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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 9, 1996

REGISTRATION NO. 333-13537

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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CUC INTERNATIONAL INC.
(Exact Name of Registrant as Specified in its Charter)

DELAWARE 06-0918165
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)

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707 SUMMER STREET
STAMFORD, CONNECTICUT 06901
(203) 324-9261
(Address, Including Zip Code, and Telephone Number,
including Area Code, of Registrant's Principal Executive Offices)

------------------------------

COSMO CORIGLIANO AMY N. LIPTON, ESQ.
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER SENIOR VICE PRESIDENT AND GENERAL COUNSEL
CUC INTERNATIONAL INC. CUC INTERNATIONAL INC.
707 SUMMER STREET 707 SUMMER STREET
STAMFORD, CONNECTICUT 06901 STAMFORD, CONNECTICUT 06901
(203) 324-9261 (203) 324-9261

(Name and Address, Including Zip Code,
and Telephone Number, Including Area Code, of Agents For Service)

------------------------------

COPIES TO:

STEPHEN E. JACOBS, ESQ. ROBERT E. BUCKHOLZ, JR., ESQ.
WEIL, GOTSHAL & MANGES LLP SULLIVAN & CROMWELL
767 FIFTH AVENUE 125 BROAD STREET
NEW YORK, NEW YORK 10153 NEW YORK, NEW YORK 10004
(212) 310-8000 (212) 558-4000

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement is declared
effective by order of the Securities and Exchange Commission.

If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. / /

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
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If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
- ----------------

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

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SUBJECT TO COMPLETION DATED OCTOBER 9, 1996

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

16,500,000 SHARES*
[LOGO]
CUC INTERNATIONAL INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
-------------------

Of the 16,500,000 shares of Common Stock being offered, 13,200,000 shares
are being offered hereby in the United States and 3,300,000 shares are being
offered in a concurrent international offering outside the United States. The
public offering price and the aggregate underwriting discount per share will be
identical for both offerings. See "Underwriting".

All of the shares of Common Stock offered hereby are being sold by the
Selling Stockholders. See "Selling Stockholders". The Company will not receive
any of the proceeds from the sale of the shares offered.

The last reported sale price of the Common Stock, which is listed under the
symbol "CU", on the New York Stock Exchange, Inc. Composite Tape on October 8,
1996 was $26.25 per share. See "Price Range of Common Stock and Dividend
Policy".

* UNLESS OTHERWISE INDICATED, ALL INFORMATION INCLUDED IN THIS PROSPECTUS
HAS BEEN ADJUSTED FOR THE THREE-FOR-TWO SPLIT OF THE COMMON STOCK TO BE EFFECTED
ON OCTOBER 21, 1996, AND FURTHER ASSUMES THAT THE UNDERWRITERS' OVER-ALLOTMENT
OPTIONS WILL NOT BE EXERCISED.
-------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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PROCEEDS TO
PUBLIC UNDERWRITING SELLING
OFFERING PRICE DISCOUNT(1) STOCKHOLDERS(2)
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Per Share......................................... $ $ $
Total(3).......................................... $ $ $

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(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933.

(2) Before deducting estimated expenses of $ payable by the Company and
$ payable by the Selling Stockholders.

(3) Certain of the Selling Stockholders have granted to the U.S. Underwriters an
option exercisable on or before November 12, 1996 to purchase up to an
additional 1,980,000 shares at the public offering price per share, less the
underwriting discount, solely to cover over-allotments. Additionally,
certain of the Selling Stockholders have granted to the International
Underwriters an option exercisable on or before November 12, 1996 to
purchase up to an additional 495,000 shares at the public offering price per
share, less the underwriting discount, solely to cover over-allotments. If
such options are exercised in full, the total initial public offering price,
underwriting discount, and proceeds to the Selling Stockholders will be
$ , $ and $ respectively. See "Underwriting".
-------------------

The shares offered hereby are offered severally by the U.S. Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in
part. It is expected that certificates for the shares will be ready for delivery
in New York, New York, on or about October , 1996, against payment therefor in
immediately available funds.

GOLDMAN, SACHS & CO. MORGAN STANLEY & CO.
INCORPORATED

BEAR, STEARNS & CO. INC.

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

SMITH BARNEY INC.
----------------

THE DATE OF THIS PROSPECTUS IS OCTOBER , 1996.

AVAILABLE INFORMATION

CUC International Inc. (the "Company" or "CUC") is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports, proxy
statements and other information with the United States Securities and Exchange
Commission (the "Commission"). The reports, proxy statements and other
information filed by the Company with the Commission may be inspected and copied
at the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of
the Commission: New York Regional Office, 7 World Trade Center, Suite 1300, New
York, New York 10048; and Chicago Regional Office, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661, and at the Commission's Web site at
(http://www.sec.gov). Copies of such material also may be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. In addition, material filed by the
Company may be inspected at the offices of the New York Stock Exchange, Inc.
(the "NYSE") at 20 Broad Street, New York, New York 10005, on which the shares
of the common stock, par value $.01 per share, of the Company (the "Common
Stock") are listed.

The Prospectus constitutes a part of a Registration Statement on Form S-3
filed by the Company with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"). This Prospectus omits certain of the information
contained in the Registration Statement, and reference is hereby made to the
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the Common Stock. Any statements
contained herein concerning the provisions of any document are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such reference.
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NYSE OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents (and the amendments thereto) filed by the Company
(File No. 1-10308) with the Commission pursuant to the Exchange Act are
incorporated herein by reference and are made a part hereof:

(i) The Company's Annual Report on Form 10-K for its fiscal year ended
January 31, 1996, filed with the Commission on April 26, 1996 (the "CUC
10-K");

(ii) The Company's Quarterly Report on Form 10-Q for its fiscal quarter
ended April 30, 1996, filed with the Commission on June 14, 1996;

(iii) The Company's Quarterly Report on Form 10-Q for its fiscal quarter
ended July 31, 1996, filed with the Commission on September 16, 1996;

(iv) The Company's Current Reports on Form 8-K, filed with the
Commission on February 21, 1996, February 22, 1996, March 12, 1996, April
22, 1996, August 5, 1996, August 14, 1996, September 17, 1996, September 19,
1996, September 26, 1996 and October 7, 1996; and

(v) The description of the Common Stock contained in the Company's
Registration Statements on Form 8-A, filed with the Commission on July 27,
1984 and August 15, 1989, including any amendment or report filed for the
purposes of updating such description.

All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the offering made hereby shall be deemed to be incorporated
herein by reference and to be a part hereof on and from the date of filing of
such documents. Any statement contained in a document incorporated or deemed to
be incorporated by reference in this Prospectus shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or incorporated herein by reference or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.

Copies of all documents incorporated by reference, other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
into such documents), will be provided without charge to each person, including
any beneficial owner, to whom a copy of this Prospectus has been delivered upon
the written or oral request of such person. Requests for such copies should be
directed to the Company, 707 Summer Street, Stamford, Connecticut 06901,
Attention: Secretary, telephone: (203) 324-9261.

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THE COMPANY

GENERAL

The Company is a leading technology-driven, membership-based consumer
services company that provides more than 62.5 million customers worldwide with
access to home shopping, travel, insurance, automobile, dining, home
improvement, lifestyle club, checking account enhancement and discount coupon
programs. Together with leading banks, retailers, oil companies, credit unions,
charitable organizations and other institutions, the Company offers significant
cost savings and convenience shopping for a wide array of high-quality consumer
goods and services.

The Company's goal is to be the leading consumer services content provider
as well as to broaden its membership base through untapped distribution
channels, global expansion and the interactive marketplace. Management believes
that the Company is uniquely positioned to lead in the expanding interactive
marketplace by combining its existing direct marketing expertise with exciting
new electronic media. The Company recently completed the acquisitions of two
interactive media companies: Davidson & Associates, Inc. ("Davidson") and Sierra
On-Line, Inc. ("Sierra"). See "--Recent Developments". These acquisitions will
enable the Company to offer content in several additional major areas of
consumer spending and, more importantly, to enhance its existing product
offerings in the electronic marketplace. Management believes the creative
development teams of Davidson and Sierra will enable the Company to design an
Internet World Wide Web site (or "Web site") that will integrate the Company's
current service offerings with creative and attractive entertainment features.
The Web site will be an important marketing tool in the Company's effort to
maximize consumer use of its interactive services.

MEMBERSHIP-BASED CONSUMER SERVICES. The Company's core business is
providing consumer services through individual, wholesale and discount
program memberships ("memberships"). Individual memberships, whereby members
pay directly for services and the Company pays the associated marketing
costs, include Shoppers Advantage-Registered Trademark-, Travelers
Advantage-Registered Trademark-, AutoVantage-Registered Trademark- and
insurance products. Individual membership fees generally range between $10
and $250 per year. Wholesale memberships include enhancement packages sold
through banks and credit unions, and insurance products sold through credit
unions, for which the Company acts as a third-party administrator. The fees
for these memberships generally range between $6 and $50 per year. Discount
Program memberships, which are sold primarily through fundraising
institutions, merchant-sponsored or general advertising, include the
Entertainment-Registered Trademark- and Gold C-Registered Trademark- coupon
book programs. Fees for these memberships generally range from $10 to $50
per year.

DISTRIBUTION CHANNELS. The Company markets its memberships through a
variety of distribution channels. The Company reaches consumers through
financial institutions or other organizations (by direct marketing or direct
sales force), merchant-sponsored general advertising, and fundraising
institutions such as schools and charitable organizations.

The table below illustrates the Company's principal membership services and
the distribution channels through which such services are currently offered:

CUC'S SERVICES AND DISTRIBUTION CHANNELS

DISTRIBUTION CHANNELS
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SMALL NEW
LARGE BANKS CREDIT AIRLINES INTER- CHARITIES/ VACATION NEW HOUSE-
SERVICES BANKS RETAIL OIL & S&LS UNIONS & HOTELS ACTIVE CLUBS SCHOOLS DIRECT OWNERS CHANNELS TV HOLDS
----- ------ --- ------ ------ -------- ------ ---------- ------- ------ -------- -------- --- ------
Shopping........ * * * * * * T T *
Dining.......... * * * * * * T
Auto............ * * * * * * * T T T
Travel.......... * * * * * * * * * T T
Home............ * * * *
Health.......... * T *
Privacy......... * * * * T
Lifestyle....... *
Entertainment/ * * T * * * T T *
Coupons....... *
Credit Card * * *
Protection.... *
Enhancements.... * * * *
Financial T
Services...... *
Buyers.......... * * * *
New Services.... T T T T T T
Interactive * T * * T
Media.........

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* = Currently Available

T = Testing

INTERACTIVE MEDIA. As discussed below under "--Recent Developments",
the Company recently completed the acquisitions of Davidson and Sierra.

Davidson and Sierra develop, publish, manufacture and distribute
high-quality educational/ entertainment (or "edutainment") and personal
productivity (or "how to") interactive multimedia products for home and
school use. These products incorporate characters, themes, sound, graphics,
music and speech in ways that the Company believes are engaging to the user,
and are designed for multimedia PC's, including CD-ROM-based PC systems, and
selected emerging platforms. Davidson's and Sierra's products are offered
through a variety of distribution channels, including specialty retailers,
mass merchandisers, discounters and schools.

GROWTH STRATEGY

Management anticipates that the Company's continued growth will derive from:

- BUILDING ITS CORE BUSINESS. Management intends to access new distribution
channels, develop new services and enhance existing services. For example,
the Company recently introduced its "Transfer Plus" program through which
its services are cross-marketed to customers of other providers that offer
products and services which complement those offered by the Company. Using
this new distribution channel, a hotel chain, for example, can "transfer"
a customer who has made a hotel reservation by telephone to a marketing
representative of the Company who, in turn, markets CUC's discount travel
services to that consumer. Examples of new and enhanced services recently
introduced by the Company include the Gardening Club (through which con-

sumers gain access to a variety of gardening information and purchasing
discounts) and Entertainment Gold (an enhanced version of the Company's
traditional Entertainment product).

- ACQUIRING COMPLEMENTARY BUSINESSES. The Company has completed multiple
acquisitions in recent years. Management intends to continue to
aggressively pursue the Company's expansion through the selective
acquisition of complementary businesses. Such acquisitions enable the
Company to offer additional services (such as the hunting, fishing,
gardening and other lifestyle club memberships offered by North American
Outdoor Group, Inc. ("NAOG")) and acquire new distribution channels (such
as the "new mover" distribution channel acquired through the Company's
acquisitions of Welcome Wagon International, Inc. ("Welcome Wagon") and
Getko Group Inc.). More recently, the Company acquired Ideon Group, Inc.,
which strengthened the Company's existing credit card registration and
loss notification services. See "--Recent Developments".

- EXPANDING INTERNATIONALLY. The Company plans to continue the rapid
expansion of its business outside of the United States. In Europe, for
example, five major European banks currently participate in the Company's
enhancement business (representing access to more than 15 million
consumers) and the Company has continued to develop relationships with
other major European financial institutions, and to market additional
services to these institutions. The Company is also expanding in Japan and
other Asian countries.

- DEVELOPING INTERACTIVE MEDIA CHANNELS. Management believes that the
ability to deliver its services via interactive multimedia channels (e.g.,
the Internet, consumer online services, interactive television and other
emerging channels) represents a significant opportunity. Members who
access the Company's services by interactive media channels renew
memberships at higher rates and are less costly to service than those
members who access by telephone. Management endeavors to position the
Company's services to make them accessible through a wide range of
interactive media. Management plans to create a single, all-encompassing
Web site that will enable consumers to access the Company's consumer
services. Management anticipates that the Davidson and Sierra creative
teams will enable the Company to develop a Web site that combines its
transaction-based consumer service offerings with the entertainment
features necessary to attract consumers.

RECENT DEVELOPMENTS

DAVIDSON ACQUISITION. On July 24, 1996, the Company acquired all of the
outstanding capital stock of Davidson for a purchase price of approximately $1.0
billion (the "Davidson Acquisition"). Pursuant to the Davidson Acquisition,
approximately 45.1 million shares of Common Stock were issued to the former
holders of Davidson common stock, including approximately 32.7 million shares of
Common Stock issued to the Selling Stockholders. See "Selling Stockholders". The
Davidson Acquisition was accounted for as a pooling-of-interests. See "The
Company--Interactive Media".

SIERRA ACQUISITION. In addition, on July 24, 1996, the Company acquired all
of the outstanding capital stock of Sierra for a purchase price of approximately
$858.0 million (the "Sierra Acquisition"). Pursuant to the Sierra Acquisition,
approximately 38.4 million shares of Common Stock were issued to the former
holders of Sierra common stock. The Sierra Acquisition was accounted for as a
pooling-of-interests. See "The Company--Interactive Media".

