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NYFS01...:\01\39801\0023\84\AGR5067L.17F
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_ _ _ SETTLEMENT AGREEMENT (this "Agreement"),
made as of May 27, 1997, by and among ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇;
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇; the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Charitable
Remainder Unitrust; the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Charitable
Remainder Unitrust; the ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Irrevocable
Trust; the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Irrevocable Trust; the ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ Irrevocable Trust; the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Charitable Remainder Unitrust; and the ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Charitable Remainder Unitrust (collectively, the
"Davidsons") and CUC International Inc., a Delaware
corporation ("CUC").
WHEREAS, CUC, Stealth Acquisition I Corp. (as
assignee of Stealth Acquisition II Corp.), a California
corporation and a wholly owned subsidiary of CUC, and
Davidson & Associates, Inc., a California corporation
("Davidson"), entered into an Agreement and Plan of Merger,
dated as of February 19, 1996 (the "Merger Agreement"),
which provided, among other things, for CUC's acquisition of
all of the outstanding capital stock of Davidson through the
merger (the "Merger") of Stealth Acquisition I Corp. into
Davidson, with Davidson as the surviving entity; and
WHEREAS, the Merger was consummated on July 24,
1996 and, as a result, Davidson became a wholly-owned
subsidiary of CUC; and
WHEREAS, in connection with the Merger, on
July 24, 1996, CUC and certain of the Davidsons entered
into a Registration Rights Agreement (the "Registration
Rights Agreement") pertaining to the sale by the Davidsons
named on the signature pages of the Registration Rights
Agreement and certain of their successors-in-interest of
the CUC common stock, $.01 par value ("CUC Common Stock"),
received by such Davidsons in the Merger; and
WHEREAS, in connection with the Merger, on
July 24, 1996, CUC also entered into employment agreements
(collectively, the "Original Employment Agreements") and
Noncompetition Agreements (collectively, the
"Noncompetition Agreements") with each of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇; and
WHEREAS, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ ceased to be full-time employees of CUC on
January 19, 1997; and
WHEREAS, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ have informed CUC that they believe that they
individually, and the other Davidsons, have certain claims
against CUC in connection with certain matters set forth
in the Notice of Arbitration, dated March 7, 1997, sent to
CUC by ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇ ("▇▇▇▇▇ Day"), attorneys
for the Davidsons (the "Notice"), and matters related to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇'▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇'▇ employment
and responsibilities while CUC employees (collectively,
the "Employment"); and
WHEREAS, CUC vigorously denies all wrongdoing; and
WHEREAS, CUC and the Davidsons desire that
disputes, controversies and claims between the Davidsons,
on the one hand, and CUC and/or its affiliates
(collectively, the "CUC Affiliates"), on the other hand,
as to matters set forth in the Notice or relating to the
Employment be permanently and irrevocably released and
settled to avoid the expense, inconvenience and disruption of any
litigation involving CUC, the CUC Affiliates and/or the
Davidsons;
NOW, THEREFORE, in consideration of the premises
and the mutual covenants contained herein and for other
good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as
follows:
1. EFFECTIVENESS OF THIS AGREEMENT.
(a) Obligations of CUC.
The obligations of CUC under this Agreement are
conditioned upon the representations and warranties of the
Davidsons made herein being true and correct on the date
hereof.
(b) Obligations of the Davidsons.
The obligations of the Davidsons under this
Agreement are conditioned upon the representations and
warranties of CUC made herein being true and correct on
the date hereof.
2. PAYMENT AND GRANT OF OPTIONS TO CERTAIN OF
THE DAVIDSONS.
In full settlement, satisfaction and compromise of
the claims asserted by any of the Davidsons or any
individual, corporation, limited liability company,
partnership, association, trust or any other entity or
organization, including any public or governmental authority
or political subdivision or any agency or instrumentality
thereof (each, a "Person") in respect of which any of the
Davidsons, directly, or indirectly through one or more
intermediaries, has the right to exercise or exercises
"control" (within the meaning of Rule 12b-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (each, a "Davidson Control Person") against CUC
and/or any one or more of the CUC Affiliates relating to the
matters set forth in the Notice or relating to the
Employment, and in consideration of the covenant not to
▇▇▇ set forth in Section 6 of this Agreement and the
other provisions of this Agreement, CUC agrees to:
(a) and does hereby confirm the prior grant of
800,000 options to each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
(for an aggregate of 1.6 million options), to purchase shares of
CUC Common Stock (as contemplated in the Option Letters to each
attached hereto as Exhibit A (the "New Option Letters")); and
(b) pay to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, on the date hereof, in immediately available funds, to an
account (or accounts) designated in writing by ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ on the date hereof, (i)
performance bonuses for the 1996 fiscal year in the sums
of $150,000 and $250,000, respectively, and (ii) an
amount, not to exceed $200,000 in the aggregate, in
respect of the Davidsons' reasonable legal fees and
expenses incurred in connection with the matters referred
to in the Notice, the Employment and this Agreement (upon
receipt of reasonable evidence of the incurrence thereof).
3. AMENDMENT OF OTHER AGREEMENTS; WAIVERS.
(a) Noncompetition Agreements.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇
agree that Sections 2(a), (b), and (c) and Section 6 of
each of the Noncompetition Agreements are hereby deleted
in their entirety and replaced with the following:
2. Restricted Activities
(a) (i) For the period
commencing on July 24, 1996 and ending on
July 24, 2000 (the "Restricted Period"),
the Executive, without prior express
written approval by the Board of Directors
of the Company (the "Board of Directors"),
will not (A) engage in competition with,
(B) directly or indirectly own or hold a
proprietary interest in (except as provided
in Section 2(a)(ii) below) or (C) be employed by, or
consult with or receive compensation from, any
party which competes, in any way or manner
with the Davidson Business (as defined below).
The "Davidson Business" shall mean the
business of Davidson or any of its
subsidiaries as conducted on July 24, 1996.
The Executive acknowledges that the Davidson
Business is conducted nationally and
internationally and agrees that the provisions
in the foregoing sentence shall operate
throughout the United States and the world.
