CHANGE-IN-CONTROL AGREEMENT
FOR CERTAIN EXECUTIVES
OF COGNIZANT CORPORATION
PERSONAL AND CONFIDENTIAL
T1 Cognizant Executive
Title
Dear Executive:
Cognizant Corporation (the "Company") considers it essential to the best
interests of its stockholders to xxxxxx the continued employment of key
management personnel. In this connection, the Board of Directors of the Company
(the "Board") recognizes that the possibility of a change in ownership or
control of the Company may result in the departure or distraction of such
personnel to the detriment of the Company and its stockholders. As you are a
skilled and dedicated executive with important management responsibilities and
talents, the Company believes that its best interests will be served if you are
encouraged to remain with the Company.
The Company has determined that your ability to perform your
responsibilities and utilize your talents for the benefit of the Company, and
the Company's ability to retain you as an employee, will be significantly
enhanced if you are provided with fair and reasonable protection from the risks
of a change in ownership or control of the Company. Accordingly, in order to
induce you to remain in the employ of the Company, you and the Company agree as
follows:
1. Term of Agreement.
(a) Generally. Except as provided in Section 1(b) hereof, (i) this
Agreement shall be effective as of the date on which the shares of common stock
of the Company that are owned by The Dun & Bradstreet Corporation ("D&B") are
distributed to the holders of record of shares of D&B (November 1, 1996), and
shall continue in effect through December 31, 1999, and (ii) commencing on
January 1, 2000, and each January 1 thereafter, this Agreement shall be
automatically extended for one additional year unless, not later than September
30th of the preceding year, either party to this Agreement gives notice to the
other that the Agreement shall not be extended; provided, however, that no such
notice by the Company shall be effective if a Change in Control or Potential
Change in Control (both as defined herein) shall have occurred prior to the date
of such notice.
(b) Upon a Change in Control. If a Change in Control shall have occurred at
any time during the period in which this Agreement is effective, this Agreement
shall continue in effect for (i) the remainder of the month in which the Change
in Control occurred and (ii) a term of 15 months beyond the month in which such
Change in Control occurred (such entire period hereinafter referred to as the
"Protected Period").
2. Change in Control; Potential Change in Control.
(a) A "Change in Control" shall be deemed to have occurred if:
(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 twenty-four months (not including any period
prior to the execution of this Agreement), 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 effect a transaction described in Sections (2)(a)(i), (iii) or
(iv) hereof, (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.
(b) A "Potential Change in Control" shall be deemed to have occurred if:
(i) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control;
(ii) any Person (including the Company) publicly announces an
intention to take or to consider taking actions which if consummated would
constitute a Change in Control; or
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(iii) the Board adopts a resolution to the effect that, for purposes
of this Agreement, a Potential Change in Control has occurred.
(c) Employee Covenants. You agree that, subject to the terms and conditions
of this Agreement, in the event of a Potential Change in Control, you will
remain in the employ of the Company until the earliest of (i) a date which is
180 days from the occurrence of such Potential Change in Control, (ii) the
termination of your employment by reason of Disability (as defined herein) or
(iii) the date on which you first become entitled under this Agreement to
receive the benefits provided in Section 3(b) hereof.
3. Termination.
(a) Termination by the Company for Cause, by You Without Good Reason, or by
Reason of Death or Disability. If during the Protected Period your employment by
the Company is terminated by the Company for Cause, by you without Good Reason,
or because of your death or Disability, the Company shall be relieved of its
obligation to make any payments to you other than (i) its payment of amounts
otherwise accrued and owing but not yet paid and (ii) any amounts payable under
then-existing employee benefit programs at the time such amounts are due.
(b) Termination by the Company Without Cause or by You for Good Reason. If
during the Protected Period your employment by the Company is terminated by the
Company without cause or by you for Good Reason, you shall be entitled to the
compensation and benefits described in this Section 3(b). If your employment by
the Company is terminated prior to a Change in Control at the request of a
Person engaging in a transaction or series of transactions that would result in
a Change in Control, the Protected Period shall commence upon the subsequent
occurrence of a Change in Control, your actual termination shall be deemed a
termination occurring during the Protected Period and covered by this Section
3(b), your Date of Termination shall be deemed to have occurred immediately
following the Change in Control, and Notice of Termination shall be deemed to
have been given by the Company immediately prior to your actual termination.
Your continued employment shall not constitute consent to, or a waiver of rights
with respect to, any circumstances constituting Good Reason hereunder. The
compensation and benefits provided under this Section 3(b) are as follows:
(i) The Company shall pay you your full base salary through the Date
of Termination at the rate in effect at the time Notice of Termination is
given, no later than the fifth day following the Date of Termination, and
you shall receive all other amounts to which you are entitled under any
compensation or benefit plan of the Company, at the time such payments are
due.
(ii) At the time specified in Section 3(d) hereof, the Company shall
pay you, in lieu of any further salary, bonus or severance payments for
periods subsequent to the Date of Termination, a lump sum amount in cash
equal to three times the sum of:
(A) the greater of (I) your annual base salary in effect
immediately prior to the Change in Control of the Company or (II) your
annual base salary in effect at the time Notice of Termination is
given; and
(B) the greater of (I) your annual target bonus for the year in
which the Change in Control occurs or, if no such target bonus has yet
been determined for such year, your annual target bonus actually
earned by you in the year immediately preceding the year in which the
Change in Control occurs.
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(iii) You shall be deemed fully vested under any nonqualified pension
plan of a type described in Section 201(2) of the Employee Retirement
Income Security Act of 1974, as amended, in which you participate at the
time of the Change in Control (except for any such plan established for the
sole purpose of restoring qualified pension benefits that were reduced due
to limitations imposed by Sections 415 and 401(a)(7) of the Internal
Revenue Code of 1986, as amended (the "Code")), and such nonqualified
pension plan shall be referred to as a "Covered Top-Hat Plan" for purposes
of this Section 3(b)(iii). The benefit to which you shall be entitled under
any Covered Top-Hat Plan (the "Covered Top-Hat Plan Benefit") shall be
determined using:
(A) the maximum credited service allowed to be taken into account
under the Covered Top-Hat Plan's benefit formula; and
(B) your salary and bonus taken into account under Section
3(b)(ii) hereof as your final average compensation.
Your Covered Top-Hat Plan benefit shall be payable upon the later of (A)
the date on which you turn 55 or (B) the date on which you terminate
employment from the Company. For purposes of calculating your Covered
Top-Hat Plan Benefit, you shall be deemed to have retired from the Company
at normal retirement age as if the Company had consented to such
retirement. Exhibit A to this Agreement sets forth an example of how the
compensation and benefits provided under this Section 3(b)(iii) shall be
determined.
