NONCOMPETITION AGREEMENT
By signing below, I, Robert M. Davidson
(sometimes referred to hereinafter as the "Executive"),
agree to the terms and conditions set forth in this
agreement (the "Agreement") between me and CUC
International Inc. (the "Company"). I am entering into
this Agreement (a) in connection with, and as additional
consideration for, the Company's acquisition, on the date
hereof (the "Acquisition"), of all of the outstanding
capital stock of Davidson & Associates, Inc. ("Davidson")
pursuant to an Agreement and Plan of Merger, dated as of
February 19, 1996 (the "Merger Agreement") and (b) in
accordance with the terms and conditions of Section 4.17
of the Merger Agreement. Immediately prior to the
Acquisition, I was Chairman and Chief Executive Officer of
Davidson and beneficially owned 16,000,125 shares of
Davidson common stock.
1. Confidentiality. The Executive acknowledges that
all secret, non-public, or proprietary information
pertaining to the affairs, business, results of
operations, accounting methods, practices and procedures,
acquisition candidates, financial condition, clients,
customers or other relationships of Davidson or any of its
subsidiaries (as defined in the Merger Agreement) that he
possesses on the date hereof and may come to possess
hereafter ("Informa tion") is confidential and is a unique
and valuable asset of the Company and its affiliates. The
Executive will not, except to the extent reasonably
necessary in performance of his duties under his
employment agreement with the Company, give any person,
firm, association, corporation or govern mental agency any
Information, except as may be required by law. The
Executive will not make use of the Information for his own
purposes or for the benefit of any person or organi
zation. The Executive will also use his best efforts to
prevent the disclosure of the Information by others.
2. Restricted Activities
(a) For the period commencing on the date hereof
and ending on the fifth anniversary of the date hereof (the
"Restricted Period"), the Executive, without prior express written
approval by the Board of Directors of the Company (the "Board of
Directors"), will not engage in competition, or directly or
indirectly own or hold a proprietary interest in or be employed by,
or consult with or receive compensa tion from, any party which
competes, in any way or manner with the business of Davidson or any
of its subsidiaries, as such business or businesses may be
conducted from time to time. The Executive acknowledges that
Davidson's and its subsidiaries' businesses are conducted
nationally and internationally and agrees that the provisions in
the fore going sentence shall operate throughout the United States
and the World.
(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 any business of Davidson or any of its subsidiaries or
discuss with any employee of the Company or any of its affiliates
information or operation of any business intended to compete with the
Company or any of its affiliates.
(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. 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.
(d) For the purposes of this Agreement, proprietary
interest means legal or equitable ownership, whether through
stock holding or otherwise, of an equity interest in a business, firm or
entity of ownership or more than 5% (or such greater percentage as may
be approved by the Company) of any class of equity interest in a
publicly-held company and the term "affiliate", when used in respect of
the Company, shall include, without limitation, all subsidiaries of the
Company, including Davidson and its subsidiaries, and all licensees of
the Company.
(e) The Executive hereby acknowledges that damages at
law may be an insufficient remedy to the Company if the
Executive violates the terms of this Agreement and that the Company
shall be entitled to preliminary and/or permanent injunctive relief in
any court of competent jurisdiction to restrain the breach of or
otherwise to specifically enforce any of the covenants contained in this
Agreement without the necessity of showing any actual damage or that
monetary damages would not provide an adequate remedy. Such right to an
injunction shall be in addition to, and not in limitation of, any other
rights or remedies the Company may have. Without limiting the generality
of the foregoing, neither party shall oppose any motion the other party
may make for any expedited discovery of hearing in connection with any
alleged breach of this Agreement.
(f) The period of time during which the provisions of
this Agreement shall be in effect shall be extended by the
length of time during which the Executive is in breach
of the terms hereof as determined by any court of
competent jurisdiction on the Company's application
for injunctive relief.
(g) The Executive agrees that the
restrictions contained in this Agreement are material
to the Company and,
but for the Executive's agreement to comply with such
re strictions, the Company would not have entered into
the Merger Agreement.
3. Governing Law; Construction. This Agreement has
been executed and delivered in the State of Connecticut and
its validity, interpretation, performance and enforcement shall
be governed by the internal laws of that state. The
construction and interpretation of this Agreement shall not be
strictly construed against the drafter.
4. Arbitration. (a) Any controversy, dispute or
claim arising out of or relating to this Agreement or the
breach hereof which cannot be settled by mutual agreement (other than
with respect to the matters for which the Compa ny may, but shall not
be required to, seek injunctive re lief) shall be finally settled by
binding arbitration in accordance with the Federal Arbitration Act (or
if not ap plicable, the applicable state arbitration law) as follows:
Any party who is aggrieved shall deliver a notice to the other party
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 arbitra tion rules of Jams/Endispute, modified only as herein
ex pressly provided. After the aforesaid twenty (20) days, either
party, upon ten (10) days notice to the other, 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.
(a) 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.
(b) Except as otherwise provided in this Agreement,
the arbitrator will be authorized to apportion its fees and
expenses and the reasonable attorney's 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, and each party will bear the fees and
expenses of its own attorney.
(c) The parties agree that this Section 4 has been
included to rapidly and inexpensively resolve any disputes
between them with respect to this Agreement, and that this Section shall
be grounds for dismissal of any court action commenced by either party
with respect to this Agreement, other than with respect to matters for
which the Company has sought injunctive relief, and post-arbitration
actions seeking to enforce an arbitration award.
(d) The parties shall keep confidential, and shall not
disclose to any person, 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.
5. Separability. All provisions of this Agreement
are intended to be severable. In the event any provision or
restriction contained herein is held to be invalid or
unenforceable in any respect, in whole or in part, such
finding shall in no way affect the validity or enforce ability of
any other provision of this Agreement. The par ties hereto
further agree that any such invalid or un enforceable provision
shall be deemed modified so that it shall be enforced to the
greatest extent permissible under law, and to the extent that any
court of competent jurisdic tion determines any restriction herein
to be unreasonable in any respect, such court may limit this
Agreement to render it reasonable in the light of the
circumstances in which it was entered into and specifically
enforce this Agreement as limited.
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 deliv ery. All communications hereunder shall be
delivered to the respective parties at the following
addresses:
If to the Executive: Robert M. Davidson
c/o Davidson & Associates, Inc.
19840 Pioneer Avenue
Torrance, California 90503
Telephone: (310) 793-0600
Facsimile: (310) 793-0601
with a copy to: Gibson, Dunn & Crutcher
333 South Grand Avenue
Los Angeles, California
90071-3197
Telephone: (213) 229-7000
Facsimile: (213) 229-7520
Attention: Peter F. Ziegler, Esq.
If to the Company: CUC International Inc.
707 Summer Street
Stamford, Connecticut 06901
Telephone: (203) 324-9261
Facsimile: (203) 348-1982
Attention: Amy N. Lipton, Esq.
with a copy to: Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
Attention: Howard Chatzinoff,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.
7. No Waiver. The failure of any party hereto to
exercise any right, power or remedy provided under this
Agreement or otherwise available in respect hereof at law or
in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any
custom or practice of the parties at variance with the
terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power
or remedy or to demand such compliance.
8. Assignability and Binding Effect. This
Agreement shall be binding upon and inure to the benefit
of the parties and their respective successors. The
obligations of the parties hereto may not be delegated,
and any attempted delegation shall be null and void and
without effect.
IN WITNESS WHEREOF, the undersigned have
executed this Agreement as of the 24th day of July, 1996.
CUC INTERNATIONAL INC.
By:
Name: E. Kirk Shelton
Title: President
ROBERT M. DAVIDSON