IDEON ACQUISITION. On August 7, 1996, the Company acquired all of the
outstanding capital stock of Ideon Group, Inc. ("Ideon") for a purchase price of
approximately $393.0 million (the "Ideon Acquisition"). Pursuant to the Ideon
Acquisition, approximately 16.6 million shares of Common Stock were issued to
the former holders of Ideon common stock. The Ideon Acquisition was accounted
for as a pooling-of-interests. Ideon is a holding company with three principal
business units: SafeCard Services, Incorporated ("SafeCard"), Wright Express
Corporation ("Wright Express") and National Leisure Group,

Inc. ("NLG"). SafeCard, which is the largest subsidiary of Ideon, is a provider
of credit card enhancement and continuity products and services. Wright Express
is a provider of information processing, information management and financial
services to commercial car, van and truck fleets in the United States. NLG is a
provider of vacation travel packages and cruises directly to consumers in
association with established retailers and warehouse clubs throughout New
England, New York and New Jersey and with credit card issuers and travel club
members nationwide.

The Company's executive offices are located at 707 Summer Street, Stamford,
Connecticut 06901, and its telephone number is (203) 324-9261.

CAPITALIZATION

The following table sets forth the consolidated capitalization of the
Company as of July 31, 1996 which has been adjusted to give effect to (i) the
Company's three-for-two stock split to be effected on October 21, 1996 for
holders of record of Common Stock on October 7, 1996 and (ii) the Ideon
Acquisition(A). The Company will not receive any proceeds from the sale of the
Common Stock offered hereby.

ADJUSTED
JULY 31, 1996
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(IN THOUSANDS)
Short-term debt
Revolving credit facility................................................................................... $ 31,452
Bank term loans............................................................................................. 1,382
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Total short-term debt................................................................................... $ 32,834
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--------------
Long-term debt (excluding current installments)
Bank term loans............................................................................................. $ 4,654
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Total long-term debt.................................................................................... 4,654
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Convertible debt.............................................................................................. 23,428
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Shareholders' equity
Common stock--par value $.01 per share; authorized 600 million shares; issued 397,926,730 shares............ 3,979
Additional paid-in capital.................................................................................. 552,956
Retained earnings........................................................................................... 687,058
Treasury stock, at cost, 5,968,642 shares................................................................... (52,291)
Deferred compensation....................................................................................... (30,485)
Unrealized loss on marketable securities.................................................................... (41)
Foreign currency translation................................................................................ (2,678)
--------------
Total shareholders' equity.............................................................................. 1,158,498
--------------
Total capitalization.................................................................................... $1,186,580
--------------
--------------

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(A) For a discussion of certain costs and expenses associated with the Ideon
Acquisition, see Note (e) to "Selected Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources; Inflation; Seasonality".

USE OF PROCEEDS

The Company will not receive any proceeds from the sale of the Common Stock
being offered hereby. See "Selling Stockholders".

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

The Company's Common Stock is traded on the NYSE under the symbol "CU". The
following table sets forth high and low closing sale prices for the Common Stock
as reported on the NYSE Composite Transactions for the periods indicated,
adjusted to give effect to the Company's three-for-two stock split to be
effected on October 21, 1996 for holders of record of Common Stock on October 7,
1996:

COMMON
STOCK
PRICE
RANGE
----------
FISCAL YEAR ENDED: HIGH LOW
---- ---

JANUARY 1995
First Quarter...................................................................................................... $14.583 $12.000
Second Quarter..................................................................................................... 13.583 11.417
Third Quarter...................................................................................................... 15.417 13.583
Fourth Quarter..................................................................................................... 16.083 12.750

JANUARY 1996
First Quarter...................................................................................................... 18.083 15.417
Second Quarter..................................................................................................... 20.750 16.333
Third Quarter...................................................................................................... 24.250 19.917
Fourth Quarter..................................................................................................... 25.333 20.000

FISCAL YEAR ENDING: HIGH LOW
---- ---

JANUARY 1997
First Quarter...................................................................................................... $26.083 $18.667
Second Quarter..................................................................................................... 26.250 21.250
Third Quarter (through October 8, 1996)............................................................................ 27.333 21.917

The last reported sale price of the Common Stock on the NYSE Composite Tape
on October 8, 1996 was $26.25 per share.

The Company has not paid any dividends with respect to the Common Stock
since inception, other than an extraordinary dividend of cash and convertible
subordinated debentures distributed to shareholders in connection with a
recapitalization of the Company effected in fiscal year 1990.

SELECTED FINANCIAL DATA

The following selected financial data are derived from the supplemental
consolidated financial statements of the Company and the related notes thereto
(the "Supplemental Consolidated Financial Statements") included in the Company's
Current Report on Form 8-K filed with the Commission on September 17, 1996 (the
"September 17, 1996 Form 8-K"). This data should be read in conjunction with the
Consolidated Financial Statements and the Supplemental Consolidated Financial
Statements, and the related notes thereto, incorporated herein by reference to
the CUC 10-K and to the September 17, 1996 Form 8-K, and Management's Discussion
and Analysis of Financial Condition and Results of Operations, included
elsewhere in this Prospectus.

(IN THOUSANDS, EXCEPT FOR PER COMMON SHARE DATA)
------------------------------------------------------------------------------------------
SIX MONTHS ENDED
YEAR ENDED JANUARY 31, JULY 31,
---------------------------------------------------------------- ----------------------
1996(B) 1995(L) 1994 1993(M) 1992 1996 1995
---------- ---------- ---------- ---------- -------- ---------- --------
(UNAUDITED)

INCOME STATEMENT DATA (A)
Total revenues................... $1,935,232 $1,554,611 $1,278,664 $1,043,311 $904,052 $1,071,223 $896,707
Income from continuing operations
before income taxes............ 235,312(C) 256,931(F) 198,319 117,434 100,896(G) 161,341(E) 60,514(K)
Income from continuing
operations..................... 144,975(C) 162,057(F) 124,705 80,239 70,479(G) 92,582(E) 35,936(K)
Income per common share from
continuing operations(D)....... $ .37(C) $ .43(F) $ .34 $ .24 $ .24(G) $ .23(E) $ .09(K)
Cash dividends per common
share(I)....................... $ .01 $ .01 $ .01 $ .01 $ .01 $ .01 $ .01
---------- ---------- ---------- ---------- -------- ---------- --------
---------- ---------- ---------- ---------- -------- ---------- --------
Weighted average number of common
and dilutive common equivalent
shares outstanding(D).......... 392,208 379,263 365,915 340,712 288,162 399,267 388,674
---------- ---------- ---------- ---------- -------- ---------- --------
---------- ---------- ---------- ---------- -------- ---------- --------
BALANCE SHEET DATA(A)
Total assets..................... $2,068,196 $1,772,122 $1,199,805 $1,032,269 $814,961 $2,137,452
Long-term obligations(H)......... 6,481 22,872 24,235 30,091 16,336 6,036
Zero coupon convertible notes.... 14,410 15,046 22,176 37,295 69,228 --
Convertible debt................. 23,389 34,634 -- -- -- 23,428
Stockholders' equity............. 1,002,523(J) 826,083 558,181 389,461 235,675 1,158,498(E)
Working capital.................. 759,271 523,996 298,230 147,475 167,394 868,367

- ------------------------

(A) During the six months ended July 31, 1996, the Company acquired Davidson
and Sierra, and in August 1996 the Company acquired Ideon. These
acquisitions were accounted for in accordance with the pooling-of-interests
method. Accordingly, all financial data has been restated for all prior
periods to include Davidson, Sierra and Ideon. See "The Company--Recent
Developments".

(B) During the fiscal year ended January 31, 1996, the Company acquired Welcome
Wagon, CUC Europe Limited, and Credit Card Sentinel, and Ideon acquired NLG.
These acquisitions were accounted for in accordance with the purchase method
and, accordingly, have been included in the Company's results of operations
from the respective dates of acquisition. The results of operations of these
acquired entities for the periods prior to their acquisition were not
significant to the historical financial statements of the Company.

(C) Includes provision for costs incurred in connection with the acquisition of
Advance Ross Corporation ("Advance Ross"). The charge aggregated $5.2
million ($4.2 million or $.01 per common share after-tax effect). Also
during fiscal 1996, Ideon recorded pre-tax charges of $43.8 million related
to the abandonment of certain new product development efforts and the
restructuring of its SafeCard division and its corporate infrastructure.

(D) Adjusted to give effect to the three-for-two stock split to be effected on
October 21, 1996 for holders of record of Common Stock on October 7, 1996.

(E) Includes provision for costs incurred in connection with the acquisitions
of Davidson and Sierra. The charge aggregated $28.6 million ($25.1 million
or $.06 per common share after-tax effect). All costs related to the Ideon
Acquisition have not been reflected in the Supplemental Consolidated
Financial Statements, but will be reflected in the Company's consolidated
statement of income during the period the Ideon Acquisition is completed.
Such costs are non-recurring and include integration and transaction costs
as well as costs relating to certain outstanding litigation matters (see
Note 6 to the Supplemental Consolidated Financial Statements as of and for
the six months ended July 31, 1996), giving consideration to the Company's
intended approach to these matters, which are estimated by Management to
approximate $125.0 million ($80.0 million after tax effect). See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources; Inflation; Seasonality".

(F) During fiscal 1995, Ideon recorded a pre-tax charge of $7.9 million for
various severance agreements and a lease termination in connection with a
reorganization of its operations and senior management team.

(G) Includes provision for costs incurred in connection with the integration of
the operations of the Company and Entertainment Publishing Corp. (acquired
during fiscal 1992 in a transaction accounted for in accordance with the
pooling-of-interests method) and costs of professional fees and other
expenses related to the merger with Entertainment Publishing Corp. The
charge aggregated $20.7 million ($15 million or $.05 per common share
after-tax effect). Also includes a gain from the sale of an unconsolidated
affiliate of Advance Ross. The gain aggregated $11.7 million ($7 million or
$.02 per common share after-tax effect). In addition, includes a pre-tax
charge of $17.5 million in connection with Ideon's relocation of an
operations center.

(H) Includes current portion of long-term debt of $1.4 million, $9 million,
$6.3 million, $3.4 million, $1.2 million and $1.4 million at January 31,
1996, 1995, 1994, 1993, 1992 and July 31, 1996, respectively. Excludes $15.4
million, $11.8 million, $5.5 million, $23.2 million, $26.7 million and $31.5
million of amounts due under revolving credit facilities at January 31,
1996, 1995, 1994, 1993, 1992 and July 31, 1996, respectively, and $6 million
due at January 31, 1993 under a note payable issued in connection with the
acquisition of Sally Foster Gift Wrap, LP ("Sally Foster").

(I) Represents cash dividends paid to Ideon common stockholders. No Common
Stock cash dividends have been paid or declared during the five years ended
January 31, 1996 and the six-month periods ended July 31, 1996 and 1995.
However, an insignificant amount of cash dividends were paid in respect of
the NAOG common stock for the fiscal years ended January 31, 1994, 1993 and
1992.

(J) Effective January 1, 1995, Ideon changed its fiscal year end from October
31 to December 31 (the "Ideon Transition Period"). The Ideon Transition
Period has been excluded from the accompanying supplemental consolidated
statement of income. Ideon's revenues and net loss for the Ideon Transition
Period were $34.7 million and $(49.9) million, respectively. The net loss
for the Ideon Transition Period was principally the result of a $65.5
million one-time, non-cash, pretax charge recorded in connection with a
change in accounting for deferred membership acquisition costs.

(K) Includes Ideon pre-tax charges of $34.2 million related to the abandonment
of certain new product development efforts and the restructuring of its
SafeCard division and its corporate infrastructure. Also includes marketing
and operational costs incurred for Ideon products abandoned of $47 million.

(L) During the fiscal year ended January 31, 1995, the Company acquired Essex
Corporation ("Essex") and subsidiaries and Ideon acquired Wright Express.
These acquisitions were accounted for in accordance with the purchase method
and, accordingly, have been included in the Company's results of operations
from the respective dates of acquisition. The results of operations of these
acquired entities for the periods prior to their acquisition were not
significant to the historical financial statements of the Company.

(M) During the fiscal year ended January 31, 1993, the Company acquired
Leaguestar plc and Sally Foster. These acquisitions were accounted for in
accordance with the purchase method and, accordingly, have been included in
the Company's results of operations from the respective dates of
acquisition. The results of operations of these acquired entities for the
periods prior to their acquisition were not significant to the historical
financial statements of the Company.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

On September 17, 1996, the Company published in the September 17, 1996 Form
8-K the Supplemental Consolidated Financial Statements giving retroactive effect
to consummation of each of the Davidson Acquisition, the Sierra Acquisition and
the Ideon Acquisition using the pooling-of-interests method of accounting as if
each of such acquired corporations and the Company had operated as one since
inception. The Supplemental Consolidated Financial Statements will constitute
the primary historical consolidated financial statements of the Company upon the
publication of Company financial statements, on or about December 15, 1996, that
include the respective dates of consummation of the Davidson Acquisition (July
24, 1996), the Sierra Acquisition (July 24, 1996) and the Ideon Acquisition
(August 7, 1996).

SIX MONTHS ENDED JULY 31, 1996 VS. SIX MONTHS ENDED JULY 31, 1995

The Company's overall membership base continues to grow at a rapid rate
(from 51.2 million members at July 31, 1995 to 62.3 million members at July 31,
1996), which is the largest contributing factor to the 20% increase in
membership revenues (from $786.7 million for the six months ended July 31, 1995
to $942.2 million for the six months ended July 31, 1996). While the overall
membership base increased by approximately 2.7 million members during the six
months ended July 31, 1996, the average annual fee collected for the Company's
membership services increased by 1%. The Company divides its memberships into
three categories: individual, wholesale and discount program memberships.
Individual memberships consist of members that pay directly for the services and
the Company pays for the marketing costs to solicit the members primarily using
direct marketing techniques. Wholesale memberships include members that pay
directly for the services to their sponsor and the Company does not pay for the
marketing costs to solicit the members. Discount program memberships are
generally marketed through a direct sales force, participating merchant or
general advertising and the related fees are either paid directly by the member
or the local retailer. All of these categories share various aspects of the
Company's marketing and operating resources.

Compared to the previous year's first six months, individual, wholesale and
discount program memberships grew by 9%, 20% and 61%, respectively, including
members which came from acquisitions completed during fiscal 1996 (members
obtained through acquisitions being hereafter referred to as "Acquired
Members"). Discount program memberships have experienced the largest increase
from Acquired Members, principally from Advance Ross, acquired in fiscal 1996,
which provides local discounts to consumers. For the six months ended July 31,
1996, individual, wholesale and discount coupon program memberships represented
68%, 12% and 20%, respectively, of membership revenues. The Company maintains a
flexible marketing plan so that it is not dependent on any one service for the
future growth of the total membership base.

Software revenues increased 17% from $110 million for the six months ended
July 31, 1995 to $129.1 million for the six months ended July 31, 1996.
Distribution revenue, which typically has low operating margins, decreased to
$25.7 million from $41.7 million. The Company's software operations continue to
focus on the growth of selling titles through retailers. Excluding distribution
revenue, core software revenue grew by 57%. Contributing to the strong software
revenue growth in fiscal 1997 is the availability of a larger number of titles
as well as the significant increase in the installed base of CD-ROM personal
computers.

