EXHIBIT 10.1
REGISTRATION RIGHTS AGREEMENT
AGREEMENT made and entered into this 24th day of July, 1996
(this "Agreement"), among CUC INTERNATIONAL INC., a corporation
organized and existing under the laws of the State of Delaware
("Parent"), and the shareholders named on the signature pages hereto
(the "Shareholders").
W I T N E S E T H :
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WHEREAS, in order to induce DAVIDSON & ASSOCIATES, INC. (the
"Company") to enter into a certain Agreement and Plan of Merger, dated
as of February 19, 1996, among the Company, Parent and STEALTH
ACQUISITION II CORP. (the "Merger Agreement"), Parent and the
Shareholders have agreed to enter into this Agreement with respect to
Parent's common stock, $.01 par value ("Parent Common Stock") to be
received (i) by the Shareholders in the merger (the "Merger") in
exchange for the shares of common stock of the Company beneficially
owned by them on the date hereof and (ii) by certain of the
Shareholders pursuant to the Agreement of Sale, dated the date hereof,
between such Shareholders and Parent with respect to the sale of
certain real property; and
WHEREAS, it is intended by Parent and the Shareholders that
this Agreement shall become effective immediately upon the issuance to
the Shareholders of Parent Common Stock pursuant to the Merger;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, each of Parent and the Shareholders, intending to be
legally bound, hereby agrees as follows:
1. DEFINITIONS. Capitalized terms used but not defined in this
Agreement shall have the meaning ascribed to such terms in the Merger
Agreement.
2. REGISTRATION RIGHTS.
(a) Registration Upon Request. (i) At any time, and from
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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 2,000,000
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 (but
not until there are publicly available financial statements reflecting
at least 30 days of combined operations of Parent and the Company),
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 (A) no Qualified Holder(s) shall be
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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) and (B) Parent shall not be required to effect any registration
if Parent reasonably determines the sale of the Registrable Securities
reasonably likely would cause the Merger not to be accounted for as a
"pooling of interests". 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 Qualifying
Holders, for any reason whatsoever, determine not to proceed with such
registration and (b) the Qualifying Holders do not reimburse Parent
for all Registration Expenses (as hereinafter defined) incurred in
connection with the preparation and filing of such registration
statement.
(ii) It is hereby agreed that (A) if Parent shall have
previously effected a Demand Registration pursuant to this Section
2(a), it shall not be required to effect a subsequent Demand
Registration until a period of at least 120 days shall have elapsed
from the effective date of the registration statement used in
connection with such previous Demand Registration and (B) Parent shall
not be required to effect more than three Demand Registrations pur-
suant to this Section 2(a) during any thirty-six month period during
the Effective Period.
(iii) If any underwritten Demand Registration pursuant
to this Section 2(a) is proposed to be effected by means of the use of
Form S-3 (or any similar short-form registration statement which is a
successor to Form S-3) and the Managing Underwriter (as
hereinafter defined) shall advise Parent in writing that in its
opinion the use of another permitted form is of material importance to
the success of the offering, then such registration shall be effected
by the use of such other permitted form.
(iv) As used in this Agreement, the term "Registrable
Securities" means any and all (i) shares of Parent Common Stock
received by the Qualified Holders in the Merger in exchange for the
shares of common stock of the Company beneficially owned by them on
the date hereof and any shares of Parent Common Stock received by a
Qualified Holder pursuant to the Agreement of Sale, dated the date
hereof, between such Qualified Holder and Parent with respect to the
sale of certain real property and (ii) any other securities issued or
issuable with respect to any shares of Parent Common Stock described
in clause (i) above by way of a stock dividend or stock split or in
connection with a combination, exchange, reorganization,
recapitalization or reclassification of Parent securities, or pursuant
to a merger, consolidation or other similar business combination
transaction involving Parent. Reference in this Section 2(a) to
specified numbers of shares shall be equitably adjusted to reflect any
such occurrences referred to in the preceding sentence.
(v) As to any particular Registrable Securities, such
securities shall cease to constitute Registrable Securities when (a) a
registration statement with respect to the sale of such securities
shall have been declared effective under the Securities Act and such
securities shall have been disposed of in accordance with the methods
contemplated by the registration statement, (b) such securities shall
have been sold in satisfaction of all applicable conditions to the
resale provisions of Rule 144 under the Securities Act (or any
successor provision thereto), (c) such securities shall have been
transferred, new certificates evidencing such securities without
legends restricting further transfer shall have been delivered by
Parent, and subsequent public distribution of such securities shall
neither require registration under the Securities Act nor
qualification (or any similar filing) under any state securities or
"blue sky" law then in effect, or (d) such securities shall have
ceased to be issued and outstanding.
