1998 Dun & Bradstreet Corporation Replacement Plan for Certain Employees Holding Dun & Bradstreet Corporation Equity-Based Awards - The Dun & Bradstreet Corp.
1998 DUN & BRADSTREET CORPORATION REPLACEMENT PLAN
FOR CERTAIN EMPLOYEES HOLDING DUN & BRADSTREET CORPORATION
EQUITY-BASED AWARDS
1. Purpose of the Plan
The purpose of the 1998 Dun & Bradstreet Corporation Replacement
Plan for Certain Employees Holding Dun & Bradstreet Corporation Equity-Based
Awards (the "Plan") is to provide for the award of substantially identical
replacement stock options, replacement stock appreciation rights and replacement
restricted stock awards to certain employees of The New Dun & Bradstreet
Corporation, a Delaware corporation to be renamed "The Dun & Bradstreet
Corporation" after the Spinoff (the "Company") whose awards under the 1991 Key
Employees Stock Option Plan for The Dun & Bradstreet Corporation and
Subsidiaries, the 1982 Key Employees Stock Option Plan for The Dun & Bradstreet
Corporation and Subsidiaries and the 1989 Key Employees Restricted Stock Plan
for The Dun & Bradstreet Corporation and Subsidiaries (the "D&B Plans") were
cancelled pursuant to the spinoff of the Company from The Dun & Bradstreet
Corporation, a Delaware corporation to be renamed "R.H. Donnelley Corporation"
after the Spinoff ("D&B") (the "Spinoff") and to certain retired employees who
elect, pursuant to the Spinoff, to have the awards granted under the D&B Plans
cancelled (the "Eligible Holders"). The Company expects that the Plan will allow
it to retain such employees and to motivate them to exert their best efforts on
behalf of the Company and its subsidiaries by providing incentives through the
replacement awards. The Company also expects that it will benefit from the added
interest which such employees will have in the welfare of the Company as a
result of their proprietary interest in the Company's success. It is the
intention of the Company that the terms of the replacement awards will (i)
substantially preserve the economic value of the cancelled D&B awards and (ii)
except for the terms described in Sections 6, 7, 8 and 10 of this Plan, remain
substantially identical to the terms of the cancelled D&B awards.
2. Stock Subject to the Plan
The total number of shares of common stock of the Company ("Shares")
which may be issued under the Plan is equal to the aggregate number of Shares to
be issued as replacement awards, as calculated pursuant to Sections 6(a), 7(a),
8 and 10 of this Plan. The Shares may consist, in whole or in part, of unissued
Shares or treasury shares. After the initial grant of options and stock
appreciation rights, no further grant shall be made under the Plan.
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3. Administration
The Board of Directors of the Company shall appoint a Compensation
and Benefits Committee (herein called the "Committee") consisting of at least
three members of the Board of Directors who shall administer the Plan and serve
at the pleasure of the Board; provided, however, that any action permitted to be
taken by the Committee may be taken by the Board, in its discretion. The
Committee shall have the authority, consistent with the Plan, to determine the
provisions of the stock options and stock appreciation rights to be granted, to
interpret the Plan and the stock options and the stock appreciation rights
granted under the Plan, to adopt, amend and rescind rules and regulations for
the administration of the Plan, the stock options and the stock appreciation
rights and generally to conduct and administer the Plan and to make all
determinations in connection therewith which may be necessary or advisable, and
all such actions of the Committee shall be binding upon all Eligible Holders.
The Committee shall require payment of any amount the Company may determine to
be necessary to withhold for federal, state or local taxes as a result of the
exercise of a stock option or a stock appreciation right. Fair market value of
the Shares as of a given date shall be determined in accordance with procedures
established by the Committee.