As the Company's membership services continue to mature, a greater
percentage of the total individual membership base is in its renewal years. This
results in increased profit margins for the Company due to the significant
decrease in certain marketing costs incurred on renewing members. Improved
response rates for new members also favorably impact profit margins. As a
result, operating income before interest, amortization of restricted stock
compensation, costs related to products abandoned and restructuring, gain on
sale of and equity in loss from ImagiNation Network, and income taxes

("EBIT") increased from $135.9 million to $185.9 million, and EBIT margins
improved from 15.2% to 17.4%.

Operating costs increased 18% (from $277.6 million to $326.3 million). The
major components of the Company's membership operating costs continue to be
personnel, telephone, computer processing and participant insurance premiums(the
cost of obtaining insurance coverage for members). The major components of the
Company's software operating costs are material costs, manufacturing labor and
overhead, royalties paid to developers and affiliated label publishers and
research and development costs related to designing, developing and testing new
software products. The increase in overall operating costs is due principally to
the variable nature of many of these costs and, therefore, the additional costs
incurred to support the growth in the membership base and software sales.
Historically, the Company has seen a direct correlation between providing a high
level of service to its members and improved retention.

Marketing costs remained constant as a percentage of revenue (39%). This is
due primarily to maintained per member acquisition costs and an increase in
renewing members. Membership acquisition costs incurred increased 18% (from $263
million to $310.4 million) as a result of the increased marketing effort which
resulted in an increased number of new members acquired. Marketing costs include
the amortization of membership acquisition costs and other marketing costs,
which consist primarily of membership communications and sales expenses.
Amortization of membership acquisition costs increased by 17% (from $272.4
million to $319.5 million). Other marketing costs increased by 23% (from $77.6
million to $95.2 million). These increases resulted primarily from the costs of
servicing a larger membership base and expenses incurred when selling and
marketing a larger number of software titles. The marketing functions for the
Company's consumer services are combined for its various services and,
accordingly, there are no significant changes in marketing costs by service.

The Company routinely reviews all renewal rates and has not seen any
material change over the last year in the average renewal rate. Renewal rates
are calculated by dividing the total number of renewing members not requesting a
refund during their renewal year by the total members up for renewal.

General and administrative costs decreased as a percentage of revenue (from
15% to 13%). This is the result of the Company's ongoing ability to control
overhead. Interest income, net, decreased from $5.8 million to $4.1 million
primarily due to cash used to fund acquisitions during fiscal 1996 and the first
six months of fiscal 1997.

Included in costs related to products abandoned and restructuring for the
six months ended July 31, 1995, are special charges totaling $34.2 million,
related to the abandonment of certain new product developmental efforts and the
related impairment of certain assets and the restructuring of the SafeCard
division of Ideon and the Ideon corporate infrastructure. The charge of $34.2
million was composed of accrued liabilities of $25.6 million and asset
impairments of $8.6 million. Also included in costs related to products
abandoned and restructuring are marketing and operational costs of $47 million
incurred for Ideon products abandoned.

Merger costs are non-recurring and are comprised primarily of transaction
costs, professional fees and integration costs associated with the Davidson
Acquisition and the Sierra Acquisition.

MEMBERSHIP INFORMATION

The following table sets forth the approximate number of members and net
additions for the respective periods:

NET NEW MEMBER
NUMBER OF ADDITIONS
PERIOD MEMBERS FOR THE PERIOD
- ---------------------------------------------------------------------------------------------------- ---------- --------------

Six Months Ended July 31, 1996...................................................................... 62,315,000 2,665,000
Year Ended January 31, 1996......................................................................... 59,650,000 12,750,000*
Six Months Ended July 31, 1995...................................................................... 51,165,000 4,265,000**
Year Ended January 31, 1995......................................................................... 46,900,000 3,820,000
Quarter Ended July 31, 1996......................................................................... 62,315,000 1,440,000
Quarter Ended July 31, 1995......................................................................... 51,165,000 1,290,000

- ------------------------

* Includes approximately 8,000,000 Acquired Members.

** Includes approximately 2,100,000 Acquired Members.

The membership acquisition costs incurred to obtain a new member, for
memberships other than coupon book memberships, generally approximate the
initial membership fee. Initial membership fees for coupon book memberships
generally exceed the membership acquisition costs incurred to obtain a new
member.

Membership cancellations processed by certain of the Company's clients
report membership information only on a net basis. Accordingly, the Company does
not receive actual numbers of gross additions and gross cancellations for
certain types of memberships. In calculating the number of members, the Company
has deducted its best estimate of cancellations which may occur during the trial
membership periods offered in its marketing programs. Typically these periods
range from one to three months.

LIQUIDITY AND CAPITAL RESOURCES; INFLATION; SEASONALITY

Funds for the Company's operations and acquisitions have been provided
through cash flow from operations. The Company also is party to a credit
agreement, dated March 26, 1996, with certain banks signatory thereto; The Chase
Manhattan Bank, N.A., Bank of Montreal, Morgan Guaranty Trust Company of New
York and The Sakura Bank, Limited, as Co-Agents; and The Chase Manhattan Bank,
N.A., as Administrative Agent (the "Credit Agreement"). The Credit Agreement
provides for a $500 million revolving credit facility with a variety of
different types of loans available thereunder. The Credit Agreement contains
certain customary restrictive covenants including, without limitation, financial
covenants and restrictions on certain corporate transactions, and also contains
various event of default provisions including, without limitation, defaults
arising from certain changes in control of the Company. The amount of borrowings
available to the Company under the Credit Agreement was $500 million at July 31,
1996, as there were no borrowings under the Credit Agreement at that date. The
Credit Agreement is scheduled to expire on March 26, 2001.

In February 1996, Wright Express entered into a revolving credit facility
agreement which has an available line of $75 million of which $50 million may be
used to finance working capital requirements and for general corporate purposes
and $25 million of which may be used for acquisition financing. This facility
expires on December 1, 1998.

In fiscal 1996, Sierra entered into an unsecured bank line of credit that
provides for borrowings of up to $10 million, expiring on August 31, 1996. The
line contains covenants requiring Sierra to maintain certain financial ratios
and minimum balances of cash and cash equivalents. There have been no borrowings
by Sierra under this line of credit to date. This line of credit expired August
31, 1996.

All costs related to the Ideon Acquisition have not been reflected in the
Company's Supplemental Consolidated Financial Statements but will be reflected
in the Company's consolidated statement of income during the period the Ideon
Acquisition is completed. Such costs are non-recurring and include integration
and transaction costs as well as costs relating to certain outstanding
litigation matters (see Note 6 to the Supplemental Consolidated Financial
Statements as of and for the six months ended July 31, 1996), giving
consideration to the Company's intended approach to these matters, which are
estimated by the Company's management to approximate $125.0 million ($80.0
million after tax effect). Most of the reserve is related to these outstanding
litigation matters. In determining such portion, the Company estimated the cost
of settling these litigation matters. In estimating such cost, the Company
considered potential liabilities related to these matters and the estimated cost
of prosecuting and defending them (including out-of-pocket costs, such as
attorneys' fees, and the cost to the Company of having its management involved
in numerous complex litigation matters). The Company is unable at this time to
determine the estimated timing of the future cash outflows with respect to this
liability. Although the Company has attempted to estimate the amounts that will
be required to settle these litigation matters, there can be no assurance that
the actual aggregate amount of such settlements will not exceed the amount of
the reserve to be accrued.

The Company invested approximately $33 million in acquisitions, net of cash
acquired, during the six months ended July 31, 1996. These acquisitions have
been fully integrated into the Company's operations. The Company is not aware of
any trends, demands or uncertainties that will have a material effect on the
Company's liquidity. The Company anticipates that cash flow from operations and
borrowings under the Credit Agreement will be sufficient to achieve its current
long-term objectives.

The Company does not anticipate any material capital expenditures for the
next year. Total capital expenditures were $24 million for the six months ended
July 31, 1996.

The Company intends to continue to review potential acquisitions that it
believes would enhance the Company's growth and profitability. Any acquisitions
paid for in cash will initially be financed through excess cash flow from
operations and the Credit Agreement. However, depending on the financing
necessary to complete a particular acquisition, additional funding may be
required.

To date, the overall impact of inflation on the Company has not been
material. Except for the cash receipts from the sale of coupon book memberships,
the Company's membership business is generally not seasonal. Most cash receipts
from these coupon book memberships are received in the fourth quarter and, to a
lesser extent, in the first and the third quarters of each fiscal year. As is
typical in the consumer software industry, the Company's software business is
highly seasonal. Net revenues and operating income are highest during the third
and fourth quarters and are lowest in the first and second quarters. This
seasonal pattern is due primarily to the increased demand for the Company's
software products during the year-end holiday season.

For the six months ended July 31, 1996, the Company's international
businesses represented less than 5% of EBIT. Operating in international markets
involves dealing with sometimes volatile movements in currency exchange rates.
The economic impact of currency exchange rate movements on the Company is
complex because it is linked to variability in real growth, inflation, interest
rates and other factors. Because the Company operates in a mix of membership
services and numerous countries, Management believes currency exposures are
fairly well diversified. To date, currency exposure has not been a significant
competitive factor at the local market operating level. As international
operations continue to expand and the number of cross-border transactions
increases, the Company intends to continue monitoring its currency exposures
closely and take prudent actions as appropriate.

YEAR ENDED JANUARY 31, 1996 VS. YEAR ENDED JANUARY 31, 1995

The Company's overall membership base continues to grow at a rapid rate
(from 47 million members at January 31, 1995 to 59.7 million members at January
31, 1996), which is the largest

contributing factor to the 20% increase in membership revenues (from $1,363.6
million in fiscal 1995 to $1,629.8 million in fiscal 1996). While the overall
membership base increased by 12.7 million members, or 27%, during the year (of
which approximately 8 million members came from acquisitions completed during
the year), the average annual fee charged for the Company's membership services
increased by 3%.

In the 1996 fiscal year, individual, wholesale and discount program
memberships grew by 8%, 19% and 11%, respectively, in addition to the increase
due to Acquired Members. For the year ended January 31, 1996, individual,
wholesale and discount program memberships represented 68%, 12% and 20% of
membership revenues, respectively. Discount program memberships have incurred
the largest increase from Acquired Members. Welcome Wagon, the Getko Group Inc.
and Advance Ross, all acquired in fiscal 1996, are classified in this membership
category as their businesses provide local discounts to consumers. The Company
maintains a flexible marketing plan so that it is not dependent on any one
service for the future growth of the total membership base. The Company
completed a number of acquisitions accounted for under the purchase method of
accounting during fiscal 1996. The total revenues contributed by these
acquisitions are not material to the Company's total reported revenues (see Note
B to the Supplemental Consolidated Financial Statements as of and for the year
ended January 31, 1996).

Software revenues increased 60% to $305.4 million in fiscal 1996 from $191.1
million in fiscal 1995. Contributing to the strong software growth in fiscal
1996 was the release of 63 new titles and an additional 18 titles which were
acquired compared to 34 new products released in fiscal 1995. Also contributing
to the software revenue growth is the significant increase in the installed base
of CD-ROM personal computers as well as increases in affiliated label and
distribution revenues.

As the Company's membership services continue to mature, a greater
percentage of the total individual membership base is in its renewal years. This
results in increased profit margins for the Company due to the significant
decrease in certain marketing costs incurred on renewing members. Improved
response rates for new members also favorably impact profit margins. As a
result, EBIT increased from $239.1 million to $322.7 million and EBIT margins
improved from 15.4% to 16.7%.

Individual membership usage continues to increase, which contributes to
additional service fees and indirectly contributes to the Company's strong
renewal rate. Historically, an increase in overall membership usage has had a
favorable impact on renewal rates. Actual membership cancellations were $376
million, $354 million and $319 million, respectively, for the fiscal years ended
January 31, 1996, 1995 and 1994. This represents 19%, 21% and 22%, respectively,
of the gross membership revenues accrued for all services. The Company records
its deferred revenue net of estimated cancellations which are anticipated in the
Company's marketing programs. The number of cancellations has increased due to
the increased level of marketing efforts, but has decreased as a percentage of
the total number of members.

Operating costs increased 25% (from $474.1 million to $593.5 million). The
major components of the Company's membership operating costs continue to be
personnel, telephone, computer processing and participant insurance premiums
(the cost of obtaining insurance coverage for members). The major components of
the Company's software operating costs are material costs, manufacturing labor
and overhead, royalties paid to developers and affiliated label publishers and
research and development costs related to designing, developing and testing new
software products. The increase in overall operating costs is due principally to
the variable nature of many of these costs and, therefore, the additional costs
incurred to support the growth in the membership base and software sales.
Historically, the Company has seen a direct correlation between providing a high
level of service to its members and improved retention.

Marketing costs decreased as a percentage of revenues, from 40% to 38%. This
decrease is primarily due to improved per member acquisition costs and an
increase in renewing members. Membership acquisition costs incurred increased
19% (from $508.8 million to $605.1 million) as a result of the increased
marketing effort which resulted in an increased number of new members acquired.
Marketing costs include the amortization of membership acquisition costs and
other marketing costs, which primarily consist of membership communications and
sales expenses. Amortization of membership acquisition costs increased by 19%
(from $467 million to $556.5 million). Other marketing costs increased by 20%
(from $151.3 million to $180.9 million). This increase resulted primarily from
the costs of servicing a larger membership base and expenses incurred when
selling and marketing a larger number of software titles. The marketing
functions for the Company's membership services are combined for its various
services and, accordingly, there are no significant changes in marketing costs
by membership service.

The Company routinely reviews all membership renewal rates and has not seen
any material change over the last year in the average renewal rate. Renewal
rates are calculated by dividing the total number of renewing members not
requesting a refund during their renewal year by the total members up for
renewal.

General and administrative costs increased as a percentage of revenues, from
14% to 15%. This is principally due to acquisitions completed during fiscal
1996. Interest income, net, increased from $7.9 million to $9.7 million due to
the reduced level of amortization associated with the Company's restricted stock
and zero coupon convertible notes and the net interest income from the increased
level of cash generated by the Company for investment.

Included in costs related to products abandoned and restructuring for the
year ended January 31, 1996, are special charges totaling $43.8 million, net of
recoveries, related to the abandonment of certain new product developmental
efforts and the related impairment of certain assets and the restructuring of
the SafeCard division of Ideon and the Ideon corporate infrastructure. The
original charge of $45 million was composed of accrued liabilities of $36.2
million and asset impairments of $8.8 million. Also included in costs related to
products abandoned and restructuring are marketing and operational costs
incurred for Ideon products abandoned of $53.2 million.

