Exhibit 10.3
AGREEMENT
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This Agreement made effective as of February 1, 1996 by and between CUC
INTERNATIONAL INC. (the "Company"), a Delaware corporation, and Christopher
McLeod (the "Executive").
WHEREAS the Executive and the Company are parties to a certain Agreement
dated February 1, 1987 as amended on November 1, 1991 (the "Agreement"); and
WHEREAS the Executive and the Company wish to make certain further
amendments to the Agreement.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is hereby agreed as follows: 1. Section IX of the Agreement is
hereby amended to read as follows:
SECTION IX
OTHER DUTIES OF THE EXECUTIVE DURING AND
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AFTER THE PERIOD OF EMPLOYMENT
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A. The Executive will with reasonable notice during or after the Period of
Employment furnish information as may be in his
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possession and fully cooperate with the Company and its affiliates as may be
requested in connection with any claims or legal action in which the Company or
any of its affiliates is or may become a party.
B. The Executive recognizes and acknowledges that all information
pertaining to this Agreement or to the affairs; business; results of operations;
accounting methods, practices and procedures; members; acquisition candidates;
financial condition; clients; customers or other relationships of the Company or
any of its affiliates ("Information") is confidential and is a unique and
valuable asset of the Company or any of its affiliates. Access to and knowledge
of certain of the Information is essential to the performance of the Executive's
duties under this Agreement. The Executive will not during the Period of
Employment or thereafter, except to the extent reasonably necessary in
performance of his duties under this Agreement, give to any person, firm,
association, corporation, or governmental 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 organization other than the
Company or any of its affiliates. The Executive will also use his best efforts
to prevent the disclosure of this Information by others. All records, memoranda,
etc. relating to the business of the Company or its affiliates whether made by
the Executive or otherwise coming into his
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possession are confidential and will remain the property of the Company or its
affiliates.
C. During the Period of Employment and for a twelve (12) month period
thereafter, irrespective of the cause, manner or time of any termination, the
Executive will not use his status with the Company or any of its affiliates to
obtain loans, goods or services from another organization on terms that would
not be available to him in the absence of his relationship to the Company or any
of its affiliates. For such period, the Executive will not make any statements
or perform any acts intended to or which may have the effect of advancing the
interest of any existing or prospective competitors of the Company or any of its
affiliates or in any way injuring the interests of the Company or any of its
affiliates. For such period, the Executive, without prior express written
approval by the Board of Directors of the Company, will not directly or
indirectly own or hold proprietary interest in or be employed by or receive
compensation from any party which competes in any way or manner with the
business of the Company or any of its affiliates, as such business or businesses
may be conducted from time to time. The Executive acknowledges that the
Company's and its affiliates' businesses are conducted nationally and
internationally and agrees that the provisions in the foregoing sentence shall
operate throughout the United States and the World. For such period, the
Executive, without express prior written approval from the Board of Directors,
will not solicit any members of the then current clients
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of the Company or any of its affiliates for any existing business of the Company
or any of its affiliates 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. For such period, the Executive will not
meddle with the Employee's or affairs of the Company or any of its affiliates or
solicit or induce any person who is an employee of the Company or any of its
affiliates to terminate any relationship such person may have with the Company
or any of its affiliates, 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. 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 or ownership of more that 5% of any class of equity interest in a
publicly-held company and the term "affiliate" shall include without limitation
all subsidiaries and licensees of the Company. 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. The Company's obligation to make any payments
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under the terms of this Agreement will cease upon any violation of the preceding
paragraphs.
D. 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 or hearing in connection with any alleged breach of this Section IX.
E. The period of time during which the provisions of this Section IX 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.
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F. The Executive agrees that the restrictions contained in this Section IX
are an essential element of the compensation the Executive is granted hereunder
and the Executive's right to retain certain stock options granted prior to the
date of this Agreement and but for the Executive's agreement to comply with such
restrictions, the Company would not have entered into this Agreement or allowed
the Executive to retain those stock options.
2. A new Section XVI is hereby added to read as follows:
SECTION XVI
LIFE INSURANCE POLICIES
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A. The Executive owns insurance policies nos. 3023130, 2995020 and 2960304
with Guardian Life Insurance Company of America ("Guardian"), policies nos.
1046439, 1208351 and 1074717 with Security Mutual Life Insurance Company of New
York ("Security"), and policy no. 2636033 with Canada Life ("Canada"), (the
Guardian, Security and Canada policies are referred to as the "Policies"). The
Policies provide a death benefit equal to the cash surrender value of the
Policies. The Executive has the right to name a beneficiary for all of the death
benefits, subject to the rights of the Company under the Prior Life Insurance
Agreements described below in Subparagraph F. As part of the compensation paid
by the Company to the Executive, the Company has advanced premium payments on
the Policies through the date hereof.