(iv) At the time specified in Section 3(d) hereof, the Company shall
pay to you, in lieu of amounts which may otherwise be payable to you under
any bonus plan (a "Bonus Plan"), an amount in cash equal to (A) your annual
target bonus for the year in which the Change in Control occurs, multiplied
by a fraction, (I) the numerator of which equals the number of full or
partial days in such annual performance period during which you were
employed by the Company and (II) the denominator of which is 365, and (B)
the entire target bonus opportunity with respect to each performance period
in progress under all other Bonus Plans in effect at the time of
termination. Notwithstanding the foregoing, this Section 3(b)(iv) shall not
apply with respect to any amounts which may otherwise be payable to you
under the Company's Senior Executive Incentive Plan or any other Bonus Plan
of the Company that applies primarily to "covered employees" within the
meaning of Section 162(m) of the Code.
(v) The Company shall provide you with a cash allowance, at the time
specified in Section 3(d) hereof, for outplacement and job search
activities (including, but not limited to, office and secretarial expenses)
in the amount of 20% of your annual base salary and annual target bonus
taken into account under Section 3(b)(ii) hereof, provided that (A) such
cash allowance shall not exceed $100,000 and (B) such cash allowance shall
apply only to those costs or obligations that are incurred by you during
the 36-month period following your termination of employment.
(vi) For a 36-month period following your termination of employment,
the Company shall arrange to provide you with life and health insurance
benefits no less favorable than those which you were receiving immediately
prior to the Notice of Termination. Notwithstanding the foregoing, any
benefit described in the preceding sentence shall constitute secondary
coverage with respect to any life and health insurance benefits actually
received by you in connection with any subsequent employment (or
self-employment) during the 36-month period following your termination.
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(vii) Starting at age 55, you shall receive retiree medical and life
benefits from the Company. Such benefits shall be no less favorable than
the benefits that you would have received had you, at the time Notice of
Termination is given, both (A) attained age 55 and (B) retired from the
Company. Notwithstanding the foregoing, any benefit described in the
preceding sentence shall constitute secondary coverage with respect to
retiree medical and life benefits actually received by you in connection
with any subsequent employment (or self-employment) following your
termination.
(c) Excise Tax. In the event you become entitled to any amounts payable in
connection with a change in control (whether or not such amounts are payable
pursuant to this Agreement) (the "Severance Payments"), if any of such Severance
Payments are subject to the tax (the "Excise Tax") imposed by Section 4999 of
the Code (or any similar federal, state or local tax that may hereafter be
imposed), the Company shall pay to you at the time specified in Section 3(d)
hereof an additional amount (the "Gross-Up Payment") such that the net amount
retained by you, after deduction of any Excise Tax on the Total Payments (as
hereinafter defined) and any federal, state and local income tax and Excise Tax
upon the payment provided for by this Section 3(c), shall be equal to the Total
Payments. For purposes of determining whether any of the Severance Payments will
be subject to the Excise Tax and the amount of such Excise Tax: (i) any other
payments or benefits received or to be received by you in connection with a
Change in Control or your termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or agreement with the
Company, any Person whose actions result in a Change in Control or any Person
affiliated with the Company or such Person) (which, together with the Severance
Payments, constitute the "Total Payments") shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of Section 280G(b)(1) of the Code shall
be treated as subject to the Excise Tax, unless in the opinion of
nationally-recognized tax counsel selected by you such other payments or
benefits (in whole or in part) do not constitute parachute payments, or such
excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4) of the Code in excess of the base amount within the meaning of
Section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax;
(ii) the amount of the Total Payments which shall be treated as subject to the
Excise Tax shall be equal to the lesser of (A) the total amount of the Total
Payments and (B) the amount of excess parachute payments within the meaning of
Section 280G(b)(1) of the Code (after applying Section 3(c)(i) hereof); and
(iii) the value of any non-cash benefits or any deferred payments or benefit
shall be determined by a nationally-recognized accounting firm selected by you
in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up Payment, you shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be made
and state and local income taxes at the highest marginal rate of taxation in the
state and locality of your residence on the Date of Termination, net of the
maximum reduction in federal income taxes which could be obtained from deduction
of such state and local taxes. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at the time
of termination of your employment, you shall repay to the Company within ten
days after the time that the amount of such reduction in Excise Tax is finally
determined the portion of the Gross-Up Payment attributable to such reduction
(plus the portion of the Gross-Up Payment attributable to the Excise Tax and
federal and state and local income tax imposed on the Gross-Up Payment being
repaid by you if such repayment results in a reduction in Excise Tax and/or
federal and state and local income tax deduction) plus interest on the amount of
such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the
event that the Excise Tax is determined to exceed the amount taken into account
hereunder at the time of the termination of your employment (including by reason
of any payment the existence or amount of which cannot be determined at the time
of the Gross-Up Payment), the Company shall make an additional gross-up payment
in respect of such excess within ten days after the time that the amount of such
excess is finally determined.
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(d) Time of Payment. The payments provided for in Sections 3(b)(ii),
3(b)(iv) and 3(c) hereof shall be made not later than the fifth day following
the Date of Termination; provided, however, that if the amount of such payments
cannot be finally determined on or before such day, the Company shall pay to you
on such day an estimate, as determined in good faith by the Company, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in Section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to you, payable on the
fifth day after the demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code). The payments provided in Section
3(b)(v) hereof shall be made not later than the fifth day following the
submission of each receipt to the Company evidencing costs or obligations
incurred by you in connection with outplacement counseling and job search
activities.
(e) Notice. During the Protected Period, any purported termination of your
employment by the Company or by you shall be communicated by written Notice of
Termination to the other party hereto.
(f) Certain Definitions. Except as otherwise indicated in this Agreement,
all definitions in this Section 3(f) shall be applicable during the Protected
Period only.
(i) Disability. "Disability" shall mean your absence from the
full-time performance of your duties with the Company for six consecutive
months as a result of your incapacity due to physical or mental illness or
disability, and within 30 days after written Notice of Termination is
thereafter given you shall not have returned to the full-time performance
of your duties.
(ii) Cause. "Cause" shall mean termination on account of (A) the
willful and continued failure by you to substantially perform your duties
with the Company (other than any such failure resulting from your
incapacity due to physical or mental illness or disability or any failure
after the issuance of a Notice of Termination by you for Good Reason) after
a written demand for substantial performance is delivered to you by the
Board, which demand specifically identifies the manner in which the Board
believes that you have not substantially performed your duties or (B) the
willful engaging by you in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise. No act, or failure to
act, on your part shall be deemed "willful" unless done, or omitted to be
done, by you not in good faith and without reasonable belief that your
action or omission was in the best interest of the Company. Notwithstanding
the foregoing, you shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to you a copy of the
resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) off the entire membership of the Board at a meeting of
the Board (after reasonable notice to you and an opportunity for you,
together with your counsel, to be heard before the Board) finding that, in
the good faith opinion of the Board, you were guilty of conduct set forth
above in this Section 3(f)(ii) and specifying the particulars thereof in
detail.