(vi) The term "Qualified Holder(s)" means any
Shareholder and those succeeding to the interest of such holder by
gift or by virtue of the laws of descent and distribution. The term
"Majority Qualified Holders" means a majority in interest of the
Qualified Holders participating in a registration of Registrable
Securities pursuant hereto.
(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 90 days after such request if (A) Parent is, at such time,
working on an underwritten public offering of Parent Common Stock
("Parent Common Stock Offering") and is advised by its managing
underwriter(s) that such 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; provided that, with respect to clause
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(B), Parent gives the Qualified Holders written notice of such
determination; and provided further, however, with respect to both
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clauses (A) and (B), Parent shall not be entitled to postpone such
filing or effectiveness if, within the preceding 12 months, it had
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); provided further, however, that, during the period
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commencing on the date hereof and ending 120 days after the date
hereof, Parent shall not so defer the filing or effectiveness of the
first Demand Registration requested pursuant to this Section 2(a) for
more than 30 days. 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.
(b) Piggyback Registration.
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(i) If at any time Parent proposes to register shares
of Parent Common Stock under the Securities Act for its own account
(other than a registration on Form S-4 or Form S-8, or any successor
or similar forms), in a manner that would permit registration of
Registrable Securities for sale to the public under the Securities
Act, it will each such time promptly give written notice to all
Qualified Holders of its intention to do so, of the registration form
of the Commission that has been selected by Parent and of rights of
Qualified Holders under this Section 2(b) (the "Section 2(b) Notice").
Parent will use its best efforts to include in the proposed
registration all Registrable Securities that Parent is requested in
writing, within 15 days after the Section 2(b) Notice is given, to
register by the Qualified Holders thereof; provided, however, that (i)
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if, at any time after giving written notice of its intention to
register shares of Parent Common Stock and prior to the effective date
of the registration statement filed in connection with such
registration, Parent shall determine for any reason not to register
such equity securities, Parent may, at its election, give written
notice of such determination to all Qualified Holders and, thereupon,
shall be relieved of its obligation to register any Registrable
Securities in connection with such
abandoned registration, without prejudice, however, to the rights of
Qualified Holders under Section 2(a) hereof and (ii) in case of a
determination by Parent to delay registration of Parent Common Stock,
Parent shall be permitted to delay the registration of such
Registrable Securities for the same period as the delay in registering
such Parent Common Stock. No registration effected under this Section
2(b) shall relieve Parent of its obligations to effect a Demand
Registration under Section 2(a) and, notwithstanding anything to the
contrary in Section 2(a), no Qualified Holder shall have the right to
require Parent to register any Registrable Securities pursuant to
Section 2(a) until the later of (A) the completion of the distribution
of the securities offered and registered pursuant to the Section 2(b)
Notice and (B) 90 days after the date each registration statement
effected under this Section 2(b) is declared effective.
(ii) Parent shall pay all Registration Expenses in
connection with each registration of Registrable Securities requested
pursuant to this Section 2(b); provided, however, that Parent shall
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not be required to pay, and the Qualified Holders shall pay,
regardless of whether the registration statement becomes effective,
all fees and out-of-pocket expenses of counsel selected by the
Qualified Holders, all transfer taxes, any fees or disbursements of
the Managing Underwriters and their counsel, participating
underwriters and brokers-dealers and any discounts, commissions or
fees of underwriters, selling brokers and dealers relating to the
distribution of the Registrable Securities pursuant to this Section
2(b).
