SCHEDULE 14C (RULE 14C-101)
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Definitive Information Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14c-5(d)(2))
Cognizant Technology Solutions Corporation
(Name of Registrant As Specified In Its Charter)
Payment of Filing Fee (Check the Appropriate Box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which the transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(4) Date Filed:
PRELIMINARY INFORMATION STATEMENT
Cognizant Technology Solutions Corporation
500 Glenpointe Centre West, Teaneck, New Jersey 07666
INFORMATION STATEMENT PURSUANT TO SECTION 14
OF THE SECURITIES EXCHANGE ACT OF 1934
AND REGULATION 14C AND SCHEDULE 14C THEREUNDER
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE NOT REQUESTED TO SEND US A PROXY
Teaneck, New Jersey,
January , 2003
This information statement has been filed with the Securities
and Exchange Commission (the "SEC") on January , 2003, and will be transmitted
on or about January , 2003 to the holders of record as of January 7, 2003 of the
common stock of Cognizant Technology Solutions Corporation, a Delaware
corporation, in connection with certain action to be taken pursuant to the
written consent of IMS Health, Inc., the majority stockholder of Cognizant,
dated January 7, 2003. Pursuant to Rule 14c-2 under the Securities Exchange Act
of 1934, as amended, the action to be taken pursuant to the written consent
shall not be effected until at least 20 days after the mailing of this
information statement. Cognizant anticipates that such action will be effected
on or about February , 2003.
THIS IS NOT A NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS, AND NO STOCKHOLDER
MEETING WILL BE HELD TO CONSIDER ANY MATTER WHICH WILL BE DESCRIBED HEREIN.
By Order of the Board of Directors,
/s/ Wijeyaraj Mahadeva
-------------------------------------------------
Wijeyaraj Mahadeva
Chairman of the Board and Chief Executive Officer
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NOTICE OF ACTION TAKEN BY WRITTEN CONSENT OF MAJORITY
STOCKHOLDER IN LIEU OF SPECIAL MEETING,
DATED JANUARY , 2003
To Our Stockholders:
NOTICE IS HEREBY GIVEN that the majority stockholder of Cognizant, by
written consent dated January 7, 2003, in lieu of a special stockholder meeting,
has approved the amendment and restatement of Cognizant's Amended and Restated
Certificate of Incorporation as described below. Such actions will be effected
on or about February , 2003:
Amendment and restatement of Cognizant's Amended and Restated Certificate
of Incorporation to:
(a) provide for a classified board of three classes of directors,
effective at the next annual meeting of stockholders; provide that the
number of Cognizant's directors will be not less than three and that
the exact number of directors will be fixed exclusively by Cognizant's
board of directors; require that directors can be removed only by the
affirmative vote of at least 80% in voting power of all of the shares
of Cognizant entitled to vote generally in the election of directors,
voting together as a single class; and provide that vacancies in the
board of directors and newly created directorships may be filled only
by the board of directors;
(b) require that all future stockholder action be taken at a meeting of
stockholders and not by written consent;
(c) provide that a special meeting of the stockholders may be called only
by the chief executive officer or the board of directors of Cognizant
and not by its stockholders, and limit business transacted at any
special meeting of stockholders to the purpose stated in the notice;
(d) require the vote of at least 80% in voting power of all outstanding
shares of Cognizant entitled to vote generally in the election of
directors, voting together as a single class, in order for
shareholders to make, amend, alter, change, add to, or repeal any
provision of the by-laws of Cognizant;
(e) require the vote of at least 80% in voting power of all outstanding
shares of Cognizant entitled to vote generally in the election of
directors, voting together as a single class, to amend, alter, change,
add to, or repeal the provisions of the certificate of incorporation
relating to:
o the classified board, the size of the board and the filling
of board vacancies and newly created directorships;
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o the inability of Cognizant's stockholders to act by written
consent or to call special meetings of stockholders;
o the 80% voting requirement in order for stockholders to
amend, add to or repeal the by-laws; and
o the 80% voting requirement to modify any of the provisions
of the certificate of incorporation described above.
(f) clarify that, following completion of the proposed exchange offer by
IMS Health (described below), a transfer of a share of class B common
stock will be deemed to occur upon any change of the beneficial owner
of such share (resulting in the automatic conversion thereof into a
share of class A common stock, as currently provided in Cognizant's
certificate of incorporation); authorize the board of directors to
determine whether such a transfer of class B common stock has
occurred; and authorize the board of directors to determine whether at
any time the outstanding shares of class B common stock represent less
than 35% of the aggregate number of shares of common stock then
outstanding; and include a new legend for certificates of class B
common stock.
As described below, certain of these changes potentially have anti-takeover
effects.
The written consent approving the charter amendments described above
was given by IMS Health in connection with a proposed exchange offer by IMS
Health. Cognizant filed a registration statement on Form S-4 with the SEC for
the purpose of registering the proposed offer by IMS Health to exchange
shares of Cognizant's class B common stock owned by IMS Health for each share
of common stock of IMS Health. At January 7, 2003, IMS Health owned
approximately 55% of Cognizant's outstanding common stock and held approximately
93% of the combined voting power of Cognizant's outstanding common stock. IMS
Health is seeking to exchange up to 11,290,900 shares of Cognizant's class B
common stock in the exchange offer, representing all class B shares of Cognizant
that are currently owned by IMS Health. The exchange offer, which is subject to
certain conditions listed in Appendix C to this information statement, is
expected to commence on January , 2003 and to be completed on February , 2003.
Pursuant to the written consent dated January 7, 2003 by IMS Health, the
amendment and restatement of Cognizant's certificate of incorporation thereby
approved will become effective only following the consummation of the exchange
offer.
As of January 7, 2003, which we refer to in this information statement
as the Record Date, 9,129,438 shares of Cognizant's class A common stock and
11,290,900 shares of Cognizant's class B common stock were issued and
outstanding. Each share of Cognizant's class A common stock entitles its holder
to one vote on each matter submitted to the stockholders and each share of
Cognizant's class B common stock entitles its holder to ten votes on each matter
submitted to the stockholders.
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However, because IMS Health, which holds in excess of a majority of the voting
power of Cognizant's outstanding common stock as of the Record Date, has
approved the foregoing amendment and restatement of the certificate of
incorporation by written consent dated January 7, 2003, no other stockholder
consents will be solicited in connection with this information statement. This
information statement also constitutes notice of action taken without a meeting
as required by Section 228 of the General Corporation Law of the State of
Delaware.
Holders of Cognizant common stock have no preemptive rights to acquire
or subscribe to any additional shares of Cognizant's common stock. Cumulative
voting for members of the board of directors is not provided pursuant to
Cognizant's certificate of incorporation, the by-laws or the General Corporation
Law of the State of Delaware.
Cognizant has asked brokers and other custodians, nominees and
fiduciaries to forward this information statement to the beneficial owners of
the common stock held of record by such persons and will reimburse such persons
for out-of-pocket expenses incurred in forwarding such material.
You are urged to read this information statement carefully. However,
you are not requested or required to take any action with respect to the
amendments to Cognizant's certificate of incorporation.
Cognizant's principal executive offices are located at 500 Glenpointe
Centre West, Teaneck, New Jersey 07666.
FORWARD LOOKING STATEMENTS MAY PROVE INACCURATE
Forward-looking statements in this information statement are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The statements contained in this information statement that
are not historical facts are forward-looking statements (within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended) that involve
risks and uncertainties. Such forward-looking statements may be identified by,
among other things, the use of forward-looking terminology such as "believes,"
"expects," "may," "will," "should" or "anticipates" or the negative thereof or
other variations thereon or comparable terminology, or by discussions of
strategy that involve risks and uncertainties. From time to time, Cognizant or
its representatives have made or may make forward-looking statements, orally or
in writing. Such forward-looking statements may be included in various filings
made by Cognizant with the SEC, or press releases or oral statements made by or
with the approval of an authorized executive officer of Cognizant. These
forward-looking statements involve predictions. Cognizant's actual results,
developments or achievements could differ materially from the results expressed
in, or implied by, these forward-looking statements. In addition, the exchange
offer of IMS Health is also subject to risks and uncertainties, including, but
not limited to, (a) risks associated with the tax consequences of the exchange
offer for IMS Health or persons participating in the exchange offer, and (b)
risks relating to the number of Cognizant shares owned by IMS Health that are
not distributed in the exchange offer and the manner and timing of any
conversion, disposition or other action by IMS Health in respect of the
Cognizant shares, and (c) risks that the conditions to the exchange offer may
not be satisfied or that IMS Health could determine, in its sole discretion, not
to proceed with the exchange offer.
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SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Common Stock
There were, as of December 31, 2002, approximately 25 holders of
record of Cognizant's class A common stock, including IMS Health, which
beneficially owns all of the shares of Cognizant's class B common stock. Such
shares of class B common stock are convertible, on a share-for-share basis, into
shares of class A common stock(1). IMS Health acquired its ownership as a result
of the spin-off of IMS Health from Cognizant Corporation. Prior to the spin-off,
all of the shares of Cognizant's class B common stock were held by Cognizant
Corporation.
Cognizant filed a registration statement on Form S-4 with the SEC for
the purpose of registering a proposed offer by IMS Health to exchange shares of
Cognizant's class B common stock owned by IMS Health for a yet to be determined
number of shares of common stock of IMS Health. IMS Health is seeking to
exchange up to 11,290,900 shares of Cognizant's class B common stock in the
exchange offer, representing all class B shares of Cognizant that are currently
owned by IMS Health. The exchange offer, which is subject to certain conditions
described in Appendix C to this information statement, is expected to commence
on January , 2003 and to be completed on February , 2003.
The following table sets forth certain information, as of December 31,
2002, with respect to holdings of each class of Cognizant's common stock by (i)
each person known by Cognizant to beneficially own more than 5% of the total
number of shares of each class of common stock outstanding as of such date, (ii)
each of Cognizant's directors, (iii) each of Cognizant's named executives, and
(iv) all directors and executive officers as a group. This information is based
upon information furnished to Cognizant by each such person and/or based upon
public filings with the Securities and Exchange Commission. Unless otherwise
indicated, the address for the individuals below is that of Cognizant.
Amount and Nature of Percent
Name and Address of Beneficial Owner Beneficial Ownership(2) of Class(3)
------------------------------------ -------------------- --------
(i) Certain Beneficial Owners:
1. IMS Health(1) (4)............................. 11,290,900 55.3%
(ii) Directors and Named Executives who are not set
forth above:
Wijeyaraj Mahadeva(5)................ 439,676 2.1%
Lakshmi Narayanan(6)................. 140,750 *
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Gordon Coburn(7)..................... 20,889 *
Nancy E. Cooper (8) ................. -- --
Francisco D'Souza(9)................. 47,603 *
Robert W. Howe(10)................... 11,400 *
John E. Klein(11).................... 50,400 *
Venetia Kontogouris(12).............. 43,500 *
James C. Malone(13).................. 15,000 *
David M. Thomas(14).................. 7,500 *
Robert E. Weissman(15)............... 8,500 *
Thomas M. Wendel(16)................. 7,500 *
(iii) All Directors and executive officers as a
group (12 persons)(17)........................ 792,718 3.7%
----------------
* Less than one percent.
(1) The current certificate of incorporation, as amended, provides that,
except as provided below, each outstanding share of class B common
stock shall convert automatically to a share of class A common stock
upon a transfer, other than in a tax-free spin-off, to any person
other than IMS Health or any of its subsidiaries or successors. In
addition, prior to the completion of the exchange offer, each
outstanding share of class B common stock is convertible at the
holder's option into one share of class A common stock. If the
exchange offer is completed, the stockholders of IMS Health that so
elect will receive class B common stock, which will continue to have
ten votes per share. Thereafter, shares of class B common stock will
convert to class A common stock automatically upon a transfer of class
B common stock and shall no longer be convertible into shares of class
A common stock at the option of the holder. In addition, each share of
class B common stock will convert automatically into one share of
class A common stock if
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at any time the number of outstanding shares of class B common stock
represents less than 35% of the economic ownership of Cognizant
represented by the aggregate number of shares of common stock then
outstanding. In the event and to the extent there are shares of class
B common stock that have not been converted to class A common stock,
such shares of class B common stock will automatically convert into
shares of class A common stock on the fifth anniversary of the
completion of the exchange offer.
(2) Except as set forth in the footnotes to this table and subject to
applicable community property law, the persons named in the table have
sole voting and investment power with respect to all shares of common
stock shown as beneficially owned by such stockholder.
(3) Applicable percentage of ownership is based on an aggregate of
20,413,682 shares of Common Stock outstanding on December 31, 2002
(consisting of 9,122,782 shares of class A common stock and 11,290,900
shares of class B common stock), plus any presently exercisable stock
options held by each such holder, and options which will become
exercisable within 60 days after December 31, 2002.
(4) The address for IMS Health is 1499 Post Road, Fairfield, Connecticut
06430. Represents 11,290,900 shares of class B common stock held of
record and beneficially by IMS Health.
(5) Represents 439,676 shares of class A common stock subject to options
which were exercisable as of December 31, 2002 or sixty (60) days
after such date. Excludes 401,074 shares of class A common stock
underlying options which become exercisable over time after such
period.
