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AS ADOPTED ON JUNE 11, 1997
1997 STOCK OPTION PLAN OF
CUC INTERNATIONAL INC.
1. PURPOSES OF THE PLAN. This stock option plan (the "Plan")
is designed to provide an incentive to key employees,
including officers and directors who are employees, of CUC
International Inc., a Delaware corporation (the "Company"),
and its present and future Subsidiaries, as defined in
Paragraph 16, and to offer an additional inducement in
obtaining the services of such individuals. The Plan
provides for the grant of "incentive stock options," within
the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), and "non-qualified stock
options."
2. STOCK SUBJECT TO THE PLAN; LIMITATION ON OPTIONS GRANTED TO
ANY ONE OPTIONEE. Options may be granted under the Plan to
purchase in the aggregate not more than 10,000,000 shares of
Common Stock, $.01 par value per share, of the Company
("Common Stock"), which shares may, in the discretion of the
Board of Directors, consist either in whole or in part of
authorized but unissued shares of Common Stock or shares of
Common Stock held in the treasury of the Company. The
Company shall at all times during the term of the Plan
reserve and keep available such number of shares of Common
Stock as will be sufficient to satisfy the requirements of
the Plan. Subject to the provision of Paragraph 12, any
shares subject to an option which for any reason expires, is
canceled or is terminated unexercised as to such shares
shall again become available for option under the Plan.
Notwithstanding anything else to the contrary which may be
set forth herein, no individual optionee shall be granted,
in any five-year period, options under and pursuant to the
Plan to purchase more than 4,500,000 shares of Common Stock.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered
by a Committee (the "Committee") consisting of not less than
two members of the Board of Directors, each of whom shall be
a Non-Employee Director of the Company, within the meaning
of Rule 16b-3 or its successors under the Securities
Exchange Act of 1934, as amended ("1934 Act"), and also
shall be an Outside Director of the Company, within the
meaning of Treasury Regulation Section 1.162-27(e)(3). A
majority of the members shall constitute a quorum, and the
acts of a majority of the members present at any meeting at
which a quorum is present, and any acts approved in writing
by all members without a meeting, shall be the acts of the
Committee.
Subject to the express provisions of the Plan, the Committee
shall have the authority, in its sole discretion: to
determine the individuals who shall receive options; the
times when they shall receive them; whether an incentive
and/or a non-qualified stock option shall be granted; the
number of shares to be subject to each option; the term of
each option; the date each option shall become exercisable;
whether an option shall be exercisable in whole, in part or
in installments, and if in installments, the number of
shares to be subject to each installment; the date each
installment shall become exercisable and the term of each
installment; to accelerate the date of exercise of any
installment; whether shares may be issued on exercise of an
option as partly paid, and, if so, the dates when future
installments of the exercise price shall become due and the
amounts of each installments; the exercise price; the form
of payment upon exercise; to require that the individual
remain employed in some capacity with the Company or its
Subsidiaries for a period of time from and after the date
the option is granted to him; the amount necessary to
satisfy the Company's withholding obligation; to restrict
the sale or other disposition of the shares of Common Stock
acquired upon the exercise of an option and to waive any
such restriction; to construe the respective option
agreements and the Plan; to prescribe, amend and rescind
rules and regulations relating to the Plan; to make all
other determinations necessary or advisable for
administering the Plan; and, with the consent of the
optionee, to cancel or modify an option, provided such
option as modified does not violate the terms of the Plan.
The determinations of the Committee on the matters referred
to in this Paragraph 3 shall be conclusive.
No member of the Committee shall be liable for anything
whatsoever in connection with the administration of the Plan
except such member's own willful misconduct. Under no
circumstances shall any member of the Committee be liable
for any act or omission of any other member of the
Committee. In the performance of its functions with respect
to the Plan, the Committee shall be entitled to rely upon
information and advice furnished by the Company's officers,
the Company's accountants, the Company's counsel and any
other party the Committee deems necessary and no member of
the Committee shall be liable for any action taken or not
taken in reliance upon any such advice.