(ii) Notwithstanding the
provisions of Section 2(a)(i)(B), from and
after July 24, 1998 until the end of the
Restricted Period, the Executive may directly
or indirectly own or hold a proprietary
interest in a party which competes with the
Davidson Business (a "Competitor"); provided
that such direct or indirect proprietary
interest, when added to any proprietary
interest held in such Competitor at any time
directly or indirectly by (x) the Executive's
spouse; or (y) any trust of which the
Executive or the Executive's spouse is a
trustee or beneficiary, and which trust is a
signatory to the Settlement Agreement, dated
as of May 27, 1997, by and among CUC, the
Executive and the other parties named therein
(the "Settlement Agreement") and only during
such time as the Executive or such spouse is
such a trustee, and not at any other time
(such combined proprietary interest
hereinafter called "Combined Proprietary
Interest") does not at any time in aggregate
exceed the lesser of: (x) 25% of the total
equity of such Competitor or (y) such
percentage as is 1% less than the percentage
of total equity of the Competitor which would
allow the holders of the Combined Proprietary
Interest to exercise control over or with
respect to such Competitor (including, without
limitation, control which arises from the
ability of the holder of such equity to block
any action or actions of the Competitor
because of super-majority or similar
provisions under applicable law or which are
contained in the Competitor's constituent
documents or agreements with or among the
holders of any of the Competitor's common or
preferred stock or other equity).
(b) During the Restricted Period, the
Executive, without express prior
written approval from the Board of Directors,
will not solicit any clients of Davidson or
any of its subsidiaries for the Davidson
Business or discuss with any employee of the
Company or any of its affiliates information
or operation of any business intended to
compete with the Davidson Business.
(c) During the Restricted Period, the
Executive will not solicit or
induce any person who is an employee of
Davidson or any of its subsidiaries to
terminate any relationship such person may
have with Davidson or any of its subsidiaries,
nor shall the Executive during such period
directly or indirectly engage, employ or
compensate, or cause or permit any person with
which the Executive may be affiliated, to
engage, employ or compensate, any employee of
the Company or any of its affiliates (other
than as contemplated in Section 8(a) of the
Settlement Agreement). The Executive hereby
represents and warrants that the Executive has
not entered into any agreement, understanding
or arrangement with any employee of the
Company or any of its affiliates pertaining to
any business in which the Executive has
participated or plans to participate, or to
the employment, engagement or compensation of
any such employee.
Section 6:
6. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing
and shall be given (and shall be deemed to
have been duly received if so given) by hand
delivery, telegram, telex or telecopy, or by
mail (registered or certified mail, postage
prepaid, return receipt requested) or by any
courier service, such as Federal Express,
providing proof of delivery. All communications
hereunder shall be delivered to the respective
parties at the following addresses:
If to the Executive:
The Davidson Group
Union Bank Tower, Suite 960
Del Amo Financial Center
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company:
CUC International Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
with a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
or to such other address as the person to whom
notice is given may have previously furnished
to the others in writing in the manner set forth above.
(b) Registration Rights Agreement.
CUC and the Davidsons agree that Sections 2(a)(i);
2(a)(vii); 2(d) and 4(b) of the Registration Rights Agreement
are hereby amended to read as follows:
Section 2(a)(i):
At any time, and from time to time,
commencing with the Effective Date and ending
six years thereafter (the "Effective Period"),
upon the written request of any Qualified
Holder(s) (as hereinafter defined) requesting
that Parent effect the registration under the
Securities Act of 1933, as amended (the
"Securities Act"), of Registrable Securities
(as hereinafter defined), which, in the
aggregate, constitute at least 3,000,000 1
shares of Parent Common Stock for each
registration hereunder, Parent shall use its
best efforts to register under the Securities
Act (a "Demand Registration"), as
expeditiously as may be practicable, the
Registrable Securities which Parent has been
requested to register, all to the extent
requisite to permit the disposition of such
Registrable Securities in accordance with the
methods intended by the sellers thereof;
provided that no Qualified Holder(s) shall be
permitted to exercise a Demand Registration
within three months of the effective date of
any registration statement for equity
securities of Parent (other than on Form S-4
or Form S-8 or any successor or similar
form). An exercise of a Demand Registration
right will not count as the use of such right
unless the registration statement to which it
relates is declared effective under the
Securities Act and remains effective for a
period (not less than 30 days) sufficient to
allow for the orderly sale of the Registrable
Securities covered thereby, except that such
exercise shall count if such registration
statement is withdrawn because (a) the
Qualified Holders, for any reason whatsoever,
determine not to proceed with such
registration and (b) the Qualified Holders do
not reimburse Parent for all Registration
Expenses and Counsel Fees (each as hereinafter
defined) incurred in connection with the
preparation and filing of such registration
statement. Qualified Holders exercising a
Demand Registration Right after
May 27, 1997, and prior to the end of the two
year period following the Merger shall
deliver, together with the request in respect
of such Demand Registration, an opinion,
rendered by ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇,
substantially in the form attached as Exhibit
C to the Settlement Agreement dated
as of May 27, 1997 among Parent and the other
parties named on the signature pages thereof.
Such opinion shall be confirmed by such
counsel in writing at the closing of any sale
by the Davidsons pursuant to a Demand
Registration.
Section 2(a)(vii):
It is hereby further agreed that
with respect to any Demand Registration
requested pursuant to this Section 2(a),
Parent may defer the filing or effectiveness
of any registration statement related thereto
for a reasonable period of time (not to exceed
45 days after such request) if (A) Parent and
a proposed underwriter are, at such time,
working on an underwritten public offering of
Parent Common Stock ("Parent Common Stock
Offering") and Parent is advised by such
underwriter or its managing underwriter(s)
that such Parent Common Stock Offering would
in its or their opinion be adversely affected
by such filing or (B) Parent determines, in
its good faith and reasonable judgment, that
any such filing or the offering of any
Registrable Securities would materially
impede, delay or interfere with any material
proposed financing, offer or sale of
securities, acquisition, corporate reorganization
or other significant transaction involving Parent
(each, a "Material Transaction"); provided that, Parent
shall not defer the filing or effectiveness of
any registration statement requested pursuant
to this Section 2(a) on or prior to May 27, 1998
(1) if the underwritten public offering
referred to in clause (A) or the Material
Transaction involves the registration of
Parent Common Stock for Parent's own account
or any other financing transaction for
Parent's own account; (2) if the underwritten
public offering referred to in Clause (A) or
the Material Transaction involves gross
proceeds of (in the case of an underwritten
public offering) or a purchase price (in the
case of any Material Transaction) less than
$250 million; or (3) in the case of any
Material Transaction involving an offer or
sale of securities or an acquisition by Parent
or any of Parent's subsidiaries, such offer,
sale or acquisition has not been proposed by
Parent at the time such Demand Registration is
requested; provided further, however, that with respect
to clause (B), Parent gives the Qualified
Holders written notice of such determination;
and provided further, however, with respect to
both clauses (A) and (B), Parent shall not be
entitled to postpone such filing or
effectiveness if, within the preceding 12
months, it has effected two postponements
pursuant to this paragraph (vii) and,
following such postponements, the Registrable
Securities to be sold pursuant to the
postponed registration statements were not
sold (for any reason). Parent agrees that the
Effective Period shall be extended by a period
which is not less than the aggregate number of
days included in the periods during which
Parent deferred the filing or effectiveness of
a registration statement as provided above
(each, a "Suspension Period"). A Suspension
Period shall commence on and include the date
on which Parent provides such written notice
and shall end on the date when the affected
registration statement is filed or declared
effective.
