price per Share shall be determined by the
Committee, but shall not be less than 100% of the Fair Market Value of the
Shares on the date an Option is granted.
(c) Exercisability. Options granted under the Plan shall be exercisable at
such time and upon such terms and conditions as may be determined by the
Committee, but in no event shall an Option be exercisable more than ten years
after the date it is granted.
(d) Exercise of Options. Except as otherwise provided in the Plan or in a
related Option agreement, an Option may be exercised for all, or from time to
time any part, of the Shares for which it is then exercisable. For purposes of
Section 6 of the Plan, the exercise date of an Option shall be the later of the
date a notice of exercise is received by the Company and, if applicable, the
date payment is received by the Company pursuant
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to clauses (i), (ii) or (iii) in the following sentence. The purchase price for
the Shares as to which an Option is exercised shall be paid to the Company in
full at the time of exercise at the election of the Participant (i) in cash,
(ii) in Shares having a Fair Market Value equal to the aggregate Option Price
for the Shares being purchased and satisfying such other requirements as may be
imposed by the Committee, (iii) partly in cash and partly in such Shares, (iv)
through the withholding of Shares (which would otherwise be delivered to the
Participant) with an aggregate Fair Market Value on the exercise date equal to
the aggregate Option Price or (v) through the delivery of irrevocable
instructions to a broker to deliver promptly to the Company an amount equal to
the aggregate Option Price for the Shares being purchased. No Participant shall
have any rights to dividends or other rights of a stockholder with respect to
Shares subject to an Option until the Participant has given written notice of
exercise of the Option, paid in full for such Shares and, if applicable, has
satisfied any other conditions imposed by the Committee pursuant to the Plan.
(e) Exercisability Upon Termination of Service by Death. If a Participant's
service with the Company and its Subsidiaries terminates by reason of death
after the date of grant of an Option, (i) the unexercised portion of such Option
shall immediately vest in full and (ii) such portion may thereafter be exercised
during the shorter of (A) the remaining stated term of the Option or (B) five
years after the date of death.
(f) Exercisability Upon Termination of Service by Disability or Retirement.
If a Participant's service with the Company and its Subsidiaries terminates by
reason of Disability or Retirement after the date of grant of an Option, (i) the
unexercised portion of such Option shall immediately vest in full and (ii) such
portion may thereafter be exercised during the shorter of (A) the remaining
stated term of the Option or (B) five years after the date of such termination
of service; provided, however, that if a Participant dies within a period of
five years after such termination of service, the unexercised portion of the
Option may thereafter be exercised, during the shorter of (i) the remaining
stated term of the Option or (ii) the period that is the longer of (A) five
years after the date of such termination of service or (B) one year after the
date of death.
(g) Effect of Other Termination of Service. If a Participant's service with
the Company and its Subsidiaries terminates for any reason other than death,
Disability or Retirement after the date of grant of an Option as described
above, the unexercised portion of an Option may thereafter be exercised during
the period ending ninety days after the date of such termination of service, but
only to the extent to which such Option was exercisable at the time of such
termination of service.
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7. Terms and Conditions of Restricted Stock
Restricted Stock granted under the Plan shall be subject to the foregoing
and the following terms and conditions and to such other terms and conditions,
not inconsistent therewith, as the Committee shall determine:
(a) Grants. A Participant may receive, on such dates as determined by the
Committee in its sole discretion, grants consisting of such amounts of
Restricted Stock as determined by the Committee in its sole discretion.
(b) Restrictions. Restricted Stock granted under the Plan may not be sold,
transferred, pledged, assigned or otherwise disposed of under any circumstances;
provided, however, that the foregoing restrictions shall elapse at such time and
upon such terms and conditions as may be specified by the Committee in the
related Award agreement(s).
(c) Acceleration. Notwithstanding anything in the Plan to the contrary, (i)
the restrictions set forth in Section 7(b) of the Plan shall automatically
elapse in the event that a Participant terminates service with the Company as a
result of death or Disability and (ii) the Committee (excluding any member
thereof whose own Award is at issue in a given case) may, in its sole
discretion, accelerate the elapsing of the restrictions set forth in Section
7(b) of the Plan in the event that a Participant terminates service with the
Company for any other reason. In the absence of such acceleration, all Shares of
Restricted Stock as to which restrictions have not previously elapsed pursuant
to Section 7(b) of the Plan shall be forfeited upon the termination of a
Participant's service with the Company for reasons other than death or
Disability.
8. Adjustments Upon Certain Events
Notwithstanding any other provisions in the Plan to the contrary, the
following provisions shall apply to all Awards granted under the Plan:
(a) Generally. In the event of any change in the outstanding Shares after
the Effective Date by reason of any Share dividend or split, reorganization,
recapitalization, merger, consolidation, spin-off, combination or exchange of
Shares or other corporate exchange, or any distribution to stockholders of
Shares other than regular cash dividends, the Committee in its sole discretion
and without liability to any person may make such substitution or adjustment, if
any, as it deems to be equitable, as to (i) the number or kind of Shares or
other securities issued or reserved for issuance pursuant to the Plan or
pursuant to outstanding Awards, (ii) the Option Price and/or (iii) any other
affected terms of such Awards.
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(b) Change in Control. In the event of a Change in Control, the Committee
in its sole discretion and without liability to any person may take such
actions, if any, as it deems necessary or desirable with respect to any Award
(including, without limitation, (i) the acceleration of an Award, (ii) the
payment of a cash amount in exchange for the cancellation of an Award and/or
(iii) the requiring of the issuance of substitute Awards that will substantially
preserve the value, rights and benefits of any affected Awards previously
granted hereunder) as of the date of the consummation of the Change in Control.
9. Successors and Assigns
The Plan shall be binding on all successors and assigns of the Company and
a Participant, including without limitation, the estate of such Participant and
the executor, administrator or trustee of such estate, or any receiver or
trustee in bankruptcy or representative of the Participant's creditors.
10. Amendments or Termination
The Board may amend, alter or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would impair the rights of any
Participant under any Award theretofore granted without such Participant's
consent.
11. Nontransferability of Awards
An Award shall not be transferable or assignable by the Participant
otherwise than by will or by the laws of descent and distribution. During the
lifetime of a Participant, an Award shall be exercisable only by such
Participant. An Award exercisable after the death of a Participant may be
exercised by the legatees, personal representatives or distributees of the
Participant. Notwithstanding anything to the contrary herein, the Committee, in
its sole discretion, shall have the authority to waive this Section 11 (or any
part thereof) to the extent that this Section 11 (or any part thereof) is not
required under the rules promulgated under any law, rule or regulation
applicable to the Company.
12. Choice of Law
The Plan shall be governed by and construed in accordance with the laws of
the State of New York applicable to contracts made and to be performed in the
State of New York.
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13. Effectiveness of the Plan
The Plan shall be effective as of the Spinoff Date.