4. Eligibility
Only Eligible Holders shall receive grants of replacement stock
options, replacement stock appreciation rights and replacement restricted stock
under the Plan. The granting of a stock option, stock appreciation right or a
share of restricted stock under the Plan shall impose no obligation on the
Company or any Subsidiary to continue the employment of an Eligible Holder and
shall not lessen or affect the right to terminate the employment of such
Eligible Holder.
5. Limitations
Options hereunder shall only be granted in replacement of D&B Stock
Options (as defined in Section 6(a) of the Plan) held by Eligible Holders
immediately prior to the Spinoff.
6. Terms and Conditions of Stock Options
Stock options granted under the Plan shall be non-qualified, and
shall be subject to the foregoing and the following terms and conditions and to
such other terms and conditions, not inconsistent therewith, as the Committee
shall determine:
(a) Generally. As of the Spinoff, each unexercised stock option held
by an Eligible Holder that was granted under the D&B Plans (a "D&B Stock
Option") shall be cancelled, and such Eligible Holder shall receive a
replacement stock option pursuant
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to this Plan. The number of Shares covered by each replacement stock option
shall be determined by (i) multiplying the number of shares of D&B common stock
covered by the cancelled D&B Stock Option by a fraction, the numerator of which
is the average of the Daily Average Trading Prices of D&B common stock for the
five consecutive trading days immediately preceding the first date on which D&B
common stock is traded ex-dividend, and the denominator of which is the average
of the Daily Average Trading Prices of the Shares for the five consecutive
trading days starting on the first date on which the Shares are traded regular
way (the "D&B Ratio") and (ii) rounding down the result to a whole number of
Shares. The option price of each replacement stock option shall be determined by
dividing the option price of the cancelled D&B Stock Option by the D&B Ratio.
Unless otherwise specified in this Plan, all other terms of the replacement
stock options shall remain substantially identical to those of the cancelled D&B
Stock Options as set forth in the applicable D&B Plan and related option
agreement(s). For purposes of this paragraph, the "Daily Average Trading Price"
shall mean the average of the high and low trading prices for stock on a given
day.
(b) Exercisability. Except as set forth in the Plan, stock options
granted under the Plan shall have substantially identical terms as those of the
stock options originally granted under the D&B Plans; provided, however, that in
no event shall a replacement stock option be exercisable more than ten years
after the date the original option was granted under the D&B Plans.
(c) First Year Non-Exercisability. Except as provided in Paragraph
10 of the Plan, no stock option shall be exercisable during the year ending on
the first anniversary date of the granting of the original option under the D&B
Plans.
(d) Exercise of Stock Options. Except as otherwise provided in the
Plan or the option, a stock option may be exercised for all, or from time to
time any part, of the Shares for which it is then exercisable. The purchase
price for the Shares as to which an option is exercised shall be paid to the
Company in full at the time of exercise at the election of the Eligible Holder
(i) in cash, (ii) in Shares of the Company having a fair market value equal to
the option price for the Shares being purchased and satisfying such other
requirements as may be imposed by the Committee or (iii) partly in cash and
partly in such Shares of the Company. The Committee may permit the Eligible
Holder to elect, subject to such terms and conditions as the Committee shall
determine, to have the number of Shares deliverable to the Eligible Holder as a
result of the exercise reduced by a number sufficient to pay the amount the
Company determines to be necessary to withhold for federal, state or local taxes
as a result of the exercise of the option. No Eligible Holder shall have any
rights to dividends or other rights of a shareholder with respect to Shares
subject to an option until the Eligible Holder has given written notice of
exercise of the option, paid in full for such Shares and, if requested, given
the representation described in Paragraph 6(h) of the Plan.
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(e) Exercisability Upon Termination of Employment by Death. If an
Eligible Holder's employment by the Company or a subsidiary terminates by reason
of death one year or more after the date of grant of the original stock option
under the D&B Plans, the option thereafter may be exercised, during the three
years after the date of death or the remaining stated period of the option,
whichever period is shorter, to the extent to which such option was exercisable
at the time of death or thereafter would become exercisable during the
three-year period after the date of death in accordance with its terms.