Section 2(d):
Registration Expenses. Except as otherwise
provided in Section 2(b)(ii) or in this Section 2(d),
whether or not any registration statement
prepared and filed pursuant to this Section 2
is declared effective by the Commission
(except where a Demand Registration is terminated,
withdrawn or abandoned at the written request of the
Majority Qualified Holders), Parent shall pay
all expenses incident to Parent's performance
of or compliance with the registration
requirements of this Agreement, including,
without limitation, the following: (A) all
Commission and any NYSE registration and
filing fees and expenses; (B) any and all
expenses incident to its performance of, or
compliance with, this Agreement, including,
without limitation, any allocation of salaries
and expenses of Parent personnel or other
general overhead expenses of Parent, or other
expenses for the preparation of historical and
pro forma financial statements or other data
normally prepared by Parent in the ordinary
course of its business; (C) all listing,
transfer and/or exchange agent and registrar
fees; (D) fees and expenses in connection with
the qualification of the Registrable
Securities under securities or "blue sky" laws
including reasonable fees and disbursements of
counsel for the underwriters in connection
therewith; (E) printing expenses; (F)
messenger and delivery expenses; and (G) fees
and out-of-pocket expenses of counsel for
Parent and its independent certified public
accountants (including the expenses of any
audit, review and/or "cold comfort" letters)
and other persons, including special experts,
retained by Parent (collectively, clause (A)
through (G), "Registration Expenses"); provided,
however, that Parent shall not be required to
pay, and the Qualified Holders shall pay, (1)
50% of all Registration Expenses (other than
those described in clause (B) above) for all
Demand Registrations after the third Demand
Registration and (2) all fees and out-of-
pocket expenses of counsel selected by the
Qualified Holders, any fees or disbursements
of Managing Underwriters and their counsel,
participating underwriters and brokers-dealers
or any discounts, commissions or fees of
underwriters, selling brokers and dealers
relating to the distribution of the
Registrable Securities; provided further,
however, that in respect of the second Demand
Registration, Parent shall pay the reasonable
fees and out-of-pocket expenses of counsel
selected by the Qualified Holders and the fees
and disbursements of Managing Underwriters and
their counsel (collectively, "Counsel Fees"),
up to an aggregate of $300,000. If the amount
of such Counsel Fees incurred in respect of
the second Demand Registration is less than
$300,000, Parent shall, in respect of the
third Demand Registration, pay Counsel Fees in
an amount equal to the difference between
$300,000 and the Counsel Fees incurred in
respect of the second Demand Registration.
Section 4(b):
If to the Shareholders, to:
The Davidson Group
Union Bank Tower, Suite 960
Del Amo Financial Center
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (phone)
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
with a copy to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(▇▇▇) ▇▇▇-▇▇▇▇ (phone)
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
(c) Merger Agreement - Election to Parent Board;
Resignation.
The Davidsons hereby waive any and all rights they may
have pursuant to the provisions of Section 4.21 of the Merger
Agreement and acknowledge that, from and after the date hereof,
CUC shall not have any further obligations thereunder. Each of
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ is executing and delivering
to CUC, on the date hereof, a resignation from the CUC Board of Directors
and the Boards of Directors of all CUC Affiliates on which they
serve, substantially in the form attached hereto as Exhibit B.
(d) Continuity of Interest Certificate - Holding
Period.
With respect to (x) each Sale (as defined in the
Certificate referred to below) within a two-year period following
the Merger pursuant to a Demand Registration Right exercised
pursuant to the Registration Rights Agreement and (y) each
purchase of CUC Common Stock pursuant to Section 4 hereof within
a two-year period following the Merger, CUC hereby waives the
covenant, set forth in Paragraph 1(e) of the Continuity of Interest
Certificate executed on March 21, 1996 by certain of the Davidsons
in connection with the Merger (the "Certificate"), that the Davidsons
not sell CUC Common Stock prior to the expiration of the time period
contained in such Paragraph 1(e) of the Certificate; provided that
such waiver is conditioned upon CUC's receipt in respect of each
such Demand Registration or purchase, as the case may be, of a manually
signed copy of the opinion of ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇ required to be
delivered in connection with the exercise of such Demand Registration or
purchase, pursuant to the Registration Rights Agreement or this
Agreement, respectively.
(e) Employment Agreements; Previously Awarded Stock
Options.
Each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
agrees that the Original Employment Agreement to which she
or he is a signatory is hereby amended and restated to read
in its entirety as set forth in Exhibit D-1 or D-2,
respectively (collectively, the "Amended and Restated
Employment Agreements"). Each of CUC, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ acknowledges that (A) of the options to
purchase 300,000 shares of CUC Common Stock (150,000 each)
granted to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ on July
24, 1996 in connection with the execution and delivery of
their respective Original Employment Agreements, as evidenced
by letters and stock option agreements dated July 24, 1996
from CUC to each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
(collectively, the "Original Option Grant Documents,"
attached hereto and make a part hereof as Exhibits D-3 and D-
4), and notwithstanding the foregoing, each of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ is entitled to exercise
options for no more than 75,000 shares each (for an aggregate
of 150,000 shares), and each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ agrees not to assert or claim otherwise or
attempt to exercise options for more than 75,000 shares each
(for an aggregate of 150,000 shares), (B) the Original Option
Grant Documents are hereby amended (i) to give effect to the
foregoing and (ii) by deleting paragraphs (e) and (f) of each
of them and inserting in lieu thereof the paragraphs set
forth in Exhibit D-5 hereto (it being understood that the
vesting schedule set forth in paragraph (b) of the Original
Option Grant Documents shall remain in effect (on a pro rata
basis) as to such reduced numbers of shares), and (C) as so
amended, the Original Option Grant Documents are hereby
reconfirmed, remade and renewed. The numbers of shares in
this paragraph give effect to the 3-for-2 split, effective
October 21, 1996.
