COGNIZANT CORPORATION
                         EXECUTIVE ANNUAL INCENTIVE PLAN


1.   Purpose of the Plan

     The purpose of the Plan is to advance the interests of the Company and its
stockholders by providing incentives in the form of periodic cash bonus awards
to certain management employees of the Company and its subsidiaries, thereby
motivating such employees to attain corporate performance goals articulated
under the Plan.

2.   Definitions

     The following capitalized terms used in the Plan have the respective
meanings set forth in this Section:

     (a)  Act: The Securities Exchange Act of 1934, as amended, or any successor
          thereto.

     (b)  Award: A periodic cash bonus award granted pursuant to the Plan.

     (c)  Beneficial Owner: As such term is defined in Rule 13d-3 under the Act
          (or any successor rule thereto).

     (d)  Board: The Board of Directors of the Company.

     (e)  Change in Control: The occurrence of any of the following events:

          (i) any Person (other than the Company, any trustee or other fiduciary
          holding securities under an employee benefit plan of the Company, or
          any company owned, directly or indirectly, by the stockholders of the
          Company in substantially the same proportions as their ownership of
          stock of the Company), becomes the Beneficial Owner, directly or



<PAGE>

          indirectly, of securities of the Company representing 20% or more of
          the combined voting power of the Company's then-outstanding
          securities;

          (ii) during any period of twenty-four months (not including any period
          prior to the Effective Date), individuals who at the beginning of such
          period constitute the Board, and any new director (other than (A) a
          director nominated by a Person who has entered into an agreement with
          the Company to effect a transaction described in Sections (2)(e)(i),
          (iii) or (iv) of the Plan, (B) a director nominated by any Person
          (including the Company) who publicly announces an intention to take or
          to consider taking actions (including, but not limited to, an actual
          or threatened proxy contest) which if consummated would constitute a
          Change in Control or (C) a director nominated by any Person who is the
          Beneficial Owner, directly or indirectly, of securities of the Company
          representing 10% or more of the combined voting power of the Company's
          securities) whose election by the Board or nomination for election by
          the Company's stockholders was approved in advance by a vote of at
          least two-thirds (2/3) of the directors then still in office who
          either were directors at the beginning of the period or whose election
          or nomination for election was previously so approved, cease for any
          reason to constitute at least a majority thereof;

          (iii) the stockholders of the Company approve any transaction or
          series of transactions under which the Company is merged or
          consolidated with any other company, other than a merger or
          consolidation (A) which would result in the voting securities of the
          Company outstanding immediately prior thereto continuing to represent
          (either by remaining outstanding or by being converted into voting
          securities of the surviving entity) more than 


                                       2
<PAGE>

          66 2/3% of the combined voting power of the voting securities of the
          Company or such surviving entity outstanding immediately after such
          merger or consolidation and (B) after which no Person holds 20% or
          more of the combined voting power of the then-outstanding securities
          of the Company or such surviving entity; or

          (iv) the stockholders of the Company approve a plan of complete
          liquidation of the Company or an agreement for the sale or disposition
          by the Company of all or substantially all of the Company's assets.

     (f)  Code: The Internal Revenue Code of 1986, as amended, or any successor
          thereto.

     (g)  Committee: The Compensation and Benefits Committee of the Board.

     (h)  Company: Cognizant Corporation, a Delaware corporation.

     (i)  Covered Employee: As such term is defined in Section 162(m) of the
          Code (or any successor section thereto).

     (j)  Covered Participant: A Participant who is, or who is anticipated to
          become, a Covered Employee.

     (k)  Effective Date: The date on which the Plan takes effect, as defined
          pursuant to Section 13 of the Plan.

     (l)  Participant: An employee of the Company or any of its Subsidiaries who
          is selected by the Committee to participate in the Plan pursuant to
          Section 4 of the Plan.

     (m)  Performance Period: The calendar year or any other period that the
          Committee, in its sole discretion, may determine.



                                       3
<PAGE>

     (n)  Person: As such term is used for purposes of Sections 13(d) or 14(d)
          of the Act (or any successor sections thereto).

     (o)  Plan: The Cognizant Corporation Executive Annual Incentive Plan.

     (p)  Shares: Shares of common stock, par value $0.01 per Share, of the
          Company.

     (q)  Subsidiary: A subsidiary corporation, as defined in Section 424(f) of
          the Code (or any successor section thereto).