(f) Exercisability Upon Termination of Employment by Disability or
Retirement. If an Eligible Holder's employment by the Company or a subsidiary
terminates by reason of disability or retirement one year or more after the date
of grant of the original option under the D&B Plans, the option thereafter may
be exercised, during the five years after the date of such termination of
employment or the remaining stated period of the option, whichever period is
shorter, to the extent to which such option was exercisable at the time of such
termination of employment or thereafter would become exercisable during such
period in accordance with its terms; provided, however, that if the Eligible
Holder dies within a period of five years after such termination of employment,
any unexercised stock option may be exercised thereafter, during either (1) the
period ending on the later of (i) five years after such termination of
employment and (ii) one year after the date of death or (2) the period remaining
in the stated term of the option, whichever period is shorter, to the extent to
which such option was exercisable at the time of death or thereafter would
become exercisable during the remainder of the five-year period after such
termination of employment in accordance with its terms. For purposes of this
Paragraph 6, "retirement" shall mean termination of employment with the Company
or a subsidiary after the Eligible Holder has attained age 55 and completed ten
or more years of employment; or after the Eligible Holder has attained age 65,
regardless of the length of such Eligible Holder's employment. An Eligible
Holder shall not be considered disabled for purposes of this Paragraph 6, unless
he or she furnishes such medical or other evidence of the existence of the
disability as the Committee, in its sole discretion, may require.
(g) Effect of Other Termination of Employment. If an Eligible
Holder's employment terminates for any reason, other than disability, death or
retirement one year or more after the date of grant of the original stock option
or stock appreciation right under the D&B Plans as described above, each stock
option and stock appreciation right held by such Eligible Holder shall thereupon
terminate.
(h) Additional Agreements of Eligible Holder and Restrictions on
Transfer. The Committee may require each person purchasing Shares pursuant to
exercise of a stock option to represent to and agree with the Company in writing
that the Shares are being acquired without a view to distribution thereof.
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The certificates for Shares so purchased may include any legend which the
Committee deems appropriate to reflect any restrictions on transfers. The
Committee also may impose, in its discretion, as a condition of any option, any
restrictions on the transferability of Shares acquired through the exercise of
such option as it may deem fit. Without limiting the generality of the
foregoing, the Committee may impose conditions restricting absolutely the
transferability of Shares acquired through the exercise of options for such
periods as the Committee may determine and, further, in the event the Eligible
Holder's employment by the Company or a subsidiary terminates during the period
in which such Shares are nontransferable, the Eligible Holder may be required,
if required by the related option agreement, to sell such Shares back to the
Company at such price and on such other terms as the Committee may have
specified in the option agreement.
(i) Nontransferability of Stock Options. Except as otherwise
provided in this Paragraph 6(i), a stock option shall not be transferable by the
Eligible Holder otherwise than by will or by the laws of descent and
distribution and during the lifetime of an Eligible Holder an option shall be
exercisable only by the Eligible Holder. An option exercisable after the death
of an Eligible Holder or a transferee pursuant to the following sentence may be
exercised by the legatees, personal representatives or distributees of the
Eligible Holder or such transferee. The Committee may, in its discretion,
authorize all or a portion of the options previously granted or to be granted to
an Eligible Holder to be on terms which permit irrevocable transfer for no
consideration by such Eligible Holder to any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, of the Eligible Holder, trusts for the exclusive benefit
of these persons, and any other entity owned solely by these persons ("Eligible
Transferees"), provided that (x) the stock option agreement pursuant to which
such options are granted must be approved by the Committee, and must expressly
provide for transferability in a manner consistent with this Section and (y)
subsequent transfers of transferred options shall be prohibited except those in
accordance with the first sentence of this Paragraph 6(i). The Committee may, in
its discretion amend the definition of Eligible Transferees to conform to the
coverage rules of Form S-8 under the Securities Act of 1933 or any comparable
Form from time to time in effect. Following transfer, any such options shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer. The events of termination of employment of
Paragraphs 6(e), 6(f) and 6(g) hereof shall continue to be applied with respect
to the original Eligible Holder, following which the options shall be
exercisable by the transferee only to the extent, and for the periods specified,
in Paragraphs 6(e), 6(f) and 6(g). The Committee may delegate to a committee
consisting of employees of the Company the authority to authorize transfers,
establish terms and conditions upon which transfers may be made and establish
classes of Eligible Holders eligible to transfer
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options, as well as to make other determinations with respect to option
transfers.