4. PURCHASE OF CERTAIN OF THE DAVIDSONS' CUC COMMON
STOCK.
(a) Proposed Purchase Acquisitions.
CUC agrees that, each time (if any) that CUC
proposes to acquire any Person, during the four year period
commencing on the date hereof, and CUC intends to account for
the purchase of such Person as a purchase, and not as a
"pooling of interests" (each such proposed acquisition to be
referred to as a "Purchase Acquisition"), CUC shall (subject
to the terms and conditions set forth in this Section 4)
offer to purchase from the Davidsons (pro rata in accordance
with their respective holdings of CUC Common Stock or in such
other proportions as the Davidsons may, by a writing signed
by all of them, inform CUC) such number of shares, if any, of
CUC Common Stock as CUC, in its sole discretion, proposes to
issue in connection with such Purchase Acquisition. CUC
shall notify the Davidsons of such Purchase Acquisition no
later than fifteen days preceding the scheduled closing date
("Scheduled Closing Date") of such proposed Purchase
Acquisition, which notice shall contain an estimate of the
number of shares CUC proposes to purchase from the Davidsons
(which would be not less than the number of shares CUC
proposes to issue) in connection with such proposed Purchase
Acquisition and the Scheduled Closing Date of such proposed
Purchase Acquisition.
(b) No Obligation.
CUC shall have no obligation to propose or
consummate any Purchase Acquisition.
(c) Purchase Price.
The purchase price for each share of CUC Common
Stock to be so purchased from the Davidsons shall be equal to
the Average Stock Price. The term "Average Stock Price"
shall mean, with respect to each proposed Purchase
Acquisition, the average of the closing prices per share of
CUC Common Stock on the New York Stock Exchange (the "NYSE")
as reported on the NYSE Composite Tape during the five
consecutive trading day period (the "Measurement Period")
ending on the fifth trading day immediately preceding the
Scheduled Closing Date for such proposed Purchase
Acquisition.
(d) Conditions to Purchase.
Under no circumstances shall CUC be required to
purchase any shares of CUC Common Stock from the Davidsons
if:
(i) such purchase might, in CUC's good faith
judgment, cause CUC to violate any applicable law or
regulation (including any applicable tax or accounting rule
or release);
(ii) such purchase might, in CUC's good faith
judgment, prevent CUC from accounting for any acquisition
which CUC wishes to account for as a "pooling of interests"
as a "pooling of interests" (whether or not such "pooling of
interests" acquisition has been consummated prior to the
closing of the proposed Purchase Acquisition referred to in
Section 4(a)); or
(iii) such shares were not issued to the
Davidsons pursuant to the Merger.
(b) Proposed Purchase Notice.
As soon as reasonably practicable after CUC has
determined the Average Stock Price in respect of a proposed Purchase
Acquisition (but in no event later than the fourth trading day
preceding the Scheduled Closing Date), CUC shall provide notice
to the Davidsons (each, a "Proposed Purchase Notice"), which
Proposed Purchase Notice shall contain the following information:
(i) the number of shares of CUC Common Stock
which CUC proposes to purchase from the Davidsons;
(ii) the Average Stock Price in respect of
such proposed purchase; and
(iii) the Scheduled Closing Date of the
proposed Purchase Acquisition and the location at, and the time
and place on, which such proposed purchase of shares of CUC
Common Stock from the Davidsons is to occur.
(c) Acceptance Notice.
Within two trading days after the receipt of
such Proposed Purchase Notice, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and/or
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, on behalf of all of the Davidsons, shall
provide a notice to CUC (each, an "Acceptance Notice"), which
Acceptance Notice shall contain at least the following information:
(i) whether one or more Davidsons wishes to sell
all or any part of the CUC Common Stock which CUC has
proposed to purchase;
(ii) the number of shares of CUC Common Stock
which each such Davidson wishes to sell to CUC; and
(iii) the Person who will act as the
Davidsons' agent in respect of such sale.
If an Acceptance Notice setting forth
such information is not so delivered within such two trading
day period, the Davidsons shall have no rights under this
Section 4 in respect of the proposed Purchase Acquisition.
(d) No Offer.
No Proposed Purchase Notice shall be deemed to
constitute an offer, and CUC shall have no obligation to effectuate
any purchase described in any such Proposed Purchase Notice, until
such time as the closing of the Purchase Acquisition in connection
with which CUC proposes to purchase shares of CUC Common Stock from the
Davidsons actually occurs. The Acceptance Notice shall constitute
an offer to sell shares of CUC Common Stock by the Davidsons designated
in such Acceptance Notice as wishing to sell shares of CUC Common Stock,
but may be revoked by each such Davidson, in whole or in part, as to
the shares of CUC Common Stock to be sold by such Davidson,
at any time until the close of business on the second
trading day immediately preceding the Scheduled Closing Date.
(e) Deliveries at Closing.
At the closing of each purchase of CUC Common Stock
from the Davidsons under this Section 4 (which may occur on a date
later than the Scheduled Closing Date, but in no event earlier than
the date and time on which all of the conditions set forth in this
Section 4 in respect of such purchase have been satisfied):
(i) the Davidsons proposing to sell shares of CUC
Common Stock to CUC hereunder shall deliver to CUC:
(x) with respect to any sale of shares of
CUC Common Stock to be made to CUC prior to the end of the
two-year period following the Merger, a manually signed copy
of the opinion, substantially in the form attached hereto as
Exhibit C, rendered by ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇;
(y) a certificate or certificates representing
the shares of CUC Common Stock to be sold to CUC, together with duly
executed, blank stock powers in respect thereof; and
(z) customary representations as to (1) the
good and marketable title of the Davidsons proposing to sell
shares of CUC Common Stock, to the CUC Common Stock which
they propose to sell; (2) each such Davidson's authority to
sell such shares of CUC Common Stock to CUC; (3) each such
Davidson's ability to sell shares of CUC Common Stock to CUC
without violating any laws, rules, regulations, agreements,
judgments or orders to which they may be parties or may be
subject; and (4) there being no default by such Davidson of
such Davidson's respective obligations under this Agreement
or any other agreement referred to in this Agreement or
surviving the execution of this Agreement; and
(i) CUC shall deliver to each Davidson selling
shares of CUC Common Stock to CUC hereunder immediately available
funds, to an account or accounts designated in writing by
such Davidson, in an amount equal to the number of shares of
CUC Common Stock to be purchased from such Davidson multiplied
by the Average Stock Price.