YEAR ENDED JANUARY 31, 1995 VS. YEAR ENDED JANUARY 31, 1994

The Company's overall membership base continues to grow at a rapid rate
(from 42.9 million members at January 31, 1994 to 47 million members at January
31, 1995), which is the largest contributing factor to the 19% increase in
membership revenues (from $1,143.2 million in fiscal 1994 to $1,363.6 million in
fiscal 1995). While the overall membership base increased by 4.1 million members
before adjustment for Acquired Members resulting from the fiscal 1996
pooling-of-interests transactions, or 10%, during the past year, the average
annual fee charged for the Company's membership services increased by 3%. The
Company divides its memberships into three categories: individual, wholesale and
discount program memberships. All of these categories share various aspects of
the Company's marketing and operating resources. In the 1995 fiscal year,
individual, wholesale and discount program memberships grew by 11%, 6% and 11%,
respectively. For the year ended January 31, 1995, individual, wholesale and
discount program memberships represented 70%, 11% and 19% of membership
revenues, respectively. The Company maintains a flexible marketing plan so that
it is not dependent on any one service for the future growth of the total
membership base. The Company completed an acquisition of Essex, a privately
owned third-party marketer of financial products for banks, and certain other
entities, during fiscal 1995. The total revenues contributed by this acquisition
are not material to the Company's total reported revenues. This acquisition was
accounted for in accordance with the purchase method of accounting and,
accordingly, the results of operations have been included in the consolidated
results of operations from the date of acquisition (see Note B to the
Supplemental Consolidated Financial Statements as of and for the year ended
January 31, 1996).

Software revenues increased 41% to $191.1 million in fiscal 1995 from $135.5
million in fiscal 1994. Contributing to the strong software growth in fiscal
1995 was the release of 34 new titles. Also contributing to the software growth
was the expansion in the installed base of personal computers as well as an
increase in affiliated label revenues.

As the Company's membership services continue to mature, a greater
percentage of the total individual membership base is in its renewal years. This
results in increased profit margins for the Company due to the significant
decrease in certain marketing costs incurred on renewing members. As a result,
EBIT increased from $200.2 million to $239.1 million, however EBIT margins
decreased slightly from 15.7% to 15.4%, due principally to increased software
research and development.

Individual membership usage continues to increase, which contributes to
additional service fees and indirectly contributes to the Company's strong
renewal rate. Historically, an increase in overall membership usage has had a
favorable impact on renewal rates. Actual membership cancellations were $354
million, $319 million and $292 million, respectively, for the fiscal years ended
January 31, 1995, 1994 and 1993. This represents approximately 21%, 22% and 24%
of the gross membership revenues accrued for all services. The Company records
its deferred revenue net of estimated cancellations which are anticipated in the
Company's marketing programs. The number of cancellations has increased due to
the increased level of marketing efforts, but has decreased as a percentage of
the total number of members.

Operating costs increased 29% (from $368.8 million to $474.1 million). The
major components of the Company's membership operating costs continue to be
personnel, telephone, computer processing and participant insurance premiums
(the cost of obtaining insurance coverage for members). The major components of
the Company's software operating costs are material costs, manufacturing labor
and overhead, royalties paid to developers and affiliated label publishers and
research and development costs related to designing, developing and testing new
software products. The increase in overall operating costs is due principally to
the variable nature of many of these costs and, therefore, the additional costs
incurred to support the growth in the membership base and software sales.
Historically, the Company has seen a direct correlation between providing a high
level of service to its members and improved retention.

Marketing costs remained constant as a percentage of revenue (40%). This is
primarily due to improved per member acquisition costs and an increase in
renewing members. Membership acquisition costs incurred increased 11% (from
$457.3 million to $508.8 million). Marketing costs include the amortization of
membership acquisition costs and other marketing costs, which primarily consist
of membership communications and sales expenses.

Amortization of membership acquisition costs increased by 14% (from $409.5
million to $467 million). Other marketing costs increased by 44% (from $105.1
million to $151.3 million). This increase resulted primarily from the costs of
servicing a larger membership base, costs to establish the American Airlines
AAdvantage Dining program and expenses incurred when selling and marketing a
larger number of software titles. The marketing functions for the Company's
membership services are combined for its various services and, accordingly,
there are no significant changes in marketing costs by membership service.

The Company routinely reviews all membership renewal rates and has not seen
any material change over the last year in the average renewal rate. Based on
current information, the Company does not anticipate that the average renewal
rate will change significantly. Renewal rates are calculated by dividing the
total number of renewing members not requesting a refund during their renewal
year by the total members up for renewal.

General and administrative costs decreased as a percentage of revenue, from
15% to 14%. This is the result of the Company's ongoing ability to control
overhead. Interest income, net, increased from $3.2 million to $7.9 million
primarily due to the reduction of the Company's average outstanding loan balance
and the net interest income from the increased level of cash generated by the
Company for investment.

SELLING STOCKHOLDERS

The following table below sets forth information as of October 1, 1996
regarding the "beneficial" ownership (within the meaning of Rule 13d-3 under the
Exchange Act) of Common Stock by each Selling Stockholder and as adjusted to
give effect to the sale of all of the Shares offered hereby. The table assumes
that the Underwriters will not exercise their over-allotment options. See
"Underwriting".

COMMON STOCK
COMMON STOCK TO BE
BENEFICIALLY OWNED BENEFICIALLY OWNED
PRIOR TO THE AFTER THE
OFFERINGS OFFERINGS(1)
------------------- -------------------
COMMON STOCK
SELLING STOCKHOLDERS AND NUMBER TO BE SOLD NUMBER
RELATIONSHIP TO THE COMPANY OF SHARES PERCENT IN THE OFFERINGS OF SHARES PERCENT
- ----------------------------------------------------------------- ---------- ------- ---------------- ---------- -------

Robert M. Davidson............................................... 20,622,550(2) 5.2% 300,000 11,922,550 3.0%
Vice-Chairman of the Board
of Directors of the Company
c/o Davidson & Associates, Inc.
19840 Pioneer Avenue
Torrance, CA 90503

Janice G. Davidson............................................... 20,622,208(3) 5.2% 300,000 11,922,208 3.0%
Director of the Company
c/o Davidson & Associates, Inc.
19840 Pioneer Avenue
Torrance, CA 90503

Robert M. Davidson............................................... 11,475,000(4) 2.9% 7,500,000 3,975,000 1.0%
Charitable Remainder Unitrust
dated March 30, 1995
c/o Robert M. Davidson
Davidson & Associates, Inc.
19840 Pioneer Avenue
Torrance, CA 90503

Janice G. Davidson............................................... 11,475,000(5) 2.9% 7,500,000 3,975,000 1.0%
Charitable Remainder Unitrust
dated March 30, 1995
c/o Janice G. Davidson
Davidson & Associates, Inc.
19840 Pioneer Avenue
Torrance, CA 90503

The John R. Davidson Trust....................................... 2,765,155(6) 0.7% 300,000 2,465,155 0.6%
c/o Robert M. Davidson
Davidson & Associates, Inc.
19840 Pioneer Avenue
Torrance, CA 90503

The Elizabeth Davidson Trust..................................... 2,765,155(7) 0.7% 300,000 2,465,155 0.6%
c/o Robert M. Davidson
Davidson & Associates, Inc.
19840 Pioneer Avenue
Torrance, CA 90503

The Emilie A. Davidson Trust..................................... 2,765,155(8) 0.7% 300,000 2,465,155 0.6%
c/o Robert M. Davidson
Davidson & Associates, Inc.
19840 Pioneer Avenue
Torrance, CA 90503

All Selling Stockholders as a Group.............................. 32,727,494(9) 8.3% 16,500,000 16,227,494 4.1%

- ------------------------------

(1) If the Underwriters' over-allotment options are exercised in full, the
Robert M. Davidson Charitable Remainder Unitrust dated March 30, 1995 and
the Janice G. Davidson Charitable Remainder Unitrust dated March 30, 1995
will each sell an additional 1,237,500 shares in the offering made hereby
and will each beneficially own 2,737,500 (or 0.7%) of the total shares of
Common Stock outstanding.

(2) Robert M. Davidson directly owns 630,286 shares of Common Stock, with
respect to which he has sole voting and dispositive power. Mr. Davidson, as
trustee with sole voting and dispositive power, may be deemed the beneficial
owner of the 11,475,000 shares of Common Stock held in the Robert M.
Davidson Charitable Remainder Unitrust dated March 30, 1995. Mr. Davidson
also serves as a trustee with shared voting and dispositive power of The
Elizabeth Davidson Trust, The Emilie A. Davidson Trust and The John R.
Davidson Trust, each of which holds 2,765,155 shares of Common Stock, and he
may be deemed to beneficially own the shares of Common Stock owned by such
trusts. Mr. Davidson also owns 221,799 shares of Common Stock together with
his wife, Janice G. Davidson, with respect to which he shares voting and
dispositive power. In the aggregate, Mr. Davidson may be deemed to
beneficially own 20,622,550 shares of Common Stock, which represents 5.2% of
the outstanding Common Stock.

(3) Janice G. Davidson directly owns 629,944 shares of Common Stock, with
respect to which she has sole voting and dispositive power. Mrs. Davidson,
as trustee with sole voting and dispositive power, may be deemed the
beneficial owner of the 11,475,000 shares of Common Stock held in the Janice
G. Davidson Charitable Remainder Unitrust dated March 30, 1995. Mrs.
Davidson also serves as a trustee with shared voting and dispositive power
of The Elizabeth Davidson Trust, The Emilie A. Davidson Trust and The John
R. Davidson Trust, each of which holds 2,765,155 shares of Common Stock, and
she may be deemed to beneficially own the shares of Common Stock owned by
such trusts. Mrs. Davidson also owns 221,799 shares of Common Stock together
with her husband, Robert M. Davidson, with respect to which she shares
voting and dispositive power. In the aggregate, Mrs. Davidson may be deemed
to beneficially own 20,622,208 shares of Common Stock, which represents 5.2%
of the outstanding Common Stock.

(4) The Robert M. Davidson Charitable Remainder Unitrust dated March 30, 1995
directly beneficially owns 11,475,000 shares of Common Stock, which
represents 2.9% of the outstanding shares of Common Stock. Robert M.
Davidson, as trustee of the Robert M. Davidson Charitable Remainder Unitrust
dated March 30, 1995, has sole power to vote and dispose of the shares owned
by such trust.

(5) The Janice G. Davidson Charitable Remainder Unitrust dated March 30, 1995
directly beneficially owns 11,475,000 shares of Common Stock, which
represents 2.9% of the outstanding shares of Common Stock. Janice G.
Davidson, as trustee of the Janice G. Davidson Charitable Remainder Unitrust
dated March 30, 1995, has sole power to vote and dispose of the shares owned
by such trust.

(6) The John R. Davidson Trust directly beneficially owns 2,765,155 shares of
Common Stock, which represents 0.7% of the outstanding shares of Common
Stock. Robert M. Davidson and Janice G. Davidson, as co-trustees of The John
R. Davidson Trust, share voting and dispositive power of the shares owned by
such trust.

(7) The Elizabeth Davidson Trust directly beneficially owns 2,765,155 shares of
Common Stock, which represents 0.7% of the outstanding shares of Common
Stock. Robert M. Davidson and Janice G. Davidson, as co-trustees of The
Elizabeth Davidson Trust, share voting and dispositive power of the shares
owned by such trust.

(8) The Emilie A. Davidson Trust directly beneficially owns 2,765,155 shares of
Common Stock, which represents 0.7% of the outstanding shares of Common
Stock. Robert M. Davidson and Janice G. Davidson, as co-trustees of The
Emilie A. Davidson Trust, share voting and dispositive power of the shares
owned by such trust.

(9) The Selling Stockholders may be deemed a "group" for purposes of Section
13(d) under the Exchange Act. The Selling Stockholders in the aggregate
directly beneficially own 32,727,494 shares of Common Stock, which
represents 8.3% of the outstanding Common Stock. Nothing contained herein
shall be deemed an admission as to the existence of a "group" under Section
13(d).

On July 24, 1996, the Company completed the Davidson Acquisition. In
connection therewith, the Company entered into a registration rights agreement
(the "Registration Rights Agreement") with the Selling Stockholders, including
Robert M. Davidson and Janice G. Davidson (Mr. and Mrs. Davidson being
hereinafter referred to collectively as the "Davidsons") and the other Selling
Stockholders identified in the table above. As more fully discussed below, the
Registration Rights Agreement entitles the Selling Stockholders to effect the
registration of the shares they received pursuant to the Davidson Acquisition,
including those shares received by the Davidsons in connection with the sale of
certain real property owned by them to a wholly owned subsidiary of the Company.

REGISTRATION RIGHTS AGREEMENT

DEMAND REGISTRATION. Pursuant to the Registration Rights Agreement, the
Company agreed, among other things, that at any time, and from time to time,
commencing on July 24, 1996 (the "Davidson Effective Date") and ending on July
24, 2002 (such six-year period, the "Davidson Effective Period"), upon the
written request of any of the Selling Stockholders requesting that the Company
effect the registration under the Securities Act of Registrable Securities (as
defined in the Registration Rights Agreement) which, in the aggregate,
constitute at least 2,000,000 shares of Common Stock, the Company will use its
best efforts to register under the Securities Act (a "Demand Registration"), as
expeditiously as may be practicable, the Registrable Securities which the
Company 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 Selling Stockholders; PROVIDED THAT (A) no Selling Stockholder
may exercise a Demand Registration within three months of the effective date of
any registration statement covering equity securities of the Company (other than
on Form S-4 or Form S-8 or any successor or similar registration form) and (B)
the Company will not be required to effect any Demand Registration if the
Company reasonably determines that the sale of the Registrable Securities would
be likely to cause the Davidson Acquisition not to be accounted for as a
"pooling of interests". The Company has filed a registration statement covering
the resale of Common Stock issued by the Company in connection with a certain
acquisition, which registration statement was declared effective by the
Commission on September 18, 1996. The Company, however, has agreed to waive the
condition described in clause (A) above in order to allow the Selling
Stockholders to exercise the Demand Registration to which this offering relates.

In addition to the above restrictions, the Registration Rights Agreement
provides that if the Company has previously effected a Demand Registration, it
is not required to effect a subsequent Demand Registration until a period of at
least 120 days has elapsed from the effective date of the registration statement
used in connection with such previous Demand Registration, and the Company is
not required to effect more than three Demand Registrations during any 36-month
period during the Davidson Effective Period.

Pursuant to the Registration Rights Agreement, the Company also may defer
the filing or effectiveness of any registration statement related to a Demand
Registration for a reasonable period of time not to exceed 90 days after such
request if (A) the Company is, at such time, conducting an underwritten public
offering of Common Stock and is advised by the managing underwriter(s) that such
offering would be adversely affected by such filing or (B) the Company
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
the Company; PROVIDED, HOWEVER, with respect to clauses (A) and (B) above, that
the Company is not entitled to postpone such filing or effectiveness if, within
the preceding 12 months, it has effected two postponements, and following such
postponements the Registrable Securities to be sold pursuant to the postponed
registration statements were not sold (for any reason); and PROVIDED FURTHER,
that during the period commencing on the

Davidson Effective Date and ending 120 days thereafter, the Company may not
defer the filing or effectiveness of the first Demand Registration requested for
more than 30 days.