(iii) If the Managing Underwriter for a registration
pursuant to this Section 2(b) that involves an underwritten offering
shall advise Parent (Parent hereby agreeing to request that such
advice be written) that, in its opinion, the inclusion of the amount
and kind of Registrable Securities to be sold for the account of
Qualified Holders would adversely affect the price per unit Parent
will derive from the offering or otherwise materially and adversely
affect the success of the offering for Parent, then the number and
kind of Registrable Securities to be sold for the account of such
Qualified Holders shall be reduced (and may be reduced to zero) in
accordance with the Managing Underwriter's recommendation to the
minimum extent necessary to eliminate such adverse effect. If the
number of Registrable Securities to be included in any registration is
reduced (but not to zero), the number of such Registrable Securities
included in such registration shall be allocated pro rata among all
requesting Qualified Holders and any other shareholders of Parent who
may hold registration rights ("Other Holders") with respect to shares
of Parent Common Stock ("Other Shares"), on the basis of the relative
number of shares of such Registrable Securities or Other Shares each
such Qualified Holder or Other Holder has requested to be included in
such registration. If, as a result of the proration provisions of
this Section 2(b), any Qualified Holder shall not be entitled to
include all Registrable
Securities in a registration pursuant to this Section 2(b) that such
Qualified Holder has requested be included, such Qualified Holder may
elect to withdraw its Registrable Securities from the registration;
provided, however, that such withdrawal election shall be irrevocable
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and, after making a withdrawal election, a Qualified Holder shall no
longer have any right to include Registrable Securities in the
registration as to which such withdrawal election was made.
(iv) Notwithstanding anything in this Section 2(b) to
the contrary, Qualified Holders shall not have any right to include
their Registrable Securities in any distribution or registration of
Parent Common Stock by Parent, which is a result of a merger,
consolidation, acquisition, exchange offer (or other offering of
securities solely to Parent's existing stockholders),
recapitalization, other reorganization, dividend reinvestment plan,
stock option plan or other employee benefit plan, or any similar
transaction having the same effect.
(c) Registration Procedures. If and whenever Parent is
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required by the provisions of this Agreement to effect or cause the
registration of any Registrable Securities under the Securities Act as
provided in this Agreement, Parent shall, as expeditiously as
practicable:
(i) prepare and file with the Securities and Exchange
Commission (the "Commission"), a registration statement on a form
which is available for the sale of Registrable Securities by the
holders thereof in accordance with the intended methods of
distribution thereof (including such audited financial statements as
the Board of Directors of Parent may, in good faith, deem appropriate)
and reasonably acceptable to the holders of Registrable Securities
participating therein, and use its best efforts to cause such
registration statement to become and remain effective under the
Securities Act for not less than a period of 30 days (unless the
Registrable Securities registered thereunder have been sold or
disposed of prior to the expiration of such 30-day period); provided,
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however, that (A) with respect to any request for registration
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pursuant to Section 2(a) made within the period commencing 60 days
next preceding the end of Parent's fiscal year and ending 90 days
after the end of Parent's fiscal year, if Parent is not then eligible
to effect a registration under the Securities Act by use of Form S-3
(or other comparable short-form registration statement), Parent shall
be entitled to delay such registration until ten days after the
earlier of (1) such time as Parent receives audited financial
statements for such fiscal year and (2) the expiration of 90 days
after the last day of such fiscal year and (B) in no event shall
Parent be required in connection with any request for registration
pursuant to Section 2(a) to cause to be prepared or to release, other
than in the ordinary course of business consistent with past
practices, audited financial statements of Parent;
(ii) prepare and file with the Commission such
amendments, post-effective amendments and supplements to such
registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for
such period of time as is necessary to complete the offering and the
distribution of the securities covered thereby (but, in no event,
longer than 30 days after such registration statement becomes
effective) in each case exclusive of any period during which the
prospectus used in connection with such registration statement shall
not comply with the requirements of Section 10 of the Securities Act;
and to comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such registration
statement during said 30-day period;
(iii) furnish to each seller of Registrable Securities
and each underwriter of the securities being sold by such seller,
(A) such number of copies (including manually executed and conformed
copies) of such registration statement and of each such amendment
thereof and supplement thereto (including all annexes, appendices,
schedules and exhibits), (B) such number of copies of the prospectus
used in connection with such registration statement (including each
preliminary prospectus and any summary prospectus and the final
prospectus filed pursuant to Rule 424(b) under the Securities Act),
and (C) such number of copies of other documents, as such seller and
underwriter may reasonably request in order to facilitate the
disposition of Registrable Securities in accordance with the methods
intended by the sellers thereof;
(iv) use its best efforts to register or qualify the
Registrable Securities covered by such registration statement under
the securities or "blue sky" laws of such jurisdictions as any seller
and each underwriter of the Registrable Securities shall reasonably
request, and do any and all other acts and things which may be
necessary or desirable to enable such seller and underwriter to
consummate the offering and disposition of Registrable Securities in
such jurisdictions; provided, however, Parent shall not, by virtue of
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this Agreement, be required to qualify generally to do business as a
foreign corporation, subject itself to taxation, or consent to general
service of process, in any jurisdiction wherein it would not, but for
the requirements of this Section 2(c), be obligated to be qualified;
(v) use its best efforts to cause the Registrable