7. Terms and Conditions of Stock Appreciation Rights
Stock appreciation rights (including limited stock appreciation
rights) granted under the Plan shall be subject to the foregoing and the
following terms and conditions and to such other terms and conditions, not
inconsistent therewith, as the Committee shall determine:
(a) Replacement Stock Appreciation Rights. As of the Spinoff, each
unexercised stock appreciation right (including a limited stock appreciation
right) held by an Eligible Holder that was granted under the D&B Plans (a "D&B
SAR") shall be cancelled, and such Eligible Holder shall receive a replacement
stock appreciation right pursuant to this Plan. The number of Shares covered by
each replacement stock appreciation right shall be determined by (i) multiplying
the number of D&B shares covered by the cancelled D&B SAR by the D&B Ratio and
(ii) rounding down the result to a whole number of Shares. The exercise price of
each replacement stock appreciation right shall be determined by dividing the
exercise price of the cancelled D&B SAR by the D&B Ratio. Unless otherwise
specified in this Plan, all other terms of the replacement stock appreciation
rights shall remain substantially identical to those of the cancelled D&B SARs
as set forth in the applicable D&B Plans and related D&B SAR agreement(s).
(b) Terms. Each stock appreciation right shall entitle an Eligible
Holder to surrender to the Company an unexercised option, or any portion
thereof, and to receive from the Company in exchange therefor an amount equal to
the excess of the fair market value on the exercise date of one Share over the
option price per Share times the number of Shares covered by the option, or
portion thereof, which is surrendered. The date a notice of exercise is received
by the Company shall be the exercise date. Payment shall be made in Shares or in
cash, or partly in Shares and partly in cash, valued at such fair market value,
all as shall be determined by the Committee. Stock appreciation rights may be
exercised from time to time upon actual receipt by the Company of written notice
of exercise stating the number of Shares subject to an exercisable option with
respect to which the stock appreciation right is being exercised. No fractional
Shares will be issued in payment for stock appreciation rights, but instead cash
will be paid for a fraction or, if the Committee should so determine, the number
of Shares will be rounded downward to the next whole Share.
(c) Limitations on Exercisability. The Committee shall impose such
conditions upon the exercisability of stock appreciation rights as will result,
except upon the occurrence of an event contemplated by replacement limited stock
appreciation rights granted pursuant to Paragraph 7(d) or contemplated by the
provisions of Paragraph 10, in the amount to be charged against
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the Company's consolidated income by reason of stock appreciation rights not to
exceed, in any one calendar year, two percent of the Company's prior calendar
year's consolidated income before income taxes. The Committee also may impose,
in its discretion, such other conditions upon the exercisability of stock
appreciation rights as it may deem fit.
(d) Replacement Limited Stock Appreciation Rights. The Committee
shall grant replacement limited stock appreciation rights in substantially the
same manner in which replacement stock appreciation rights are awarded pursuant
to this Section 7 of the Plan. Unless the context otherwise requires, whenever
the term "stock appreciation right" is used in the Plan, such term shall include
limited stock appreciation rights.