INCIDENTAL ("PIGGYBACK") REGISTRATION. The Company has further agreed that
if at any time it proposes to register shares of 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 registration forms) in a manner that would
permit registration of Registrable Securities for sale to the public under the
Securities Act, it will promptly give written notice to all Selling Stockholders
of its intention to do so and will use its best efforts to include in the
proposed Company registration all Registrable Securities that the Company is
requested in writing to register by the Selling Stockholders.

In connection with the foregoing rights of demand and incidental
registration, the Company has agreed to pay certain registration, printing and
NYSE listing fees and expenses incident thereto and to indemnify the holders of
Registrable Securities against certain liabilities, including liabilities
arising under the Securities Act.

Pursuant to the Underwriting Agreement, the Company, the Selling
Stockholders and the Underwriters severally have agreed to indemnify each other
against certain liabilities, including certain liabilities arising under the
Securities Act. See "Underwriting".

OTHER MATERIAL RELATIONSHIPS OF SELLING STOCKHOLDERS WITH THE COMPANY

DIRECTORSHIPS. Immediately following the Davidson Acquisition, the Company
increased the size of the Company's Board of Directors (the "CUC Board") by
three directors and caused Robert M. Davidson and Janice G. Davidson to be
appointed to the CUC Board to fill two of the vacancies so created, for initial
terms expiring two years and one year, respectively, following the date of the
Company's first annual meeting of shareholders next following February 19, 1996,
and further caused Robert M. Davidson to be elected as a Vice Chairman of the
CUC Board. From and after the Davidson Effective Date, and for so long as the
Selling Stockholders collectively beneficially own (as such term is defined in
Section 13 of the Exchange Act and the rules and regulations thereunder) 25% of
the shares of Common Stock received by them in the Davidson Acquisition, the
Company has agreed to cause at least one of the Davidsons to be included in the
slate of nominees for election to the CUC Board at each annual meeting of
holders of Common Stock and at any special meeting of such holders at which
directors are to be elected (unless one of the Davidsons is then a member of a
director class whose term does not expire at such meeting).

EMPLOYMENT AND NONCOMPETITION AGREEMENTS. In connection with the Davidson
Acquisition, the Davidsons entered into separate employment and noncompetition
agreements with the Company.

Pursuant to his employment agreement with the Company, Mr. Davidson serves
(i) as a Vice Chairman of the CUC Board and as Davidson's Chief Executive
Officer and a director of Davidson and (ii) as a director, Chairman and Chief
Executive Officer of CUC's educational and entertainment software division, and
is responsible for the overall management of Davidson and CUC's educational and
entertainment software division. Pursuant to her employment agreement with the
Company, Mrs. Davidson serves as Davidson's President and as a director of
Davidson, and serves as a director of CUC's educational and entertainment
software division. The term of each of the Davidsons' employment continues
through July 24, 1999, subject to extension or termination as provided in their
agreements. The Davidsons are eligible for discretionary annual incentive
compensation awards and are entitled to participate in all compensation or
employee benefit plans or programs and receive all benefits and perquisites for
which salaried employees of the Company are eligible under any plan or program
now in effect or later established by the Company for salaried employees
generally.

The non-competition agreements with the Davidsons provide that, until July
24, 2001, without the prior written approval by the CUC Board, the Davidsons
must abstain from (i) engaging in competition,

or directly or indirectly owning or holding a proprietary interest in or being
employed by, or consulting with or receiving compensation 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;
(ii) soliciting any clients of Davidson or any of its subsidiaries for any
business of Davidson or any of its subsidiaries or discussing with any employee
of CUC or any of its affiliates information or operations of any business
intended to compete with CUC or any of its affiliates; and (iii) soliciting or
inducing 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. In addition, the Davidsons have agreed that during such period,
they will not directly or indirectly engage, employ or compensate, or cause or
permit any person with whom they may be affiliated to engage, employ or
compensate, any employee of CUC or any of its affiliates.

REAL PROPERTY AGREEMENT. Pursuant to a certain agreement dated July 23,
1996, the Davidsons sold to a subsidiary of the Company, simultaneously with the
closing of the Davidson Acquisition, certain real property then owned by them
and leased to Davidson. The purchase price was paid by delivery of 221,799
shares of Common Stock, which shares constitute Registrable Securities pursuant
to the Registration Rights Agreement.

UNDERWRITING

Subject to the terms and conditions of the U.S. Underwriting Agreement, the
Selling Stockholders have severally agreed to sell to each of the U.S.
Underwriters named below, and each of such U.S. Underwriters, for whom Goldman,
Sachs & Co., Morgan Stanley & Co. Incorporated, Bear, Stearns & Co. Inc.,
Donaldson, Lufkin & Jenrette Securities Corporation and Smith Barney Inc. are
acting as representatives, has severally agreed to purchase from the Selling
Stockholders, the respective number of shares of Common Stock set forth opposite
its name below:

NUMBER OF SHARES
UNDERWRITER OF COMMON STOCK
- ---------------------------------------------------------------------------------------------------- ----------------

Goldman, Sachs & Co.................................................................................
Morgan Stanley & Co. Incorporated...................................................................
Bear, Stearns & Co. Inc.............................................................................
Donaldson, Lufkin & Jenrette Securities Corporation.................................................
Smith Barney Inc....................................................................................
----------------
Total......................................................................................... 13,200,000
----------------
----------------

Under the terms and conditions of the U.S. Underwriting Agreement, the U.S.
Underwriters are committed to take and pay for all of the shares of Common Stock
offered hereby, if any are taken.

The U.S. Underwriters propose to offer the shares of Common Stock in part
directly to the public at the public offering price set forth on the cover page
of this Prospectus, and in part to certain securities dealers at such price less
a concession of $ per share. The U.S. Underwriters may allow, and such
dealers may reallow, a concession not in excess of $ per share to
certain brokers and dealers. After the shares of Common Stock are released for
sale to the public, the offering price and other selling terms may from time to
time be varied by the representatives.

The Company and the Selling Stockholders have entered into an underwriting
agreement (the "International Underwriting Agreement") with the underwriters of
the international offering (the "International Underwriters") providing for the
concurrent offer and sale of 3,300,000 shares of Common Stock in an offering
conducted outside the United States. The offering price and aggregate
underwriting discounts and commissions per share for the two offerings are
identical. The closing of the offering made hereby is a condition to the closing
of the international offering, and vice versa. The representatives of the
International Underwriters are Goldman Sachs International, Morgan Stanley & Co.
International Limited, Bear, Stearns International Limited, Donaldson, Lufkin &
Jenrette Securities Corporation and Smith Barney Inc.

Pursuant to an Agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the two offerings, each of the
U.S. Underwriters named herein has agreed that, as a part of the distribution of
the shares offered hereby and subject to certain exceptions, it will offer, sell
or deliver the shares of Common Stock, directly or indirectly, only in the
United States (including the States and the District of Columbia), its
territories, its possessions and other areas subject to its jurisdiction
(collectively the "United States") and to U.S. persons, which term shall mean,
for purposes hereof: (a) any individual who is a resident of the United States
or (b) any corporation, partnership or other entity organized in or under the
laws of the United States or any political subdivision thereof and whose office
most directly involved with the purchase is located in the United States. Each
of the International Underwriters has agreed pursuant to the Agreement Between
that, as a part of the distribution of the shares of Common Stock offered as a
part of the international offering, and subject to certain exceptions, it will
(i) not, directly or indirectly, offer, sell or deliver shares of Common Stock
(a) in the United States or to any U.S. persons or (b) to any person whom it
believes intends to reoffer, resell or

deliver the shares in the United States or to any U.S. persons, and (ii) cause
any dealer to whom it may sell such shares at any concession to agree to observe
a similar restriction.

Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Common Stock as may be mutually agreed. The price of any shares so sold shall be
the public offering price, less an amount not greater than the selling
concession.

Certain of the Selling Stockholders have granted the U.S. Underwriters an
option exercisable on or before November 12, 1996 for the purchase of up to an
aggregate of 1,980,000 additional shares of Common Stock, solely to cover
over-allotments, if any. If the U.S. Underwriters exercise such over-allotment
option, the U.S. Underwriters have severally agreed, subject to certain
conditions, to purchase approximately the same percentage thereof that the
number of shares to be purchased by each of them, as shown in the foregoing
table, bears to the total number of shares of Common Stock offered hereby. In
addition, certain of the Selling Stockholders have granted the International
Underwriters a similar option exercisable for up to an aggregate of 495,000
additional shares of Common Stock.

The Company and the Selling Stockholders have agreed that, during the period
beginning on the date of this Prospectus and continuing to and including the
date 90 days after the date of this Prospectus, they will not offer, sell,
contract to sell or otherwise dispose of any securities of the Company (other
than pursuant to employee stock option and purchase plans existing, or on the
conversion or exchange of convertible or exchangeable securities outstanding, on
the date of this Prospectus, or shares in connection with the acquisition by the
Company of the business, assets or capital stock of another company or pursuant
to a purchase, business combination or merger agreement, pursuant to which, in
any single transaction, not more than 25,000,000 shares of Common Stock are
issued or exchanged) which are substantially similar to the shares of Common
Stock or which are convertible into or exchangeable for securities which are
substantially similar to the shares of Common Stock, without the prior written
consent of the representatives, except for shares of Common Stock offered in
connection with the concurrent U.S. and international offerings.

The Company and the Selling Stockholders have agreed to indemnify the U.S.
Underwriters and the International Underwriters against certain liabilities,
including liabilities under the Securities Act of 1933.

This Prospectus may be used by underwriters and dealers in connection with
offers and sales of the Common Stock, including shares initially sold in the
international offering, to persons located in the United States.

Goldman, Sachs & Co. has provided various investment banking and financial
advisory services for the Company, in respect of which it has received certain
fees.

Smith Barney Inc. has provided various investment banking and financial
advisory services for Davidson & Associates, Inc., in respect of which it has
received certain fees.

The U.S. Underwriters and the International Underwriters have agreed to
reimburse certain Selling Stockholders for certain expenses incurred by them in
connection with the offering.

VALIDITY OF COMMON STOCK

The validity of the shares offered hereby will be passed upon for the
Company by Weil, Gotshal & Manges LLP, New York, New York, and for the
Underwriters by Sullivan & Cromwell, New York, New York.

EXPERTS

in part on the report of Deloitte & Touche LLP, independent auditors. The
Supplemental Consolidated Financial Statements of the Company included in its
Current Report on Form 8-K dated July 24, 1996 have also been audited by Ernst &
Young LLP, as set forth in their report included therein and incorporated herein
by reference which, as to the years 1996, 1995 and 1994, are based in part on
the reports of Deloitte & Touche LLP, KPMG Peat Marwick LLP and Price Waterhouse
LLP, independent auditors. The financial statements and schedule and the
Supplemental Consolidated Financial Statements referred to above are
incorporated herein by reference in reliance upon such reports given upon the
authority of such firms as experts in accounting and auditing.

With respect to the unaudited condensed consolidated interim financial
information for the three-month periods ended April 30, 1996 and April 30, 1995,
and the three-month periods and the six-month periods ended July 31, 1996 and
July 31, 1995, incorporated by reference in this Prospectus, Ernst & Young LLP
have reported that they have applied limited procedures in accordance with
professional standards for a review of such information. However, their separate
report, included in the Company's Quarterly Reports on Form 10-Q for the
quarters ended April 30, 1996 and July 31, 1996, incorporated herein by
reference, state that they did not audit and they do not express an opinion on
that interim financial information. Accordingly, the degree of reliance on their
report on such information should be restricted considering the limited nature
of the review procedures applied. The independent auditors are not subject to
the liability provisions of Section 11 of the Securities Act for their report on
the unaudited interim financial information because that report is not a
"report" or a "part" of the Registration Statement prepared or certified by the
auditors within the meaning of Sections 7 and 11 of the Securities Act.

The consolidated financial statements and the Supplemental Consolidated
Financial Statements included in the CUC 10-K and the Company's Current Report
on Form 8-K filed on September 17, 1996, respectively, and the unaudited
condensed consolidated interim financial information included in the Company's
Quarterly Reports referred to above have not been adjusted to give effect to the
three-for-two stock split to be effected on October 21, 1996 (see Note d to
"Selected Financial Data").

The consolidated financial statements of Ideon as of December 31, 1995 and
1994 and as of October 31, 1994 and for the year ended December 31, 1995, the
two months ended December 31, 1994 and each of the two years in the period ended
October 31, 1994, incorporated in this Prospectus by reference to the Company's
Current Report on Form 8-K filed with the Commission on September 17, 1996, have
been so incorporated in reliance upon the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
accounting and auditing.

The consolidated financial statements and related financial statement
schedules of Davidson, incorporated in this Prospectus by reference to the
Company's Current Report on Form 8-K filed with the Commission on September 17,
1996, have been audited by KPMG Peat Marwick LLP, independent auditors, as
stated in their report which is incorporated herein by reference, and have been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.

The consolidated financial statements and related financial statement
schedule of Sierra, incorporated in this Prospectus by reference to the
Company's Current Report on Form 8-K filed with the Commission on September 17,
1996, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report which is incorporated herein by reference, and has been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.

As stated in their report dated September 11, 1996 on the consolidated
financial statements and the related financial statement schedule of Advance
Ross, which report is incorporated herein by reference to the September 17, 1996
Form 8-K, the consolidated financial statements and the related financial
statement schedule of Advance Ross have been audited by Deloitte & Touche LLP,
independent auditors, such report of such firm having been given upon their
authority as experts in accounting and auditing.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

------------------------

TABLE OF CONTENTS

PAGE
----

Available Information................................................................................................... 2
Incorporation of Certain Documents by Reference......................................................................... 3
The Company............................................................................................................. 4
Capitalization.......................................................................................................... 8
Use of Proceeds......................................................................................................... 9
Price Range of Common Stock and Dividend Policy......................................................................... 9
Selected Financial Data................................................................................................. 10
Management's Discussion and Analysis of Financial Condition and Results of Operations................................... 12
Selling Stockholders.................................................................................................... 19
Underwriting............................................................................................................ 24
Validity of Common Stock................................................................................................ 25
Experts................................................................................................................. 25

16,500,000 SHARES

CUC INTERNATIONAL INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)

----------------

[LOGO]

----------------

GOLDMAN, SACHS & CO.

MORGAN STANLEY & CO.
INCORPORATED

BEAR, STEARNS & CO. INC.

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

SMITH BARNEY INC.

REPRESENTATIVES OF THE UNDERWRITERS

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SUBJECT TO COMPLETION DATED OCTOBER 9, 1996
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT.