(iii) Good Reason. "Good Reason" shall mean, without your express
written consent, the occurrence upon or after a Change in Control of any of
the following circumstances unless, in the case of Sections 3(f)(iii)(A),
(E), (F) or (G) hereof, such circumstances are fully corrected prior to the
Date of Termination specified in the Notice of Termination given in respect
thereof:
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(A) the assignment to you of any duties inconsistent with the
position in the Company that you held immediately prior to the Change
in Control, or an adverse alteration in the nature or status of your
responsibilities or the conditions of your employment from those in
effect immediately prior to such Change in Control;
(B) a reduction by the Company in your annual base salary, any
target bonus or perquisites as in effect immediately prior to the
Change in Control or as the same may be increased from time to time
except for across-the-board perquisite reductions similarly affecting
all senior executives of the Company and all senior executives of any
Person in control of the Company;
(C) the relocation of the principle place of your employment to a
location outside of (I) New York City, (II) Westchester County, New
York, or (III) Fairfield County, Connecticut; except for required
travel on the Company's business to an extent substantially consistent
with your business travel obligations prior to the Change in Control;
(D) the failure by the Company to pay to you any portion of your
compensation or to pay to you any portion of an installment of
deferred compensation under any deferred compensation program of the
Company within seven days of the date such compensation is due;
(E) the failure by the Company to continue in effect any material
compensation or benefit plan in which you participated immediately
prior to the Change in Control, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made
with respect to such plan, or the failure by the Company to continue
your participation therein (or in such substitute or alternative plan)
on a basis not materially less favorable, both in terms of the amounts
of benefits provided and the level of your participation relative to
other participants, as existed at the time of the Change in Control;
(F) the failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 6 hereof;
(G) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(f)(iv) hereof (and, if applicable, the
requirements of Section 3(f)(ii) hereof), which purported termination
shall not be effective for purposes of this Agreement; or
(H) the lapse of twelve months following the last day of the
month in which the Change in Control occurs.
(iv) Notice of Termination. "Notice of Termination" shall mean notice
indicating the specific termination provision in this Agreement relied upon
and setting forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of your employment under the provision
so indicated.
(v) Date of Termination. "Date of Termination" shall mean (A) if your
employment is terminated for Disability, 30 days after Notice of
Termination is given (provided that you shall not have returned to the
full-time performance of your duties during such 30-day period) or (B) if
your employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a termination for Cause,
shall not be less than 30 days from the date such Notice of Termination is
given and, in the case of a termination for Good Reason, shall not be less
than 15 nor more than 60 days from the date such Notice of Termination is
given).
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4. Mitigation. Except as provided in Section 3(b)(vi) and (vii) hereof, you
shall not be required to mitigate the amount of payment provided for under this
Agreement by seeking other employment or otherwise, nor shall the amount of
payment or benefit provided for under this Agreement be reduced by any
compensation earned by you as the result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be owed by you to
the Company, or otherwise.
5. Costs of Proceedings. The Company shall pay all costs and expenses,
including all attorneys' fees and disbursements, of the Company and, at least
monthly, you in connection with any legal proceedings, whether or not instituted
by the Company or you, relating to the interpretation or enforcement of any
provision of this Agreement; provided that if you instituted the proceeding and
a finding (no longer subject to appeal) is entered that you instituted the
proceeding in bad faith, you shall pay all of your costs and expenses, including
attorneys' fees and disbursements. The Company shall pay prejudgment interest on
any money judgment obtained by you as a result of such proceeding, calculated at
the prime rate of The Chase Manhattan Bank as in effect from time to time from
the date that payment should have been made to you under this Agreement.
6. Successors; Binding Agreement.
(a) The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable by you
and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. In the event of your
death, all amounts otherwise payable to you hereunder shall, unless otherwise
provided herein, be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there is no such designee, to your
estate.
7. Notice. Notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given when
(a) personally delivered or (b) mailed by United States certified or registered
mail, return receipt requested, postage prepaid, addressed to the respective
addresses set forth on the first page of this Agreement; provided that all
notice to the Company shall be directed to the attention of the Board with a
copy to the General Counsel of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
8. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by you and such officer as may be designated by the Board. No waiver
by either party hereto at any time of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the time or at any prior or subsequent time. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of New York without regard to its conflicts of law
principles. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding required
under federal, state or local law. The obligations of the Company under this
Agreement
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shall survive the expiration of this Agreement to the extent necessary to give
effect to this Agreement.
9. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
10. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. Entire Agreement. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and during the
term of this Agreement supersedes the provisions of all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative
of any party hereof with respect to the subject matter contained herein. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement. Notwithstanding anything to the
contrary in this Agreement, the procedural provisions of this Agreement shall
apply to all benefits payable as a result of a Change in Control (or other
change in control) under any employee benefit plan, agreement, program, policy
or arrangement of the Company.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter, which
will then constitute our agreement on this subject.
COGNIZANT CORPORATION
By: ___________________________________
Xxxxxx X. Xxxxxxxx
Chairman and Chief Executive Officer
Agreed to this __________________ day
of ____________________________, 1997.
-----------------------------------
Cognizant Associate's Name (typed)
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EXHIBIT A
Covered Top Hat Plan
Sample Illustration
Name of Participant Sample Employee
Social Security Number 000-00-0000
Date of Birth 01/01/48
Date of Hire 01/01/91
Current Age 50
Calculation as of: 01/01/98 01/01/98
No Change Change in
in Control Control
---------- -------
1) Final Average 250,000 300,000
Earnings*
2) Credited Service 7 15
(for Covered Top
Hat Plan)
3) Benefit 35% 60%
Percentage
(5% x (2) up to
10 years of
service plus 2%
x (2) from 10 to
15 years of
service)
4) Total Gross 87,500 180,000
Benefit
((1) x (3))
5) Retirement Plan 9,400 9,400
Offset **
6) Social Security 6,700 6,700
Benefit Offset
7) Accrued Covered 71,400 163,900
Top Hat Plan
Benefit
((4) - (5) - (6))
8) Early Retirement 50% 100%
Reduction
Factor***
9) Vested 100% 100%
Percentage****
10
10) Vested Covered 35,700 163,900
Top Hat Plan
Benefit
((7) x (8) x (9))
*****
------------------------------
* The calculations based on "No Change in Control" reflect the terms of the
proposed covered top hat plan including five-year final average earnings;
"Change in Control" calculations are based on earnings as determined under
Section 3(b)(ii) of the Agreement.
** The retirement plan offset is based on the terms of D&B's current Master
Retirement Plan. It is equal to the vested benefit payable from that plan.
For participants with less than 5 years of service, the vested benefit is
0.
*** If a participant terminates prior to retirement eligibility (age 55 and 10
years of service) and without the Corporation's consent, benefits are
reduced 10% for each year that commencement precedes age 60.
**** "No Change in Control" calculations reflect full vesting after 5 years;
"Change in Control" calculations reflect automatic 100% vesting regardless
of service.
*****Annual benefit payable for life starting at age 55, or immediately if over
age 55.