Securities covered by such registration statement to be registered
with, or approved by, such other public, governmental or regulatory
authorities as may be necessary to facilitate the disposition of such
Registrable Securities in accordance with the methods of disposition
intended by the sellers thereof;
(vi) notify each seller of any Registrable Securities
covered by such registration statement and the Managing Underwriter
(as such term is defined in Rule 12b-2 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), if any, promptly and,
if requested by any such person, confirm such notification in writing,
(A) when a prospectus or any prospectus supplement has been filed with
the Commission, and, with respect to a registration statement or any
post-effective amendment thereto, when the same has been declared
effective by the Commission, (B) of any request by the Commission for
amendments or supplements to a registration statement or related
prospectus, or for additional information, (C) of the issuance by the
Commission of any stop order or the initiation of any proceedings for
such or a similar purpose (and Parent shall make every reasonable
effort to obtain the withdrawal of any such order at the earliest
practicable moment), (D) of the receipt by Parent of any notification
with respect to the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose (and Parent shall
make every reasonable effort to obtain the withdrawal of any such
suspension at the earliest practicable moment), (E) of the occurrence
of any event which requires the making of any changes to a
registration statement or related prospectus so that such documents
will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading (and Parent shall promptly prepare and
furnish to such seller and Managing Underwriter a reasonable number of
copies of a supplemented or amended prospectus such that, as
thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading), and (F) of
Parent's determination that the filing of a post-effective amendment
to the Registration Statement shall be necessary or appropriate. Each
holder of Registrable Securities agrees that, such holder will, as
expeditiously as possible, notify Parent at any time when a prospectus
relating to a registration statement covering such seller's
Registrable Securities is required to be delivered under the
Securities Act, of the happening of any event of the kind described in
this Section 2(c)(vi) as a result of any information provided by such
seller for inclusion in such prospectus included in such registration
statement and, at the request of Parent, promptly prepare and furnish
to it such information as may be necessary so that, after
incorporation into a supplement or amendment of such prospectus as
thereafter delivered to the purchasers of such securities, the
information provided by such seller shall not include an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements made therein,
in the light of the circumstances under which they were made, not
misleading. Each holder of Registrable Securities shall be deemed to
have agreed by acquisition of such Registrable Securities that upon
the receipt of any notice
from Parent of the occurrence of any event of the kind described in
clause (E) of this Section 2(c)(vi), such holder shall forthwith
discontinue such holder's offer and disposition of Registrable
Securities pursuant to the registration statement covering such
Registrable Securities until such holder shall have received copies of
a supplemented or amended prospectus which is no longer defective as
contemplated by clause (E) of this Section 2(c)(vi) and, if so
directed by Parent, shall deliver to Parent, at Parent's expense, all
copies (other than permanent file copies) of the defective prospectus
covering such Registrable Securities which are then in such holder's
possession. In the event Parent shall provide any notice of the type
referred to in the preceding sentence, the 30-day period mentioned in
Sections 2(c)(i) and 2(c)(ii) shall be extended by the number of days
from and including the date such notice is provided, to and including
the date when each seller of any Registrable Securities covered by
such registration statement shall have received copies of the
corrected prospectus contemplated by clause (E) of this Section
2(c)(vi), plus an additional seven days;
(vii) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, as the same
may hereafter be amended, and make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the
period of twelve months beginning with the first day of Parent's first
fiscal quarter next succeeding the effective date of the registration
statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act;
(viii) use its best efforts to cause all such
Registrable Securities covered by such registration statement to be
listed on each securities exchange on which similar securities issued
by Parent are then listed, if the listing of such Registrable
Securities is then permitted under the rules and regulations of such
exchange;
(ix) engage and provide a transfer agent for all
Registrable Securities covered by such registration statement not
later than the effective date of such registration statement;
(x) in the case of a Demand Registration effected
pursuant to Section 2(a) and at the request of the Majority Qualified
Holders, enter into one or more underwriting agreements (in customary
form and substance and including customary representations and
warranties of Parent, indemnities and contribution) and take all such
other actions as the holders shall reasonably request in order to
expedite or facilitate the disposition of such Registrable Securities
in accordance with the methods of disposition intended by the sellers
thereof; it being hereby acknowledged and agreed that the selection of
any Managing Underwriter(s) shall be made by the Majority Qualified
Holders with the consent of Parent (Parent shall be entitled to
withhold consent in its sole discretion to any
Managing Underwriter(s), except, in the case of any Demand
Registration, consent may not be withheld as to Smith Barney Inc.;
(xi) use its reasonable efforts to obtain an opinion
from counsel to Parent, and a "cold comfort" letter from an
independent certified public accounting firm of national recognition
and standing who have certified Parent's financial statements included
in the registration statement or any amendment thereto, in each case
in form and substance reasonably satisfactory to the Majority
Qualified Holders, and covering such matters of the type customarily
covered by such opinions and "cold comfort" letters as the Majority
Qualified Holders shall reasonably request; and
(xii) permit any holder of Registrable Securities,
which holder, in its reasonable judgment, might be deemed to be a
"control person" of Parent (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), to participate in
the preparation of such registration statement and include therein
material, furnished to Parent in writing which, in the reasonable
judgment of such holder and its counsel, is required to be included
therein.