4. ELIGIBILITY. The Committee may, consistent with the
purposes of the Plan, grant options from time to time,
within 10 years from the date of adoption of the Plan by the
Executive Committee of the Board of Directors, to key
employees (including officers and directors who are
employees) of the Company or any of its Subsidiaries and
covering such number of shares of Common Stock as it may
determine; provided, however, that the aggregate market
value (determined at the time the stock option is granted)
of the shares for which any eligible person may be granted
incentive stock options under the Plan or any other plan of
the Company, or of a Subsidiary of the Company, which are
exercisable for the first time by such optionee during any
calendar year shall not exceed $100,000. Any option (or the
portion thereof) granted in excess of such amount shall be
treated as a non-qualified stock option.
5. EXERCISE PRICE. The exercise price of the shares of Common
Stock under each option shall be determined by the
Committee, but in no event shall such purchase price be less
than 100% of the fair market value of the Common Stock on
the date of grant; provided, however, that if, at the time
an option is granted, the optionee owns (or is deemed to
own) stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or of
any of its Subsidiaries, the exercise price shall not be
less than 110% of the fair market value of the Common Stock
subject to the option at the time of the granting of such
option. The fair market value of the Common Stock on any
day shall be (a) if the principal market for the Common
Stock is a national securities exchange, the closing sale
price of the Common Stock on such day as reported by such
exchange or on a consolidated tape reflecting transactions
on such exchange, (b) if the principal market for the Common
Stock is not a national securities exchange and the Common
Stock is quoted on the National Association of Securities
Dealers Automated Quotations System ("NASDAQ"), and (i) if
the Common Stock is quoted on the NASDAQ National Market
System, the closing sale price of the Common Stock on such
day, or (ii) if the Common Stock is not quoted on the NASDAQ
National Market System, the average between the highest bid
and the lowest asked prices for the Common Stock on such day
on NASDAQ, or (c) if the principal market for the Common
Stock is not a national securities exchange and the Common
Stock is not quoted on NASDAQ, the average between the
highest bid and lowest asked prices for the Common Stock on
such day as reported by National Quotation Bureau,
Incorporated; provided that if clauses (a), (b) and (c) of
this Paragraph are all inapplicable, or if no trades have
been made or no quotes are available for such day, the fair
market value of the Common Stock shall be determined by the
Committee by any method consistent with applicable
regulations adopted by the Treasury Department relating to
stock options. The determination of the Committee shall be
conclusive in determining the fair market value of the
stock.
6. TERM OF OPTION. The term of each option granted pursuant to
the Plan shall be such term as is established by the
Committee, in its sole discretion, at the time such option
is granted; provided, however, that the term of each
incentive stock option granted pursuant to the Plan shall be
for a period not exceeding 10 years from the date of
granting thereof, and further, provided, that if, at the
time an option is granted, the optionee owns (or is deemed
to own) stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company, or of
any of its Subsidiaries, the term of the incentive stock
option shall be for a period not exceeding five years.
Options shall be subject to earlier termination as
hereinafter provided.
7. EXERCISE OF OPTION. An option (or any part or installment
thereof) shall be exercised by giving written notice to the
Company at its principal office (at present 707 Summer
Street, Stamford, Connecticut 06901), stating whether an
incentive stock option or a non-qualified stock option is
being exercised, specifying the number of shares as to which
such option is being exercised and accompanied by payment in
full of the aggregate exercise price therefor (or the amount
due on exercise if the Stock Option Contract permits
installment payments) (i) in cash or by certified check,
(ii) with previously acquired shares of Common Stock having
an aggregate fair market value, on the date of exercise,
equal to the aggregate exercise price of all options being
exercised, (iii), if approved by the Committee, by
requesting the Company withhold from the shares of Common
Stock issuable upon exercise of such options that number of
shares which have an aggregate fair market value, on the
date of exercise, equal to the aggregate exercise price of
all or any portion of the options being exercised, or (iv)
any combination thereof.
The Company shall have the right to deduct and withhold from
any cash otherwise payable to an optionee, or require that
an optionee make arrangements satisfactory to the Company
for payment of (including, without limitation, by
withholding shares of Common Stock otherwise issuable upon
exercise of options), such amounts as the Company shall
determine for the purpose of satisfying its liability to
withhold Federal, state or local income or FICA taxes
incurred by reason of the grant or exercise of an option.