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CHANGE-IN-CONTROL AGREEMENT
FOR CERTAIN EXECUTIVES
OF COGNIZANT CORPORATION
PERSONAL AND CONFIDENTIAL
T2 Cognizant Executive
Title(s)
Address
Dear T2 Executive:
Cognizant Corporation (the "Company") considers it essential to the best
interests of its stockholders to xxxxxx the continued employment of key
management personnel. In this connection, the Board of Directors of the Company
(the "Board") recognizes that the possibility of a change in ownership or
control of the Company may result in the departure or distraction of such
personnel to the detriment of the Company and its stockholders. As you are a
skilled and dedicated executive with important management responsibilities and
talents, the Company believes that its best interests will be served if you are
encouraged to remain with the Company.
The Company has determined that your ability to perform your
responsibilities and utilize your talents for the benefit of the Company, and
the Company's ability to retain you as an employee, will be significantly
enhanced if you are provided with fair and reasonable protection from the risks
of a change in ownership or control of the Company. Accordingly, in order to
induce you to remain in the employ of the Company, you and the Company agree as
follows:
1. Term of Agreement.
(a) Generally. Except as provided in Section 1(b) hereof, (i) this
Agreement shall be effective as of the date on which the shares of common stock
of the Company that are owned by The Dun & Bradstreet Corporation ("D&B") are
distributed to the holders of record of shares of D&B (November 1, 1996), and
shall continue in effect through December 31, 1999, and (ii) commencing on
January 1, 2000, and each January 1 thereafter, this Agreement shall be
automatically extended for one additional year unless, not later than September
30th of the preceding year, either party to this Agreement gives notice to the
other that the Agreement shall not be extended; provided, however, that no such
notice by the Company shall be effective if a Change in Control or Potential
Change in Control (both as defined herein) shall have occurred prior to the date
of such notice.
(b) Upon a Change in Control. If a Change in Control shall have occurred at
any time during the period in which this Agreement is effective, this Agreement
shall continue in effect for (i) the remainder of the month in which the Change
in Control occurred and (ii) a term of 15 months beyond the month in which such
Change in Control occurred (such entire period hereinafter referred to as the
"Protected Period").
2. Change in Control; Potential Change in Control.
(a) A "Change in Control" shall be deemed to have occurred if:
(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 twenty-four months (not including any period
prior to the execution of this Agreement), 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 effect a transaction described in Sections (2)(a)(i), (iii) or
(iv) hereof, (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.
(b) A "Potential Change in Control" shall be deemed to have occurred if:
(i) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control;
(ii) any Person (including the Company) publicly announces an
intention to take or to consider taking actions which if consummated would
constitute a Change in Control; or
2
(iii) the Board adopts a resolution to the effect that, for purposes
of this Agreement, a Potential Change in Control has occurred.
(c) Employee Covenants. You agree that, subject to the terms and conditions
of this Agreement, in the event of a Potential Change in Control, you will
remain in the employ of the Company until the earliest of (i) a date which is
180 days from the occurrence of such Potential Change in Control, (ii) the
termination of your employment by reason of Disability (as defined herein) or
(iii) the date on which you first become entitled under this Agreement to
receive the benefits provided in Section 3(b) hereof.
3. Termination.
(a) Termination by the Company for Cause, by You Without Good Reason, or by
Reason of Death or Disability. If during the Protected Period your employment by
the Company is terminated by the Company for Cause, by you without Good Reason,
or because of your death or Disability, the Company shall be relieved of its
obligation to make any payments to you other than (i) its payment of amounts
otherwise accrued and owing but not yet paid and (ii) any amounts payable under
then-existing employee benefit programs at the time such amounts are due.
(b) Termination by the Company Without Cause or by You for Good Reason. If
during the Protected Period your employment by the Company is terminated by the
Company without cause or by you for Good Reason, you shall be entitled to the
compensation and benefits described in this Section 3(b). If your employment by
the Company is terminated prior to a Change in Control at the request of a
Person engaging in a transaction or series of transactions that would result in
a Change in Control, the Protected Period shall commence upon the subsequent
occurrence of a Change in Control, your actual termination shall be deemed a
termination occurring during the Protected Period and covered by this Section
3(b), your Date of Termination shall be deemed to have occurred immediately
following the Change in Control, and Notice of Termination shall be deemed to
have been given by the Company immediately prior to your actual termination.
Your continued employment shall not constitute consent to, or a waiver of rights
with respect to, any circumstances constituting Good Reason hereunder. The
compensation and benefits provided under this Section 3(b) are as follows:
(i) The Company shall pay you your full base salary through the Date
of Termination at the rate in effect at the time Notice of Termination is
given, no later than the fifth day following the Date of Termination, and
you shall receive all other amounts to which you are entitled under any
compensation or benefit plan of the Company, at the time such payments are
due.
(ii) At the time specified in Section 3(d) hereof, the Company shall
pay you, in lieu of any further salary, bonus or severance payments for
periods subsequent to the Date of Termination, a lump sum amount in cash
equal to three times the sum of:
(A) the greater of (I) your annual base salary in effect
immediately prior to the Change in Control of the Company or (II) your
annual base salary in effect at the time Notice of Termination is
given; and
(B) the greater of (I) your annual target bonus for the year in
which the Change in Control occurs or, if no such target bonus has yet
been determined for such year, your annual target bonus actually
earned by you in the year immediately preceding the year in which the
Change in Control occurs.
3
(iii) At the time specified in Section 3(d) hereof, the Company
shall pay to you, in lieu of amounts which may otherwise be payable to
you under any bonus plan (a "Bonus Plan"), an amount in cash equal to
(A) your annual target bonus for the year in which the Change in
Control occurs, multiplied by a fraction, (I) the numerator of which
equals the number of full or partial days in such annual performance
period during which you were employed by the Company and (II) the
denominator of which is 365, and (B) the entire target bonus
opportunity with respect to each performance period in progress under
all other Bonus Plans in effect at the time of termination.
Notwithstanding the foregoing, this Section 3(b)(iii) shall not apply
with respect to any amounts which may otherwise be payable to you
under the Company's Senior Executive Incentive Plan or any other Bonus
Plan of the Company that applies primarily to "covered employees"
within the meaning of Section 162(m) of the Code.
(iv) The Company shall provide you with a cash allowance, at the
time specified in Section 3(d) hereof, for outplacement and job search
activities (including, but not limited to, office and secretarial
expenses) in the amount of 20% of your annual base salary and annual
target bonus taken into account under Section 3(b)(ii) hereof,
provided that (A) such cash allowance shall not exceed $100,000 and
(B) such cash allowance shall apply only to those costs or obligations
that are incurred by you during the 36-month period following your
termination of employment.
(v) For a 36-month period following your termination of
employment, the Company shall arrange to provide you with life and
health insurance benefits no less favorable than those which you were
receiving immediately prior to the Notice of Termination.
Notwithstanding the foregoing, any benefit described in the preceding
sentence shall constitute secondary coverage with respect to any life
and health insurance benefits actually received by you in connection
with any subsequent employment (or self-employment) during the
36-month period following your termination.
(vi) Starting at age 55, you shall receive retiree medical and
life benefits from the Company. Such benefits shall be no less
favorable than the benefits that you would have received had you, at
the time Notice of Termination is given, both (A) attained age 55 and
(B) retired from the Company. Notwithstanding the foregoing, any
benefit described in the preceding sentence shall constitute secondary
coverage with respect to retiree medical and life benefits actually
received by you in connection with any subsequent employment (or
self-employment) following your termination.