(6) Represents 140,750 shares of class A common stock underlying options
which were exercisable as of December 31, 2002 or sixty (60) days
after such date. Excludes 88,750 shares of class A common stock
underlying options which become exercisable over time after such
period.
(7) Includes 9,709 shares of class A common stock owned of record and
11,180 shares of class A common stock subject to options which were
exercisable as of December 31, 2002 or sixty (60) days after such
date. Excludes 70,350 shares of class A common stock underlying
options which become exercisable over time after such period.
(8) Excludes 15,000 shares of class A common stock underlying options
which become exercisable after June 5, 2003.
(9) Includes 10,527 shares of class A common stock owned of record and
37,076 shares of class A common stock subject to options which were
exercisable as of December 31, 2002 or sixty (60) days after such
date.
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Excludes 69,824 shares of class A common stock underlying options
which become exercisable over time after such period.
(10) Includes 3,900 shares of class A common stock owned of record and
7,500 shares of class A common stock subject to options which were
exercisable as of December 31, 2002 or sixty (60) days after such
date. Excludes 7,500 shares of class A common stock underlying options
which become exercisable over time after such period.
(11) Includes 32,900 shares of class A common stock owned of record and
17,500 shares of class A common stock subject to options which were
exercisable as of December 31, 2002 or sixty (60) days after such
date. Excludes 7,500 shares of class A common stock underlying options
which become exercisable over time after such period.
(12) Includes 1,000 shares of class A common stock owned of record and
42,500 shares of class A common stock subject to options which were
exercisable as of December 31, 2002 or sixty (60) days after such
date. Excludes 7,500 shares of class A common stock underlying options
which become exercisable over time after such period.
(13) Represents 15,000 shares of class A common stock underlying options
which were exercisable as of December 31, 2002 or sixty (60) days
after such date.
(14) Represents 7,500 shares of class A common stock underlying options
which were exercisable as of December 31, 2002 or sixty (60) days
after such date. Excludes 12,500 shares of class A common stock
underlying options which become exercisable over time after such
period.
(15) Includes 1,000 shares of class A common stock owned of record and
7,500 shares of class A common stock subject to options which were
exercisable as of December 31, 2002 or sixty (60) days after such
date. Excludes 12,500 shares of class A common stock underlying
options which become exercisable over time after such period.
(16) Represents 7,500 shares of class A common stock underlying options
which were exercisable as of December 31, 2002 or sixty (60) days
after such date. Excludes 12,500 shares of class A common stock
underlying options which become exercisable over time after such
period.
(17) Includes an aggregate of 733,682 shares of class A common stock
underlying options granted to Directors and executive officers listed
in the table which are exercisable as of December 31, 2002 or within
sixty (60) days after such date. Excludes 704,998 shares of class A
common stock underlying options granted to executive officers and
Directors, which become exercisable over time after such period.
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AMENDMENTS TO COGNIZANT'S AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION
Following the completion of the exchange offer, Cognizant's
certificate of incorporation and by-laws will be amended and restated to include
the provisions described below. IMS Health has acted by written consent to
approve the following amendment and restatement of Cognizant's certificate of
incorporation and Cognizant's board of directors has approved conforming and
other amendments to Cognizant's by-laws. The following is a summary of the
amendments to Cognizant's certificate of incorporation to be effected by the
amendment and restatement upon the completion of the exchange offer. For
complete information, you should read the full text of the new restated
certificate of incorporation, included as Appendix A to this information
statement.
General
Cognizant's board of directors approved by unanimous vote of those
present the amendment and restatement of Cognizant's certificate of
incorporation. The amendment and restatement will amend Cognizant's certificate
of incorporation in a manner that Cognizant's board of directors believes is
appropriate to foster Cognizant's long-term growth as an independent company
following the exchange offer.
Under the terms of Cognizant's existing certificate of incorporation,
Cognizant's board of directors has the power to amend the by-laws without
stockholder approval. As a result, separate stockholder approval is not required
to effect the by-law amendments. However, effectuation of the by-law amendments
and the charter amendments is subject to the completion of the exchange offer.
In addition to containing those amendments to the Cognizant by-laws described in
"Amendments to Cognizant's By-laws" on page 17 herein, the by-law amendments
contain changes necessary to conform Cognizant's by-laws to the new restated
certificate of incorporation. For complete information, you should read the full
text of the amended and restated by-laws, included as Appendix B to this
information statement.
Cognizant's board of directors also expects to adopt a stockholders'
rights plan prior to the expiration of the exchange offer. Please refer to
"Stockholders' Rights Plan" on page 22 herein.
Purpose and Effects of the Amendments
The exchange offer may make it easier for a single person or group of
related persons to gain control over Cognizant. Because IMS Health currently
holds approximately 55% of Cognizant's outstanding common stock, constituting
93% of the combined voting power of Cognizant's common stock, it is impossible
at present that a person other than IMS Health would gain control of Cognizant
without IMS Health's consent. Following the exchange offer, however, the new
holders of Cognizant's common stock will have the ability to elect Cognizant's
entire board of directors. Accordingly, a person or group of related persons
could gain control of Cognizant by
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acquiring a majority of the outstanding common stock, or the votes represented
by those shares. In addition, the control position that IMS Health has the
ability to exert in matters voted on by Cognizant stockholders will be
eliminated as a result of the exchange offer. For these reasons, the proposed
exchange offer could render Cognizant more susceptible to proxy contests for
control of the board of directors and unsolicited takeover bids from third
parties, including offers below the intrinsic value of Cognizant or other offers
that would not be in the best interests of Cognizant's stockholders.
Eliminating IMS Health as holder of approximately 55% of Cognizant's
outstanding common stock, constituting 93% of the combined voting power of
Cognizant's common stock, as a result of the exchange offer will increase
Cognizant's vulnerability to an unsolicited takeover proposal. In order to
reduce the concerns described above, the charter amendments, together with the
by-law amendments and Cognizant's anticipated stockholders' rights plan, are
intended to make it more difficult for a potential acquiror of Cognizant to take
advantage of Cognizant's new capital structure in acquiring Cognizant by means
of a transaction that is not negotiated with Cognizant's board of directors. The
charter amendments, the by-law amendments and the anticipated stockholders'
rights plan will reduce the vulnerability of Cognizant to an unsolicited
takeover proposal. These provisions are designed to enable Cognizant to develop
its business in a manner that will foster its long-term growth by reducing the
threat of a takeover not deemed by Cognizant's board of directors to be in the
best interests of Cognizant and its stockholders and the potential disruption
entailed by such a threat of a takeover reduced to the extent practicable.
In addition, Cognizant has agreed to indemnify IMS Health for tax
liabilities under some circumstances, including, but not limited to, if in the
event that Cognizant is acquired, the exchange offer becomes taxable. The
likelihood of the exchange offer losing its tax-free status and the likelihood
of Cognizant being subject to liability under the tax indemnification provisions
of the distribution agreement increase if Cognizant is acquired. By making a
takeover of Cognizant without the approval of its board of directors more
difficult, the charter amendments, the by-law amendments and the anticipated
stockholders' rights plan will also protect Cognizant and its stockholders from
potential liabilities resulting from the loss of the tax-free status of the
exchange offer.
The amendments to Cognizant's certificate of incorporation, together
with the amendments to Cognizant's by-laws, the stockholders' rights plan
expected to be adopted by Cognizant's board of directors in connection with the
exchange offer and the business combination statute of the General Corporation
Law of the State of Delaware already in effect, along with Cognizant's existing
blank check preferred stock provision, may discourage unsolicited takeover bids
from third parties or efforts to remove Cognizant's incumbent management or its
board of directors, or make these actions more difficult to accomplish, even if
a substantial number of Cognizant's stockholders feel this would be in their
best interests. The existence of these provisions may deprive Cognizant's
stockholders of opportunities to sell their shares at a premium over prevailing
prices. The potential inability of Cognizant's stockholders to obtain a control
premium could adversely affect the market price of Cognizant's common stock.
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The board of directors is not aware of any current effort to
accumulate shares of the Company's common stock or to otherwise obtain control
of the Company. Rather, the defensive provisions included in the restatement of
the certificate of incorporation, are being proposed at this time because of the
exchange offer proposed by IMS Health. The board of directors does not currently
contemplate adopting or recommending the approval of any other action, other
than a stockholders' rights plan, which might have the effect of delaying,
deterring or preventing a change in control of Cognizant.
Classified Board
Cognizant's certificate of incorporation will be amended to provide
for a classified board of directors, also known as a staggered board. The board
of directors, other than those directors who may be elected by the holders of
Cognizant's preferred stock, will be divided into three classes of directors,
each having a three-year term, effective as of the first annual meeting of
stockholders following the completion of the exchange offer. A classified board
staggers the terms of the three classes and will be implemented through initial
one, two and three-year terms for the three classes, followed in each case by
full three-year terms.
The classified board provision will make it more difficult for a
person seeking to obtain control of Cognizant to do so. With a classified board,
only one-third of the members of the board are elected each year, and directors
may only be removed from office for cause. Accordingly, control of a majority of
Cognizant's board of directors will require the election of new directors at a
minimum of two successive annual meetings of stockholders. Any newly created
directorship that results from an increase in the number of directors and any
vacancy occurring in the board of directors can be filled only by a majority of
the directors then in office.
The overall impact of the classified board amendment will be to render
more difficult or discourage attempts to assume control of Cognizant by means of
a merger or tender offer that is not negotiated with Cognizant's board of
directors, even if the transaction will result in a premium over the market
price for the shares of Cognizant's common stock held by the stockholders or may
otherwise be favorable to the interests of the stockholders, or by means of a
proxy contest. The classified board will similarly delay stockholders who do not
approve of policies of Cognizant's board of directors in their attempt to
replace a majority of the directors.
Cognizant believes that the classified board amendment is advantageous
to Cognizant and its stockholders for a number of reasons. As discussed above,
public companies are potentially subject to attempts by various individuals and
entities to acquire significant minority positions with the intent of either
obtaining actual control by electing their own slate of directors, or of
achieving some other goal, such as the repurchase of their shares by Cognizant
at a premium. These prospective acquirers may be in a position to elect the
majority or the entirety of Cognizant's board of directors through a proxy
contest or otherwise, even though they do not actually own a majority of a
Cognizant's outstanding shares of common stock at the time. Once the classified
board
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amendment is implemented, a majority of Cognizant's directors will not be able
to be replaced without cause until at least two annual meetings of stockholders
have occurred. By eliminating the possibility of the sudden replacement or
removal of Cognizant's board of directors, the incumbent board of directors will
be given the time and opportunity to evaluate any proposals for acquisition of
control of Cognizant and assess and develop alternatives in a manner consistent
with their responsibilities to Cognizant's stockholders without the pressure
created by the threat of imminent replacement or removal or loss of control.
In addition, by allowing directors to serve three-year terms rather
than one-year terms, the classified board enhances the continuity and stability
of both the composition of Cognizant's board of directors and the policies
formulated by the board of directors. This enhances Cognizant's ability to adopt
and implement long-term business strategies aimed at increasing stockholder
value. Cognizant believes, therefore, that removing the threat of sudden
replacement or removal will permit it to more effectively represent the
interests of all stockholders, including responding to demands or actions by any
stockholder or group.
Cognizant has no knowledge of any present effort to gain control of
Cognizant or to conduct a proxy contest. In addition, Cognizant has not
experienced any problems in the past or at the present time with its board of
directors' continuity or stability. However, Cognizant believes that adopting a
classified board is advisable and in the best interests of stockholders because,
following the completion of the exchange offer it will give Cognizant's board of
directors more time to fulfill its responsibilities to stockholders and it will
provide greater assurance of continuity and stability in the composition and
policies of Cognizant's board of directors. Cognizant also believes that these
advantages outweigh any disadvantages relating to discouraging potential
acquirors from attempting to obtain control of Cognizant.
Implementation of the Classified Board
Cognizant's directors will be elected to three separate classes at
Cognizant's next annual meeting, as follows:
o two "Class I Directors" will be elected at Cognizant's next annual
meeting to serve for a term expiring at the first annual meeting of
stockholders to be held following that meeting;
o two "Class II Directors" will be elected at Cognizant's next annual
meeting to serve for a term expiring at the second annual meeting of
stockholders to be held following that meeting; and
o two "Class III Directors" will be elected at Cognizant's next annual
meeting to serve for a term expiring at the third annual meeting of
stockholders to be held following that meeting.
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At each annual meeting following Cognizant's next annual meeting, only
directors of the class whose term is expiring that year will be required to
stand for election, and upon election each director will serve a three-year
term. The board of directors has set the number of directors at 6, effective
upon completion of the exchange offer. Cognizant's certificate of incorporation
will provide that the authorized number of directors may be decreased or
increased at any time by the board of directors, but may not be less than three.
No change may have the effect of removing any director from office. Upon any
change in the authorized number, the total number of directors will be allocated
as evenly as possible within the three classes, provided that the term of office
may not be shortened for any incumbent director. Any director elected to fill a
vacancy not resulting from an increase in the number of directors shall have the
same remaining term as that of his or her predecessor. Any director elected to
fill a newly created directorship resulting from an increase in the size of any
class shall have the same remaining term as the other directors of that class.