(d) Registration Expenses. Except as otherwise provided in
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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
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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.
(e) Indemnification; Contribution.
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(i) Parent hereby agrees to indemnify and hold
harmless to the fullest extent permitted by law, each holder (a
"Participating Holder") of Registrable Securities registered pursuant
to Section 2(a) or Section 2(b) hereof, its officers and directors, if
any, and each person, if any, who controls such holder within the
meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act, against all losses, claims, damages, liabilities (or
proceedings in respect thereof) and expenses (under the Securities
Act, common law and otherwise) (collectively, "Claims"), joint or
several, which arise out of or are based upon (A) any untrue statement
or alleged untrue statement of a material fact contained in any
registration statement, prospectus, preliminary prospectus, any
amendment or supplement thereto or any document incorporated by
reference or in any filing made in connection with the registration or
qualification of the offering under "blue sky" or other securities
laws of jurisdictions in which the Participating Holder's Registrable
Securities are offered (collectively, "Security Filings"), or any
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading,
and (B) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus, if used prior to the
effective date of such registration statement (unless such statement
is corrected in the final prospectus and Parent has previously
furnished copies thereof to any Participating Holder seeking such
indemnification and to the underwriters of the registration in
question and the Participating Holder and/or the underwriters shall
have failed to deliver such final prospectus to the purchaser of
securities), or contained in the final prospectus (as amended or
supplemented if Parent shall have filed with the Commission any
amendment thereof or supplement thereto) if used within the period
during which Parent is required to keep the registration statement to
which such prospectus relates current, or the omission or alleged
omission to state therein a material fact necessary in order to make
the statements therein in light of the circumstances under which they
were made, not misleading; and Parent shall, and it hereby agrees to,
reimburse such holders for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any
such Claim provided, however, that such indemnification shall not
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extend to any Claims which are caused by any untrue statement or
alleged untrue statement contained in, or by any omission
or alleged omission from, information furnished in writing to Parent
by such Participating holder specifically for use in any such Security
Filing.
(ii) In the case of an underwritten offering in which
the registration statement covers Registrable Securities, Parent
agrees to enter into an underwriting agreement in customary form and
substance with such underwriters and to indemnify the underwriters,
their officers and directors, if any, and each person, if any, who
controls such underwriters within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act, to the same extent
as provided in the preceding paragraph with respect to the
indemnification of the holders of Registrable Securities; provided,
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however, Parent shall not be required to indemnify any such
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underwriter, or any officer or director of such underwriter or any
person who controls such underwriter within the meaning of Section 15
of the Securities Act and Section 20 of the Exchange Act, to the
extent that the loss, claim, damage, liability (or proceedings in
respect thereof) or expense for which indemnification is sought
results from such underwriter's failure to deliver or otherwise
provide a copy of the final prospectus to the person asserting an
untrue statement or omission or alleged untrue statement or omission
at or prior to the written confirmation of the sale of securities to
such person, if such statement or omission was in fact corrected in
such final prospectus.