(c) Excise Tax. In the event you become entitled to any amounts payable in
connection with a change in control (whether or not such amounts are payable
pursuant to this Agreement) (the "Severance Payments"), if any of such Severance
Payments are subject to the tax (the "Excise Tax") imposed by Section 4999 of
the Code (or any similar federal, state or local tax that may hereafter be
imposed), the Company shall pay to you at the time specified in Section 3(d)
hereof an additional amount (the "Gross-Up Payment") such that the net amount
retained by you, after deduction of any Excise Tax on the Total Payments (as
hereinafter defined) and any federal, state and local income tax and Excise Tax
upon the payment provided for by this Section 3(c), shall be equal to the Total
Payments. For purposes of determining whether any of the Severance Payments will
be subject to the Excise Tax and the amount of such Excise Tax: (i) any other
payments or benefits received or to be received by you in connection with a
Change in Control or your termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or agreement with the
Company, any Person whose actions result in a Change in Control or any Person
affiliated with the Company or such Person) (which, together with the Severance
Payments, constitute the "Total Payments") shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of Section 280G(b)(1) of the Code shall
be treated as subject to the Excise Tax, unless in the opinion of
nationally-recognized tax counsel selected by you such other payments or
benefits (in whole or in part) do not constitute
4
parachute payments, or such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered within the
meaning of Section 280G(b)(4) of the Code in excess of the base amount within
the meaning of Section 280G(b)(3) of the Code, or are otherwise not subject to
the Excise Tax; (ii) the amount of the Total Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of (A) the total amount
of the Total Payments and (B) the amount of excess parachute payments within the
meaning of Section 280G(b)(1) of the Code (after applying Section 3(c)(i)
hereof); and (iii) the value of any non-cash benefits or any deferred payments
or benefit shall be determined by a nationally-recognized accounting firm
selected by you in accordance with the principles of Sections 280G(d)(3) and (4)
of the Code. For purposes of determining the amount of the Gross-Up Payment, you
shall be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up Payment is to
be made and state and local income taxes at the highest marginal rate of
taxation in the state and locality of your residence on the Date of Termination,
net of the maximum reduction in federal income taxes which could be obtained
from deduction of such state and local taxes. In the event that the Excise Tax
is subsequently determined to be less than the amount taken into account
hereunder at the time of termination of your employment, you shall repay to the
Company within ten days after the time that the amount of such reduction in
Excise Tax is finally determined the portion of the Gross-Up Payment
attributable to such reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax and federal and state and local income tax
imposed on the Gross-Up Payment being repaid by you if such repayment results in
a reduction in Excise Tax and/or federal and state and local income tax
deduction) plus interest on the amount of such repayment at the rate provided in
Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the time of the
termination of your employment (including by reason of any payment the existence
or amount of which cannot be determined at the time of the Gross-Up Payment),
the Company shall make an additional gross-up payment in respect of such excess
within ten days after the time that the amount of such excess is finally
determined.
(d) Time of Payment. The payments provided for in Sections 3(b)(ii),
3(b)(iii) and 3(c) hereof shall be made not later than the fifth day following
the Date of Termination; provided, however, that if the amount of such payments
cannot be finally determined on or before such day, the Company shall pay to you
on such day an estimate, as determined in good faith by the Company, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in Section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to you, payable on the
fifth day after the demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code). The payments provided in Section
3(b)(iv) hereof shall be made not later than the fifth day following the
submission of each receipt to the Company evidencing costs or obligations
incurred by you in connection with outplacement counseling and job search
activities.
(e) Notice. During the Protected Period, any purported termination of your
employment by the Company or by you shall be communicated by written Notice of
Termination to the other party hereto.
(f) Certain Definitions. Except as otherwise indicated in this Agreement,
all definitions in this Section 3(f) shall be applicable during the Protected
Period only.
(i) Disability. "Disability" shall mean your absence from the
full-time performance of your duties with the Company for six consecutive
months as a result of your incapacity due to physical or mental illness or
disability, and within 30 days after written Notice of Termination is
thereafter given you shall not have returned to the full-time performance
of your duties.
5
(ii) Cause. "Cause" shall mean termination on account of (A) the
willful and continued failure by you to substantially perform your duties
with the Company (other than any such failure resulting from your
incapacity due to physical or mental illness or disability or any failure
after the issuance of a Notice of Termination by you for Good Reason) after
a written demand for substantial performance is delivered to you by the
Board, which demand specifically identifies the manner in which the Board
believes that you have not substantially performed your duties or (B) the
willful engaging by you in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise. No act, or failure to
act, on your part shall be deemed "willful" unless done, or omitted to be
done, by you not in good faith and without reasonable belief that your
action or omission was in the best interest of the Company. Notwithstanding
the foregoing, you shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to you a copy of the
resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) off the entire membership of the Board at a meeting of
the Board (after reasonable notice to you and an opportunity for you,
together with your counsel, to be heard before the Board) finding that, in
the good faith opinion of the Board, you were guilty of conduct set forth
above in this Section 3(f)(ii) and specifying the particulars thereof in
detail.
(iii) Good Reason. "Good Reason" shall mean, without your express
written consent, the occurrence upon or after a Change in Control of any of
the following circumstances unless, in the case of Sections 3(f)(iii)(A),
(E), (F) or (G) hereof, such circumstances are fully corrected prior to the
Date of Termination specified in the Notice of Termination given in respect
thereof:
(A) the assignment to you of any duties inconsistent with the
position in the Company that you held immediately prior to the Change
in Control, or an adverse alteration in the nature or status of your
responsibilities or the conditions of your employment from those in
effect immediately prior to such Change in Control;
(B) a reduction by the Company in your annual base salary, any
target bonus or perquisites as in effect immediately prior to the
Change in Control or as the same may be increased from time to time
except for across-the-board perquisite reductions similarly affecting
all senior executives of the Company and all senior executives of any
Person in control of the Company;
(C) the relocation of the principle place of your employment to a
location outside of (I) New York City, (II) Westchester County, New
York, or (III) Fairfield County, Connecticut; except for required
travel on the Company's business to an extent substantially consistent
with your business travel obligations prior to the Change in Control;
(D) the failure by the Company to pay to you any portion of your
compensation or to pay to you any portion of an installment of
deferred compensation under any deferred compensation program of the
Company within seven days of the date such compensation is due;
(E) the failure by the Company to continue in effect any material
compensation or benefit plan in which you participated immediately
prior to the Change in Control, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made
with respect to such plan, or the failure by the Company to continue
your participation therein (or in such substitute or alternative plan)
on a basis not materially less favorable, both in terms of the amounts
of benefits provided and the level of your participation relative to
other participants, as existed at the time of the Change in Control;
6
(F) the failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 6 hereof;
(G) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(f)(iv) hereof (and, if applicable, the
requirements of Section 3(f)(ii) hereof), which purported termination
shall not be effective for purposes of this Agreement; or
(H) the lapse of twelve months following the last day of the
month in which the Change in Control occurs.