(i) Fees and Expenses.
All reasonable legal fees and expenses and other
related expenses incurred by the Davidsons in connection with
any repurchase of shares of CUC Common Stock pursuant to this
Section 4 shall be paid by CUC; provided that CUC shall only
be obligated to pay the legal fees of a single law firm. The
Davidsons shall be responsible for the payment of any
applicable transfer or similar taxes arising out of the sale
by them to CUC of CUC Common Stock.
(j) Capital Gains Treatment.
At the request of the Davidsons, CUC will use its
good faith efforts to structure each repurchase transaction
pursuant to Section 4 so as to have each such transaction
qualify for capital gains treatment for the Davidsons;
provided, however, that in no event shall CUC be obligated to
repurchase a number of shares greater than the number it
proposes to issue in the applicable Purchase Acquisition.
5. MUTUAL RELEASE.
Each of the Davidsons, on behalf of himself,
herself, itself, and her, his or its heirs, executors,
successors, assigns and each Davidson Control Person and any
other Person claiming by, through or because of any of the
Davidsons (collectively, the "Davidson Releasors"), and CUC,
on behalf of itself and the CUC Affiliates and any of their
successors, assigns or any other Person claiming by, through
or because of any of CUC or the CUC Affiliates (collectively,
the "CUC Releasors" and with the Davidson Releasors, the
"Releasors", and each individually a "Releasor"), jointly and
severally, hereby agrees as follows:
(a) Benefit.
The following release (this "Release") by and on
behalf of the Davidson Releasors is in respect of and for the
benefit of CUC, and by and on behalf of the CUC Releasors is
in respect of and for the benefit of the Davidsons and each
Davidson Control Person and in each case, for the benefit of
each of its present and former share holders, officers,
directors, employees, agents, attorneys, accountants,
representatives, successors, assigns, affiliates (within the
meaning of Rule 12b-2 under the Exchange Act) and any other
Person who is or may be liable as a result of any association
with any of them (each, a "Releasee" and collectively, the
"Releasees").
(b) Release.
Each of the Releasees is entitled to enforce the
terms of this Release contained in this Agreement by all
means available at law, in equity or as herein provided. Each
of the Davidsons, on behalf of himself, herself, itself and
his, her or its respective other Releasors, and CUC, on
behalf of itself and its other Releasors hereby acquits,
remises, discharges, and forever releases each of the
Releasees and each of their respective shareholders,
officers, directors, employees, agents, attorneys,
accountants, representatives, successors, assigns,
affiliates, parents, spouses, heirs, executors,
administrators and personal or legal representatives, past or
present, from any and all sums of money, actions, awards,
causes of action, suits, judgments, damages, demands, debts,
dues, escrows, contracts, accounts, agreements, liabilities,
obligations, representations, rights, setoffs, trespasses,
torts, wrongs, losses, expenses, claims and counterclaims of
any and all kind or nature whatsoever, whether known or
unknown, suspected or unsuspected, which have in the past
existed, or which as of this date do exist, or which may
exist in the future, arising out of, relating to or in
connection with:
(i) The matters contained in the Notice or any
claim which could have been asserted against the Releasees, or by
any of them, arising out of, relating to or in connection
with matters specified in the Notice; and
(ii) Any and all claims or causes of action that could
have been alleged against the Releasees, or any of them, in any
lawsuit in any court or other forum of competent jurisdiction,
whether state, federal or foreign, arising
under the laws of the State of California, Delaware,
Connecticut or any other state, federal or foreign laws,
whether statutory, at common law, equity, civil law or
otherwise, whether state, federal or foreign (including
claims which may have arisen or accrued prior to the date of
this Release, whether related to the Merger, the Merger
Agreement, the Original Employment Agreements or the
Employment, as well as claims which may arise or accrue
subsequent to the date of this Release (whether or not
foreseeable), as a result of any form of conduct, behavior,
action or omission occurring at any time prior to the date
hereof.
(c) Limitations on Release.
Nothing in the foregoing releases shall in any way
limit or eliminate the rights and obligations of the parties
under this Agreement; the Noncompetition Agreements (as such
agreements are amended pursuant hereto); the Registration
Rights Agreement (as such agreement is amended pursuant
hereto); the Amended and Restated Employment Agreements
(from and after the date hereof); the New Option Letters;
the Original Option Grant Documents (as such documents are
amended pursuant hereto); the Continuity of Interest
Certificate; or any document, instrument or agreement
entered into in connection with the secondary public
offering of CUC Common Stock effected by certain of
the Davidsons in November, 1996 and all rights to
indemnification provided by any of the agreements, documents,
certificates or instruments referred to in this Section 5(c)
(collectively, the "Surviving Agreements"), the Merger
Agreement, the Delaware General Corporation Law, the
California Corporations Code, the Certificate of
Incorporation of CUC or the Articles of Incorporation of
Davidson or any other of the organizational documents of CUC
or Davidson (however such document may be designated or
denominated) or any rights to indemnification under any
officers and directors insurance policy of CUC or Davidson
(collectively, the "Surviving Agreements and Rights").
6. COVENANT NOT TO ▇▇▇.
Except as otherwise specifically provided for
herein to enforce the terms of this Agreement and Rights
and/or any of the Surviving Agreements and Rights and/or to
seek relief including damages or an injunction or other
appropriate relief in the event of a breach of this
Agreement or any of the Surviving Agreements and Rights
(subject to Section 7 hereof), each of the Davidsons, on
behalf of himself, herself, itself and his, her or its
respective other Releasors, jointly and severally, and CUC,
on behalf of itself and its other Releasors,
unconditionally, fully and finally covenants forever not to
commence, sponsor, assert, file, institute, prosecute or
continue, or cooperate with any Person or in any way
facilitate or encourage anyone in the commencement,
assertion, filing, institution, prosecution, commencement, or
continuance of any complaint, suit, legal or equitable
proceeding, including proceedings before any federal, state
or foreign court, regulatory agency, arbitral tribunal or
other forum, wherever located, against the Releasees, or any
of them, for any claim, counterclaim, demand, charge, cause
of action, injury, damage, loss, expense, cost or other
matter of any and every kind and nature whatsoever with
respect to any of the matters addressed by the Release,
except to the extent required to provide information or
assistance by law or legal process, but only after reasonable
advance written notice to CUC or the Davidsons, as the case
may be, of such proposed action and only after having
received a written opinion of counsel for the providing or
assisting party that such action is required by law.
