1996 COGNIZANT CORPORATION
NON-EMPLOYEE DIRECTORS' DEFERRED COMPENSATION PLAN
1. Purpose of the Plan
The purpose of the Plan is to enhance the Company's ability to attract and
retain talented individuals to serve as members of the Board and to promote a
greater alignment of interests between non-employee directors and the
shareholders of the Company.
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) Annual Deferral Amount: As such term is defined in Section 5(a) of the
Plan.
(c) Award: A Deferred Share Unit or Deferred Cash granted pursuant to the
Plan.
(d) Beneficial Owner: As such term is defined in Rule 13d-3 under the Act
(or any successor rule thereto).
(e) Board: The Board of Directors of the Company.
(f) 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(f)(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.
(g) Code: The Internal Revenue Code of 1986, as amended, or any successor
thereto.
(h) Committee: The Compensation and Benefits Committee of the Board.
(i) Company: Cognizant Corporation, a Delaware corporation.
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(j) D&B: The Dun & Bradstreet Corporation, a Delaware corporation.
(k) Deferred Cash: A bookkeeping entry credited in accordance with an
election made by a Participant pursuant to Section 5 of the Plan.
(l) Deferred Share Unit: A bookkeeping entry, equivalent in value to one
Share, credited in accordance with an election made by a Participant
pursuant to Section 5 of the Plan.
(m) Determination Date: As such term is defined in Section 6 of the Plan.
(n) Effective Date: The date on which the Plan takes effect, as defined
pursuant to Section 13 of the Plan.
(o) Election Date: The date on which a Participant files an election with
the Secretary of the Company pursuant to Section 5 of the Plan.
(p) 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.
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(q) First Trading Date: The first date on which the Shares are traded
regular way on the principal national securities exchange on which
such Shares are listed or admitted to trading.
(r) Participant: Any director of the Company who is not an employee of the
Company or any Subsidiary of the Company (i) as of any Election Date
and (ii) during any years of service covered by the election made on
such Election Date.
(s) Person: As such term is used for purposes of Section 13(d) or 14(d) of
the Act (or any successor section thereto).
(t) Plan: The 1996 Cognizant Corporation Non-Employee Directors' Deferred
Compensation Plan.
(u) Prime Rate: The rate of interest per annum publicly announced from
time to time by The Chase Manhattan Bank as its prime rate in effect
at its principal office in New York City; provided that each change in
the Prime Rate shall be effective from and including the date such
change is publicly announced as being effective.
(v) Shares: Shares of common stock, par value $0.01 per Share, of the
Company.
(w) 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.
(x) Subsidiary: A subsidiary corporation, as defined in Section 424(f) of
the Code (or any successor section thereto).
3. 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-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,
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conclusive and binding on all parties concerned (including, but not limited to,
Participants and their beneficiaries or successors).
4. Eligibility
All Participants shall be eligible to participate under this Plan.
5. Voluntary Deferral of Cash Compensation
A Participant may voluntarily elect to defer his or her cash compensation
(including, but not limited to, annual retainer, board meeting fees, committee
meeting fees and committee chairman fees) in the following manner:
(a) Method of Election. In order to make a voluntary election pursuant to
the Plan, the Participant must complete and deliver to the Secretary of the
Company a written election, not later than 30 days after the date on which he or
she commences service as a director of the Company (or, in subsequent years, not
later than the anniversary of the normal commencement date for such director's
term), designating (i) the portion of his or her cash compensation for a year of
service as a director that is to be deferred (the "Annual Deferral Amount") and
(ii) the portion of the Annual Deferral Amount that is to be deferred into (A)
Deferred Share Units and/or (B) Deferred Cash. Such an election shall only be
effective with respect to (i) the annual retainer and (ii) any other fees earned
after the date of the election. Such election shall remain effective for all
future years of service unless the Participant makes a new election in a
subsequent year.
(b) Deferred Share Units. If a Participant elects to defer his or her
Annual Deferral Amount into Deferred Share Units, such Participant will have
Deferred Share Units credited (as of each date on which his or her cash
compensation would otherwise have been paid) to a Deferred Share Unit account
maintained for him or her on the books of the Company. The number of Deferred
Share Units (including fractional Deferred Share Units) to be credited shall be
determined by dividing (i) the amount of cash compensation to be deferred into
Deferred Share Units by (ii) the Fair Market Value of one Share on the date
credited. Deferred Share Units shall be credited with dividend equivalents when
dividends are paid on Common Shares, and such dividend equivalents shall be
converted into additional Deferred Share Units based on the Fair Market Value of
Shares on the date credited. Notwithstanding anything to the contrary in this
Section 5(b), the Fair Market Value of one Share on any date prior to the First
Trading Date shall be the Fair Market Value of one Share on the First Trading
Date.
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(c) Deferred Cash. If a Participant makes a voluntary election to defer his
or her Annual Deferral Amount into Deferred Cash, such Participant will have
Deferred Cash credited (as of each date on which his or her cash compensation
would otherwise have been paid) to a Deferred Cash account maintained for him or
her on the books of the Company. The amount of Deferred Cash to be credited
shall equal the amount of cash compensation to be deferred into Deferred Cash. A
Participant's account shall be credited with additional Deferred Cash equal to
the amount of notional interest earned on the account, assuming that such
interest is earned at the Prime Rate and compounded on an annual basis.
6. Termination of Board Service
No later than the first business day of the calendar year immediately
following the date on which a Participant terminates service with the Company
(the "Determination Date"), the Participant shall receive (a) a lump sum payment
in Shares equal in number to the Deferred Share Units credited to the
Participant's Deferred Share Unit account (provided, however, that any
fractional Shares shall be paid in cash based on the Fair Market Value of a
Share as of the Determination Date) and (b) a lump sum payment in cash equal to
the Deferred Cash credited to the Participant's Deferred Cash account.
7. Nontransferability of Units
Awards 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, Awards shall be payable only to such Participant. Awards payable
after the death of a Participant may be paid to the legatees, personal
representatives or distributees of the Participant.
8. Unfunded Plan
Unless otherwise determined by the Committee, the Plan shall be unfunded.
To the extent any individual holds any rights by virtue of an Award granted
under the Plan, such rights (unless otherwise determined by the Committee) shall
be no greater than the rights of an unsecured general creditor of the Company.
9. Adjustments Upon Certain Events
Notwithstanding any other provisions in the Plan to the contrary, the
following provisions shall apply to Awards:
(a) Generally. In the event of any change in the outstanding Shares after
the Effective Date by reason of any
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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 any Deferred Share Units granted under the Plan.
(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 Awards
(including, without limitation, (i) the acceleration of Awards, (ii) the payment
of a cash amount in exchange for the cancellation of Awards 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.
10. 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.
11. 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 Awards theretofore granted without such Participant's
consent.
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.
13. Effectiveness of the Plan
The Plan shall be effective as of the date of its adoption by the Board.