16,500,000 SHARES*
[LOGO]
CUC INTERNATIONAL INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
-------------------
Of the 16,500,000 shares of Common Stock being offered, 3,300,000 shares are
being offered hereby in an international offering outside the United States and
13,200,000 shares are being offered in a concurrent United States offering. The
public offering price and the aggregate underwriting discount per share will be
identical for both offerings. See "Underwriting".
All of the shares of Common Stock offered hereby are being sold by the
Selling Stockholders. See "Selling Stockholders". The Company will not receive
any of the proceeds from the sale of the shares offered hereby.
The last reported sale price of the Common Stock, which is listed under the
symbol "CU", on the New York Stock Exchange, Inc. Composite Tape on October 8,
1996 was $26.25 per share. See "Price Range of Common Stock and Dividend
Policy".
* UNLESS OTHERWISE INDICATED, ALL INFORMATION INCLUDED IN THIS PROSPECTUS
HAS BEEN ADJUSTED FOR THE THREE-FOR-TWO SPLIT OF THE COMMON STOCK TO BE EFFECTED
ON OCTOBER 21, 1996, AND FURTHER ASSUMES THAT THE UNDERWRITERS' OVER-ALLOTMENT
OPTIONS WILL NOT BE EXERCISED.
-------------------
THIS INTERNATIONAL PROSPECTUS IS INTENDED FOR USE ONLY IN CONNECTION WITH
OFFERS
AND SALES OF THE COMMON STOCK OUTSIDE THE UNITED STATES AND IS NOT TO BE
SENT OR GIVEN TO ANY PERSON WITHIN THE UNITED STATES. THE COMMON
STOCK
OFFERED HEREBY IS NOT BEING REGISTERED UNDER THE U.S.
SECURITIES ACT
OF 1933 FOR THE PURPOSE OF SALES OUTSIDE THE UNITED
STATES.
-------------------

PROCEEDS TO
PUBLIC UNDERWRITING SELLING
OFFERING PRICE DISCOUNT(1) STOCKHOLDERS(2)
---------------------------------------------------------------------------------

Per Share......................................... $ $ $
Total(3).......................................... $ $ $

- -------------

(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933.

(2) Before deducting estimated expenses of $ payable by the Company and
$ payable by the Selling Stockholders.

(3) Certain of the Selling Stockholders have granted to the International
Underwriters an option exercisable on or before November 12, 1996 to
purchase up to an additional 495,000 shares at the initial public offering
price per share, less the underwriting discount, solely to cover
over-allotments. Additionally, certain of the Selling Stockholders have
granted to the U.S. Underwriters an option exercisable on or before November
12, 1996 to purchase up to an additional 1,980,000 shares at the public
offering price per share, less the underwriting discount, solely to cover
over-allotments. If such options are exercised in full, the total initial
public offering price, underwriting discount, and proceeds to the Selling
Stockholders will be $ , $ and $ respectively. See
"Underwriting".
-------------------

The shares offered hereby are offered severally by the International
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that certificates for the shares will be ready for delivery in New York, New
York, on or about October , 1996, against payment therefor in immediately
available funds.

GOLDMAN SACHS INTERNATIONAL MORGAN STANLEY & CO.
INTERNATIONAL

BEAR, STEARNS INTERNATIONAL LIMITED

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

SMITH BARNEY INC.
----------------

THE DATE OF THIS PROSPECTUS IS OCTOBER , 1996.

CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES TO NON-U.S. STOCKHOLDERS

The following is a discussion of the material United States Federal income
and estate tax consequences of the ownership and disposition of Common Stock
applicable to Non-U.S. Holders who acquire and hold the Common Stock as a
capital asset within the meaning of Section 1221 of the Internal Revenue Code of
1986, as amended (the "Code"). The term "Non-U.S. Holder" means any corporation,
partnership, individual or estate or trust that, as to the United States and for
United States Federal income tax purposes, is (a) a foreign corporation, (b) a
foreign partnership, (c) a non-resident alien individual, or (d) a foreign
estate or trust (I.E., a trust or estate other than a trust or estate the income
of which is includible in gross income for U.S. tax purposes).

This discussion does not address all aspects of the United States Federal
income and estate taxation that may be relevant to Non-U.S. Holders in light of
their personal circumstances and does not address foreign, state or local tax
consequences. This discussion also does not consider the tax consequences to a
shareholder, partner or beneficiary of a Holder. Furthermore, the following
discussion is based on current provisions of the Code, current and proposed
Treasury regulations promulgated thereunder and administrative and judicial
interpretations as of the date hereof, all of which are subject to change,
possibly on a retroactive basis.

PROSPECTIVE FOREIGN INVESTORS SHOULD CONSULT THEIR TAX ADVISORS REGARDING
THE UNITED STATES AND OTHER TAX CONSEQUENCES OF OWNING AND DISPOSING OF SHARES
OF COMMON STOCK.

DIVIDENDS

Generally, any dividend paid to a Non-U.S. Holder of Common Stock will be
subject to United States withholding tax at a rate of 30% of the amount of the
dividend, or at such lesser rate as may be provided by an applicable treaty.
(For purposes of the withholding tax, a non-resident alien or other fiduciary of
an estate or trust will be considered a Non-U.S. Holder.) No withholding will be
required with respect to dividends that are "U.S. trade or business income" of a
Non-U.S. Holder which has timely filed a Form 4224 (or successor form), in
duplicate, with the Company in respect of the taxable year in which the
dividends are paid. However, such dividends will be subject to United States
Federal income tax at regular graduated rates. Dividends will be "U.S. trade or
business income" if such dividends are (i) effectively connected with the
conduct of a trade or business in the United States or (ii) where a U.S. income
tax treaty applies, attributable to a U.S. permanent establishment or, in case
of an individual, a "fixed base" in the United States. In the case of a Non-U.S.
Holder which is a corporation, such U.S. trade or business income also may be
subject to the branch profits tax (which is generally imposed on a foreign
corporation on the repatriation from the United States of earnings and profits
attributable to U.S. trade or business income) at a 30% rate. The branch profits
tax may not apply (or may apply at a reduced rate) if the recipient is a
qualified resident of certain countries with which the United States has an
income tax treaty.

Under current Treasury regulations, dividends paid to an address in a
foreign country generally are presumed to be paid to a resident of such country
for purposes of determining the applicability of the 30% withholding tax or of
any lower treaty rate. However, under proposed Treasury regulations not
currently in effect, a Non-U.S. Holder of Common Stock who wishes to claim the
benefit of an applicable treaty would be required to satisfy certain
certification requirements.

DISPOSITION OF COMMON STOCK

Except as described below, any gain realized by a Non-U.S. Holder on the
sale or exchange of Common Stock will generally not be subject to U.S. Federal
income tax, unless (i) such gain is U.S. trade or business income; (ii) the
Non-U.S. Holder is an individual who is present in the United States for 183
days or more in the taxable year of the disposition and meets certain other
requirements; (iii) the Non-U.S. Holder is subject to tax pursuant to the
provisions of U.S. tax law applicable to certain U.S. expatriates; or (iv) the
Company is or has been a "U.S. real property holding corporation" (as defined
for

U.S. Federal income tax purposes) and the Non-U.S. Holder has held, during the
preceding five-year period (or such shorter period that the shares were held)
more than 5% of the Common Stock (assuming such stock is regularly traded on an
established securities market). The Company is not now and has not been within
the past five years and anticipates it will not become a "U.S. real property
holding corporation."

FEDERAL ESTATE TAXES

Shares of Common Stock held by an individual at the time of his death (or
theretofore transferred subject to certain retained rights or powers) will be
subject to United States Federal estate tax unless otherwise provided by an
applicable estate tax treaty.

INFORMATION REPORTING AND BACKUP WITHHOLDING

Generally, the Company must report annually to the Internal Revenue Service
and to each Non-U.S. Holder the amount of dividends paid to, and the tax
withheld, if any, with respect to each Non-U.S. Holder. These reporting
requirements apply whether or not withholding was reduced or eliminated by an
applicable tax treaty. Copies of these information returns may also be made
available under the provisions of a specific treaty or agreement to the tax
authorities of the country in which the Non-U.S. Holder resides. U.S. backup
withholding tax (which generally is a tax imposed at the rate of 31% on payments
to persons that fail to furnish the information required under the United States
information reporting requirements) generally will not apply to dividends paid
on the Common Stock to a Non-U.S. Holder at an address outside the United
States. Under proposed regulations, a Non-U.S. Holder may be required to
establish such holder's foreign status to avoid the application of backup
withholding on dividends paid outside the United States.

The payment of the proceeds of the disposition of shares of Common Stock to
or through the United States office of a broker will be subject to information
reporting and possible backup withholding unless the owner certifies its
non-U.S. status under penalties of perjury or otherwise establishes an
exemption. The payment of the proceeds from the disposition of shares of Common
Stock to or through a non-U.S. office of a non-U.S. broker generally will not be
subject to backup withholding and information reporting. In the case of the
payment of proceeds from the disposition of shares of Common Stock through a
non-U.S. office of a broker that is a U.S. person or a "U.S. related person",
existing regulations require information reporting, but not backup withholding
on, the payment, unless the broker has documentary evidence in its files that
the owner is a Non-U.S. Holder and the broker has no actual knowledge to the
contrary. (For this purpose, a "U.S. related person" is (i) a "controlled
foreign corporation" for United States Federal income tax purposes, or (ii) a
foreign person 50% or more of whose gross income from all sources for the
three-year period ending with the close of its taxable year preceding the
payment (or for such part of the period that the broker has been in existence),
is derived from activities that are effectively connected with the conduct of a
trade or business in the United States.)

Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be allowed as a refund or a credit against such Non-U.S.
Holder's United States Federal income tax liability, provided that certain
required information is furnished to the Internal Revenue Service.

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Selling Stockholders have agreed to sell to each of the International
Underwriters, named below, and each of such International Underwriters, for whom
Goldman Sachs International, Morgan Stanley & Co. International Limited, Bear,
Stearns International Limited, Donaldson, Lufkin & Jenrette Securities
Corporation and Smith Barney Inc. are acting as representatives, has severally
agreed to purchase from each of the Selling Stockholders, the respective number
of shares of Common Stock set forth opposite its name below:

NUMBER OF SHARES
UNDERWRITER OF COMMON STOCK
- ---------------------------------------------------------------------------------------------------- ----------------

Goldman Sachs International.........................................................................
Morgan Stanley & Co. International..................................................................
Bear, Stearns International Limited.................................................................
Donaldson, Lufkin & Jenrette Securities Corporation................................................. .
Smith Barney Inc....................................................................................
----------------
Total....................................................................................... 3,300,000
----------------
----------------

Under the terms and conditions of the Underwriting Agreement, the
International Underwriters are committed to take and pay for all of the shares
offered hereby, if any are taken.

The International Underwriters propose to offer the shares of Common Stock
in part directly to the public at the initial public offering price set forth on
the cover page of this Prospectus, and in part to certain securities dealers at
such price less a concession of $ per share. The International Underwriters
may allow, and such dealers may reallow, a concession not in excess of $ per
share to certain brokers and dealers. After the shares of Common Stock are
released for sale to the public, the offering price and other selling terms may
from time to time be varied by the representatives.

The Company and the Selling Stockholders have entered into an underwriting
agreement (the "U.S. Underwriting Agreement") with the underwriters of the U.S.
Offering (the "U.S. Underwriters") providing for the concurrent offer and sale
of 13,200,000 shares of Common Stock in a U.S. offering in the United States.
The offering price and aggregate underwriting discounts and commissions per
share for the two offerings will be identical. The closing of the offering made
hereby is a condition to the closing of the U.S. offering, and vice versa. The
representatives of the U.S. Underwriters are Goldman, Sachs & Co., Morgan
Stanley & Co. Incorporated, Bear, Stearns & Co. Inc., Donaldson, Lufkin &
Jenrette Securities Corporation and Smith Barney Inc.

Pursuant to an Agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the two offerings, each of the
U.S. Underwriters has agreed that, as a part of the distribution of the shares
offered as a part of the U.S. offering and subject to certain exceptions, it
will offer, sell or deliver the shares of Common Stock, directly or indirectly,
only in the United States (including the States and the District of Columbia),
its territories, its possessions and other areas subject to its jurisdiction
(the "United States") and to U.S. persons, which term shall mean, for purposes
of this paragraph: (a) any individual who is a resident of the United States or
(b) any corporation, partnership or other entity organized in or under the laws
of the United States or any political subdivision thereof and whose office most
directly involved with the purchase is located in the United States. Each of the
International Underwriters named herein has agreed pursuant to the Agreement,
Between that, as a part of the distribution of the shares offered hereby, and
subject to certain exceptions, it will (i) not, directly or indirectly, offer,
sell or deliver shares of Common Stock, (a) in the United States or to any U.S.
persons or (b) to any person who it believes intends to reoffer, resell or
deliver these shares in the United States or to any U.S. persons, and (ii) cause
any dealer to whom it may sell such shares at any concession to agree to observe
a similar restriction.

Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Common Stock as may be mutually agreed. The

price of any shares so sold shall be the public offering price, less an amount
not greater than the selling concession.

The Selling Stockholders have granted the International Underwriters an
option exercisable on or before November 12, 1996 for the purchase up to an
aggregate of 495,000 additional shares of Common Stock, solely to cover
over-allotments, if any. If the International Underwriters exercise their over-
allotment option, the International Underwriters have severally agreed, subject
to certain conditions, to purchase approximately the same percentage thereof
that the number of shares to be purchased by each of them, as shown in the
foregoing table, bears to the total number of shares of Common Stock offered
hereby. The Company has granted the U.S. Underwriters a similar option to
purchase up to an aggregate of 1,980,000 additional shares of Common Stock.

The Company and the Selling Stockholders have agreed that, during the period
beginning from the date of this Prospectus and continuing to and including the
date 90 days after the date of the Prospectus, they will not offer, sell,
contract to sell or otherwise dispose of any securities of the Company (other
than pursuant to employee stock option and purchase plans existing, or on the
conversion or exchange of convertible or exchangeable securities outstanding, on
the date of this Prospectus, or shares in connection with the acquisition by the
Company of the business assets or capital stock of another company or pursuant
to a purchase, business combination or merger agreement, pursuant to which, in
any single transaction, not more than 25,000,000 shares of Common Stock are
issued or exchanged) which are substantially similar to the shares of the Common
Stock or which are convertible into or exchangeable for securities which are
substantially similar to the shares of the Common Stock without the prior
written consent of the representatives, except for the shares of the Common
Stock offered in connection with the concurrent U.S. and international
offerings.

Each International Underwriter has also agreed that (a) it has not offered
or sold and will not offer or sell any shares of Common Stock to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995, (b) it
has complied, and will comply, with all applicable provisions of the Financial
Services Act of 1986 of Great Britain with respect to anything done by it in
relation to the shares of Common Stock in, from or otherwise involving the
United Kingdom, and (c) it has only issued or passed on and will only issue or
pass on in the United Kingdom any document received by it in connection with the
issuance of the shares of Common Stock to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (investment Advertisements)
(Exemptions) Order 1996 of Great Britain or is a person to whom the document may
otherwise lawfully be issued or passed on.

Buyers of shares of Common Stock offered hereby may be required to pay stamp
taxes and other charges in accordance with the laws and practice of the country
of purchase in addition to the public offering price.