(iv) Notice of Termination. "Notice of Termination" shall mean notice
indicating the specific termination provision in this Agreement relied upon
and setting forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of your employment under the provision
so indicated.
(v) Date of Termination. "Date of Termination" shall mean (A) if your
employment is terminated for Disability, 30 days after Notice of
Termination is given (provided that you shall not have returned to the
full-time performance of your duties during such 30-day period) or (B) if
your employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a termination for Cause,
shall not be less than 30 days from the date such Notice of Termination is
given and, in the case of a termination for Good Reason, shall not be less
than 15 nor more than 60 days from the date such Notice of Termination is
given).
4. Mitigation. Except as provided in Section 3(b)(v) and (vi) hereof, you
shall not be required to mitigate the amount of payment provided for under this
Agreement by seeking other employment or otherwise, nor shall the amount of
payment or benefit provided for under this Agreement be reduced by any
compensation earned by you as the result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be owed by you to
the Company, or otherwise.
5. Costs of Proceedings. The Company shall pay all costs and expenses,
including all attorneys' fees and disbursements, of the Company and, at least
monthly, you in connection with any legal proceedings, whether or not instituted
by the Company or you, relating to the interpretation or enforcement of any
provision of this Agreement; provided that if you instituted the proceeding and
a finding (no longer subject to appeal) is entered that you instituted the
proceeding in bad faith, you shall pay all of your costs and expenses, including
attorneys' fees and disbursements. The Company shall pay prejudgment interest on
any money judgment obtained by you as a result of such proceeding, calculated at
the prime rate of The Chase Manhattan Bank as in effect from time to time from
the date that payment should have been made to you under this Agreement.
6. Successors; Binding Agreement.
(a) The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
7
(b) This Agreement shall inure to the benefit of and be enforceable by you
and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. In the event of your
death, all amounts otherwise payable to you hereunder shall, unless otherwise
provided herein, be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there is no such designee, to your
estate.
7. Notice. Notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given when
(a) personally delivered or (b) mailed by United States certified or registered
mail, return receipt requested, postage prepaid, addressed to the respective
addresses set forth on the first page of this Agreement; provided that all
notice to the Company shall be directed to the attention of the Board with a
copy to the General Counsel of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
8. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by you and such officer as may be designated by the Board. No waiver
by either party hereto at any time of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the time or at any prior or subsequent time. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of New York without regard to its conflicts of law
principles. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding required
under federal, state or local law. The obligations of the Company under this
Agreement shall survive the expiration of this Agreement to the extent necessary
to give effect to this Agreement.
9. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
10. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. Entire Agreement. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and during the
term of this Agreement supersedes the provisions of all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative
of any party hereof with respect to the subject matter contained herein. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement. Notwithstanding anything to the
contrary in this Agreement, the procedural provisions of this Agreement shall
apply to all benefits payable as a result of a Change in Control (or other
change in control) under any employee benefit plan, agreement, program, policy
or arrangement of the Company.
8
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter, which
will then constitute our agreement on this subject.
COGNIZANT CORPORATION
By: ___________________________________
Xxxxxx X. Xxxxxxxx
Chairman and Chief Executive Officer
Agreed to this ____________________ day
of ____________________________, 1997.
-----------------------------------
Cognizant Executive's Name (typed)
9
CHANGE-IN-CONTROL AGREEMENT
FOR CERTAIN EXECUTIVES
OF COGNIZANT CORPORATION
PERSONAL AND CONFIDENTIAL
T3 Cognizant Executive
Title
Department
Dear T3 Executive:
Cognizant Corporation (the "Company") considers it essential to the best
interests of its stockholders to xxxxxx the continued employment of key
management personnel. In this connection, the Board of Directors of the Company
(the "Board") recognizes that the possibility of a change in ownership or
control of the Company may result in the departure or distraction of such
personnel to the detriment of the Company and its stockholders. As you are a
skilled and dedicated executive with important management responsibilities and
talents, the Company believes that its best interests will be served if you are
encouraged to remain with the Company.
The Company has determined that your ability to perform your
responsibilities and utilize your talents for the benefit of the Company, and
the Company's ability to retain you as an employee, will be significantly
enhanced if you are provided with fair and reasonable protection from the risks
of a change in ownership or control of the Company. Accordingly, in order to
induce you to remain in the employ of the Company, you and the Company agree as
follows:
1. Term of Agreement.
(a) Generally. Except as provided in Section 1(b) hereof, (i) this
Agreement shall be effective as of the date on which the shares of common stock
of the Company that are owned by The Dun & Bradstreet Corporation ("D&B") are
distributed to the holders of record of shares of D&B (November 1, 1996), and
shall continue in effect through December 31, 1999, and (ii) commencing on
January 1, 2000, and each January 1 thereafter, this Agreement shall be
automatically extended for one additional year unless, not later than September
30th of the preceding year, either party to this Agreement gives notice to the
other that the Agreement shall not be extended; provided, however, that no such
notice by the Company shall be effective if a Change in Control or Potential
Change in Control (both as defined herein) shall have occurred prior to the date
of such notice.
(b) Upon a Change in Control. If a Change in Control shall have occurred at
any time during the period in which this Agreement is effective, this Agreement
shall continue in effect for (i) the remainder of the month in which the Change
in Control occurred and (ii) a term of 15 months beyond the month in which such
Change in Control occurred (such entire period hereinafter referred to as the
"Protected Period").
2. Change in Control; Potential Change in Control.
(a) A "Change in Control" shall be deemed to have occurred if:
(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 twenty-four months (not including any period
prior to the execution of this Agreement), 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 effect a transaction described in Sections (2)(a)(i), (iii) or
(iv) hereof, (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.
(b) A "Potential Change in Control" shall be deemed to have occurred if:
(i) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control;
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(ii) any Person (including the Company) publicly announces an
intention to take or to consider taking actions which if consummated would
constitute a Change in Control; or (iii) the Board adopts a resolution to
the effect that, for purposes of this Agreement, a Potential Change in
Control has occurred.
(c) Employee Covenants. You agree that, subject to the terms and conditions
of this Agreement, in the event of a Potential Change in Control, you will
remain in the employ of the Company until the earliest of (i) a date which is
180 days from the occurrence of such Potential Change in Control, (ii) the
termination of your employment by reason of Disability (as defined herein) or
(iii) the date on which you first become entitled under this Agreement to
receive the benefits provided in Section 3(b) hereof.
3. Termination.
(a) Termination by the Company for Cause, by You Without Good Reason, or by
Reason of Death or Disability. If during the Protected Period your employment by
the Company is terminated by the Company for Cause, by you without Good Reason,
or because of your death or Disability, the Company shall be relieved of its
obligation to make any payments to you other than (i) its payment of amounts
otherwise accrued and owing but not yet paid and (ii) any amounts payable under
then-existing employee benefit programs at the time such amounts are due.