(iii) Each Participating Holder shall furnish to
Parent in writing such information regarding such holder and the
intended method of distribution as shall be reasonably requested by
Parent and as required by law or the Commission for use in any
Security Filing (and Parent may exclude from registration the
Registrable Securities of any such Participating Holder if such holder
fails to furnish such information with a reasonable time after
receiving such request) and hereby indemnifies jointly and severally,
to the fullest extent permitted by law, Parent, its officers and
directors and each person, if any, who controls Parent within the
meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act, against any Claims resulting from any untrue statement
or alleged untrue statement of a material fact or any omission or
alleged omission of a material fact required to be stated or necessary
to make the statements in the registration statement or prospectus, or
any amendment thereof or supplement thereto, not misleading; provided,
--------
however, each such holder shall be liable hereunder if and only to
-------
the extent that any such Claim arises out of or is based upon an
untrue statement, or alleged untrue statement or omission or alleged
omission, made in reliance upon and in conformity with information
pertaining to such holder, which is requested by Parent and furnished
in writing to Parent by such holder specifically for use in any such
Security Filing.
(iv) In the case of an underwritten offering of
Registrable Securities, each Participating Holder shall enter into an
underwriting agreement in customary form and
substance with such underwriters, and agree to indemnify such
underwriters, their officers and directors, if any, and each person,
if any, who controls such underwriters within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act, to the
same extent as provided in the preceding paragraph with respect to
indemnification by such holder to Parent, but subject to the same
limitation as provided in Section 2(e)(ii) with respect to indem-
nification by Parent of such underwriters, officers, directors and
control persons.
(v) Any person seeking indemnification under the
provisions of this Section 2(e) shall, promptly after receipt by such
person of notice of the commencement of any action, suit, claim or
proceeding, notify each party against whom indemnification is to be
sought in writing of the commencement thereof; provided, however, the
-------- -------
failure so to notify an indemnifying party shall not relieve the
indemnifying party from any liability which it may have under this
Section 2(e) (except to the extent that it has been prejudiced in any
material respect by such failure) or from any liability which the
indemnifying party may otherwise have. In case any such action, suit,
claim or proceeding is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the indem-
nifying party shall be entitled to participate therein and, to the
extent it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party. Notwithstanding
the foregoing, the indemnified party shall have the right to employ
its own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless
(A) the employment of such counsel shall have been authorized in
writing by the indemnifying party in connection with the defense of
such suit, action, claim or proceeding, (B) the indemnifying party
shall not have employed counsel (reasonably satisfactory to the
indemnified party) to take charge of the defense of such action, suit,
claim or proceeding within a reasonable time after notice of
commencement of the action, suit, claim or proceeding, or (C) such
indemnified party shall have reasonably concluded that there may be
defenses available to it which are different from or additional to
those available to the indemnifying party which, if the indemnifying
party and the indemnified party were to be represented by the same
counsel, could result in a conflict of interest for such counsel or
materially prejudice the prosecution of the defenses available to such
indemnified party. If any of the events specified in clauses (B) or
(C) of the preceding sentence shall have occurred or shall otherwise
be applicable, then the fees and expenses of one counsel or firm of
counsel selected by a majority in interest of the indemnified parties
shall be borne by the indemnifying party. If, in any case, the
indemnified party employs separate counsel, the indemnifying party
shall not have the right to direct the defense of such action, suit,
claim or proceeding on behalf of the indemnified party. Anything in
this paragraph to the contrary notwithstanding, an indemnifying party
shall not be liable for the settlement of any action, suit, claim or
proceeding effected without
its prior written consent (which consent in the case of an action,
suit, claim or proceeding exclusively seeking monetary relief shall
not be unreasonably withheld). Such indemnification shall remain in
full force and effect irrespective of any investigation made by or on
behalf of an indemnified party.
(vi) If the indemnification from the indemnifying
party as provided in this Section 2(e) is unavailable or is otherwise
insufficient to hold harmless an indemnified party in respect of any
losses, claims, damages, liabilities or expenses referred to therein,
then the indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages, liabilities or expenses in such proportion as is appropriate
to reflect the relative benefits received by and the relative fault of
the indemnifying party and indemnified parties in connection with the
actions which resulted in such losses, claims, damages, liabilities or
expenses. The relative fault of such indemnifying party shall be
determined by reference to, among other things, whether any action in
question, including any untrue (or alleged untrue) statement of a
material fact or omission (or alleged omission) to state a material
fact, has been made, or relates to information supplied by such
indemnifying party or such indemnified party, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party
as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the
limitations set forth in Section 2(e)(v) hereof, any legal or other
fees or expenses reasonably incurred by such party in connection with
any such investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 2(c) were
determined by pro rata allocation or by any other method of allocation
other than as described above. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
If, however, indemnification is available under this Section
2(e), the indemnifying parties shall indemnify each indemnified party
to the fullest extent provided in Sections 2(e)(i) through 2(e)(v)
hereof without regard to the relative fault of said indemnifying party
or indemnified party or any other equitable consideration.