Board Size
Cognizant's certificate of incorporation will provide that the number
of Cognizant's directors will be not less than three and that the exact number
of directors will be fixed from time to time exclusively by Cognizant's board of
directors, by a resolution adopted by the majority of the board of directors.
The current by-laws contain a similar provision which will be amended to conform
to the certificate of incorporation. The effect of such a provision is that the
stockholders of Cognizant, acting on their own, will not have the power to amend
Cognizant's by-laws to increase the size of its board of directors and fill the
new directorships with their own representatives. Cognizant believes that it is
important to reinforce the classified board provision in this way in light of
the increased vulnerability, discussed above, that Cognizant will have following
the exchange offer to potentially abusive takeover tactics and efforts to
acquire control of Cognizant at a price or on terms that are not in the best
interests of all stockholders. Protecting the classified board structure will
help ensure that the incumbent board of directors will be given the time and
opportunity to evaluate any proposals for acquisition of control of Cognizant
and assess and develop alternatives in a manner consistent with their
responsibility to Cognizant's stockholders, without the pressure created by the
threat of imminent loss of control.
Elimination of Ability to Act by Written Consent
Unless otherwise provided in a company's certificate of incorporation,
Delaware law permits any action required or permitted to be taken by
stockholders of a company at a meeting to be taken without notice, without a
meeting and without a stockholder vote if a written consent setting forth the
action to be taken is signed by the holders of shares of outstanding stock
having the requisite number of votes that would be necessary to authorize the
action at a meeting of stockholders at which all shares entitled to vote were
present and voted. IMS Health has approved the amendment and restatement to
Cognizant's certificate of incorporation pursuant to which, upon consummation of
the exchange offer, the certificate of incorporation will be amended, and
conforming changes will be
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made to Cognizant's by-laws, to require that stockholder action be taken at an
annual or special meeting of stockholders, and to prohibit stockholder action
by written consent.
This amendment will give all stockholders of Cognizant the opportunity
to participate in determining any proposed action and will prevent the holders
of a majority of the voting stock from using the written consent procedure to
take stockholder action without affording all stockholders an opportunity to
participate. This amendment will prevent stockholders from taking action other
than at an annual or special meeting of stockholders at which a proposal is
submitted to stockholders in accordance with the advance notice provisions of
Cognizant's by-laws. This could lengthen the amount of time required to take
stockholder actions, which will ensure that stockholders will have sufficient
time to weigh the arguments presented by both sides in connection with any
contested stockholder vote. Once the special meeting amendment is effected,
stockholders will no longer have the ability to call a special meeting of
stockholders of Cognizant to take corporate action between annual meetings.
Accordingly, the written consent amendment in conjunction with the special
meeting amendment may discourage, delay or prevent a change in control of
Cognizant. For example, a proposal for the removal of Cognizant's directors for
cause could, if Cognizant's board of directors desired, be delayed until the
next annual meeting of Cognizant stockholders.
Elimination of Ability to Call a Special Meeting
Under Cognizant's current by-laws, a special meeting of stockholders
may be called by the president of Cognizant or by Cognizant's board of directors
and is required to be called by the president at the request in writing of a
majority of the shares of common stock issued and outstanding and entitled to
vote. Upon completion of the exchange offer, Cognizant's certificate of
incorporation will be amended, and conforming changes will be made to
Cognizant's by-laws, to prohibit stockholders from calling a special meeting and
to require that business transacted at any special meeting be limited to the
purpose stated in the notice of the meeting. A common tactic of bidders
attempting a takeover is to initiate a proxy contest by calling a special
meeting. By eliminating the stockholders' right to call a special meeting,
expensive proxy contests cannot occur other than in connection with Cognizant's
annual meeting. Also, Cognizant's board of directors will retain the ability to
call a special meeting of the stockholders when issues arise that require a
stockholder meeting. The inability of a stockholder to call a special meeting
might impact upon a person's decision to purchase voting securities of
Cognizant.
Supermajority Approval Requirements
Currently, in addition to approval by Cognizant's board of directors,
the approval of the holders of a majority in voting power of Cognizant's
outstanding shares of stock entitled to vote thereon is required to amend any
provision of Cognizant's certificate of incorporation. Delaware law permits a
company to include provisions in its certificate of incorporation that require a
greater vote than the vote otherwise required by law for any corporate action.
Upon completion of the exchange offer, Cognizant's certificate of incorporation
will be amended to require the affirmative vote of the holders
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of at least 80% in voting power of the outstanding shares of Cognizant entitled
to vote generally in the election of directors, voting together as a single
class, to amend, alter, change, add to or repeal certain provisions of
Cognizant's certificate of incorporation. The provisions in Cognizant's
certificate of incorporation affected by this amendment are:
o the provisions concerning the classified board, the size of
the board and the filling of board vacancies and newly
created directorships;
o the provision concerning the inability of Cognizant's
stockholders to call special meetings;
o the provision concerning the inability of Cognizant's
stockholders to act by written consent; and
o the provision concerning the ability of Cognizant's
stockholders to amend, alter, change, add to or repeal the
provisions of the certificate of incorporation described in
this paragraph or the by-laws.
The supermajority voting requirement may discourage or deter a person
from attempting to obtain control of Cognizant by making it more difficult to
amend certain provisions of Cognizant's certificate of incorporation, whether to
eliminate provisions that have an anti-takeover effect or those that protect the
interests of minority stockholders. The supermajority voting requirement will
make it more difficult for a stockholder or stockholder group to put pressure on
Cognizant's board of directors to amend Cognizant's certificate of incorporation
to facilitate a takeover attempt.
In addition, the supermajority amendment provides that the
affirmative vote of the holders of at least 80% in voting power of the
outstanding shares of Cognizant entitled to vote generally in the election of
directors, voting together as a single class, is required for the stockholders
to amend, alter, change, add to or repeal any provisions of the by-laws of
Cognizant. This supermajority voting requirement may discourage or deter
a person from attempting to obtain control of Cognizant by making it more
difficult to amend Cognizant's by-laws, whether to eliminate provisions that
have an anti-takeover effect or those that protect the interests of minority
stockholders. This supermajority voting amendment permits a minority of
Cognizant's shareholders to block an attempt by its stockholders to amend or
repeal its by-laws.
Conversion of Class B Common Stock to Cognizant Class A Common Stock
Cognizant's existing certificate of incorporation provides that upon
the completion of the exchange offer each share of class B common stock will
automatically convert into one share of class A common stock immediately prior
to the first transfer of such share following completion of the exchange offer.
Cognizant's certificate of incorporation will be amended to specify that such
transfer will be deemed to occur upon any change of the beneficial owner of such
share. In addition, the board of directors will
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\
be authorized to determine in good faith, based on such information as it deems
appropriate, whether such a transfer has occurred.
Furthermore, the board of directors will be authorized to determine
whether at any time the outstanding shares of class B common stock represent
less than 35% of the economic ownership represented by the aggregate number of
shares of common stock then outstanding, which would result in the automatic
conversion of all outstanding shares of class B common stock into class A common
Stock.
Cognizant's existing certificate of incorporation includes a provision
specifying the legend that currently appears on class B common stock
certificates. As this provision will not be applicable following the exchange
offer, Cognizant's certificate of incorporation will be amended to provide for a
new legend.
The purpose of these amendments is to ensure that the existing
provisions that provide for automatic conversion of class B common stock into
class A common stock can be properly effectuated.
Required Vote
Approval of the charter amendments described above, which will be
effected by the amendment and restatement of the current certificate of
incorporation, requires the vote or the written consent of the holders of a
majority in voting power of the shares of Cognizant's common stock outstanding
as of the Record Date and the holders of a majority in voting power of the
shares of Cognizant's class B common stock outstanding as of the record date,
voting separately as a class. IMS Health has acted by written consent with
respect to all shares of Cognizant's common stock owned by it, constituting
approximately 55% of the total number of outstanding shares of common stock and
93% of the voting power thereof, and all of the outstanding class B common
stock, approving such amendment and restatement of the current certificate of
incorporation, provided that such amendment and restatement will not become
effective until the completion of the exchange offer.
APPRAISAL RIGHTS
Holders of neither Cognizant's class A common stock nor Cognizant's
class B common stock are entitled to appraisal rights under Section 262 of the
General Corporation Law of the State of Delaware in connection with the matters
discussed in this information statement.
AMENDMENTS TO COGNIZANT'S BY-LAWS
In connection with the exchange offer, Cognizant's board of directors
has also approved amendments to Cognizant's by-laws. Under the terms of
Cognizant's existing certificate of incorporation, our directors have the power
to amend Cognizant's by-laws without stockholder approval. As a result, separate
approval by Cognizant's stockholders is not required to adopt the by-law
amendments. A description of the by-laws amendments is included in this
information statement for information purposes only. The by-law amendments will
become effective upon the completion of the exchange
-16-
offer. We refer you to the full text of the amendments to Cognizant's by-laws,
which are attached as Appendix B.
Cognizant's by-law amendments require that, at any annual meeting of
stockholders, the only nominations of persons for election to the board of
directors and proposals of business to be considered will be the nominations
made or proposals of business brought before the meeting:
o pursuant to Cognizant's notice of meeting;
o by or at the direction of the board of directors; and
o by a stockholder of Cognizant who was a stockholder of
record of Cognizant at the time of the delivery of the
notice provided for in the by-laws and who is entitled to
vote at the meeting and who complies with the notice
procedures set forth below.
For nominations or other business to be properly brought before an
annual meeting of stockholders pursuant to the third point above, the
stockholder must give written notice to the secretary of Cognizant not later
than 90 days and not earlier than 120 days prior to the first anniversary of the
preceding year's annual meeting. If the annual meeting is more than 30 days
before or more than seventy days after that anniversary date, the stockholder
must give written notice not earlier than 120 days prior to the annual meeting
and not later than the close of business on the later of the day that is 90 days
prior to the annual meeting or 10 days following the date on which public
announcement of the annual meeting is first given. The notice must set forth:
o as to nominations, all information relating to the proposed
nominee that is required to be disclosed under Regulation
14A under the Securities Exchange Act of 1934, as amended,
and such person's written consent to be named as nominee and
to serving as a director if elected;
o as to other business, a description of the business desired
to be brought before the meeting, the text of any proposal
to be presented to the stockholders and the reasons for
conducting the business at the meeting;
o the name and address, as they appear on Cognizant's books,
of the stockholder who is proposing the business, and the
name and address of the beneficial owner, if any, on whose
behalf the nomination or proposal is made;
o the class and number of shares of stock of Cognizant that
are owned by the stockholder or the beneficial owner on
whose behalf the nomination or proposal is made;
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o a representation that the stockholder is a stockholder of
record of Cognizant entitled to vote at the meeting and
intends to appear in person or by proxy at the meeting to
propose the business or nomination;
o any material interest of the stockholder of record and the
beneficial owner, if any, on whose behalf the proposal is
made, in the business; and
o a representation as to whether the stockholder of record or
the beneficial owner, if any, intends, or is part of a group
which intends, to solicit proxies in support of the nominee
or proposal.
The amended by-laws also provide that at any special meeting of the
stockholders of Cognizant, the only business that may be brought before the
special meeting is the business specified in the notice of special meeting.
Accordingly, the stockholders of Cognizant may not raise any other matters for
consideration at special meetings.
With respect to an election of directors to be held at a special
meeting of the stockholders as determined by Cognizant's notice of special
meeting, a stockholder may make a nomination pursuant to notice given not
earlier than 120 days prior to the special meeting and not later than the close
of the business on the later of the day that is 90 days prior to the special
meeting or 10 days following the date on which public announcement of the
special meeting is first made.
These amendments may preclude nominations or the conduct of business
by stockholders at a particular stockholders meeting if the proper procedures
are not followed, and may discourage or deter a third party from attempting to
obtain control of Cognizant, even if this attempt might be viewed as beneficial
to Cognizant by its stockholders.
The presiding officer of the meeting will determine and declare at the
meeting whether the business was properly brought before the meeting in
accordance with the procedures described above and may declare the nominations
or the business as not properly brought before the meeting and not recognize the
nominations or the business.
In addition to the provisions described above, the by-laws amendments
contain changes necessary to conform the by-laws to the amendments to
Cognizant's certificate of incorporation described above. These changes contain
defensive provisions and relate to the sections regarding special meetings,
vacancies in the board of directors and amendments of the by-laws.
The by-law amendments also contain:
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o changes regarding the mechanism by which notice may be given
to stockholders (expanding the permissible period for giving
notice and permitting electronic transmission);
o a clarification of the quorum requirements for stockholder
meetings;
o a new paragraph regarding the authority of the person
presiding at a meeting of stockholders;
o a change from a majority requirement to a plurality
requirement in the election of directors;
o changes regarding the fixing of the record date;
o amendments regarding the use of electronic transmission for
board consents in lieu of a meeting and amendments regarding
board committees;
o changes to the indemnification provision; and
o an amendment to the provision regarding stock certificates
and stock transfers stating that shares may be subject to
transfer restrictions and a clarification regarding the
voting of securities.