The Company and the Selling Shareholders have agreed to indemnify the
International Underwriters and the U.S. Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.

Goldman, Sachs & Co. has provided various investment banking and financial
advisory services for the Company, in respect of which it has received certain
fees.

Smith Barney Inc. has provided various investment banking and financial
advisory services for Davidson & Associates, Inc., in respect of which it has
received certain fees.

The International Underwriters and the U.S. Underwriters have agreed to
reimburse certain Selling Stockholders for certain expenses incurred by them in
connection with the offering.

VALIDITY OF COMMON STOCK

The validity of the shares offered hereby will be passed upon for the
Company by Weil, Gotshal & Manges LLP, New York, New York, and for the
Underwriters by Sullivan & Cromwell, New York, New York.

EXPERTS

The consolidated financial statements and schedule of the Company appearing
in the CUC 10-K have been audited by Ernst & Young LLP, independent auditors, as
set forth in their report thereon included therein and incorporated herein by
reference which, as to the years 1995 and 1994, are based in part on the report
of Deloitte & Touche LLP, independent auditors. The Supplemental Consolidated
Financial Statements of the Company included in its Current Report on Form 8-K
dated July 24, 1996 have also been audited by Ernst & Young LLP, as set forth in
their report included therein and incorporated herein by reference which, as to
the years 1996, 1995 and 1994, are based in part on the reports of Deloitte &
Touche LLP, KPMG Peat Marwick LLP and Price Waterhouse LLP, independent
auditors. The financial statements and schedule and the Supplemental
Consolidated Financial Statements referred to above are incorporated herein by
reference in reliance upon such reports given upon the authority of such firms
as experts in accounting and auditing.

The consolidated financial statements and related financial statement
schedule of Sierra, incorporated in this Prospectus by reference to the
Company's Current Report on Form 8-K filed with the

Commission on September 17, 1996, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report which is incorporated herein by
reference, and has been so incorporated in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

------------------------

TABLE OF CONTENTS

PAGE
----

Available Information................................................................................................... 2
Incorporation of Certain Documents by Reference......................................................................... 3
The Company............................................................................................................. 4
Capitalization.......................................................................................................... 8
Use of Proceeds......................................................................................................... 9
Price Range of Common Stock and Dividend Policy......................................................................... 9
Selected Financial Data................................................................................................. 10
Management's Discussion and Analysis of Financial Condition and Results of Operations................................... 12
Selling Stockholders.................................................................................................... 19
Certain United States Federal Tax Consequences to Non-U.S. Stockholders................................................. 24
Underwriting............................................................................................................ 26
Validity of Common Stock................................................................................................ 28
Experts................................................................................................................. 28

16,500,000 SHARES

CUC INTERNATIONAL INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)

----------------

[LOGO]

----------------

GOLDMAN SACHS INTERNATIONAL

MORGAN STANLEY & CO.
INTERNATIONAL

BEAR, STEARNS INTERNATIONAL LIMITED

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

SMITH BARNEY INC.

REPRESENTATIVES OF THE UNDERWRITERS

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The table below sets forth the expenses expected to be incurred and borne
solely by the Company in connection with the registration of the shares of
Common Stock offered hereby. All amounts, except the SEC Registration Fee, are
estimated.

SEC Registration Fee............................................................................................... $155,480.00
Legal Fees and Expenses............................................................................................ 65,000.00
Blue Sky Fees and Expenses......................................................................................... 10,000.00
Accounting Fees and Expenses....................................................................................... 25,000.00
Printing Fees and Expenses......................................................................................... 65,000.00
Miscellaneous...................................................................................................... 10,000.00
-----------
Total.................................................................................................. $330,480.00
-----------
-----------

The Company has agreed to bear certain costs of registering the shares of
Common Stock under the Securities Act, including the registration fee under the
Securities Act, all other registration and filing fees, all fees and
disbursements of counsel and accountants retained by the Company and all other
expenses incurred by the Company in connection with the Company's performance of
or compliance with the Registration Rights Agreement; such costs (or estimates
thereof) have been set forth above. The Selling Stockholders will bear certain
other costs relating to the registration of the shares of Common Stock under the
Securities Act, including all underwriting discounts and commissions, all
transfer taxes and all costs of any separate legal counsel or other advisors
retained by the Selling Stockholders.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the General Corporation Law of the State of Delaware empowers
a Delaware corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of such
corporation or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding, provided that such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such person's conduct was
unlawful. A Delaware corporation may indemnify directors, officers, employees
and other agents of such corporation in an action by or in the right of the
corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the person to be indemnified has been
adjudged to be liable to the corporation. Where a director, officer, employee or
agent of the corporation is successful on the merits or otherwise in the defense
of any action, suit or proceeding referred to above or in defense of any claim,
issue or matter therein, the corporation must indemnify such person against the
expenses (including attorneys' fees) which he or she actually and reasonably
incurred in connection therewith.

The Company's By-laws contain provisions that provide for indemnification of
officers and directors and their heirs and distributees to the fullest extent
permitted by, and in the manner permissible under, the General Corporation Law
of the State of Delaware.

II-1

As permitted by Section 102(b)(7) of the General Corporation Law of the
State of Delaware, the Company's Amended and Restated Certificate of
Incorporation contains a provision eliminating the personal liability of a
director to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director, subject to certain exceptions.

The Company maintains policies insuring its officers and directors against
certain civil liabilities, including liabilities under the Securities Act.

Pursuant to the U.S. and International Underwriting Agreements, the
Underwriters have agreed to indemnify the Company and the Selling Stockholders
against certain liabilities, including liabilities under the Securities Act.
Pursuant to Registration Rights Agreements, the Selling Stockholders have agreed
to indemnify the Company and its officers, directors and control persons against
certain liabilities.

ITEM 16. EXHIBITS AND FINANCIAL SCHEDULES

(a) Exhibits

1.1 ) Form of U.S. Underwriting Agreement dated October , 1996, among CUC International Inc., the Selling Stockholders and the
U.S. Underwriters.

1.1 ) Form of International Underwriting Agreement dated October , 1996, among CUC International Inc., the Selling Stockholders,
and the International Underwriters.

*4.1 Registration Rights Agreement dated July 24, 1996, among CUC International Inc. and the other parties signatory thereto
(incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the Commission on
August 5, 1996).

5.1 Opinion as to validity of the Shares.

15.1 Letter re: Unaudited Interim Financial Information.

23.1 Consent of Counsel (included in Exhibit 5.1).

23.2 Consent of Ernst & Young LLP.

23.3 Consent of Price Waterhouse LLP (relating to the Ideon Group, Inc. financial statements).

23.4 Consent of KPMG Peat Marwick LLP (relating to the Davidson & Associates, Inc. financial statements).

23.5 Consent of Deloitte & Touche LLP (relating to the Sierra On-Line, Inc. financial statements).

23.6 Consent of Deloitte & Touche LLP (relating to the Advance Ross Corporation financial statements).

*24.1 Power of Attorney (included as part of the Signature Page of this Registration Statement).

- ------------------------

* Previously filed.

ITEM 17. UNDERTAKINGS

1. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement

II-2

relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

2. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
offered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

3. For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

4. For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

II-3

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Stamford, State of Connecticut on this 9th day of
October 1996.

CUC INTERNATIONAL INC.

BY: /S/ WALTER A. FORBES
-----------------------------------------
Walter A. Forbes
CHIEF EXECUTIVE OFFICER AND
CHAIRMAN OF THE BOARD OF DIRECTORS

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Walter A. Forbes and E. Kirk Shelton, and
each and either of them, his or her true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities, to sign any and all
amendments (including, without limitation, post-effective amendments) to this
Registration Statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.

SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------

Chief Executive Officer and
/s/ WALTER A. FORBES Chairman of the Board
- ------------------------------ (Principal Executive October 9, 1996
Walter A. Forbes Officer)

Senior Vice President and
/s/ COSMO CORIGLIANO Chief Financial Officer
- ------------------------------ (Principal Financial and October 9, 1996
Cosmo Corigliano Accounting Officer)

/s/ BARTLETT BURNAP Director
- ------------------------------ October 9, 1996
Bartlett Burnap

/s/ T. BARNES DONNELLEY Director
- ------------------------------ October 9, 1996
T. Barnes Donnelley

/s/ STEPHEN A. GREYSER Director
- ------------------------------ October 9, 1996
Stephen A. Greyser

/s/ CHRISTOPHER K. MCLEOD Director
- ------------------------------ October 9, 1996
Christopher K. McLeod

II-4

SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------

/s/ BURTON C. PERFIT Director
- ------------------------------ October 9, 1996
Burton C. Perfit

/s/ ROBERT P. RITTEREISER Director
- ------------------------------ October 9, 1996
Robert P. Rittereiser

/s/ STANLEY M. RUMBOUGH, Director
JR.
- ------------------------------ October 9, 1996
Stanley M. Rumbough, Jr.

/s/ E. KIRK SHELTON Director
- ------------------------------ October 9, 1996
E. Kirk Shelton

/s/ KENNETH A. WILLIAMS Director
- ------------------------------ October 9, 1996
Kenneth A. Williams

/s/ JANICE G. DAVIDSON Director
- ------------------------------ October 9, 1996
Janice G. Davidson

/s/ ROBERT M. DAVIDSON Director
- ------------------------------ October 9, 1996
Robert M. Davidson

II-5

EXHIBIT INDEX

EXHIBIT NO. DESCRIPTION PAGE NO.
- ----------- --------------------------------------------------------------------------------------------------------- --------

1.1(a) Form of U.S. Underwriting Agreement dated October , 1996, among CUC International Inc., the Selling
Shareholders, the U.S. Underwriters.

1.1(b) Form of International Underwriting Agreement dated October , 1996, among CUC International Inc.,
the Selling Stockholders, and the International Underwriters.

*4.1 Registration Rights Agreement dated July 24, 1996, among CUC International Inc. and the other parties
signatory thereto (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on
Form 8-K, filed with the Commission on August 5, 1996).

5.1 Opinion as to validity of the Shares.

15.1 Letter re: Unaudited Interim Financial Information.

23.1 Consent of Counsel (included in Exhibit 5.1).

23.2 Consent of Ernst & Young LLP.

23.3 Consent of Price Waterhouse LLP (relating to the Ideon Group, Inc. financial statements).

23.4 Consent of KPMG Peat Marwick LLP (relating to the Davidson & Associates, Inc. financial statements).

23.5 Consent of Deloitte & Touche LLP (relating to the Sierra On-Line, Inc. financial statements).

23.6 Consent of Deloitte & Touche LLP (relating to the Advance Ross Corporation financial statements).

*24.1 Power of Attorney (included as part of the Signature Page of this Registration Statement).

- ------------------------

* Previously filed.





                                                    S&C Draft of October 9, 1996




                            CUC INTERNATIONAL INC.

                                 COMMON STOCK
                          PAR VALUE $.01 PER SHARE

                                 ------------

                            UNDERWRITING AGREEMENT
                                (U.S. VERSION)
                                 ------------


                                        October   , 1996

Goldman, Sachs & Co.,
Morgan Stanley & Co. Incorporated,
Bear Stearns & Co. Inc.,
Donaldson, Lufkin & Jenrette
  Securities Corporation,
Smith Barney Inc., 
 As representatives of the several
  Underwriters named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.

Dear Sirs:

     Certain stockholders named in Schedule II hereto (the "Selling 
Stockholders") of CUC International Inc., a Delaware corporation (the 
"Company"), propose, subject to the terms and conditions stated herein, to 
sell to the Underwriters named in Schedule I hereto (the "Underwriters") an 
aggregate of 13,200,000 shares (the "Firm Shares") and, at the election of 
the Underwriters, up to 1,980,000 additional shares (the "Optional Shares") 
of Common Stock, par value $.01 per share ("Stock"), of the Company (the Firm 
Shares and the Optional Shares which the Underwriters elect to purchase 
pursuant to Section 2 hereof are herein collectively called the "Shares").

     It is understood and agreed to by all parties that the Company and the 
Selling Stockholders are concurrently entering into an agreement (the 
"International Underwriting Agreement") providing for the sale by the Selling 
Stockholders of up to a total of 3,795,000 shares of Stock (the 
"International Shares"), including the over-allotment option thereunder, 
through arrangements with certain underwriters outside the United States (the 
"International Underwriters"), for whom Goldman Sachs International and 
Morgan Stanley & Co. International Limited are acting as lead managers.  
Anything herein or therein to the contrary



notwithstanding, the respective closings under this Agreement and the 
International Underwriting Agreement are hereby expressly made conditional on 
one another.  The Underwriters hereunder and the International Underwriters 
are simultaneously entering into an Agreement between U.S. and International 
Underwriting Syndicates (the "Agreement between Syndicates") which provides, 
among other things, for the transfer of shares of Stock between the two 
syndicates.  Two forms of prospectus are to be used in connection with the 
offering and sale of shares of Stock contemplated by the foregoing, one 
relating to the Shares hereunder and the other relating to the International 
Shares.  The latter form of prospectus will be identical to the former except 
for certain substitute pages.  Except as used in Sections 2, 3, 4, 9 and 11 
herein, and except as the context may otherwise require, references 
hereinafter to the Shares shall include all the shares of Stock which may be 
sold pursuant to either this Agreement or the International Underwriting 
Agreement, and references herein to any prospectus whether in preliminary or 
final form, and whether as amended or supplemented, shall include both the 
U.S. and the international versions thereof.