(f) Certain Requirements in Connection with Registration
----------------------------------------------------
Rights. In the case of a Demand Registration pursuant to Section
------
2(a), if the holders of securities initially requesting such Demand
Registration have determined to enter into one or more underwriting
agreements in connection therewith, all shares constituting
Registrable Securities to be included in such Demand Registration
shall be subject to such underwriting agreements and
no person may participate in such Demand Registration unless such
person agrees to sell his or its securities on the basis provided in
the underwriting arrangements and completes all questionnaires, powers
of attorney, indemnities, underwriting agreements, "lock up" letters
and other documents which are reasonable and customary under the
circumstances.
3. RULE 144.
Parent shall comply with the requirements of Rule 144(c)
under the Securities Act, as such Rule may be amended from time to
time (or any similar rule or regulation hereafter adopted by the
Commission), regarding the availability of current public information
to the extent required to enable any Qualified Holder to sell
Registrable Securities without registration under the Securities Act
pursuant to Rule 144 (or any similar rule or regulation).
4. NOTICES.
Except as otherwise provided below, whenever it is provided
in this Agreement that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served
upon any of the parties hereto, or whenever any of the parties hereto,
desires to provide to or serve upon any person any other communication
with respect to this Agreement, each such notice, demand, request,
consent, approval, declaration or other communication shall be in
writing and either shall be delivered in person with receipt
acknowledged or sent by registered or certified mail (return receipt
requested, postage prepaid), or by overnight mail, courier, or
delivery service or by telecopy and confirmed by telecopy addressed as
follows:
(a) If to Parent, to:
----------------
CUC International Inc.
707 Summer Street
Stamford, Connecticut 06901
Telephone: (203) 324-9261
Facsimile: (203) 977-8501
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.
(b) If to the Shareholders, to:
--------------------------
c/o: Robert M. Davidson and
Janice G. Davidson
c/o Davidson & Associates, Inc.
19840 Pioneer Avenue
Torrance, CA 90503
Tel: (310) 793-0600
Facsimile: (310) 793-0601
with a copy to: Gibson, Dunn & Crutcher
333 South Grand Avenue
Los Angeles, California 90071
Telephone (213) 229-7000
Facsimile: (213) 229-7520
Attention: Peter F. Ziegler, Esq.
or at such other address as may be substituted by notice delivered as
provided herein. The furnishing of any notice required hereunder may
be waived in writing by the party entitled to receive such notice.
Every notice, demand, request, consent, approval, declaration or other
communication hereunder shall be deemed to have been duly furnished or
served on (i) the date on which personally delivered, with receipt
acknowledged, (ii) the date on which telecopied and confirmed by
telecopy answerback, (iii) the next business day if delivered by
overnight or express mail, courier or delivery service, or (iv) three
business days after the same shall have been deposited in the United
States mail, as the case may be. Failure or delay in delivering
copies of any notice, demand, request, consent, approval, declaration
or other communication to the persons designated above to receive
copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other
communication.
5. ENTIRE AGREEMENT.
This Agreement represents the entire agreement and
understanding among the parties hereto with respect to the subject
matter hereof and supersedes any and all prior oral and written
agreements, arrangements and understandings among the parties hereto
with respect to such subject matter; and can be amended, supplemented
or changed, and any provision hereof can be waived, only by a written
instrument making specific reference to this Agreement signed by
Parent on the one hand, and the holders of a majority of the
Registrable Securities on the other hand.
6. SUCCESSORS.
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors.
7. PARAGRAPH HEADINGS.
The paragraph headings contained in this Agreement are for
general reference purposes only and shall not affect in any manner the
meaning, interpretation or construction of the terms or other
provisions of this Agreement.
8. APPLICABLE LAW.
This Agreement shall be governed by, construed and enforced
in accordance with the laws of the State of New York, applicable to
contracts to be made, executed, delivered and performed wholly within
such state and, in any case, without regard to the conflicts of law
principles of such state.
9. SEVERABILITY.
If at any time subsequent to the date hereof, any provision
of this Agreement shall be held by any court of competent jurisdiction
to be illegal, void or unenforceable, such provision shall be of no
force and effect, but the illegality or unenforceability of such
provision shall have no effect upon and shall not impair the
enforceability of any other provision of this Agreement.