In addition, certain provisions regarding interested director
transactions and stockholder ratifications have been deleted to take advantage
of similar provisions in the General Corporation Law of the State of Delaware.
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CERTAIN EXISTING CIRCUMSTANCES POTENTIALLY AFFECTING A
CHANGE IN CONTROL OF COGNIZANT
General Corporation Law of the State of Delaware
Under Section 203 of the General Corporation Law of the State of
Delaware, a corporation is generally restricted from engaging in a business
combination with an interested stockholder for a three-year period following the
time the stockholder became an interested stockholder. An interested stockholder
is defined as a stockholder who, together with its affiliates or associates,
owns, or who is an affiliate or associate of the corporation and within the
prior three-year period did own, 15% or more of the corporation's voting stock.
This restriction applies unless,
o prior to the time the stockholder became an interested
stockholder, the board of directors of the corporation
approved either the business combination or the transaction
which resulted in the stockholder becoming an interested
stockholder;
o the interested stockholder owned at least 85% of the voting
stock of the corporation, excluding specified shares, upon
completion of the transaction which resulted in the
stockholder becoming an interested stockholder; or
o at or subsequent to the time the stockholder became an
interested stockholder, the business combination was
approved by the board of directors of the corporation and
authorized by the affirmative vote, at an annual or special
meeting, and not by written consent, of at least 66 2/3% of
the outstanding voting shares of the corporation, excluding
shares held by that interested stockholder.
A business combination generally includes:
o mergers, consolidations and sales or other dispositions of
10% or more of the assets of a corporation to or with an
interested stockholder;
o transactions resulting in the issuance or transfer to an
interested stockholder of any capital stock of the
corporation or its subsidiaries, subject to certain
exceptions;
o transactions having the effect of increasing the
proportionate share of the interested stockholder in the
capital stock of the corporation or its subsidiaries,
subject to certain exceptions; and
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o other transactions resulting in a disproportionate financial
benefit to an interested stockholder.
This makes a take-over of a company more difficult and may have the
effect of diminishing the possibility of certain types of two-step acquisitions
of a company or other unsolicited attempts to acquire a company. This may
further have the effect of preventing changes in the board of directors of a
company and it is possible that such provisions could make it more difficult to
accomplish transactions which stockholders may otherwise deem to be in their
best interests.
Certificate of Incorporation
Cognizant's certificate of incorporation authorizes the issuance of
preferred stock with such designations, rights and preferences as may be
determined from time to time by its board of directors. Accordingly, Cognizant's
board of directors is empowered, without stockholder approval, to issue
preferred stock with dividends, liquidation, voting or other rights that could
adversely affect the voting power or other rights of the holders of Cognizant's
common stock. Pursuant to the Intercompany Agreement, dated May 15, 1998,
between IMS Health and Cognizant, IMS Health's consent will be required to issue
any preferred stock prior to the completion of the exchange offer. After the
exchange offer, neither IMS Health's nor any other stockholder's consent will be
required to issue any preferred stock. In the event preferred stock is issued,
it could be used, under certain circumstances, as a method of discouraging,
delaying or preventing a change in control of Cognizant. No shares of preferred
stock are issued or outstanding and Cognizant has no present plans to issue any
shares of preferred stock. However, Cognizant expects to designate a new series
of preferred stock in connection with its stockholders' rights plan, which is to
become effective upon consummation of the exchange offer.
STOCKHOLDERS' RIGHTS PLAN
Upon completion of the exchange offer, Cognizant's board of directors
expects to adopt a stockholders' rights plan in order to improve the ability of
the board to protect and advance the interests of Cognizant and its stockholders
in the event of an unsolicited proposal to acquire a significant interest in
Cognizant. The stockholders' rights plan will not require stockholder approval.
The stockholders' rights plan is expected to provide that holders of
Cognizant's outstanding class A or class B common stock will receive, in the
form of a dividend, a right to purchase 1/1000 of a share of a newly created
series of preferred stock, which will be the economic equivalent of one share of
Cognizant's common stock. Rights become exercisable on the earlier of: (1) the
tenth day following the public announcement that a person or group has acquired
beneficial ownership of 15% or more of Cognizant's total voting power
represented by the class A common stock and class B common stock or (2) the
tenth business day (or such later date as may be determined by Cognizant's board
of directors) following the commencement or announcement of an intention to make
a tender offer or exchange offer pursuant to which a person would
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acquire more than 15% of Cognizant's voting power. Rights will be redeemable at
a price of $.01 per right, by the vote of Cognizant's board of directors, at any
time prior to the time a person acquires more than 15% of the voting power. If
any person does so, each holder of a right (other than rights held by the
acquiring person, which will become void) will receive, upon exercise of the
right at the then-current exercise price, shares of the class of Cognizant's
common stock to which such right relates, having a market value on that date of
twice the exercise price of the right, commonly referred to as a "flip-in
right." If the flip-in right is exercised, the acquiring person's voting and
economic interest in Cognizant would be dramatically diluted by the issuance by
Cognizant of large numbers of its shares of common stock to its current
stockholders other than the acquiring person at a reduced price. If, after any
person acquires shares of the outstanding common stock representing more than
15% of the voting power, Cognizant is acquired in a business consolidation or
50% or more of its assets or earning power is sold, each holder of a right
(other than rights held by the acquiring person, which will thereupon become
void) will receive, upon exercise of the right at the then-current exercise
price, shares of the acquiror having a market value on that date of twice the
exercise price of the right, commonly referred to as a "flip-over right." This
would cause significant dilution to the acquiror's existing shareholders.
Any person owning in excess of 15% of Cognizant's voting power on the
date of the adoption of the plan or as a result of the exchange offer will be
grandfathered so long as such person does not acquire additional shares.
Cognizant's board of directors may adopt a stockholders' rights plan
in order to encourage potential acquirors to negotiate with its board of
directors to preserve for its stockholders the value of the company in the event
of a takeover attempt, particularly if the common stock of Cognizant is trading
at prices substantially less than Cognizant's long term value. The rights plan
that Cognizant's board of directors expects to adopt will reduce the likelihood
that a potential acquiror who is unwilling to pay a market premium that the
board determines is sufficient will attempt to acquire stock by means of an open
market accumulation, front-end loaded tender offer or other coercive or unfair
takeover tactic. With the stockholders' rights plan in place, if a hostile
takeover is threatened or an offer to acquire a substantial block of Cognizant's
common stock is made, the board would be better able to manage the process to
ensure that any proposal accepted is in the best interest of all stockholders.
DELIVERY OF DOCUMENTS TO STOCKHOLDERS
SHARING AN ADDRESS
Certain stockholders who share an address are being delivered only one
copy of this information statement unless Cognizant or one of its mailing agents
has received contrary instructions. Upon the written or oral request of a
stockholder at a shared address to which a single copy of the information
statement was delivered, Cognizant shall promptly deliver a separate copy of
such documents to such stockholder.
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Written requests should be made to Cognizant Technology Solutions, 500
Glenpointe Centre West, Teaneck, New Jersey 07666 and oral requests may be made
by calling Cognizant at (201) 801-0233. In addition, if such stockholder wishes
to receive a separate copy of this information statement in the future, such
stockholder should notify Cognizant either in writing addressed to the foregoing
address or by calling the foregoing telephone number. Stockholders sharing an
address who are receiving multiple copies of the information and proxy
statements of Cognizant may request delivery of a single copy of the information
statement and proxy statements of Cognizant in writing to the address above or
calling the number above.
Dated: January , 2003
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APPENDIX A
RESTATED CERTIFICATE OF INCORPORATION
OF
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
The undersigned officer of Cognizant Technology Solutions Corporation,
a corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware (the "Corporation"), hereby certifies
as follows:
1. The name of the Corporation is Cognizant Technology Solutions
Corporation. The Corporation was originally incorporated under
the name Anemone Investments, Inc.
2. The Corporation's original Certificate of Incorporation was
filed with the Secretary of State on April 6, 1988.
3. A Restated Certificate of Incorporation of the Corporation, in
the form attached hereto as Exhibit A, has been duly adopted
by the Board of Directors and by written consent of the
majority stockholder of the Corporation, in accordance with
Sections 228, 242 and 245 of the General Corporation Law of
the State of Delaware.
4. The Amended and Restated Certificate of Incorporation of the
Corporation is hereby further amended and restated to read in
its entirety as set forth in the Restated Certificate of
Incorporation attached hereto as Exhibit A, which is hereby
incorporated by reference.
IN WITNESS WHEREOF, the Corporation has caused this Restated
Certificate of Incorporation to be signed by its duly elected Chairman of the
Board and Chief Executive Officer this _________ day of __, 2003.
-------------------------
Wijeyaraj Mahadeva
Chief Executive Officer
EXHIBIT A
RESTATED CERTIFICATE OF INCORPORATION
OF
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
ARTICLE I
The name of the Corporation is Cognizant Technology Solutions
Corporation (hereinafter, the "Corporation").
ARTICLE II
The registered office of the Corporation within the State of Delaware
is located at Corporation Trust Center, 1209 Orange Street, City of Wilmington,
County of New Castle. The name of its registered agent at that address is The
Corporation Trust Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware (the "GCL").
ARTICLE IV
A. The total number of shares of stock that the Corporation shall have
authority to issue is One Hundred Forty Million (140,000,000) of which (i) One
Hundred Million (100,000,000) shares shall be shares of Class A Common Stock,
$.01 par value per share (the "Class A Common Stock"), and Twenty-five Million
(25,000,000) shares shall be shares of Class B Common Stock, $.01 par value per
share (the "Class B Common Stock") (the Class A Common Stock and the Class B
Common Stock being collectively referred to herein as the "Common Stock"), and
(ii) Fifteen Million (15,000,000) shares shall be shares of Preferred Stock,
$.10 par value per share (the "Preferred Stock").
B. The number of authorized shares of any class or classes of stock may
be increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a majority of the votes
entitled to be cast by the holders of the Common Stock of the Corporation,
voting together as a single class, irrespective of the provisions of Section
242(b)(2) of the GCL or any corresponding provision hereinafter enacted.
C. The following is a statement of the powers, preferences and relative
participating, optional or other special rights and qualifications, limitations
and restrictions of the Class A Common Stock and Class B Common Stock of the
Corporation.
(1) Except as otherwise set forth below in this Article IV,
the powers, preferences and relative participating, optional or other
special rights and qualifications,
A-1
limitations or restrictions of the Class A Common Stock and Class B
Common Stock shall be identical in all respects.
(2) Subject to the rights of the holders of Preferred Stock,
and subject to any other provisions of this Restated Certificate of
Incorporation, holders of Class A Common Stock and Class B Common Stock
shall be entitled to receive such dividends and other distributions in
cash, stock or property of the Corporation as may be declared thereon
by the Board of Directors of the Corporation from time to time out of
assets or funds of the Corporation legally available therefor. If any
dividend or other distribution in cash or other property is paid with
respect to Class A Common Stock or with respect to Class B Common Stock
(other than dividends or other distributions payable in shares of
Common Stock), a like dividend or other distribution in cash or other
property shall also be paid with respect to shares of the other class
of Common Stock, in an amount equal per share. In the case of dividends
or other distributions payable in Common Stock, including distributions
pursuant to stock splits or divisions of Common Stock of the
Corporation, only shares of Class A Common Stock shall be paid or
distributed with respect to Class A Common Stock and only shares of
Class B Common Stock shall be paid or distributed with respect to Class
B Common Stock. The number of shares of Class A Common Stock and Class
B Common Stock so distributed shall be equal in number on a per share
basis. Neither the shares of Class A Common Stock nor the shares of
Class B Common Stock may be reclassified, subdivided or combined unless
such reclassification, subdivision or combination occurs simultaneously
and in the same proportion for each class.
(3) (a) At every meeting of the stockholders of the
Corporation, every holder of Class A Common Stock shall be entitled to
one vote in person or by proxy for each share of Class A Common Stock
standing in his, her or its name on the transfer books of the
Corporation, and every holder of Class B Common Stock shall be entitled
to ten votes in person or by proxy for each share of Class B Common
Stock standing in his, her or its name on the transfer books of the
Corporation in connection with the election of directors and all other
matters submitted to a vote of the stockholders; provided, however,
that with respect to any proposed conversion subsequent to a Tax-Free
Spin-Off (as defined in paragraph (C)(6)(b) below) of the shares of
Class B Common Stock into shares of Class A Common Stock pursuant to
paragraph (C)(6)(b) below, each holder of a share of Common Stock,
irrespective of class, shall have one vote in person or by proxy for
each share of Common Stock standing in his, her or its name on the
transfer books of the Corporation. Except as may be otherwise required
by this Article IV, the holders of Class A Common Stock and Class B
Common Stock shall vote together as a single class on all matters
submitted to a vote of the holders of Common Stock.