3.   Administration

     The Plan shall be administered by the Committee or such other persons
designated by the Board. The Committee may delegate its duties and powers in
whole or in part to any subcommittee thereof consisting solely of at least two
individuals who are each "non-employee directors" within the meaning of Rule
16b-3 of the Act (or any successor rule thereto) and "outside directors" within
the meaning of Section 162(m) of the Code (or any successor section thereto).
The Committee shall have the authority to select the employees to be granted
Awards under the Plan, to determine the size and terms of an Award (subject to
the limitations imposed on Awards in Section 5 below), to modify the terms of
any Award that has been granted (except for any modification that would increase
the amount of the Award payable to a Covered Participant), to determine the time
when Awards will be made and the Performance Period to which they relate, to
establish performance objectives in respect of such performance periods and to
certify that such performance objectives were attained; provided, however, that
any such action shall be consistent with the applicable provisions of Section
162(m) of the Code. The Committee is authorized to interpret the Plan, to
establish, amend and rescind any rules and regulations relating to the Plan, and
to make any other determinations that it deems necessary or desirable for the
administration of the Plan. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan in the manner and to the
extent the Committee deems necessary or desirable. Any decision of the Committee
in


                                       4
<PAGE>

the interpretation and administration of the Plan, as described herein, shall
lie within its sole and absolute discretion and shall be final, conclusive and
binding on all parties concerned. Determinations made by the Committee under the
Plan need not be uniform and may be made selectively among Participants, whether
or not such Participants are similarly situated. The Committee shall have the
right to deduct from any payment made under the Plan any federal, state, local
or foreign income or other taxes required by law to be withheld with respect to
such payment. To the extent consistent with the applicable provisions of Section
162(m) of the Code, the Committee may delegate to one or more employees of the
Company or any of its Subsidiaries the authority to take actions on its behalf
pursuant to the Plan.

4.   Eligibility and Participation

     The Committee shall designate those persons who shall be Participants for
each Performance Period. Participants shall be selected from among the employees
of the Company and any of its Subsidiaries who are in a position to have a
material impact on the results of the operations of the Company or of one or
more of its Subsidiaries. The designation of Participants may be made
individually or by groups or classifications of employees, as the Committee
deems appropriate.

5.   Awards

     (a) Performance Goals. A Participant's Award shall be determined based on
the attainment of written performance goals approved by the Committee for a
Performance Period established by the Committee (i) while the outcome for that
Performance Period is substantially uncertain and (ii) no more than 90 days
after the commencement of the Performance Period to which the performance goal
relates or, if less than 90 days, the number of days which is equal to 25
percent of the relevant Performance Period. The performance goals, which must be
objective with respect to Covered Participants, shall be based upon one or more
of the following criteria: (i) consolidated earnings before or after taxes
(including earnings before interest, taxes, depreciation and amortization); (ii)
net income; (iii) operating income;



                                        5
<PAGE>

(iv) earnings per Share; (v) book value per Share; (vi) return on stockholders'
equity; (vii) expense management; (viii) return on investment; (ix) improvements
in capital structure; (x) profitability of an identifiable business unit or
product; (xi) maintenance or improvement of profit margins; (xii) stock price;
(xiii) market share; (xiv) revenues or sales; (xv) costs; (xvi) cash flow;
(xvii) working capital; (xviii) return on assets; (xix) customer satisfaction;
and (xx) employee satisfaction. In addition, with respect to Participants who
are not Covered Participants, the Committee may approve performance goals based
on other criteria, which may or may not be objective. The foregoing criteria may
relate to the Company, one or more of its Subsidiaries or one or more of its
divisions, units, partnerships, joint venturers or minority investments, product
lines or products or any combination of the foregoing, and may be applied on an
absolute basis and/or be relative to one or more peer group companies or
indices, or any combination thereof, all as the Committee shall determine. In
addition, to the degree consistent with Section 162(m) of the Code (or any
successor section thereto), the performance goals may be calculated without
regard to extraordinary items. The maximum amount of an Award to any Participant
with respect to a fiscal year of the Company shall be $3,000,000.

     (b) Payment. The Committee shall determine whether, with respect to a
Performance Period, the applicable performance goals have been met with respect
to a given Participant and, if they have, to so certify and ascertain the amount
of the applicable Award. No Awards will be paid for such performance period
until such certification is made by the Committee. The amount of the Award
actually paid to a given Participant may be less or, with respect to
Participants who are not Covered Participants, more than the amount determined
by the applicable performance goal formula, at the discretion of the Committee.
The amount of the Award determined by the Committee for a performance period
shall be paid to the Participant at such time as determined by the Committee in
its sole discretion after the end of such Performance Period.