(b) Termination by the Company Without Cause or by You for Good Reason. If
during the Protected Period your employment by the Company is terminated by the
Company without cause or by you for Good Reason, you shall be entitled to the
compensation and benefits described in this Section 3(b). If your employment by
the Company is terminated prior to a Change in Control at the request of a
Person engaging in a transaction or series of transactions that would result in
a Change in Control, the Protected Period shall commence upon the subsequent
occurrence of a Change in Control, your actual termination shall be deemed a
termination occurring during the Protected Period and covered by this Section
3(b), your Date of Termination shall be deemed to have occurred immediately
following the Change in Control, and Notice of Termination shall be deemed to
have been given by the Company immediately prior to your actual termination.
Your continued employment shall not constitute consent to, or a waiver of rights
with respect to, any circumstances constituting Good Reason hereunder. The
compensation and benefits provided under this Section 3(b) are as follows:
(i) The Company shall pay you your full base salary through the Date
of Termination at the rate in effect at the time Notice of Termination is
given, no later than the fifth day following the Date of Termination, and
you shall receive all other amounts to which you are entitled under any
compensation or benefit plan of the Company, at the time such payments are
due.
(ii) At the time specified in Section 3(d) hereof, the Company shall
pay you, in lieu of any further salary, bonus or severance payments for
periods subsequent to the Date of Termination, a lump sum amount in cash
equal two times the sum of:
(A) the greater of (I) your annual base salary in effect
immediately prior to the Change in Control of the Company or (II) your
annual base salary in effect at the time Notice of Termination is
given; and
(B) the greater of (I) your annual target bonus for the year in
which the Change in Control occurs or, if no such target bonus has yet
been determined for such year, your annual target bonus actually
earned by you in the year immediately preceding the year in which the
Change in Control occurs.
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(iii) At the time specified in Section 3(d) hereof, the Company shall
pay to you, in lieu of amounts which may otherwise be payable to you under
any bonus plan (a "Bonus Plan"), an amount in cash equal to (A) your annual
target bonus for the year in which the Change in Control occurs, multiplied
by a fraction, (I) the numerator of which equals the number of full or
partial days in such annual performance period during which you were
employed by the Company and (II) the denominator of which is 365, and (B)
the entire target bonus opportunity with respect to each performance period
in progress under all other Bonus Plans in effect at the time of
termination. Notwithstanding the foregoing, this Section 3(b)(iii) shall
not apply with respect to any amounts which may otherwise be payable to you
under the Company's Senior Executive Incentive Plan or any other Bonus Plan
of the Company that applies primarily to "covered employees" within the
meaning of Section 162(m) of the Code.
(iv) The Company shall provide you with a cash allowance, at the time
specified in Section 3(d) hereof, for outplacement and job search
activities (including, but not limited to, office and secretarial expenses)
in the amount of 20% of your annual base salary and annual target bonus
taken into account under Section 3(b)(ii) hereof, provided that (A) such
cash allowance shall not exceed $100,000 and (B) such cash allowance shall
apply only to those costs or obligations that are incurred by you during
the 36-month period following your termination of employment.
(v) For a 24-month period following your termination of employment,
the Company shall arrange to provide you with life and health insurance
benefits no less favorable than those which you were receiving immediately
prior to the Notice of Termination. Notwithstanding the foregoing, any
benefit described in the preceding sentence shall constitute secondary
coverage with respect to any life and health insurance benefits actually
received by you in connection with any subsequent employment (or
self-employment) during the 24-month period following your termination.
(vi) Starting at age 55, you shall receive retiree medical and life
benefits from the Company. Such benefits shall be no less favorable than
the benefits that you would have received had you, at the time Notice of
Termination is given, both (A) attained age 55 and (B) retired from the
Company. Notwithstanding the foregoing, any benefit described in the
preceding sentence shall constitute secondary coverage with respect to
retiree medical and life benefits actually received by you in connection
with any subsequent employment (or self-employment) following your
termination.
(c) Excise Tax. In the event you become entitled to any amounts payable in
connection with a change in control (whether or not such amounts are payable
pursuant to this Agreement) (the "Severance Payments"), if any of such Severance
Payments are subject to the tax (the "Excise Tax") imposed by Section 4999 of
the Code (or any similar federal, state or local tax that may hereafter be
imposed), the Company shall pay to you at the time specified in Section 3(d)
hereof an additional amount (the "Gross-Up Payment") such that the net amount
retained by you, after deduction of any Excise Tax on the Total Payments (as
hereinafter defined) and any federal, state and local income tax and Excise Tax
upon the payment provided for by this Section 3(c), shall be equal to the Total
Payments. For purposes of determining whether any of the Severance Payments will
be subject to the Excise Tax and the amount of such Excise Tax: (i) any other
payments or benefits received or to be received by you in connection with a
Change in Control or your termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or agreement with the
Company, any Person whose actions result in a Change in Control or any Person
affiliated with the Company or such Person) (which, together with the Severance
Payments, constitute the "Total Payments") shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of Section 280G(b)(1) of the Code shall
be treated as subject to the Excise Tax, unless in the opinion of
nationally-recognized tax counsel selected by you such other payments or
benefits (in whole or in part) do not constitute
4
parachute payments, or such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered within the
meaning of Section 280G(b)(4) of the Code in excess of the base amount within
the meaning of Section 280G(b)(3) of the Code, or are otherwise not subject to
the Excise Tax; (ii) the amount of the Total Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of (A) the total amount
of the Total Payments and (B) the amount of excess parachute payments within the
meaning of Section 280G(b)(1) of the Code (after applying Section 3(c)(i)
hereof); and (iii) the value of any non-cash benefits or any deferred payments
or benefit shall be determined by a nationally-recognized accounting firm
selected by you in accordance with the principles of Sections 280G(d)(3) and (4)
of the Code. For purposes of determining the amount of the Gross-Up Payment, you
shall be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up Payment is to
be made and state and local income taxes at the highest marginal rate of
taxation in the state and locality of your residence on the Date of Termination,
net of the maximum reduction in federal income taxes which could be obtained
from deduction of such state and local taxes. In the event that the Excise Tax
is subsequently determined to be less than the amount taken into account
hereunder at the time of termination of your employment, you shall repay to the
Company within ten days after the time that the amount of such reduction in
Excise Tax is finally determined the portion of the Gross-Up Payment
attributable to such reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax and federal and state and local income tax
imposed on the Gross-Up Payment being repaid by you if such repayment results in
a reduction in Excise Tax and/or federal and state and local income tax
deduction) plus interest on the amount of such repayment at the rate provided in
Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the time of the
termination of your employment (including by reason of any payment the existence
or amount of which cannot be determined at the time of the Gross-Up Payment),
the Company shall make an additional gross-up payment in respect of such excess
within ten days after the time that the amount of such excess is finally
determined.