(b) Subject to any rights of the holders of Preferred
Stock, the provisions of this Restated Certificate of Incorporation
shall not be modified, revised, altered or amended, repealed or
rescinded in whole or in part, without the approval of a majority of
the votes entitled to be cast by the holders of the Class A Common
Stock and the Class B Common Stock, voting together as a single class;
provided, however, that with respect to any proposed amendment of this
Restated Certificate of Incorporation which would alter or change the
powers, preferences or special rights of the shares of Class A Common
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Stock or Class B Common Stock so as to affect them adversely, the
approval of a majority of the votes entitled to be cast by the holders
of the shares affected by the proposed amendment, voting separately as
a class, shall be obtained in addition to the approval of a majority of
the votes entitled to be cast by the holders of the Class A Common
Stock and the Class B Common Stock voting together as a single class as
hereinbefore provided. Any increase in the authorized number of shares
of any class or classes of stock of the Corporation or creation,
authorization or issuance of any securities convertible into, or
warrants, options or similar rights to purchase, acquire or receive,
shares of any such class or classes of stock shall be deemed not to
affect adversely the powers, preferences or special rights of the
shares of Class A Common Stock or Class B Common Stock. Neither the
outcome of any vote with respect to any proposed conversion subsequent
to a Tax-Free Spin-Off of the shares of Class B Common Stock into
shares of Class A Common Stock pursuant to paragraph (C)(6)(b) below
nor the occurrence of the events described in the last sentence of
paragraph (C)(6)(b)(iii) below shall be deemed to be a modification,
revision, alteration, amendment, repeal or rescission of the provisions
of this Restated Certificate of Incorporation.
(c) Every reference in this Restated Certificate of
Incorporation to a majority or other proportion of shares of Common
Stock, Class A Common Stock or Class B Common Stock shall refer to such
majority or other proportion of the votes to which such shares of
Common Stock, Class A Common Stock or Class B Common Stock, as
applicable, are entitled.
(4) In the event of any dissolution, liquidation or winding up
of the affairs of the Corporation, whether voluntary or involuntary,
after payment in full of the amounts required to be paid to the holders
of Preferred Stock, the remaining assets and funds of the Corporation
shall be distributed pro rata to the holders of Class A Common Stock
and Class B Common Stock. For the purposes of this paragraph (C)(4),
the voluntary sale, conveyance, lease, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or
substantially all of the assets of the Corporation or a consolidation
or merger of the Corporation with one or more other corporations
(whether or not the Corporation is the corporation surviving such
consolidation or merger) shall not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary.
(5) In the event of any reorganization or any consolidation of
the Corporation with one or more other corporations or a merger of the
Corporation with another corporation unless immediately following such
event, and based solely on the securities issued in connection
therewith, a majority of the total voting power of the successor
corporation is held by Persons (as defined in paragraph (C)(6)(b)(ii)
below) that were stockholders of the Corporation immediately prior to
such event, each holder of a share of Class A Common Stock shall be
entitled to receive with respect to such share the same kind and amount
of shares of stock and other securities and property (including cash)
receivable upon such reorganization, consolidation or merger by a
holder of a share of Class B Common Stock and each holder of a share of
Class B Common Stock shall be entitled to receive with respect to such
share the same kind and amount of shares of stock and other securities
and property (including cash) receivable upon such reorganization,
consolidation or merger by a holder of a share of Class A Common Stock;
provided, however, that in the event of any such reorganization or
consolidation in which a majority
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of the total voting power of the successor corporation is held by
Persons that were stockholders of the Corporation immediately prior to
such event, each holder of a share of Class A Common Stock shall be
entitled to receive with respect to such share the same kind and amount
of shares of stock and other securities and property (including cash)
receivable upon such reorganization, consolidation or merger by a
holder of a share of Class B Common Stock and vice versa except that
any stock or securities received may differ insofar as is necessary to
preserve the respective voting rights of the Class A Common Stock and
Class B Common Stock hereunder.
(6) (a) Prior to the date on which shares of Class B Common
Stock are distributed to stockholders of Cognizant (as defined in
paragraph (C)(6)(b) below) in a Tax-Free Spin-Off, each record holder
of shares of Class B Common Stock may convert from time to time any or
all of such shares into an equal number of shares of Class A Common
Stock by surrendering the certificates for such shares, accompanied by
any required tax transfer stamps and by a written notice by such record
holder to the Corporation stating that such record holder desires to
convert such shares of Class B Common Stock into the same number of
shares of Class A Common Stock and requesting that the Corporation
issue all of such shares of Class A Common Stock to Persons named
therein, setting forth the number of shares of Class A Common Stock to
be issued to each such Person and the denominations in which the
certificates therefor are to be issued. To the extent permitted by law,
such voluntary conversion shall be deemed to have been effected at the
close of business on the date of such surrender. Following a Tax-Free
Spin-Off, shares of Class B Common Stock shall no longer be convertible
into shares of Class A Common Stock except as set forth in paragraph
(C)(6)(b) below.
(b) (i) Prior to a Tax-Free Spin-Off, each share of Class
B Common Stock shall automatically convert into one share of Class A
Common Stock immediately prior to the transfer of such share if, after
such transfer, such share is not Beneficially Owned (as defined below)
by Cognizant. Shares of Class B Common Stock shall not convert into
shares of Class A Common Stock (x) in any transfer effected in
connection with a distribution of Class B Common Stock as a spin-off,
split-up or split-off to stockholders of Cognizant intended to be on a
tax-free basis under the Internal Revenue Code of 1986, as amended from
time to time (the "Code") (a "Tax-Free Spin-Off'), or (y) except as
otherwise set forth below in this paragraph (C)(6)(b), in any transfer
after a Tax-Free Spin-Off. For purposes of this paragraph (C)(6), a
Tax-Free Spin-Off shall be deemed to have occurred at the time shares
are first transferred to stockholders of Cognizant following receipt of
an affidavit described in clauses (vi) or (vii) of the first sentence
of paragraph (C)(6)(d) below. For purposes of this paragraph (C)(6),
"Cognizant" shall mean Cognizant Corporation, a Delaware corporation,
all successors to Cognizant Corporation by way of merger, consolidation
or sale of all or substantially all its assets, and all corporations,
partnerships, joint ventures, associations and other entities in which
Cognizant Corporation Beneficially Owns, directly or indirectly, 50% or
more of the outstanding voting stock, voting power or similar voting
interests ("Voting Interests") (each, a "Subsidiary Entity"), but which
shall not include the Corporation or any Subsidiary Entity in which the
Corporation Beneficially Owns, directly or indirectly, 50% or more of
the outstanding Voting Interests (it being understood that Cognizant
shall mean IMS Health Incorporated upon consummation of the
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reorganization of Cognizant into IMS Health Incorporated and Nielsen
Media Research on or about June 30, 1998). The terms "Beneficially
Own," "Beneficially Owns" and "Beneficially Owned" as used herein shall
have the meanings ascribed to such terms in Rule 13d-3 of the General
Rules and Regulations of the Securities Exchange Act of 1934, as in
effect on the date of filing of this Restated Certificate of
Incorporation.
(ii) The term "Person" as used herein shall mean any
individual, firm, corporation or other entity; each reference to an
"individual" (or to a "record holder" of shares, if an individual)
shall be deemed to include in his or her representative capacity a
guardian, committee, executor, administrator or other legal
representative of such individual or record holder.
(iii) In the event of a Tax-Free Spin-Off, each share of Class
B Common Stock shall automatically convert into one share of Class A
Common Stock (x) immediately prior to the first transfer of such share
(such transfer being deemed to occur upon any change of the Beneficial
Owner thereof) after such share is transferred to a stockholder of
Cognizant in the Tax-Free Spin-Off or (y) if later, on the fifth
anniversary of the date on which such share of Class B Common Stock is
first transferred to a stockholder of Cognizant in the Tax-Free
Spin-Off unless, prior to such Tax-Free Spin-Off, Cognizant delivers to
the Corporation the written advice of counsel, reasonably satisfactory
to the Corporation, to the effect that such conversion could adversely
affect the ability of Cognizant to obtain a favorable ruling from the
Internal Revenue Service that the distribution would be a Tax-Free
Spin-Off under the Code or the Internal Revenue Service has adopted a
general non-ruling policy on tax-free spinoffs and that such conversion
could adversely affect the status of the transaction as a Tax-Free
Spin-Off. If such written advice of counsel is received, approval of
such conversion shall be submitted to a vote of the holders of the
Common Stock as soon as practicable after the fifth anniversary of the
Tax-Free Spin-Off. At the meeting of stockholders called for such
purpose, every holder of Common Stock shall be entitled to one vote
(irrespective of the voting rights provided for such shares under
paragraph (C)(3)(a) above) in person or by proxy for each share of
Common Stock standing in his or her name on the transfer books of the
Corporation. Approval of such conversion shall require the approval of
a majority of the votes, on the per share voting basis provided in the
preceding sentence, entitled to be cast by the holders of the Class A
Common Stock and Class B Common Stock present and voting, voting
together as a single class, and the holders of the Class B Common Stock
shall not be entitled to a separate class vote. Such conversion shall
be effective on the date on which such approval is given at a meeting
of stockholders called for such purpose. Notwithstanding the foregoing,
if Cognizant delivers to the Corporation prior to such anniversary the
written advice of counsel, reasonably satisfactory to the Corporation,
to the effect that such vote could adversely affect the status of the
transaction as a Tax-Free Spin-Off (including without limitation the
ability to obtain a favorable ruling from the Internal Revenue
Service), such vote shall not be held and no such conversion shall take
place. Upon delivery of such written advice of counsel as to such vote,
and the further advice that the continued existence of this paragraph
(C)(6)(b)(iii) itself could adversely affect the status of the
transaction as a Tax-Free Spin-Off (including without limitation the
ability to obtain a favorable ruling from the Internal
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Revenue Service), then this paragraph (C)(6)(b)(iii) shall thereafter
be null and void and no longer be deemed to be part of this Restated
Certificate of Incorporation.
(iv) If at any time the outstanding shares of Class B Common
Stock shall cease to represent at least 35% of the economic ownership
represented by the aggregate number of shares of Common Stock then
outstanding, then each share of Class B Common Stock shall
automatically convert into one share of Class A Common Stock.
(v) The Corporation will provide notice of any automatic
conversion of all outstanding shares of Class B Common Stock to holders
of record as soon as practicable after the conversion; provided,
however, that the Corporation may satisfy such notice requirement by
providing such notice prior to conversion. Such notice shall be
provided by mailing notice of such conversion first class postage
prepaid, to each holder of record of the Common Stock, at such holder's
address as it appears on the transfer books of the Corporation;
provided, however, that no failure to give such notice nor any defect
therein shall affect the validity of the automatic conversion of any
shares of Class B Common Stock. Each such notice shall state, as
appropriate, the following:
(A) the automatic conversion date;
(B) that all outstanding shares of Class B Common Stock are
automatically converted;
(C) the place or places where certificates for such shares are
to be surrendered for conversion; and
(D) that no dividends will be declared on the shares of Class
B Common Stock converted after such conversion date.
(vi) The Board of Directors of the Corporation shall have the
power and authority to determine in good faith, based on such
information as it deems appropriate, (x) whether there has occurred a
transfer of a share of Class B Common Stock as described in clause (x)
of paragraph (C)(6)(b)(iii) above, and (y) whether at any time the
outstanding shares of Class B Common Stock represent less than 35% of
the economic ownership represented by the aggregate number of shares of
Common Stock then outstanding as described in paragraph (C)(6)(b)(iv)
above.
Immediately upon such conversion, the rights of the holders of shares
of Class B Common Stock as such shall cease and such holders shall be treated
for all purposes as having become the record owners of the shares of Class A
Common Stock issuable upon such conversion; provided, however, that such Persons
shall be entitled to receive when paid any dividends declared on the Class B
Common Stock as of a record date preceding the time of such conversion and
unpaid as of the time of such conversion, subject to paragraph (C)(6)(f) below.
(c) Prior to a Tax-Free Spin-Off, holders of shares of Class B
Common Stock may (i) sell or otherwise dispose of or transfer any or
all of such shares held by them, respectively, only in connection with
a transfer which meets the qualifications of paragraph (C)(6)(d) below,
and under no other circumstances, or (ii) convert any or all of
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such shares into shares of Class A Common Stock as provided in
paragraph (C)(6)(a) above. Prior to a Tax-Free Spin-Off, no one other
than those Persons in whose names shares of Class B Common Stock
originally are registered on the stock ledger of the Corporation, or
transferees or successive transferees who receive shares of Class B
Common Stock in connection with a transfer which meets the
qualifications set forth in paragraph (C)(6)(d) below, shall by virtue
of the acquisition of a certificate for shares of Class B Common Stock
have the status of an owner or holder of shares of Class B Common Stock
or be recognized as such by the Corporation or be otherwise entitled to
enjoy for his or her own benefit the special rights and powers of a
holder of shares of Class B Common Stock.
Holders of shares of Class B Common Stock may at any and all times
transfer to any Person the shares of Class A Common Stock issuable upon
conversion of such shares of Class B Common Stock.