7. AGREEMENT TO ARBITRATE
(a) Notwithstanding anything to the contrary
contained in this Agreement or the Surviving Agreements and Rights,
any controversy, dispute or claim arising out of or relating
to this Agreement or any of the Surviving Agreements and
Rights or the breach hereof or thereof which cannot be
settled by mutual agreement shall be finally settled by
binding arbitration in accordance with the Federal
Arbitration Act (or if not applicable, the applicable state
arbitration law) as follows: Any party who is aggrieved
shall deliver a notice to the other party (or parties)
setting forth the specific points in dispute. Any points
remaining in dispute twenty (20) days after the giving of
such notice may be submitted to arbitration in New York,
New York, or Los Angeles, California, whichever the
complaining party may choose, to Jams/Endispute, before a
single arbitrator appointed in accordance with the
arbitration rules of Jams/Endispute, modified only as herein
expressly provided. After the aforesaid twenty (20) days,
either party (or parties), upon ten (10) days notice to the
other(s), may so submit the points in dispute to arbitration.
The arbitrator may enter a default decision against any party
who fails to participate in the arbitration proceedings.
(b) The decision of the arbitrator on the points in
dispute will be final, unappealable and binding, and judgment
on the award may be entered in any court having jurisdiction
thereof.
(c) Except as otherwise provided in this Agreement or
any of the Surviving Agreements and Rights, the arbitrator
will be authorized to apportion its fees and expenses and the
reasonable attorneys fees and expenses of any such party as
the arbitrator deems appropriate. In the absence of any such
apportionment, the fees and expenses of the arbitrator will
be borne equally by each party (or, as applicable, group of
related parties), and each party will bear the fees and
expenses of its own attorney.
(d) The parties agree that this Section has been
included to rapidly and inexpensively resolve any disputes
between them with respect to this Agreement or any of the
Surviving Agreements and Rights, and that this Section shall
be grounds for dismissal of any court action commenced by any
party with respect to this Agreement or any of the Surviving
Agreements and Rights, other than post-arbitration actions
seeking to enforce an arbitrator award.
(e) The parties shall keep confidential, and shall not
disclose to any person, other than to the arbitrator in the
normal course of any proceeding in this Section 7, or except
as may be required by law, the existence of any controversy
hereunder, the referral of any such controversy to
arbitration or the status or resolution thereof.
Section 2. ADDITIONAL COVENANTS.
(a) Employment of ▇▇▇▇ ▇▇▇▇▇. From the date hereof
until December 31, 1997 (the "Loan Out Period"), ▇▇▇▇ ▇▇▇▇▇,
a long term employee of Davidson, shall be available to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ full time to provide such secretarial and
administrative assistance as ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall
request. At all times during the Loan Out Period and the
Supplemental Loan Out Period (hereinafter defined), ▇▇▇▇
▇▇▇▇▇ shall remain an employee of Davidson and shall
continue to receive all benefits to which she is entitled as
an employee. During the Loan Out Period, the Davidsons will
reimburse Davidson in an amount equal to 50% of ▇▇. ▇▇▇▇▇'▇
salary plus an allocation of direct taxes and benefits on the
same basis as applicable to other Davidson employees of her
category ("▇▇▇▇ ▇▇▇▇▇ Employment Cost"). From and after
January 1, 1998 and to (but not after) June 30, 1998 (the
"Supplemental Loan Out Period"), ▇▇▇▇ ▇▇▇▇▇ shall be
available to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as and to the extent from
time to time requested by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇. During the
Supplemental Loan Out Period the Davidsons will reimburse
Davidson for 100% of ▇▇▇▇ ▇▇▇▇▇ Employment Cost for each
business day or part thereof on which ▇▇. ▇▇▇▇▇ is so
employed by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
(b) Personal Likeness or Endorsement of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇.
CUC agrees that neither it nor Davidson will use
the personal name, likeness or endorsement of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
in connection with any products, packaging, promotions or activities
of CUC or Davidson or in any other way that exploits
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇'▇ name or image. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ hereby
agrees that CUC and the CUC Affiliates may (until December 31,
1997) exhaust any and all existing inventory of products, packaging
and promotional materials on hand at the date of this Agreement which
contain ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇'▇ personal name, likeness or endorsement
(or any variation or derivative thereof) (the "Existing Davidson
Inventory"). CUC shall provide to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ monthly status
reports in reasonable detail concerning such Existing Davidson
Inventory at least monthly during the period commencing June 1, 1997
and ending December 31, 1997.
(c) Davidson Name and Trademark. CUC further agrees
that it will not use the "Davidson" name or trademark on
software of a type which would be rated "R" or "NC-17" under
the standards of the Motion Picture Association of America,
Inc., or "x", in each case relating to films (which, for the
purpose of the Agreement, shall be, mean and include all
forms of software), as in effect on the date hereof, a copy
of which standards are attached hereto and made a part hereof
as Exhibit E. Nothing herein shall limit or restrict CUC's
or Davidson's right to use the "Davidson" trademark (or any
variation or derivative thereof) in any way except as
specifically set forth in the preceding sentence.
(d) Confidentiality.
Each party hereto agrees that it shall keep in
confidence the financial terms of this Agreement and shall not,
without the consent of each other party hereto, disclose the
same to any Person except its own counsel or accountants or as
required by applicable law (after consultation with counsel).
Section 3. REPRESENTATIONS OF THE DAVIDSONS.
(a) Authority.
The Davidsons hereby represent and warrant to CUC
that they have requisite legal capacity, power and authority to
execute, deliver and perform the provisions of this Agreement
and that this Agreement is a valid and binding obligation of the
Davidsons enforceable against them in accordance with its terms.
(b) No Agreements with Employees.