8. Terms and Conditions of Restricted Stock
As of the Spinoff Date, restricted stock held by an Eligible Holder
that was granted under the D&B Plans ("D&B Restricted Stock") and restricted
stock received by an Eligible Holder as a result of the Spinoff ("New D&B
Restricted Stock") shall be forfeited, and such Eligible Holder shall receive
replacement restricted stock pursuant to this Plan. The number of shares of
restricted stock shall equal (i) the number of Shares of forfeited New D&B
Restricted Stock plus (ii) the number of shares of forfeited D&B Restricted
Stock multiplied by a fraction, the numerator of which is the average of the
Daily Average Trading Prices of D&B common stock for the five consecutive
trading days starting on the ex-dividend trading date, and the denominator of
which is the average of the Daily Average Trading Prices of the Shares for the
five consecutive trading days starting on the first date on which the Shares are
traded regular way. Unless otherwise specified in this Plan, all other terms of
the replacement restricted stock shall remain substantially identical to those
of the forfeited D&B Restricted Stock as set forth in the applicable D&B Plans
and related D&B Restricted Stock agreement(s). For purposes of this paragraph,
the "Daily Average Trading Price" shall mean the average of the high and low
trading prices for stock on a given day.
9. Transfers and Leaves of Absence
For purposes of the Plan: (a) a transfer of an employee from the
Company to a 50% or more owned subsidiary, partnership, venture or other
affiliate (whether or not incorporated) or vice versa, or from one such
subsidiary, partnership, venture or other affiliate to another, (b) a leave of
absence, duly authorized in writing by the Company, for military service or
sickness or for any other purpose approved by the Company if the period of such
leave does not exceed 90 days, or (c) a leave of absence in excess of 90 days,
duly authorized in writing by the Company, provided the employee's right to
re-employment is guaranteed either by statute or by contract, shall not be
deemed a termination of employment under the Plan.
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10. Adjustments Upon Changes in Capitalization or Other Events
Upon changes in the Shares by reason of a stock dividend, stock
split, reverse split, recapitalization, merger, consolidation, combination or
exchange of Shares, separation, reorganization or liquidation, the number and
class of Shares available under the Plan as to which stock options, stock
appreciation rights or restricted stock may be granted (both in the aggregate
and to any one Eligible Holder), the number and class of Shares under each
option and the option price per Share, the terms of stock appreciation rights
and the number and class of shares under each restricted stock award shall be
correspondingly adjusted by the Committee, such adjustments to be made in the
case of outstanding options without change in the total price applicable to such
options. In the event of a merger, consolidation, combination, reorganization or
other transaction in which the Company will not be the surviving corporation, an
Eligible Holder shall be entitled to options on that number of shares of stock
in the new corporation which the Eligible Holder would have received had the
Eligible Holder exercised all of the unexercised options available to the
Eligible Holder under the Plan, whether or not then exercisable, at the instant
immediately prior to the effective date of such transaction, and if such
unexercised options had related stock appreciation rights the Eligible Holder
also will receive new stock appreciation rights related to the new options.