(d) Prior to a Tax-Free Spin-Off, shares of Class B Common
Stock shall be transferred on the books of the Corporation and a new
certificate therefor issued, upon presentation at the office of the
Secretary of the Corporation (or at such additional place or places as
may from time to time be designated by the Secretary of the
Corporation) of the certificate for such shares, in proper form for
transfer and accompanied by all requisite stock transfer tax stamps,
only if such certificate when so presented shall also be accompanied by
any one of the following:
(i) an affidavit from Cognizant stating that such certificate
is being presented to effect a transfer by Cognizant of such shares to
a successor of Cognizant or Subsidiary Entity of Cognizant; or
(ii) an affidavit from Cognizant or a successor of Cognizant
stating that such certificate is being presented to effect a transfer
by any Subsidiary Entity of Cognizant or a successor of Cognizant of
such shares to Cognizant or a successor of Cognizant or another
Subsidiary Entity of Cognizant or a successor of Cognizant; or
(iii) an affidavit from Cognizant or a successor of Cognizant
stating that such certificate is being presented to effect a transfer
by Cognizant or a successor of Cognizant of such shares to the
stockholders of Cognizant or a successor of Cognizant in connection
with a Tax-Free Spin-Off.
Each affidavit of a record holder furnished pursuant to this paragraph
(C)(6)(d) shall be verified as of a date not earlier than five days prior to the
date of delivery thereof, and, where such record holder is a corporation or
partnership, shall be verified by an officer of the corporation or by a general
partner of the partnership, as the case may be.
(e) Prior to the occurrence of a Tax-Free Spin-Off, each
certificate for shares of Class B Common Stock shall bear a legend on
the face thereof reading as follows:
"The shares of Class B Common Stock represented by this Certificate may
not be transferred to any person or entity in connection with a transfer that
does not meet the qualifications set forth in paragraph (C)(6)(d) of Article IV
of the Restated Certificate of
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Incorporation of this Corporation and no person who receives such shares in
connection with a transfer which does not meet the qualifications prescribed by
paragraph (C)(6)(d) of said Article IV is entitled to own or to be registered as
the record holder of such shares of Class B Common Stock and such shares will
have been automatically converted into Class A Common Stock upon any such
purported transfer. The record holder of this certificate may at any time
convert such shares of Class B Common Stock into the same number of shares of
Class A Common Stock. Each holder of this certificate, by accepting the same,
accepts and agrees to all of the foregoing."
Upon and after the transfer of shares in a Tax-Free Spin-Off, shares of
Class B Common Stock shall no longer bear the legend set forth above in this
paragraph (C)(6)(e), instead each certificate for shares of Class B Common Stock
shall bear a legend on the face thereof reading as follows:
"According to the Restated Certificate of Incorporation of Cognizant
Technology Solutions Corporation, the shares of Class B Common Stock represented
by this certificate will be automatically converted into shares of Class A
Common Stock upon any transfer of such shares of Class B Common Stock.
Consequently, no purported transferee of any shares of Class B Common Stock is
entitled to own or to be registered as the record holder of such shares of Class
B Common Stock but instead shall be entitled to own and be registered as the
record holder of a like number of shares of Class A Common Stock. Each holder of
this certificate, by accepting the same, accepts and agrees to all of the
foregoing."
(f) Upon any conversion of shares of Class B Common Stock
into shares of Class A Common Stock pursuant to the provisions of this
paragraph (C)(6), any dividend, for which the payment date shall be
subsequent to such conversion, which may have been declared on the
shares of Class B Common Stock so converted shall be deemed to have
been declared, and shall be payable, with respect to the shares of
Class A Common Stock into or for which such shares of Class B Common
Stock shall have been so converted, and any such dividend payable in
Common Stock shall be deemed to have been declared, and shall be
payable, in shares of Class A Common Stock.
(g) The Corporation shall not reissue or resell any shares
of Class B Common Stock which shall have been converted into shares of
Class A Common Stock pursuant to or as permitted by the provisions of
this paragraph (C)(6), or any shares of Class B Common Stock which
shall have been acquired by the Corporation in any other manner. The
Corporation shall, from time to time, take such appropriate action as
may be necessary to retire such shares and to reduce the authorized
amount of Class B Common Stock accordingly. The Corporation shall at
all times reserve and keep available, out of its authorized but
unissued Common Stock, such number of shares of Class A Common Stock as
would become issuable upon the conversion of all shares of Class B
Common Stock then outstanding.
(h) In connection with any transfer or conversion of any
stock of the Corporation pursuant to or as permitted by the provisions
of this paragraph (C)(6) or in connection with the making of any
determination referred to in this paragraph (C)(6):
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(i) the Corporation shall be under no obligation to
make any investigation of facts unless an officer, employee or
agent of the Corporation responsible for making such transfer
or determination or issuing Class A Common Stock pursuant to
such conversion has substantial reason to believe, or unless
the Board of Directors (or a committee of the Board of
Directors designated for such purpose) determines that there
is substantial reason to believe, that any affidavit or other
document is incomplete or incorrect in a material respect or
that an investigation would disclose facts upon which any
determination referred to in paragraph (C)(6)(f) above should
be made, in either of which events the Corporation shall make
or cause to be made such investigation as it may deem
necessary or desirable in the circumstances and have a
reasonable time to complete such investigation; and
(ii) neither the Corporation nor any director,
officer, employee or agent of the Corporation shall be liable
in any manner for any action taken or omitted in good faith.
(i) The Corporation will not be required to pay any
documentary, stamp or similar issue or transfer taxes payable in
respect of the issue or delivery of shares of Class A Common Stock on
the conversion of shares of Class B Common Stock pursuant to this
paragraph (C)(6), and no such issue or delivery shall be made unless
and until the Person requesting such issue has paid to the Corporation
the amount of any such tax or has established, to the satisfaction of
the Corporation, that such tax has been paid.
(7) All rights to vote and all voting power (including, without
limitation thereto, the right to elect directors) shall be vested
exclusively in the holders of Common Stock, voting together as a single
class, except as otherwise expressly provided in this Restated
Certificate of Incorporation, in a Preferred Stock Designation or as
otherwise expressly required by applicable law.
D. Subject to the limitations and in the manner provided by law, shares
of the Preferred Stock may be issued from time to time in series, and the Board
of Directors of the Corporation or a duly-authorized committee of the Board of
Directors of the Corporation, in accordance with the laws of the State of
Delaware, is hereby authorized to determine or alter the relative rights, powers
(including voting powers), preferences, privileges and restrictions granted to
or imposed upon Preferred Stock or any wholly unissued series of shares of
Preferred Stock, and to increase or decrease (but not below the number of shares
of any series of Preferred Stock then outstanding) the number of shares of any
such series subsequent to the issue of shares of that series. In case the number
of shares of any series shall be so decreased, the shares constituting such
decrease shall upon the taking of any action required by applicable law resume
the status which they had prior to the adoption of the resolution originally
fixing the number of shares of such series.
ARTICLE V
The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. In addition to the powers and
authority expressly conferred upon them by
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statute or by this Restated Certificate of Incorporation or the bylaws of the
Corporation, the directors are hereby empowered to exercise all such powers and
do all such acts and things as may be exercised or done by the Corporation.
Election of directors need not be by written ballot unless the bylaws so
provide.
ARTICLE VI
The books and records of the Corporation may be kept (subject to any
mandatory requirement of law) outside the State of Delaware at such place or
places as may be designated from time to time by the Board of Directors or by
the bylaws of the Corporation.
ARTICLE VII
The Board of Directors shall be authorized to make, amend, alter,
change, add to or repeal the By-Laws of the corporation in any manner not
inconsistent with the laws of the State of Delaware. The affirmative vote of the
holders of at least 80 percent in voting power of all outstanding shares of the
corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required in order for the stockholders to
make, amend, alter, change, add to or repeal any provision of the By-Laws of the
corporation.
ARTICLE VIII
(1) The board of directors shall consist of not less than
three directors, the exact number of directors to be determined from
time to time by resolution adopted by the affirmative vote of a
majority of the Board of Directors. Commencing with the election of
directors at the first annual meeting following this Restated
Certificate of Incorporation becoming effective, the directors shall be
divided into three classes designated Class I, Class II and Class III.
Each class shall consist, as nearly as possible, of one-third of the
total number of directors constituting the entire Board of Directors.
Class I directors shall be originally elected for a term expiring at
the succeeding annual meeting of stockholders, Class II directors shall
be originally elected for a term expiring at the second succeeding
annual meeting of stockholders, and Class III directors shall be
originally elected for a term expiring at the third succeeding annual
meeting of stockholders. At each annual meeting of stockholders, other
than the first annual meting following this Restated Certificate of
Incorporation becoming effective, successors to the class of directors
whose term expires at that annual meeting shall be elected for a term
expiring at the third succeeding annual meeting. If the number of
directors is changed, any increase or decrease shall be apportioned
among the classes so as to maintain the number of directors in each
class as nearly equal as possible, and any additional director of any
class elected to fill a newly created directorship resulting from an
increase in such class shall hold office for a term that shall coincide
with the remaining term of that class, but in no case shall a decrease
in the number of directors remove or shorten the term of any incumbent
director. A director shall hold office until the annual meeting for the
year in which his term expires and until his successor shall be elected
and shall qualify, subject, however, to prior death, resignation,
retirement, disqualification or removal from office. Any newly created
directorship on the Board of Directors that results from an increase in
the number of directors and any vacancy occurring in the Board of
Directors
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shall be filled only by a majority of the directors then in office,
although less than a quorum, or by a sole remaining director. Any
director elected to fill a vacancy not resulting from an increase in
the number of directors shall have the same remaining term as that of
his predecessor. Directors may be removed only by the affirmative vote
of at least 80 percent in voting power of all outstanding shares of the
corporation entitled to vote generally in the election of directors,
voting as a single class.
(2) Notwithstanding the foregoing, whenever the holders of any
one or more series of Preferred Stock issued by the corporation shall
have the right, voting separately as a series or separately as a class
with one or more such other series, to elect directors at an annual or
special meeting of stockholders, the election, term of office, removal,
filling of vacancies and other features of such directorships shall be
governed by the terms of this Restated Certificate of Incorporation
(including any certificate of designations relating to any series of
preferred stock) applicable thereto, and such directors so elected
shall not be divided into classes pursuant to this Article VIII unless
expressly provided by such terms.
ARTICLE IX
Subject to the rights of the holders of any series of Preferred Stock,
any action required or permitted to be taken by stockholders must be effected at
a duly called annual or special meeting of stockholders and may not be effected
by any consent in writing by such holders. Except as otherwise required by law
and subject to the rights of the holders of any series of Preferred Stock,
special meetings of stockholders of the corporation may be called only by the
Chief Executive Officer of the corporation or by the Board of Directors pursuant
to a resolution approved by the Board of Directors, and special meetings may not
be called by any other person or persons. Business transacted at any special
meeting of stockholders shall be limited to the purposes stated in the notice.
ARTICLE X
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (a) for any breach of the director's
duty of loyalty to the Corporation and its stockholders; (b) for acts or
omissions not in good faith or which involve intentional misconduct or knowing
violations of law; (c) under Section 174 of the GCL; or (d) for any transaction
from which the director derived an improper personal benefit.
If the GCL hereafter is amended to further eliminate or limit the
liability of directors, then the liability of a director of the Corporation, in
addition to the limitation on personal liability provided herein, shall be
limited to the fullest extent permitted by the amended GCL. Any repeal or
modification of the foregoing provisions of this Article X shall not adversely
affect any right or protection of any director, officer, employee or agent of
the Corporation existing at the time of such repeal or modification.
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ARTICLE XI
(1) The Corporation reserves the right to amend or repeal any provision
contained in this Restated Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon a stockholder
herein are granted subject to this reservation.
(2) Notwithstanding anything else contained in this Restated
Certificate of Incorporation or the By-laws of the corporation to the contrary,
the affirmative vote of the holders of at least 80 percent in voting power of
all the outstanding shares of the corporation entitled to vote generally in the
election of directors, voting together as a single class, shall be required in
order for the stockholders to amend, alter, change, add to or repeal any
provision of Article VII, Article VIII, Article IX or this Article XI or to
adopt any provision inconsistent therewith.
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APPENDIX B
AMENDED AND RESTATED BY-LAWS
OF
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
ARTICLE I
STOCKHOLDERS
SECTION 1. The annual meeting of the stockholders of the corporation
for the purpose of electing directors and for the transaction of such other
business as may properly be brought before the meeting shall be held on the
third Wednesday in April of each year, if not a legal holiday, and if a legal
holiday, then on the next secular day following, within or without the State of
Delaware, or at such time and place as may be designated from time to time by
the Board of Directors.
SECTION 2. Except as otherwise required by law and subject to the
rights of the holders of any series of Preferred Stock, special meetings of
stockholders of the corporation may be called only by the Chief Executive
Officer of the corporation or by the Board of Directors pursuant to a resolution
approved by the Board of Directors, and special meetings may not be called by
any other person or persons. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
SECTION 3. Except as otherwise provided by law, notice of the time,
place and purpose or purposes of every meeting of stockholders shall be given
not earlier than sixty, nor less than ten, days previous thereto to each
stockholder of record entitled to vote at the meeting. Notice of any meeting of
stockholders need not be given to any stockholders who shall waive notice
thereof, before or after such meeting, in writing or by electronic transmission,
or to any stockholder who shall attend such meeting, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened.