10. SPECIFIC PERFORMANCE.
Parent acknowledges that it would be impossible to determine the
amount of damages that would result from any breach by it of any of
the provisions of this Agreement and that the remedy at law for any
breach, or threatened breach, of any of such provisions would likely
be inadequate and, accordingly, agrees that each Shareholder shall, in
addition to any other rights or remedies which it may have, be
entitled to seek such equitable and injunctive relief as may be
available from any court of competent jurisdiction to compel specific
performance of, or restrain Parent from violating any of, such
provisions. In connection with any action or proceeding for
injunctive relief, Parent hereby waives the claim or defense that a
remedy at law alone is adequate and agrees, to the maximum extent
permitted by law, to have such provision of this Agreement
specifically enforced against it, without the necessity of posting
bond or other security against it, and consents to the entry of
injunctive relief against it enjoining or restraining any breach or
threatened breach of this Agreement.
11. ARBITRATION.
Any controversy, dispute or claim arising out of or relating
to this Agreement or the breach hereof which cannot be settled by
mutual agreement shall be finally settled by arbitration as follows:
Any party who is aggrieved shall deliver a notice to other party
setting forth the specific points in dispute. Any points remaining in
dispute twenty (20) days after the giving of such notice shall 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 (who shall be an attorney
expert in the federal securities laws) appointed in accordance with
JAMS/Endispute's Arbitration Rules, modified only as herein expressly
provided. The arbitrator may enter a default decision against any
party who fails to participate in the arbitration proceedings. 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. The arbitrator will be
authorized to apportion its fees and expenses and the reasonable
attorney's fees and expenses of Parent and the Qualified Holder(s) as
the arbitrator deems appropriate. In the absence of any such
apportionment, the fees and expense of the arbitrator will be borne
equally by each party, and each party will bear the fees and expenses
of its own attorney. The parties agree that this clause has been
included to rapidly and inexpensively resolve any disputes between
them with respect to this Agreement, and that this clause shall be
grounds for dismissal of any court action commenced by either party
with respect to this Agreement, other than post-arbitration actions
seeking to enforce an arbitration award. 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. Notwithstanding the provisions of this Section 11, nothing
contained herein shall prevent either party from seeking specific
performance of the provisions of this Agreement pursuant to Section 10
in any court having jurisdiction over any matter in dispute under this
Agreement.
12. NO WAIVER.
The failure of any party at any time or times to require
performance of any provision hereof shall not affect the right at a
later time to enforce the same. No waiver by any party of any
condition, and no breach of any provision, term, covenant,
representation or warranty contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to
be construed as a further or continuing waiver of any such condition
or of the breach of any other provision, term, covenant,
representation or warranty of this Agreement.
13. COUNTERPARTS.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together
shall constitute but one and the same original instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed and delivered by their respective officers thereunto
duly authorized as of the date first above written.
CUC INTERNATIONAL INC.
By: /s/ E. Kirk Shelton
---------------------------
Name: E. Kirk Shelton
Title: President
ROBERT M. DAVIDSON By: /s/ Robert M. Davidson
---------------------------
CHARITABLE REMAINDER TRUST Robert M. Davidson
By: /s/ Robert M. Davidson By: /s/ Janice G. Davidson
--------------------------- ---------------------------
Robert M. Davidson, Trustee Janice G. Davidson
JANICE G. DAVIDSON ELIZABETH A. DAVIDSON TRUST
CHARITABLE REMAINDER TRUST
By: /s/ Robert M. Davidson
---------------------------
By: /s/ Janice G. Davidson Robert M. Davidson, Co-Trustee
---------------------------
Janice G. Davidson, Trustee
By: /s/ Janice G. Davidson
---------------------------
Janice G. Davidson, Co-Trustee
JOHN R. DAVIDSON TRUST EMILIE A. DAVIDSON TRUST
By: /s/ Robert M. Davidson By: /s/ Robert M. Davidson
---------------------------- ---------------------------
Robert M. Davidson, Co-Trustee Robert M. Davidson, Co-Trustee
By: /s/ Janice G. Davidson By: /s/ Janice G. Davidson
---------------------------- ---------------------------
Janice G. Davidson, Co-Trustee Janice G. Davidson, Co-Trustee
NYFS01...:\01\39801\0023\1547\AGR0255X.29F