Certificates representing the shares purchased shall be
issued as promptly as practicable, provided that the Company
may postpone issuing certificates for such shares for such
time as the Company, in its sole discretion, may deem
necessary or desirable in order to enable it to comply with
any requirements of the Securities Act of 1933, as amended
("Securities Act"), the 1934 Act, any Rules or Regulations
of the Securities and Exchange Commission promulgated under
either of the foregoing acts, the listing requirements of
any securities exchange on which the Company's Common Stock
may now or hereafter be listed, or any applicable laws of
any jurisdiction relating to the authorization, issuance or
sale of securities. With respect to persons subject to
Section 16 of the 1934 Act, the Company reserves the right
to defer distribution of share certificates issuable upon
exercise of an option by such person until at least six
months have elapsed from the date of grant of the option.
The holder of an option shall not have the rights of a
stockholder with respect to the shares covered by his option
until the date of issuance of a stock certificate to him for
such shares; provided, however, that until such stock
certificate is issued, any option holder using previously
acquired shares in payment of an option exercise price shall
have the rights of a shareholder with respect to such
previously acquired shares. In no case may a fraction of a
share be purchased or issued under the Plan.
8. TERMINATION OF EMPLOYMENT. Any optionee whose employment or
relationship with the Company (and its Subsidiaries) has
terminated for any reason other than death or permanent and
total disability (as defined in Section 22(e) (3) of the
Code) may exercise his option, to the extent exercisable on
the date of such termination, at any time within four months
after the date of termination, unless otherwise permitted by
the Committee, but in no event after the expiration of the
term of the option. Options granted to an employee under
the Plan shall not be affected by any changes in the status
of an optionee so long as he continues to be employed in
some capacity with the Company, or any of its Subsidiaries,
or a Constituent Corporation, as defined in Paragraph 16,
unless the Committee otherwise permits.
Nothing in the Plan or in any option granted under the Plan
shall confer on any individual any right to continue in the
employ of the Company or any of its Subsidiaries, or
interfere in any way with the right of the Company or any of
its Subsidiaries to terminate the employee's employment at
any time for any reason whatsoever without liability to the
Company or any of its Subsidiaries.
9. DEATH OR DISABILITY OF AN OPTIONEE. If an optionee dies
while he is employed by the Company or any of its
Subsidiaries, or within three months after the termination
of his employment, or if the optionee's employment has
terminated by reason of a permanent and total disability (as
defined in Section 22(e)(3) of the Code), options granted
under this Plan shall become immediately exercisable by his
executor, administrator or other person at the time entitled
by law to his rights under the option.
10. STOCK OPTION CONTRACTS. Each option shall be evidenced by
an appropriate Stock Option Contract, and shall contain such
terms and conditions not inconsistent herewith as may be
determined by the Committee, and which may provide, among
other things, (a) that in the event of the exercise of such
option, unless the shares of Common Stock received upon such
exercise shall have been registered under an effective
registration statement under the Securities Act, such shares
will be acquired for investment and not with a view to
distribution thereof, and that such shares may not be sold
except in compliance with the applicable provisions of the
Securities Act, and (b) that in the event of any disposition
of the shares of Common Stock acquired upon the exercise of
an incentive stock option within two years from the date of
grant of the option or one year from the date of issuance of
such shares to him (a "Disqualifying Disposition") the
optionee will notify the Company thereof in writing within
30 days after such disposition, pay the Company, on demand,
in cash an amount necessary to satisfy its obligation, if
any, to withhold any Federal, state or local income taxes or
other taxes by reason of such Disqualifying Disposition and
provide the Company, on demand, with such information as the
Company shall reasonably request to determine such
obligation.
11. ADJUSTMENTS UPON CHANGES IN COMMON STOCK. The number and
kind of shares reserved for issuance hereunder may be
equitably adjusted, in the discretion of the Committee, in
the event of a stock split, stock dividend,
recapitalization, reorganization, merger, consolidation,
extraordinary dividend, split-up, spin-off, combination,
stock repurchase, exchange of shares, warrants or rights
offering to purchase stock at a price substantially below
fair market value or other similar corporate event affecting
the stock, in order to preserve the benefits intended to be
made available under the Plan. In the event of any of the
foregoing, the number and kind of shares subject to any
outstanding option granted pursuant to the Plan and the
exercise price of any such option shall be equitably
adjusted (including by payment of cash to the holder of such
option) in the discretion of the Committee in order to
preserve the benefits or potential benefits intended to be
made available to the holder of an option granted pursuant
to the Plan. The determination of the Committee as to what
adjustments shall be made, and the extent thereof, shall be
final. Unless otherwise determined by the Committee, such
adjustments shall be subject to the same vesting schedule
and restrictions to which the underlying option is subject.