Each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
hereby represents and warrants to CUC that neither ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
nor ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ has entered into any agreement, understanding
or arrangement with any employee of CUC or any of the CUC Affiliates
pertaining to any business in which ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ or
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ has participated or plans to participate,
or to the employment, engagement or compensation of any such
employee.
(c) Validity of Restrictive Covenants.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ agree that
they shall not contest, challenge or call into question, or cause
or permit any other Person to contest, challenge or call into question,
in any way the validity or enforceability of any of the restrictive
covenants contained in the Non-Competition Agreements, as
amended by this Agreement (the "Restrictive Covenants")
(whether as an affirmative claim or cause of action or as a
defense to an action by CUC or any CUC Affiliate), in any
judicial or arbitral forum. Nothing herein shall prevent
either of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ from
asserting that she or he has not violated the terms of any
of such Restrictive Covenants in defending a claim to that
effect brought by CUC or any CUC Affiliate.
(d) Ownership of Stock by the Davidsons.
Each of the Davidsons hereby represents and warrants
that with the possible exception of minor differences, none of which
is material, and which collectively are not material, the Davidsons
own beneficially and of record the number of shares of CUC Common Stock
set forth opposite each Davidson's name on Exhibit F hereto, free and
clear of any lien, pledge, claim, charge or encumbrance.
(e) No Interest in Competitors. Each of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ hereby represents and
warrants that she or he does not own or hold (or have the right to
acquire), directly or indirectly, as a member of a "group" (within
the meaning of Section 13(d)(3) of the Exchange Act, or otherwise,
any proprietary interest in a Competitor (as defined in Section 2(a)
of the Noncompetition Agreements (as such agreements are amended pursuant
hereto)).
(f) No Basis for Claims. Each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ hereby represents and warrants that
neither she nor he knows of any basis for any claim or cause
of action that could be alleged against any of the CUC
Releasees as of the date hereof arising out of, relating to
or in connection with matters other than those contained or
specified in the Notice.
Section 4. REPRESENTATIONS OF CUC.
(a) Authority. CUC hereby represents and
warrants to the Davidsons that it has the requisite legal
capacity, power and authority to execute, deliver and perform the
provisions of this Agreement and that this Agreement is a
valid and binding obligation of CUC enforceable against it
in accordance with its terms.
(b) No Basis for Claims. CUC hereby represents
and warrants that it does not know of, and to the best knowledge
of CUC none of the CUC Affiliates knows of, any basis for
any claim or cause of action that could be alleged against
any of the Davidson Releasees as of the date hereof arising
out of, related to or in connection with matters other than
those contained or specified in the Notice.
Section 5. CONSTRUCTION.
All of the parties to this Agreement were represented
by counsel and this document was negotiated by counsel, and no party
may rely on any drafts of this Agreement in any interpretation of
this Agreement. Each party and counsel for each party to this Agreement has
reviewed this Agreement and has participated in its drafting
and, accordingly, no party shall attempt to invoke the rule
of construction to the effect that ambiguities are to be
resolved against the drafting party in any interpretation of
this Agreement.
Section 6. VOLUNTARY SIGNING OF AGREEMENT AND RIGHT TO
REVOKE.
The Davidsons acknowledge that before entering into
this Agreement, they consulted with attorneys and other advisors
of their choice. They further acknowledge that they have entered
into this Agreement of their own free will, and that no promises or
representations have been made to them by any person to induce them to
enter into this Agreement other than the express terms set forth
herein. The Davidsons further acknowledge that they have
read this Agreement and understand all of its terms,
including the waiver and release of claims set forth in
Section 5. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ each
acknowledges that she or he, as the case may be, may take up
to 21 calendar days from the date she or he, as the case may
be, was given this Agreement to consider, sign and return
this Agreement. In addition, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ each acknowledges that she or he, as the case may
be, may revoke the Agreement after signing it, but only by
delivering a signed revocation notice to CUC during the
Revocation Period. For purposes of this Agreement the
"Revocation Period" shall mean the period which is seven (7)
calendar days following the execution of this Agreement by
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
Section 7. MISCELLANEOUS.
(a) Notices.
All notices under this Agreement shall be in
writing and shall be deemed to have been duly given upon
receipt of hand delivery or facsimile transmission with
confirmation of receipt, as follows:
CUC International Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Attention: ▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Senior Vice President and
General Counsel
with a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
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Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
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If to the Davidsons, to:
The Davidson Group
Union Bank Tower, Suite 960
Del Amo Financial Center
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
and
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with a copy to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
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Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(▇▇▇) ▇▇▇-▇▇▇▇ (phone)
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Such names and addresses may be changed by written notice to
each Person listed above.
(a) Governing Law.
Except as provided for in Section 7, this Agreement and
all disputes arising hereunder or related hereto, shall be governed
by, construed and interpreted in accordance with the internal laws
of the State of Delaware, applicable to instruments made, delivered and
performed entirely in such state; provided, however, that the
Surviving Agreements and Rights shall continue to be governed
by, construed and interpreted in accordance with the laws of
the jurisdiction to the extent specifically selected in each
such Surviving Agreement, or, in the case of the Rights, the laws
of the state of incorporation of the relevant corporation, or
other laws selected in the instrument creating such Rights, as
the case may be.
(b) Counterparts.
This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which
together shall constitute one and the same original instrument.
(c) Interpretation.
Whenever a reference is made in this Agreement to a
particular Section or Exhibit, such reference shall be to a
Section of or an Exhibit to this Agreement unless otherwise indicated.
The headings contained in the provisions of this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of the provisions of this Agreement. Whenever
the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the
words "without limitation."
(d) Entire Agreement; Severability;
Reformation. This Agreement, including the Exhibits hereto
and the Surviving Agreements, embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter
contained herein and supersedes all prior and contemporaneous agreements
and understandings (whether written or oral) among the parties
hereto with respect to such subject matter. If any provision of
this Agreement is determined to be invalid or unenforceable, in whole
or in part, it is the parties' desire and intention that such
determination shall not be held to affect the validity or enforceability
of any other provision of this Agreement, which provisions shall
otherwise remain in full force and effect.
(e) Amendment and Modification.
This Agreement may be amended or modified only by the duly
executed written agreement of the parties hereto.
(f) Extension; Waiver.
The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered
a waiver or deprive that party of the right thereafter to require
strict adherence to that term or any other term of this Agreement.