     (c) Termination of Employment. If a Participant who is not a Covered
Participant dies, retires, is assigned 



                                       6
<PAGE>

to a different position, is granted a leave of absence, or if the Participant's
employment is otherwise terminated (except with cause by the Company) during a
Performance Period, a pro rata share of the Participant's award based on the
period of actual participation may, at the Committee's discretion, be paid to
the Participant after the end of the Performance Period if it would have become
earned and payable had the Participant's employment status not changed.

     (d) Compliance with Section 162(m) of the Code. The provisions of this
Section 5 shall be administered and interpreted in accordance with Section
162(m) of the Code to ensure the deductibility by the Company or its
Subsidiaries of the payment of Awards.

6.   Amendments or Termination

     The Board may amend, alter or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would impair any of the rights
or obligations under any Award theretofore granted to a Participant under the
Plan without such Participant's consent; provided, however, that the Committee
may amend the Plan in such manner as it deems necessary to permit the granting
of Awards meeting the requirements of the Code or other applicable laws.
Notwithstanding anything to the contrary herein, the Board may not amend, alter
or discontinue the provisions relating to Section 10(b)(ii) of the Plan after
the occurrence of a Change in Control.

7.   No Right to Employment

     Neither the Plan nor any action taken hereunder shall be construed as
giving any Participant or other person any right to continue to be employed by
or perform services for the Company or any Subsidiary, and the right to
terminate the employment of or performance of services by any Participant at any
time and for any reason is specifically reserved to the Company and its
Subsidiaries.

8.   Nontransferability of Awards



                                        7
<PAGE>

     An Award shall not be transferable or assignable by the Participant
otherwise than by will or by the laws of descent and distribution.

9.   Reduction of Awards

     Notwithstanding anything to the contrary herein, the Committee, in its sole
discretion (but subject to applicable law), may reduce any amounts payable to
any Participant hereunder in order to satisfy any liabilities owed to the
Company or any of its Subsidiaries by the Participant.

 10.    Adjustments Upon Certain Events

     (a) Generally. In the event of any change in the outstanding Shares by
reason of any Share dividend or split, reorganization, recapitalization, merger,
consolidation, spin-off, combination or exchange of Shares or other corporate
exchange, or any distribution to stockholders of Shares other than regular cash
dividends, the Committee in its sole discretion and without liability to any
person may make such substitution or adjustment, if any, as it deems to be
equitable, as to any affected terms of outstanding Awards.

     (b) Change in Control. Notwithstanding any other provision in the Plan to
the contrary, in the event of a Change in Control, (i) the Committee in its sole
discretion and without liability to any person may take such actions, if any, as
it deems necessary or desirable with respect to any Award (including, without
limitation, (A) the acceleration of an Award, (B) the payment of a cash amount
in exchange for the cancellation of an Award and/or (C) the requiring of the
issuance of substitute Awards that will substantially preserve the value, rights
and benefits of any affected Awards previously granted hereunder) as of the date
of the consummation of the Change in Control and (ii) any Participant who, as a
result of a Change in Control, receives payments pursuant to a Change-in-Control
agreement shall receive, subject to the same terms and conditions under which
such payments are made, an amount in cash equal to (A) the annual target bonus
under the Plan for the year in which the Change in Control occurs, multiplied by
a fraction, (I) the numerator of which equals the number of


                                        8
<PAGE>

full or partial days in such annual performance period during which he or she
was employed by the Company and (II) the denominator of which is 365, and (B)
the entire target bonus opportunity with respect to all other performance
periods in progress under this Plan at the time of his or her termination of
employment from the Company.

11.  Miscellaneous Provisions

     The Company is the sponsor and legal obligor under the Plan and shall make
all payments hereunder, other than any payments to be made by any of the
Subsidiaries (in which case shall be made by such Subsidiary, as appropriate).
The Company shall not be required to establish any special or separate fund or
to make any other segregation of assets to ensure the payment of any amounts
under the Plan, and the Participants' rights to the payment hereunder shall be
no greater than the rights of the Company's (or Subsidiary's) unsecured
creditors. All expenses involved in administering the Plan shall be borne by the
Company.

12.  Choice of Law

     The Plan shall be governed by and construed in accordance with the laws of
the State of New York applicable to contracts made and to be performed in the
State of New York.

     13. Effectiveness of the Plan

     The Plan shall be effective as of January 1, 1997.



                                       9