Thereafter, adjustments as provided above shall relate to the options or stock
appreciation rights of the new corporation. Except as otherwise specifically
provided in the stock option, stock appreciation right or restricted stock
award, in the event of a Change in Control, merger, consolidation, combination,
reorganization or other transaction in which the shareholders of the Company
will receive cash or securities (other than common stock) or in the event that
an offer is made to the holders of common stock of the Company to sell or
exchange such common stock for cash, securities or stock of another corporation
and such offer, if accepted, would result in the offeror becoming the owner of
(a) at least 50% of the outstanding common stock of the Company or (b) such
lesser percentage of the outstanding common stock which the Committee in its
sole discretion determines will materially adversely affect the market value of
the common stock after the tender or exchange offer, the Committee shall, prior
to the shareholders' vote on such transaction or prior to the expiration date
(without extensions) of the tender or exchange offer, (A) with respect to stock
options and stock appreciation rights, (i) accelerate the time of exercise so
that all stock options and stock appreciation rights which are outstanding shall
become immediately exercisable in full without regard to any limitations of time
or amount otherwise contained in the Plan or the options or stock appreciation
rights and/or (ii) determine that the options and stock appreciation rights
shall be adjusted and make such adjustments by substituting for common stock of
the Company subject to options and stock appreciation rights, common stock of
the surviving corporation or offeror if such stock of such corporation is
publicly traded or, if such stock is not
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publicly traded, by substituting common stock of a parent of the surviving
corporation or offeror if the stock of such parent is publicly traded, in which
event the aggregate option price shall remain the same and the number of Shares
subject to option shall be the number of Shares which could have been purchased
on the closing day of such transaction or the expiration date of the offer with
the proceeds which would have been received by the Eligible Holder if the option
had been exercised in full prior to such transaction or expiration date and the
Eligible Holder had exchanged all of such Shares in the transaction or sold or
exchanged all of such Shares pursuant to the tender or exchange offer, and if
any such option has related stock appreciation rights, the stock appreciation
rights shall likewise be adjusted and (B) with respect to restricted stock, (i)
accelerate the termination of the Restriction Period (as defined in the
applicable D&B Plan) so that all restrictions with respect to an Eligible
Holder's restricted stock shall immediately lapse without regard to any
limitations of time or amount otherwise contained in the D&B Plans or a
restricted stock agreement and/or (ii) determine that the awards shall be
adjusted and make such adjustments by substituting for the Shares subject to
awards, common stock of the surviving corporation or offeror if such stock of
such corporation is publicly traded or, if such stock is not publicly traded, by
substituting common stock of a parent of the surviving corporation or offeror if
the stock of such parent is publicly traded, in which event the number of shares
subject to an award shall be the number of shares which could have been
purchased on the closing day of such transaction or the expiration date of the
offer with the proceeds which would have been received by the Eligible Holder if
the Eligible Holder had exchanged all of such shares in the transaction or sold
or exchanged all of such shares pursuant to the tender or exchange offer. For
purposes of stock options and stock appreciation rights, "Change in Control"
means:
(a) any "Person," as such term is used in Sections 13(d) and 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 corporation owned, directly or
indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company), is or becomes the
"Beneficial Owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities;
(b) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board, and any new Director (other
than a Director designated by a person who has entered into an agreement with
the Company to effect a transaction described in clause (a), (c) or (d) of this
Paragraph) whose election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds (2/3) of
the Directors then still in office who either
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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;
(c) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (1) a merger
or consolidation 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 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (2) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
"Person" (as hereinabove defined) acquires more than 50% of the combined voting
power of the Company's then outstanding securities; or
(d) the shareholders 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.
For purposes of restricted stock, "Change in Control" shall have the
same meaning as in the 1989 Key Employees Restricted Stock Plan for The Dun &
Bradstreet Corporation and Subsidiaries as in effect on the date on which this
Plan becomes effective.
11. Use of Proceeds
Proceeds from the sale of Shares pursuant to exercise of stock
options granted under the Plan shall constitute general funds of the Company.
12. Amendments
The Board of Directors may amend, alter or discontinue the Plan, but
no amendment, alteration or discontinuation shall be made which would impair the
rights of any Eligible Holder under any award theretofore granted, without the
Eligible Holder's consent, or which, without the approval of the shareholders of
the Company, would:
(a) Except as is provided in Paragraph 10 of the Plan,
increase the total number of Shares reserved for the purposes of the Plan or
change the maximum number of Shares for which awards may be granted to any
Eligible Holder.
(b) Decrease the option price to less than 100% of fair market
value on the date of grant of the original option under the D&B Plans.
(c) Change the employees (or class of employees) eligible to
receive awards under the Plan.
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(d) Materially increase the benefits accruing to employees
participating under the Plan.
13. Effectiveness of the Plan and Amendments
The Plan shall be effective as of the Spinoff.