No waiver of any breach of this Agreement shall be held to constitute a
waiver of any other or subsequent breach. Any waiver must be
evidenced in writing and duly executed by the party against
whom such waiver may be enforced.
(g) Binding Effect; Benefits.
This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns.
Other than as provided for in Section 5 and Section 7, nothing in this
Agreement, express or implied, is intended to confer on any Person
other than the parties hereto and their respective successors and
assigns any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
(h) Assignability.
This Agreement is not assignable by any party hereto without
the prior written consent of the other parties hereto.
(i) Expenses.
Other than as provided for in Section 4 and Section 7 hereof,
each of the parties hereto shall pay all of its own expenses relating to
the transactions contemplated by this Agreement, including the fees
and expenses of its own financial, legal and tax advisors.
(j) Gender and Certain Definitions.
All words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine
or neuter, as the context requires.
(k) Specific Enforcement.
The parties hereto acknowledge and agree that each would be
irreparably damaged in the event that any of the provisions of this
Agreement are not fully performed by the other in accordance with
their specific terms or are otherwise breached. Subject to Section 7
hereof, it is accordingly hereby agreed that each party shall
be entitled to an injunction (or injunctions) to prevent breaches of
this Agreement by any other party hereto and to specifically enforce
this Agreement and the terms and provisions thereof against any other
party hereto.
(l) No Admission.
This Agreement shall not be construed as an
admission by CUC and/or any of the CUC Affiliates, nor by
any of the Davidsons or any of the Davidson Control Persons
of any liability or wrongdoing, nor shall this Agreement be
construed as evidence of such liability or wrongdoing.
IN WITNESS WHEREOF, CUC and the Davidsons have
duly executed and delivered this Agreement as of the date
first above written.
CUC INTERNATIONAL INC.
By: _________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
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CHARITABLE REMAINDER UNITRUST ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, individually
By:___________________________ ________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Trustee ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, individually
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CHARITABLE REMAINDER UNITRUST IRREVOCABLE TRUST
By:___________________________ By:_____________________________
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By:_____________________________
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IRREVOCABLE TRUST IRREVOCABLE TRUST
By:______________________________ By:______________________________
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By:______________________________ By:______________________________
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CHARITABLE REMAINDER UNITRUST CHARITABLE REMAINDER UNITRUST
By:______________________________ By:______________________________
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By:______________________________ By:______________________________
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SETTLEMENT AGREEMENT
BY AND AMONG
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THE ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ CHARITABLE REMAINDER UNITRUST;
THE ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ CHARITABLE REMAINDER UNITRUST;
THE ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ IRREVOCABLE TRUST;
THE ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ IRREVOCABLE TRUST;
THE ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ IRREVOCABLE TRUST;
THE ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ CHARITABLE REMAINDER UNITRUST;
THE ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ CHARITABLE REMAINDER UNITRUST;
AND
CUC INTERNATIONAL INC.
Dated: as of May 27, 1997
TABLE OF CONTENTS
Page
Section 1. EFFECTIVENESS OF THIS AGREEMENT 3
(a) Obligations of CUC 3
(b) Obligations of the Davidsons 3
Section 2. PAYMENT AND GRANT OF OPTIONS TO CERTAIN OF
THE DAVIDSONS 4
Section 3. AMENDMENT OF OTHER AGREEMENTS; WAIVERS 5
(a) Noncompetition Agreements 5
(b) Registration Rights Agreement 9
(c) Merger Agreement - Election to Parent Board;
Resignation 14
(d) Continuity of Interest Certificate - Holding
Period 14
(e) Employment Agreements; Previously Awarded Stock
Options 15
Section 4. PURCHASE OF CERTAIN OF THE DAVIDSONS'
CUC COMMON STOCK 16
(a) Proposed Purchase Acquisitions 16
(b) No Obligation 17
(c) Purchase Price 17
(d) Conditions to Purchase 18
(e) Proposed Purchase Notice 19
(f) Acceptance Notice 19
(g) No Offer 20
(h) Deliveries at Closing 21
(i) Fees and Expenses 22
(j) Capital Gains Treatment 22
Section 5. MUTUAL RELEASE 23
(a) Benefit 23
(b) Release 24
(c) Limitations on Release 26
Section 6. COVENANT NOT TO ▇▇▇ 27
Section 7. AGREEMENT TO ARBITRATE 28
Section 8. ADDITIONAL COVENANTS 30
(a) Employment of ▇▇▇▇ ▇▇▇▇▇ 30
(b) Personal Likeness or Endorsement of
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(c) Davidson Name and Trademark 32
(d) Confidentiality 32
Section 9. REPRESENTATIONS OF THE DAVIDSONS 32
(a) Authority 32
(b) No Agreements with Employees 33
(c) Validity of Restrictive Covenants 33
(d) Ownership of Stock by the Davidsons 34
(e) No Interest in Competitors 34
(f) No Basis for Claims 34
Section 10. REPRESENTATIONS OF CUC 35
(a) Authority 35
(b) No Basis for Claims 35
Section 11. CONSTRUCTION 35
Section 12. VOLUNTARY SIGNING OF AGREEMENT AND
RIGHT TO REVOKE 36
Section 13. MISCELLANEOUS 37
(a) Notices 37
(b) Governing Law 38
(c) Counterparts 38
(d) Interpretation 39
(e) Entire Agreement; Severability; Reformation 39
(f) Amendment and Modification 40
(g) Extension; Waiver 40
(h) Binding Effect; Benefits 40
(i) Assignability 41
(j) Expenses 41
(k) Gender and Certain Definitions 41
(l) Specific Enforcement 41
(m) No Admission 42
EXHIBITS
Exhibit A Option Letters to each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and
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Exhibit B Resignation Letters of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and
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Exhibit C Form of Opinion - Demand Registration/Repurchase
Exhibit D-1 Amended and Restated Employment Agreement of ▇▇▇▇▇▇
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Exhibit D-2 Amended and Restated Employment Agreement of ▇▇▇▇▇▇
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Exhibit D-3 Original Option Grant Documents
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Exhibit D-4 Original Option Grant Documents
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Exhibit D-5 Amendment to Original Option Grant Documents
Exhibit E Rating Standards of the Motion Picture Association
of America, Inc.
Exhibit F Ownership of Davidson Stock
_______________________________
1. This number gives effect to the 3-for-2 split, effective
October 21, 1996.