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B. In consideration of the services performed by the Executive, the Company
agrees to advance annual premium payments for the Policies, in the aggregate, in
the amount ofapproximately $ 265,000 or such other amount as agreed to in
writing between the Company and the Executive per year (the "Required Premiums")
through the calendar year in which the Executive attains age sixty (60)
regardless of whether the Executive is employed by the Company at the time the
premiums are paid; provided, however, that the Required Premiums made by the
Company shall cease in the event the Executive breaches any of the Covenants
contained in Section IX of the Agreement (the "Covenants").
C. In consideration of the Required Premiums to be advanced annually by the
Company whether or not the Executive is employed by the Company pursuant to this
Agreement, the Executive agrees not to breach the Covenants.
D. In further consideration of the premiums to be advanced annually by the
Company, the Executive further agrees that between the date hereof and until the
date the Executive attains age sixty (60), the Executive may not withdraw any
amount (either as a Policy loan or a withdrawal of cash surrender value) from
the Policies.
E. Within fifteen (15) days of the date hereof the Policies shall be
transferred by the Executive to the Escrow Agent to be
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agreed to by the Executive and the Company (the "Escrow Agent")pursuant to an
escrow agreement between the Company, the Executive and the Escrow Agent (the
"Escrow Agreement"). The Escrow Agreement shall be substantially in the form
annexed hereto as Exhibit A. In the event the Executive violates the Covenants
prior to the Executive attaining age sixty (60), the Executive shall forfeit any
interest in the Policies, and the Escrow Agent shall transfer the Policies to
the Company, subject to the provisions of the Escrow Agreement. The Executive
shall execute an assignment agreement ("Assignment Agreement") annexed hereto as
Exhibit B to reflect the obligation of the Executive to transfer the Policies to
the Company in such event, and the Assignment Agreement shall be held in escrow
by the Escrow Agent. Upon the Executive having attained age sixty (60) without
having violated any of the Covenants, the Escrow Agent shall return the Policies
to the Executive, and the Executive shall hold all right, title and interest in
and to the Policies, without regard to the terms of Section IX, but subject to
the New Collateral Assignments described in Subparagraph F below.
F. Pursuant to collateral assignment agreements dated December 13, 1988,
and August 13, 1991, the Executive has assigned to the Company an interest in
the Policies issued by Security(other than policy No. 1208351) equal to the
premiums advanced by the Company. Pursuant to collateral assignment agreements
dated
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June 2, 1988, the Executive has assigned to the Company an interest in the
Policies issued by Guardian equal to the premiums advanced by the Company. These
agreements are referred to herein collectively as the "Prior Life Insurance
Agreements". Effective as of the date hereof, new collateral assignments have
been entered into between Guardian and Security (respectively), the Company and
the Executive and collateral assignments have been entered into between
Securities and Canada respectively, the Company and the Executive in the form
annexed hereto as Exhibit C, for the seven individual Policies ("New Collateral
Assignments"). Each provides that the Company shall have an interest in such
Policies equal to the premiums advanced by the Company.
G. During the term of this Agreement and further provided that the
Executive does not breach the terms of the Covenants before his attainment of
age sixty (60), in the event that the Company fails to make Required Premium
payments for the Policies for any calendar year by December 31st of such year
(the "Default Date"), the Company's right under any or all of the New Collateral
Assignments to be repaid from the cash surrender value of the Policies the
premiums advanced by the Company to the Executive shall be reduced by the
shortfall (unless otherwise subsequently advanced by the Company) with interest
at the rate of seven percent (7%) per annum (without regard to which Policy
there is a failure to pay). Such interest shall be calculated from the Default
Date
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to the earlier of the (a) date the Company advances Required Premiums with
respect which there is a shortfall and certifies to the Executive that such
payment is being made to make up for the shortfall or (b) date of withdrawal of
premiums advanced by the Company pursuant to the New Collateral Assignment. For
purposes of the preceding sentence, the Executive may request a reduction from
any Policy of the premiums to be repaid to the Company pursuant to the New
Collateral Assignments.
H. In the event the Executive breaches any of the Covenants after attaining
age sixty (60), the Company may seek an injunction in a court of competent
jurisdiction barring the Executive from breaching such Covenants.
IN WITNESS WHEREOF the undersigned have caused this Agreement to be
executed as of the date first above written.
CUC INTERNATIONAL INC.
by: /s/ E. Kirk Shelton
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/s/ Christopher K. McLeod
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Christopher McLeod
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