SECTION 4. The holders of record of a majority in voting power of the
issued and outstanding shares of the corporation, which are entitled to vote at
the meeting, shall, except as otherwise provided by law, constitute a quorum at
all meetings of the stockholders. If there be no such quorum present in person
or by proxy, the holders of a majority in voting power of such shares so present
or represented may adjourn the meeting from time to time.
SECTION 5. (1) Meetings of the stockholders shall be presided over by
the Chief Executive Officer or Chairman, or, if neither is present, by a Vice
President or, if no such officer is present, by a chairman to be chosen at the
meeting. The Secretary of the corporation or, in his absence, an Assistant
Secretary shall act as secretary of the meeting. If neither the Secretary nor an
Assistant Secretary is present, the chairman shall appoint a secretary.
(2) The date and time of the opening and the closing of the polls for
each matter upon which the stockholders will vote at a meeting shall be
announced at the meeting by the person presiding over the meeting. The Board of
Directors may adopt by resolution such rules and
regulations for the conduct of the meeting of stockholders as it shall deem
appropriate. Except to the extent inconsistent with such rules and regulations
as adopted by the Board of Directors, the person presiding over any meeting of
stockholders shall have the right and authority to convene and to adjourn the
meeting, to prescribe such rules, regulations and procedures and to do all such
acts as, in the judgment of such presiding person, are appropriate for the
proper conduct of the meeting. Such rules, regulations or procedures, whether
adopted by the Board of Directors or prescribed by the presiding person of the
meeting, may include, without limitation, the following: (i) the establishment
of an agenda or order of business for the meeting; (ii) rules and procedures for
maintaining order at the meeting and the safety of those present; (iii)
limitations on attendance at or participation in the meeting to stockholders of
record of the corporation, their duly authorized and constituted proxies or such
other persons as the presiding person of the meeting shall determine; (iv)
restrictions on entry to the meeting after the time fixed for the commencement
thereof; and (v) limitations on the time allotted to questions or comments by
participants. The presiding person at any meeting of stockholders, in addition
to making any other determinations that may be appropriate to the conduct of the
meeting, shall, if the facts warrant, determine and declare to the meeting that
a matter or business was not properly brought before the meeting and if such
presiding person should so determine, such presiding person shall so declare to
the meeting and any such matter or business not properly brought before the
meeting shall not be transacted or considered. Unless and to the extent
determined by the Board of Directors or the person presiding over the meeting,
meetings of stockholders shall not be required to be held in accordance with the
rules of parliamentary procedure.
SECTION 6. Each stockholder entitled to vote at any meeting may vote in
person or by proxy for each share of stock held by him which has voting power
upon the matter in question at the time; but no proxy shall be voted on after
three years from its date, unless such proxy provides for a longer period.
SECTION 7. At all elections of directors the voting shall be by ballot,
and a plurality of the votes cast shall elect. Except as otherwise provided by
the Certificate of Incorporation, these By-laws, the rules or regulations of any
stock exchange applicable to the corporation, or applicable law, all other
questions to stockholders shall be determined by a majority of the votes cast on
such questions.
SECTION 8. In order that the corporation may determine the stockholders
entitled to notice at any meeting of stockholders or any adjournment thereof, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors, and which record date: (1) in the case of determination
of stockholders entitled to vote at any meeting of stockholders or adjournment
thereof, shall, unless otherwise required by law, not be more than sixty (60)
nor less than ten (10) days before the date of such meeting; (2) in the case of
determination of stockholders entitled to express consent to corporate action in
writing without a meeting, shall not be more than ten (10) days from the date
upon which the resolution fixing the record date is adopted by the Board of
Directors; and (3) in the case of any other action, shall not be more than sixty
(60) days prior to such other action. If no record date is fixed: (1) the record
date for determining stockholders entitled to notice of or to vote at a
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meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held; (2) the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
of the Board of Directors is required by law, shall be the first date on which a
signed written consent setting forth the action taken or proposed to be taken is
delivered to the corporation in accordance with applicable law, or, if prior
action by the Board of Directors is required by law, shall be at the close of
business on the day on which the Board of Directors adopts the resolution taking
such prior action; and (3) the record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
SECTION 9. (A) Annual Meetings of Stockholders. (1) Nominations of
persons for election to the Board of Directors of the corporation and the
proposal of business to be considered by the stockholders may be made at an
annual meeting of stockholders only (a) pursuant to the corporation's notice of
meeting (or any supplement thereto), (b) by or at the direction of the Board of
Directors or (c) by any stockholder of the corporation who was a stockholder of
record of the corporation at the time the notice provided for in this Section 9
is delivered to the Secretary of the corporation, who is entitled to vote at the
meeting and who complies with the notice procedures set forth in this Section 9.
(2) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (c) of
paragraph (A)(1) of this Section 9, the stockholder must have given
timely notice thereof in writing to the Secretary of the corporation
and any such proposed business other than the nominations of persons
for election to the Board of Directors must constitute a proper matter
for stockholder action. To be timely, a stockholder's notice shall be
delivered to the Secretary at the principal executive offices of the
corporation not later than the close of business on the ninetieth day
nor earlier than the close of business on the one hundred twentieth day
prior to the first anniversary of the preceding year's annual meeting
(provided, however, that in the event that the date of the annual
meeting is more than thirty days before or more than seventy days after
such anniversary date, notice by the stockholder must be so delivered
not earlier than the close of business on the one hundred twentieth day
prior to such annual meeting and not later than the close of business
on the later of the ninetieth day prior to such annual meeting or the
tenth day following the day on which public announcement of the date of
such meeting is first made by the corporation). In no event shall the
public announcement of an adjournment or postponement of an annual
meeting commence a new time period (or extend any time period) for the
giving of a stockholder's notice as described above. Such stockholder's
notice shall set forth: (a) as to each person whom the stockholder
proposes to nominate for election as a director (i) all information
relating to such person that is required to be disclosed in
solicitations of proxies for election of directors in an election
contest, or is otherwise required, in each case pursuant to and in
accordance with Regulation 14A under the Securities Exchange Act of
1934, as amended (the "Exchange Act") and (ii) such person's written
consent to being named in the proxy statement as a nominee and to
serving as a director if elected;
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(b) as to any other business that the stockholder proposes to bring
before the meeting, a brief description of the business desired to be
brought before the meeting, the text of the proposal or business
(including the text of any resolutions proposed for consideration and
in the event that such business includes a proposal to amend the
By-laws of the corporation, the language of the proposed amendment),
the reasons for conducting such business at the meeting and any
material interest in such business of such stockholder and the
beneficial owner, if any, on whose behalf the proposal is made; and (c)
as to the stockholder giving the notice and the beneficial owner, if
any, on whose behalf the nomination or proposal is made (i) the name
and address of such stockholder, as they appear on the corporation's
books, and of such beneficial owner, (ii) the class and number of
shares of capital stock of the corporation which are owned beneficially
and of record by such stockholder and such beneficial owner, (iii) a
representation that the stockholder is a holder of record of stock of
the corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to propose such business or
nomination, and (iv) a representation whether the stockholder or the
beneficial owner, if any, intends or is part of a group which intends
(a) to deliver a proxy statement and/or form of proxy to holders of at
least the percentage of the corporation's outstanding capital stock
required to approve or adopt the proposal or elect the nominee and/or
(b) otherwise to solicit proxies from stockholders in support of such
proposal or nomination. The foregoing notice requirements shall be
deemed satisfied by a stockholder if the stockholder has notified the
corporation of his or her intention to present a proposal at an annual
meeting in compliance with Rule 14a-8 (or any successor thereof)
promulgated under the Exchange Act and such stockholder's proposal has
been included in a proxy statement that has been prepared by the
corporation to solicit proxies for such annual meeting. The corporation
may require any proposed nominee to furnish such other information as
it may reasonably require to determine the eligibility of such proposed
nominee to serve as a director of the corporation.
(3) Notwithstanding anything in the second sentence of
paragraph (A)(2) of this Section 9 to the contrary, in the event that
the number of directors to be elected to the Board of Directors of the
corporation at an annual meeting is increased and there is no public
announcement by the corporation naming the nominees for the additional
directorships at least one hundred days prior to the first anniversary
of the preceding year's annual meeting, a stockholder's notice required
by this Section 9 shall also be considered timely, but only with
respect to nominees for the additional directorships, if it shall be
delivered to the Secretary at the principal executive offices of the
corporation not later than the close of business on the tenth day
following the day on which such public announcement is first made by
the corporation.
B. Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the corporation's notice of meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting
of stockholders at which directors are to be elected pursuant to the
corporation's notice of meeting (1) by or at the direction of the Board of
Directors or (2) provided that the Board of Directors has determined that
directors shall be elected at such meeting, by any stockholder of the
corporation who is a stockholder of record at the time the notice provided for
in this Section 9 is delivered to the Secretary of the corporation, who is
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entitled to vote at the meeting and upon such election and who complies with the
notice procedures set forth in this Section 9. In the event the corporation
calls a special meeting of stockholders for the purpose of electing one or more
directors to the Board of Directors, any such stockholder entitled to vote in
such election of directors may nominate a person or persons (as the case may be)
for election to such position(s) as specified in the corporation's notice of
meeting, if the stockholder's notice required by paragraph (A)(2) of this
Section 9 shall be delivered to the Secretary at the principal executive offices
of the corporation not earlier than the close of business on the one hundred
twentieth day prior to such special meeting and not later than the close of
business on the later of the ninetieth day prior to such special meeting or the
tenth day following the day on which public announcement is first made of the
date of the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting. In no event shall the public
announcement of an adjournment or postponement of a special meeting commence a
new time period (or extend any time period) for the giving of a stockholder's
notice as described above.
C. General. (1) Only such persons who are nominated in accordance with
the procedures set forth in this Section 9 shall be eligible to be elected at an
annual or special meeting of stockholders of the corporation to serve as
directors and only such business shall be conducted at a meeting of stockholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this Section 9. Except as otherwise provided by law, the chairman
of the meeting shall have the power and duty (a) to determine whether a
nomination or any business proposed to be brought before the meeting was made or
proposed, as the case may be, in accordance with the procedures set forth in
this Section 9 (including whether the stockholder or beneficial owner, if any,
on whose behalf the nomination or proposal is made solicited (or is part of a
group which solicited) or did not so solicit, as the case may be, proxies in
support of such stockholder's nominee or proposal in compliance with such
stockholder's representation as required by clause (A)(2)(c)(iv) of this Section
9) and (b) if any proposed nomination or business was not made or proposed in
compliance with this Section 9, to declare that such nomination shall be
disregarded or that such proposed business shall not be transacted.
Notwithstanding the foregoing provisions of this Section 9, if the stockholder
(or a qualified representative of the stockholder) does not appear at the annual
or special meeting of stockholders of the corporation to present a nomination or
business, such nomination shall be disregarded and such proposed business shall
not be transacted, notwithstanding that proxies in respect of such vote may have
been received by the corporation.
(2) For purposes of this Section 9, "public announcement"
shall include disclosure in a press release reported by the Dow Jones
News Service, Associated Press or comparable national news service or
in a document publicly filed by the corporation with the Securities and
Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange
Act.
(3) Notwithstanding the foregoing provisions of this Section
9, a stockholder shall also comply with all applicable requirements of
the Exchange Act and the rules and regulations thereunder with respect
to the matters set forth in this Section 9. Nothing in this Section 9
shall be deemed to affect any rights (a) of stockholders to request
inclusion of proposals in the corporation's proxy statement pursuant to
Rule 14a-8 under the
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Exchange Act or (b) of the holders of any series of Preferred Stock to
elect directors pursuant to any applicable provisions of the
Certificate of Incorporation.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. The Board of Directors of the corporation shall consist of
such number of directors, not less than three, as shall from time to time be
fixed by the affirmative vote of a majority of the Board of Directors. A
majority of the total number of directors shall constitute a quorum for the
transaction of business. Directors need not be stockholders.
SECTION 2. Vacancies in the Board of Directors and newly created
directorships resulting from an increase in the number of directors shall be
filled as provided in the Certificate of Incorporation.
SECTION 3. Meetings of the Board of Directors shall be held at such
place within or without the State of Delaware as may from time to time be fixed
by resolution of the Board or as may be specified in the notice of call of any
meeting. Regular meetings of the Board of Directors shall be held at such times
as may from time to time be fixed by resolution of the Board and special
meetings may be held at any time upon the call of the Chief Executive Officer or
Chairman, by oral, telegraphic, facsimile or written notice or notice by means
of electronic transmission, duly served on or sent, given or mailed to each
director not less than one day before the meeting. The notice of any meeting
need not specify the purposes thereof. A meeting of the Board may be held
without notice immediately after the meeting of stockholders at the same place
at which such meeting is held. Notice need not be given of regular meetings of
the Board held at times fixed by resolution of the Board. Notice of any meeting
need not be given to any director who shall attend such meeting in person or who
shall waive notice thereof, before or after such meeting, in writing or by
electronic transmission. Unless otherwise provided by the Certificate of
Incorporation or these By-laws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all the members of the Board of Directors or committee, as
the case may be, consent thereto in writing or by electronic transmission, and
the writing or writings (or electronic transmission or transmissions) are filed
with the minutes of proceedings of the Board of Directors or committee.