No fractional shares of Company Stock shall be reserved or
authorized or made subject to any outstanding option by any
such adjustment.
12. AMENDMENTS AND TERMINATION OF THE PLAN. The Plan was
adopted by the Executive Committee of the Board of Directors
on April 22, 1997. No stock options may be granted under
the Plan after April 22, 2007. The Board of Directors,
without further approval of the Company's stockholders, may
at any time suspend or terminate the Plan, in whole or in
part, or amend it from time to time in such respects as it
may deem advisable, including, without limitation, in order
that incentive stock options granted hereunder meet the
requirements for "incentive stock options" under the Code,
or any comparable provisions thereafter enacted and conform
to any change in applicable law or to regulations or rulings
of administrative agencies. No termination, suspension or
amendment of the Plan shall, without the consent of the
holder of an existing option affected thereby, adversely
affect his rights under such option.
13. TRANSFERABILITY OF OPTIONS. Options granted under the Plan
shall be transferable by the optionee only pursuant to the
following methods, and, with respect to incentive stock
options, only to the extent permitted under the Code for
options to qualify as incentive stock options: by will or
the laws of descent and distribution; pursuant to a domestic
relations order, as defined in the Code or Title I of the
Employee Retirement Income Security Act, or the rules
thereunder; or as a gift to family members of the optionee,
trusts for the benefit of family members of the optionee or
charities or other not-for-profit organizations. Except to
the extent provided in this Paragraph, Paragraph 9 and
Paragraph 14, options may not be assigned, transferred,
pledged, hypothecated or disposed of in any way (whether by
operation of law or otherwise), shall not be subject to
execution, attachment or similar process, and may be
exercised during the lifetime of the holder thereof only by
such holder.
14. DESIGNATION OF BENEFICIARY. The optionee may designate in
writing on forms prescribed by and filed with the Committee
prior to the optionee's death a beneficiary or beneficiaries
to receive all or part of the options to be delivered to the
optionee under this Plan in the event of the death of the
optionee at any time on forms prescribed by and filed with
the Committee. In the event of the optionee's death, the
options to be delivered to the optionee under this Plan with
respect to which a designation of a beneficiary has been
made (to the extent such designation is valid and
enforceable under applicable law) shall be delivered, in
accordance with the Plan, to the designated beneficiary or
beneficiaries. Any options to be delivered as to which a
designation has not been made shall be delivered to the
optionee's estate. If there is any question as to the legal
right of any beneficiary to receive delivery of the Plan
pursuant to the Plan, the options (and shares issuable upon
the exercise thereof) may be delivered in the sole
discretion of the Committee to the estate of the optionee,
in which event neither the Company nor any Subsidiary shall
have any further liability to anyone with respect to such
options.
15. SUBSTITUTIONS AND ASSUMPTIONS OF OPTIONS OF CERTAIN
CONSTITUENT CORPORATIONS. Anything in this Plan to the
contrary notwithstanding, the Board of Directors may,
without further approval by the stockholders, substitute new
options for prior options of a Constituent Corporation or
assume the prior options of such Constituent Corporation.
16. DEFINITIONS.
(a) Subsidiary. The term "Subsidiary" shall have the
same definition as "subsidiary corporation" in Section
424(f) of the Code.
(b) Parent. The term "Parent" shall have the same
definition as "parent corporation" in Section 424(e) of
the Code.
(c) Constituent Corporation. The term "Constituent
Corporation" shall mean any corporation which engages
with the Company or any of its Subsidiaries in a
transaction to which Section 424(a) of the Code applies
(or would apply if the option assumed or substituted
were an incentive stock option), or any Parent or any
Subsidiary of such corporation.
17. STOCKHOLDERS' APPROVAL. The Plan shall be subject to
approval by a majority of the Company's outstanding stock
entitled to vote thereon at the next annual or special
meeting of its stockholders to be held to consider such
approval and no options granted hereunder may be exercised
prior to such approval, provided that the date of grant of
any options granted hereunder shall be determined as if the
Plan had not been subject to such approval.
18. GOVERNING LAW. The Plan and all rights hereunder shall be
construed in accordance with and governed by the internal
laws of the State of Delaware.
19. COMPLIANCE WITH RULE 16b-3. With respect to optionees
subject to Section 16 of the 1934 Act, transactions under
the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934
Act. To the extent any provision of the Plan or action by
the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed
advisable by the Committee.