(d) Time of Payment. The payments provided for in Sections 3(b)(ii),
3(b)(iii) and 3(c) hereof shall be made not later than the fifth day following
the Date of Termination; provided, however, that if the amount of such payments
cannot be finally determined on or before such day, the Company shall pay to you
on such day an estimate, as determined in good faith by the Company, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in Section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to you, payable on the
fifth day after the demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code). The payments provided in Section
3(b)(iv) hereof shall be made not later than the fifth day following the
submission of each receipt to the Company evidencing costs or obligations
incurred by you in connection with outplacement counseling and job search
activities.
(e) Notice. During the Protected Period, any purported termination of your
employment by the Company or by you shall be communicated by written Notice of
Termination to the other party hereto.
(f) Certain Definitions. Except as otherwise indicated in this Agreement,
all definitions in this Section 3(f) shall be applicable during the Protected
Period only.
(i) Disability. "Disability" shall mean your absence from the
full-time performance of your duties with the Company for six consecutive
months as a result of your incapacity due to physical or mental illness or
disability, and within 30 days after written Notice of Termination is
thereafter given you shall not have returned to the full-time performance
of your duties.
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(ii) Cause. "Cause" shall mean termination on account of (A) the
willful and continued failure by you to substantially perform your duties
with the Company (other than any such failure resulting from your
incapacity due to physical or mental illness or disability or any failure
after the issuance of a Notice of Termination by you for Good Reason) after
a written demand for substantial performance is delivered to you by the
Board, which demand specifically identifies the manner in which the Board
believes that you have not substantially performed your duties or (B) the
willful engaging by you in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise. No act, or failure to
act, on your part shall be deemed "willful" unless done, or omitted to be
done, by you not in good faith and without reasonable belief that your
action or omission was in the best interest of the Company. Notwithstanding
the foregoing, you shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to you a copy of the
resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) off the entire membership of the Board at a meeting of
the Board (after reasonable notice to you and an opportunity for you,
together with your counsel, to be heard before the Board) finding that, in
the good faith opinion of the Board, you were guilty of conduct set forth
above in this Section 3(f)(ii) and specifying the particulars thereof in
detail.
(iii) Good Reason. "Good Reason" shall mean, without your express
written consent, the occurrence upon or after a Change in Control of any of
the following circumstances unless, in the case of Sections 3(f)(iii)(A),
(E), (F) or (G) hereof, such circumstances are fully corrected prior to the
Date of Termination specified in the Notice of Termination given in respect
thereof:
(A) the assignment to you of any duties inconsistent with the
position in the Company that you held immediately prior to the Change
in Control, or an adverse alteration in the nature or status of your
responsibilities or the conditions of your employment from those in
effect immediately prior to such Change in Control;
(B) a reduction by the Company in your annual base salary, any
target bonus or perquisites as in effect immediately prior to the
Change in Control or as the same may be increased from time to time
except for across-the-board perquisite reductions similarly affecting
all senior executives of the Company and all senior executives of any
Person in control of the Company;
(C) the relocation of the principle place of your employment to a
location outside of (I) New York City, (II) Westchester County, New
York, or (III) Fairfield County, Connecticut; except for required
travel on the Company's business to an extent substantially consistent
with your business travel obligations prior to the Change in Control;
(D) the failure by the Company to pay to you any portion of your
compensation or to pay to you any portion of an installment of deferred
compensation under any deferred compensation program of the Company
within seven days of the date such compensation is due;
(E) the failure by the Company to continue in effect any material
compensation or benefit plan in which you participated immediately
prior to the Change in Control, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made
with respect to such plan, or the failure by the Company to continue
your participation therein (or in such substitute or alternative plan)
on a basis not materially less favorable, both in terms of the amounts
of benefits provided and the level of your participation relative to
other participants, as existed at the time of the Change in Control;
6
(F) the failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 6 hereof;
(G) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(f)(iv) hereof (and, if applicable, the
requirements of Section 3(f)(ii) hereof), which purported termination
shall not be effective for purposes of this Agreement; or
(H) the lapse of twelve months following the last day of the
month in which the Change in Control occurs.
(iv) Notice of Termination. "Notice of Termination" shall mean notice
indicating the specific termination provision in this Agreement relied upon
and setting forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of your employment under the provision
so indicated.
(v) Date of Termination. "Date of Termination" shall mean (A) if your
employment is terminated for Disability, 30 days after Notice of
Termination is given (provided that you shall not have returned to the
full-time performance of your duties during such 30-day period) or (B) if
your employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a termination for Cause,
shall not be less than 30 days from the date such Notice of Termination is
given and, in the case of a termination for Good Reason, shall not be less
than 15 nor more than 60 days from the date such Notice of Termination is
given).
4. Mitigation. Except as provided in Section 3(b)(v) and (vi) hereof, you
shall not be required to mitigate the amount of payment provided for under this
Agreement by seeking other employment or otherwise, nor shall the amount of
payment or benefit provided for under this Agreement be reduced by any
compensation earned by you as the result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be owed by you to
the Company, or otherwise.
5. Costs of Proceedings. The Company shall pay all costs and expenses,
including all attorneys' fees and disbursements, of the Company and, at least
monthly, you in connection with any legal proceedings, whether or not instituted
by the Company or you, relating to the interpretation or enforcement of any
provision of this Agreement; provided that if you instituted the proceeding and
a finding (no longer subject to appeal) is entered that you instituted the
proceeding in bad faith, you shall pay all of your costs and expenses, including
attorneys' fees and disbursements. The Company shall pay prejudgment interest on
any money judgment obtained by you as a result of such proceeding, calculated at
the prime rate of The Chase Manhattan Bank as in effect from time to time from
the date that payment should have been made to you under this Agreement.
6. Successors; Binding Agreement.
(a) The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
7
(b) This Agreement shall inure to the benefit of and be enforceable by you
and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. In the event of your
death, all amounts otherwise payable to you hereunder shall, unless otherwise
provided herein, be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there is no such designee, to your
estate.
7. Notice. Notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given when
(a) personally delivered or (b) mailed by United States certified or registered
mail, return receipt requested, postage prepaid, addressed to the respective
addresses set forth on the first page of this Agreement; provided that all
notice to the Company shall be directed to the attention of the Board with a
copy to the General Counsel of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
8. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by you and such officer as may be designated by the Board. No waiver
by either party hereto at any time of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the time or at any prior or subsequent time. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of New York without regard to its conflicts of law
principles. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding required
under federal, state or local law. The obligations of the Company under this
Agreement shall survive the expiration of this Agreement to the extent necessary
to give effect to this Agreement.
9. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
10. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. Entire Agreement. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and during the
term of this Agreement supersedes the provisions of all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative
of any party hereof with respect to the subject matter contained herein. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement. Notwithstanding anything to the
contrary in this Agreement, the procedural provisions of this Agreement shall
apply to all benefits payable as a result of a Change in Control (or other
change in control) under any employee benefit plan, agreement, program, policy
or arrangement of the Company.
8
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter, which
will then constitute our agreement on this subject.
COGNIZANT CORPORATION
By: ___________________________________
Xxxxxx X. Xxxxxxxx
Chairman and Chief Executive Officer
Agreed to this ____________________ day
of ____________________________, 1997.
-----------------------------------
Cognizant Executive's Name (typed)
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