SECTION 4. The Board of Directors may designate one or more committees,
each committee to consist of one or more of the directors of the corporation,
which to the extent permitted by law and provided in said resolution or
resolutions, shall have and may exercise the powers of the Board of Directors in
the management of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers which may require it. A
majority of the members of a committee shall constitute a quorum for the
transaction of its business. The Board of Directors may designate one or more
directors as alternate members of any committee. In the absence or
disqualification of any member of any such committee or committees, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors, to act at the meeting for all purposes in the
place of any such absent or disqualified member. Such committee or committees
shall have such
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name or names as may be determined from time to time by resolution adopted by
the Board of Directors.
ARTICLE III
OFFICERS
SECTION 1. The Board of Directors as soon as may be after their
election held in each year shall elect officers of the corporation, including a
Chief Executive Officer, President, one or more Vice Presidents, a Secretary and
a Treasurer. The Board of Directors may also from time to time appoint such
other officers (including a Chairman who shall be a member of the Board of
Directors, one or more Vice Chairmen, one or more Assistant Secretaries and one
or more Assistant Treasurers) as it may deem proper or may delegate to any
elected officer of the corporation the power so to appoint and remove any such
other officers and to prescribe their respective terms of office, authorities
and duties. Any Vice President may be designated Executive, Senior, or Regional,
or may be given such other designation or combination of designations.
SECTION 2. All officers of the corporation elected or appointed by the
Board of Directors shall hold office until their respective successors are
chosen and qualified. Any officer may be removed from office at any time either
with or without cause by the affirmative vote of a majority of the members of
the Board then in office, or, in the case of appointed officers, by any elected
officer upon whom such power of removal shall have been conferred by the Board
of Directors.
SECTION 3. Each of the officers of the corporation elected or appointed
by the Board of Directors shall have the powers and duties prescribed by law, by
the By-laws or by the Board of Directors and, unless otherwise prescribed by the
By-laws or by the Board of Directors, shall have such further powers and duties
as ordinarily pertain to his office. The Chief Executive Officer shall be the
Principal Executive Officer and shall have the general direction of the affairs
of the corporation. Any officer, agent, or employee of the corporation may be
required to give bond for the faithful discharge of his duties in such sum and
with such surety or sureties as the Board of Directors may from time to time
prescribe.
SECTION 4. The corporation shall indemnify, to the full extent that it
shall have power under applicable law to do so and in a manner permitted by such
law, any person (a "Covered Person") made or threatened to be made a party to
any threatened, pending or completed action, suit or proceeding whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was a director or officer of the corporation. Notwithstanding the preceding
sentence, except as specifically provided in this paragraph below, the
corporation shall be required to indemnify a Covered Person in connection with a
proceeding (or part thereof) commenced by such Covered Person only if the
commencement of such proceeding (or part thereof) by the Covered Person was
authorized in the specific case by the Board of Directors of the corporation.
The corporation shall to the fullest extend not prohibited by applicable law pay
the expenses (including attorneys' fees) incurred by a Covered Person in
defending any proceeding in advance of its final disposition, provided, however,
that, to the extent required by law, such payment of expenses in advance of the
final disposition of the proceeding shall be made only upon receipt of
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an undertaking by the Covered Person to repay all amounts advanced if it should
be ultimately determined that the Covered Person is not entitled to be
indemnified under this Article III or otherwise. The corporation may indemnify,
to the full extent permitted by such law, any person made or threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was an employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise. If a
claim for indemnification (following the final disposition of such action, suit
or proceeding) or advancement of expenses under this Article III is not paid in
full within thirty days after a written claim therefor by the Covered Person has
been received by the corporation, the Covered Person may file suit to recover
the unpaid amount of such claim and, if successful in whole or in part, shall be
entitled to be paid the expense of prosecuting such claim. In any such action
the corporation shall have the burden of proving that the Covered Person is not
entitled to the requested indemnification or advancement of expenses under
applicable law. The indemnification provided by this Article III shall not be
deemed exclusive of any other rights to which any person indemnified may be
entitled under by-law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be such director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person. The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of this Article III or otherwise.
ARTICLE IV
CERTIFICATES OF STOCK
SECTION 1. Except as otherwise determined by resolution of the Board of
Directors in respect of any uncertificated shares, the interest of each
stockholder of the corporation shall be evidenced by a certificate or
certificates for shares of stock in such form as the Board of Directors may from
time to time prescribe. Subject to any applicable restrictions on transfer, the
shares of the stock of the corporation shall be transferable on the books of the
corporation by the holder thereof in person or by his attorney, upon surrender
for cancellation of a certificate or certificates for the same number of shares,
with an assignment and power of transfer endorsed thereon or attached thereto,
duly executed, and with such proof of the authenticity of the signature as the
corporation or its agents may reasonably require.
SECTION 2. The certificates of stock shall be signed by such officer or
officers as may be permitted by law to sign (except that where any such
certificate is countersigned by a transfer agent other than the corporation or
its employee, or by a registrar other than the corporation or its employee, the
signatures of any such officer or officers may be facsimiles), and shall be
countersigned and registered in such manner, all as the Board of Directors may
by
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resolution prescribe. In case any officer or officers who shall have signed, or
whose facsimile signature or signatures shall have been used on any such
certificate or certificates shall cease to be such officer or officers of the
corporation, whether because of death, resignation or otherwise, before such
certificate or certificates shall have been issued by the corporation, such
certificate or certificates may nevertheless be issued and delivered as though
the person or persons who signed such certificate or certificates, or whose
facsimile signature or signatures shall have been used thereon had not ceased to
be such officer or officers of the corporation.
SECTION 3. No certificate for shares of stock in the corporation shall
be issued in place of any certificate alleged to have been lost, stolen or
destroyed, except upon production of such evidence of such loss, theft or
destruction and upon delivery to the corporation of a bond of indemnity in such
amount, upon such terms and secured by such surety, as the Board of Directors in
its discretion may require.
ARTICLE V
CORPORATE BOOKS
The books of the corporation may be kept outside of the State of
Delaware at such place or places as the Board of Directors may from time to time
determine.
ARTICLE VI
CHECKS, NOTES, PROXIES, ETC.
All checks and drafts on the corporation's bank accounts and all bills
of exchange and promissory notes, and all acceptances, obligations and other
instruments for the payment of money, shall be signed by such officer or
officers or agent or agents as shall be thereunto authorized from time to time
by the Board of Directors. Proxies to vote and consents with respect to
securities of other corporations or entities owned by or standing in the name of
the corporation may be executed and delivered from time to time on behalf of the
corporation by the Chief Executive Officer, or by such officers as the Board of
Directors may from time to time determine.
ARTICLE VII
FISCAL YEAR
The fiscal year of the corporation shall begin on the first day of
January in each year and shall end on the thirty-first day of December
following.
ARTICLE VIII
CORPORATE SEAL
The corporate seal shall have inscribed thereon the name of the
corporation and the words "Corporate Seal" state and date of incorporation. In
lieu of the corporate seal, when
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so authorized by the Board of Directors or a duly empowered committee thereof, a
facsimile thereof may be impressed or affixed or reproduced.
ARTICLE IX
OFFICES
The corporation and the stockholders and the directors may have offices
outside of the State of Delaware at such places as shall be determined from time
to time by the Board of Directors.
ARTICLE X
AMENDMENTS
The Board of Directors shall be authorized to make, amend, alter,
change, add to or repeal the By-laws of the corporation in any manner not
inconsistent with the laws of the State of Delaware. The affirmative vote of the
holders of at least 80 percent in voting power of all the outstanding shares of
the corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required in order for the stockholders to
make, amend, alter, change, add to or repeal any provision of the By-laws of the
corporation.
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APPENDIX C
CONDITIONS FOR COMPLETION OF THE EXCHANGE OFFER BY IMS HEALTH
IMS Health may not complete the exchange offer if less than shares
of IMS Health common stock are validly tendered.
IMS Health also may not accept shares for exchange and may terminate
or not complete the exchange offer if:
o any action, proceeding or litigation against IMS Health or
Cognizant seeking to enjoin, make illegal or delay
completion of the exchange offer or otherwise relating in
any manner to the exchange offer is instituted or
threatened;
o any order, stay, judgment or decree is issued by any court,
government, governmental authority or other regulatory or
administrative authority and is in effect, or any statute,
rule, regulation, governmental order or injunction shall
have been proposed, enacted, enforced or deemed applicable
to the exchange offer, any of which would or might restrict,
prohibit or delay completion of the exchange offer or impair
the contemplated benefits of the exchange offer to IMS
Health or to Cognizant;
o IMS Health reasonably determines that any of the
representations or undertakings made in connection with, or
assumptions underlying, the opinion given by McDermott, Will
& Emery regarding the tax-free nature of the exchange offer
is not true and correct in all material respects, or IMS
Health does not, for any reason, receive an updated copy of
such opinion dated as of the date of expiration of the
exchange offer in form and substance reasonably satisfactory
to IMS Health, or a change in law or fact occurs that leads
IMS Health to feel less confident about the tax-free nature
of the exchange offer than IMS Health feels on the date of
the prospectus relating to the exchange offer;
o any of the following occurs and the adverse effect of such
occurrence, in IMS Health's reasonable judgment, is
continuing:
o any general suspension of trading in, or limitation on
prices for, securities on any national securities
exchange or in the over-the-counter market in the
United States,
o any extraordinary or material adverse change in U.S.
financial markets generally, including, without
limitation, a decline of at least ten percent in either
the Dow Jones Average of
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Industrial Stocks or the Standard & Poor's 500 Index
from their reported levels on the last trading day
prior to the date of this document,
o a declaration of a banking moratorium or any suspension
of payments in respect of banks in the United States,
o any limitation, whether or not mandatory, by any
governmental entity on, or any other event that would
reasonably be expected to materially adversely affect,
the extension of credit by banks or other lending
institutions,
o a commencement of war or other national or
international calamity directly or indirectly involving
the United States, which would reasonably be expected
to affect materially and adversely, or to delay
materially, the completion of the exchange offer, or
o a deterioration in any of the situations above to the
extent that they exist at the time of commencement of
the exchange offer,
o any tender or exchange offer, other than the exchange offer
by IMS Health, with respect to some or all the outstanding
Cognizant common stock or IMS Health common stock or any
merger, acquisition or other business combination proposal
involving IMS Health or Cognizant, shall have been proposed,
announced or made by any person or entity;
o any event or events occur that have resulted or may result,
in IMS Health's reasonable judgment, in an actual or
threatened material change in the business condition
(financial or otherwise), income, operations, stock
ownership (other than the exchange offer) or prospects of
IMS Health and its subsidiaries, taken as a whole, or of
Cognizant and its subsidiaries, taken as a whole; or
o as the term "group" is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended,
o any person, entity or group acquires more than five
percent of the outstanding shares of IMS Health common
stock or Cognizant class A common stock, other than a
person, entity or group which had publicly disclosed
such ownership with the SEC on or before the last
trading day prior to the date of the prospectus
relating to the exchange offer,
o any such person, entity or group which had publicly
disclosed such ownership on or prior to such date shall
acquire additional shares of IMS Health common stock or
Cognizant
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class A common stock, as the case may be, constituting
more than two percent of the outstanding shares of IMS
Health common stock or Cognizant class A common stock,
or
o any new group shall have been formed that beneficially
owns more than five percent of the outstanding shares
of IMS Health common stock or shares of Cognizant class
A common stock,
which, in any of the above cases, in IMS Health's judgment
makes it inadvisable to proceed with the exchange offer or
accept any exchange of shares.
If any of the above events occur, IMS Health may:
o terminate the exchange offer and promptly return all
tendered shares of IMS Health common stock to tendering
stockholders;
o extend the exchange offer and, subject to certain withdrawal
rights, retain all tendered shares of IMS Health common
stock until the extended exchange offer expires;
o amend the terms of the exchange offer; or
o waive the unsatisfied condition and, subject to any
requirement to extend the period of time during which the
exchange offer is open, complete the exchange offer.
These conditions are solely for the benefit of IMS Health. IMS Health
may assert these conditions regardless of the circumstances giving rise to them.
IMS Health may waive any condition in whole or in part at any time in IMS
Health's discretion. IMS Health's failure to exercise its rights under any of
the above conditions does not represent a waiver of these rights. Each right is
an ongoing right that may be asserted at any time. All conditions must be
satisfied or waived prior to the expiration of the exchange offer. Any
determination by us concerning the conditions described above will be final and
binding on all parties.
If a stop order issued by the SEC is in effect with respect to the
registration statement relating to the exchange offer, IMS Health will not
accept any shares of IMS Health common stock tendered and will not exchange
shares of Cognizant class B common stock for any shares of IMS Health common
stock unless and until such stop order is no longer in effect or such
registration statement is declared effective by the Securities and Exchange
Commission.
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