     1.  (a)  The Company represents and warrants to, and agrees with, each 
of the Underwriters that:

       (i)  A registration statement on Form S-3 (File No. 333-13537)   (the 
"Initial Registration Statement") in respect of the Shares has   been filed 
with the  Securities and Exchange Commission (the   "Commission"); the 
Initial Registration Statement and any post-effective   amendment thereto, 
each in the form heretofore delivered to you, and,   excluding exhibits 
thereto but including all documents incorporated by   reference in the 
prospectus contained therein, for each of the other Underwriters, have been 
declared effective by the Commission in such form; other than a registration 
statement, if any, increasing the size of the offering (a "Rule 462(b) 
Registration Statement") filed pursuant to Rule 462(b) under the Securities 
Act of 1933, as amended (the "Act"), which will become effective upon filing, 
no other document with respect to the Initial Registration Statement or 
document incorporated by reference therein has heretofore been filed with the 
Commission; and no stop order suspending the effectiveness of the Initial 
Registration Statement, any post-effective amendment thereto or the Rule 
462(b) Registration Statement, if any, has been issued and no proceeding for 
that purpose has been initiated or threatened by the Commission (any 
preliminary prospectus included in the Initial Registration Statement or 
filed with the Commission pursuant to Rule 424(a) of the rules and 
regulations of the Commission under the Act, being hereinafter called a 
"Preliminary Prospectus"; the various parts of the Initial Registration 
Statement and the Rule 462(b) Registration Statement, if any, including all 
exhibits thereto and including (i) the information contained in the form of 
final prospectus filed with the Commission pursuant to Rule 424(b) under the 
Act in accordance with Section 5(a) hereof and deemed by virtue of Rule 430A 
under the Act to be part of the Initial Registration Statement at the time it 
was declared effective or such part of the Rule 462(b) Registration 
Statement, if any, became or thereafter becomes effective; and (ii) the 
documents incorporated by reference in the prospectus contained in the 
Initial Registration Statement and the Rule 462(b) Registration Statement, if 
any, at the time such part of the Initial Registration Statement and the Rule 
462(b) Registration Statement, if any, became effective, each as amended at 
the time such part of the registration statement became effective, being 
hereinafter called


                                       -2-



the "Registration Statement"; such final prospectus, in the form first filed
pursuant to Rule 424(b) under the Act, being hereinafter called the
"Prospectus"; and any reference herein to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents incorporated
by reference therein pursuant to Item 12 of Form S-3 under the Act, as of the
date of such Preliminary Prospectus or Prospectus, as the case may be; any
reference to any amendment or supplement to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include any documents filed after
the date of such Preliminary Prospectus or Prospectus, as the case may be,
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and 
incorporated by reference in such Preliminary Prospectus or Prospectus, as 
the case may be; and any reference to any amendment to the Registration 
Statement shall be deemed to refer to and include any annual report of the 
Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act after 
the effective date of the Registration Statement that is incorporated by 
reference in the Registration Statement);

      (ii)  No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary 
Prospectus, at the time of filing thereof, conformed in all material respects
to the requirements of the Act and the rules and regulations of the Commission 
thereunder, and did not contain 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 the light of the circumstances under which 
they were made, not misleading; PROVIDED, HOWEVER, that this representation 
and warranty shall not apply to any statements or omissions made in reliance 
upon and in conformity with information furnished in writing to the Company 
by an Underwriter through Goldman, Sachs & Co. expressly for use therein or 
by a Selling Stockholder expressly for use in the preparation of the answers 
therein to Item 7 of Form S-3;

      (iii)  The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may be, 
conformed in all material respects to the requirements of the Act or the 
Exchange Act, as applicable, and the rules and regulations of the Commission 
thereunder, and none of such documents contained an untrue statement of a 
material fact or omitted to state a material fact required to be stated 
therein or necessary to make the statements therein not misleading; and any 
further documents so filed and incorporated by reference in the Prospectus or 
any further amendment or supplement thereto, when such documents become 
effective or are filed with the Commission, as the case may be, will conform 
in all material respects to the requirements of the Act or the Exchange Act, 
as applicable, and the rules and regulations of the Commission thereunder and 
will not contain 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 not misleading;

      (iv)  The Registration Statement conforms, and the Prospectus and any 
further amendments or supplements to the Registration Statement or the 
Prospectus will conform, in all material respects to the requirements of the 
Act and the rules and 

                                       -3-


regulations of the Commission thereunder and do not and 
will not, as of the applicable effective date as to the Registration 
Statement and any amendment thereto and as of the applicable filing date as to
the Prospectus and any amendment or supplement thereto, contain 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 not misleading;
provided, however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through you expressly for
use therein or by a Selling Stockholder expressly for use in the preparation of
the answers therein to Item 7 of Form S-3;

     (v)  Neither the Company nor any of its subsidiaries has sustained since
the date of the latest audited financial statements included or incorporated by
reference in the Prospectus any material loss or interference with its 
business from fire, explosion, flood or other calamity, whether or not 
covered by insurance, or from any labor dispute or court or governmental 
action, order or decree, otherwise than as set forth or contemplated in the 
Prospectus; and, since the respective dates as of which information is given 
in the Registration Statement and the Prospectus, there has not been any 
change in the capital stock (other than increases in the outstanding common 
stock of the Company as a result of the issuance of stock pursuant to any of 
the Company's existing stock option plans or employee stock purchase plans or 
upon the conversion of convertible securities outstanding on the date of this 
Agreement, in accordance with the descriptions of such plans and convertible 
securities in the Prospectus) or long-term debt or (other than any increase 
of less than $50,000,000 incurred in the ordinary course of business of the 
Company and its subsidiaries, including for the purpose of financing 
acquisitions, or any decrease) short-term debt of the Company or any of its 
subsidiaries or any material adverse change, or any development involving a 
prospective material adverse change, in or affecting the business, 
management, financial position, stockholders' equity or results of operations 
of the Company and its subsidiaries taken as a whole, otherwise than as set 
forth or contemplated in the Prospectus;

     (vi)  The Company and its subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to all personal 
property owned by them, in each case free and clear of all liens, 
encumbrances and defects except such as are described in the Prospectus or 
such as do not materially affect the value of such property and do not 
interfere with the use made and proposed to be made of such property by the 
Company and its subsidiaries; and any real property and buildings held under 
lease by the Company and its subsidiaries are held by them under valid, 
subsisting and enforceable leases with such exceptions as are not material 
and do not interfere with the use made and proposed to be made of such 
property and buildings by the Company and its subsidiaries;

     (vii)  The Company has been duly incorporated and is validly existing as a 
corporation in good standing under the laws of the State of Delaware, with 
power and authority (corporate and other) to own its properties and conduct 
its business as described in the Prospectus, and has been duly qualified as a 
foreign corporation for 
                                       -4-


the transaction of business and is in good standing 
under the laws of each other jurisdiction in which it owns or leases 
properties, or conducts any business, so as to
require such qualification, or is subject to no material liability or 
disability by reason of the failure to be so qualified in any such 
jurisdiction; and each of FISI*Madison Financial Company, Benefit 
Consultants, Inc., Entertainment Publishing Corp. ("Entertainment"), 
Entertainment Publications Inc., Interval International, Inc., Davidson & 
Associates, Inc., Sierra On-Line, Inc. and Ideon Group, Inc. (each a 
"Subsidiary" and collectively, the "Subsidiaries") has been duly incorporated 
and is validly existing as a corporation in good standing under the laws of 
its jurisdiction of incorporation;

      (viii)  The Company has an authorized capitalization as set forth in the 
Company's Quarterly Report on Form 10-Q for the six months ended July 31, 
1996 as incorporated by reference in the Prospectus, and all of the issued 
shares of capital stock of the Company have been duly and validly authorized 
and issued, are fully paid and non-assessable and conform to the description 
of the Stock contained in the Prospectus; and all of the issued shares of 
capital stock of each Subsidiary of the Company have been duly and validly 
authorized and issued, are fully paid and non-assessable and are owned 
directly or indirectly by the Company, free and clear of all liens, 
encumbrances, equities or claims;

      (ix)  The compliance by the Company with all of the provisions of this 
Agreement and the International Underwriting Agreement and the consummation 
of the transactions herein and therein contemplated will not conflict with or 
result in a breach or violation of any of the terms or provisions of, or 
constitute a default under, any indenture, mortgage, deed of trust, loan 
agreement or other agreement or instrument to which the Company or any of its 
subsidiaries is a party or by which the Company or any of its subsidiaries is 
bound or to which any of the property or assets of the Company or any of its 
subsidiaries is subject, except for such conflicts, breaches, violations or 
defaults that will not have a material adverse effect on the Company and its 
subsidiaries taken as a whole or on the transactions contemplated hereby or 
by the International Underwriting Agreement, nor will such action result in 
any violation of the provisions of the Certificate of Incorporation or 
By-laws of the Company or any statute or any order, rule or regulation of any 
court or governmental agency or body having jurisdiction over the Company or 
any of its subsidiaries or any of their properties; and no consent, approval, 
authorization, order, registration or qualification of or with any such court 
or governmental agency or body is required for the sale of the Shares or the 
consummation by the Company of the transactions contemplated by this 
Agreement and the International Underwriting Agreement, except the 
registration under the Act of the Shares and such consents, approvals, 
authorizations, registrations or qualifications as may be required under 
state securities or Blue Sky laws in connection with the purchase and 
distribution of the Shares by the Underwriters and the International 
Underwriters;

      (x)  Neither the Company nor any of its Subsidiaries is in violation of
its Certificate of Incorporation or By-laws or in default in the performance
or observance of any material obligation, agreement, covenant or condition 
contained in any 
                                       -5-



indenture, mortgage, deed of trust, loan agreement lease or 
other agreement or instrument to which it is a party or by which it or any of 
its properties may be bound;


      (xi)  The statements set forth in the Prospectus under the captions 
"Management's Discussion and Analysis of Financial Condition and Results of 
Operations -- Liquidity and Capital Resources; Inflation; Seasonality", 
"Selling Stockholders" and "Taxation", insofar as they purport to describe 
the provisions of the laws and documents referred to therein and the 
description of the capital stock of the Company contained in the Company's 
Registration Statements on Form 8-A, as amended, referred to under the 
caption "Incorporation of Certain Documents by Reference", insofar as they 
purport to constitute summaries of the terms of the Stock and other capital 
stock of the Company, are accurate, complete and fair;

      (xii)  Other than as set forth in the Prospectus, there are no legal or 
governmental proceedings pending to which the Company or any of its 
subsidiaries is a party or of which any property of the Company or any of its 
subsidiaries is the subject which, if determined adversely to the Company or 
any of its subsidiaries, would individually or in the aggregate have a 
material adverse effect on the consolidated financial position, stockholders' 
equity or results of operations of the Company and its subsidiaries taken as 
a whole; and, to the best of the Company's knowledge, no such proceedings are 
threatened or contemplated by governmental authorities or threatened by 
others;

      (xiii)  Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba within
the meaning of Section 517.075, Florida Statutes; and

      (xiv)  Ernst & Young LLP, who have certified certain financial statements
of the Company and its subsidiaries, Deloitte & Touche LLP, who have certified 
certain financial statements of Sierra On-Line Inc and its subsidiaries and 
of Advance Ross Corporation and its subsidiaries, KPMG Peat Marwick LLP, who 
have certified certain financial statements of Davidson & Associates, Inc. 
and its subsidiaries and Price Waterhouse, LLP, who have certified certain 
financial statements of Ideon Group, Inc. and its subsidiaries, are 
independent public accountants as required by the Act and the rules and 
regulations of the Commission thereunder.

     (b)  Each of the Selling Stockholders severally represents and warrants
to,  and agrees with, each of the Underwriters and the Company that:

      (i)  All consents, approvals, authorizations and orders necessary for the 
execution and delivery by such Selling Stockholder of this Agreement, the 
International Underwriting Agreement and the Power of Attorney (the "Power of 
Attorney") and the Custody Agreement (the "Custody Agreement") hereinafter 
referred to, and for the sale and delivery of the Shares to be sold by such 
Selling Stockholder hereunder and under the International Underwriting 
Agreement, have been obtained; and such Selling Stockholder has full right, 
power and authority to enter into this Agreement, the International 
Underwriting Agreement, the Power of Attorney and the Custody


                                       -6-



Agreement and to sell, assign, transfer and deliver the Shares to be sold
by such Selling Stockholder hereunder and under the International
Underwriting Agreement;


     (ii)  The sale of the Shares to be sold by such Selling Stockholder
hereunder and under the International Underwriting Agreement and the
compliance by such Selling Stockholder with all of the provisions of this
Agreement, the International Underwriting Agreement, the Power of Attorney and
the Custody Agreement and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which such Selling Stockholder is a party or by which such
Selling Stockholder is bound, or to which any of the property or assets of such
Selling Stockholder is subject, nor will such action result in any violation 
of the provisions of the Certificate of Incorporation or By-laws of such 
Selling Stockholder if such Selling Stockholder is a corporation; or the 
trust agreement of each Selling Stockholder if such Selling Stockholder is a 
trust; or the partnership agreement of such Selling Stockholder if such 
Selling Stockholder is a partnership; or any statute or any order, rule or 
regulation of any court or governmental agency or body having jurisdiction 
over such Selling Stockholder;

     (iii)  Such Selling Stockholder has, and immediately prior to each Time of 
Delivery (as defined in Section 4 hereof) such Selling Stockholder will have, 
good and valid title to the Shares to be sold at such Time of Delivery by 
such Selling Stockholder hereunder and under the International Underwriting 
Agreement, free and clear of all liens, encumbrances, equities or claims; 
and, upon delivery of such Shares and payment therefor pursuant hereto and 
thereto, good and valid title to such Shares, free and clear of all liens, 
encumbrances, equities or claims, will pass to the several Underwriters and 
the International Underwriters;

     (iv)  During the period beginning from the date hereof and continuing to
and including the date 90 days after the date of the Prospectus, such Selling 
Stockholder will not offer, sell, contract to sell or otherwise dispose of, 
except as provided hereunder or under the International underwriting 
Agreement, any securities of the Company that are substantially similar to 
the Shares, including but not limited to any securities that are convertible 
into or exchangeable for, or that represent the right to receive, Stock or 
any such substantially similar securities (other than pursuant to employee 
stock option plans existing on, or upon the conversion or exchange of 
convertible or exchangeable securities outstanding as of, the date of this 
Agreement), without your prior written consent;

     (v)  Such Selling Stockholder has not taken and will not take, directly or 
indirectly, any action which is designed to or which has constituted or which 
might reasonably be expected to cause or result in stabilization or 
manipulation of the price of any security of the Company to facilitate the 
sale or resale of the Shares; and

     (vi)  To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or 

                                       -7-



supplement thereto are made in reliance upon and in conformity with written 
information furnished to the Company by such Selling Stockholder expressly 
for use therein, such Preliminary Prospectus and the Registration Statement 
did, and the Prospectus and any further amendments or supplements to the
Registration Statement and the Prospectus will, when they become effective or
are filed with the Commission, as the case may be, conform in all material
respects to the requirements of the Act and the rules and regulations of the
Commission thereunder and 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 not misleading;

     (vii)  In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, each of the Selling Stockholders agrees to deliver to you prior
to or at the First Time of Delivery (as hereinafter defined) a properly
completed and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations
in lieu thereof).

     (viii)  Certificates in negotiable form representing all of the Shares to
be sold by such Selling Stockholder hereunder and under the International 
Underwriting Agreement have been placed in custody under a Custody Agreement, 
in the form heretofore furnished to you, duly executed and delivered by such 
Selling Stockholder to       , as custodian (the "Custodian"), and that such 
Selling Stockholder has duly executed and delivered a Power of Attorney, in 
the form heretofore furnished to you, appointing the persons indicated in 
Schedule II hereto, and each of them, as such Selling Stockholder's 
attorneys-in-fact (the "Attorneys-in-Fact") with authority to execute and 
deliver this Agreement on behalf of such Selling Stockholder, to determine 
the purchase price to be paid by the Underwriters to the Selling Stockholders 
as provided in Section 2 hereof, to authorize the delivery of the Shares to 
be sold by such Selling Stockholder hereunder and otherwise to act on behalf 
of such Selling Stockholder in connection with the transactions contemplated 
by this Agreement, the International Underwriting Agreement and the Custody 
Agreement.

     (ix)  The Shares represented by the certificates held in custody for such 
Selling Stockholder under the Custody Agreement are subject to the interests 
of the Underwriters hereunder and the International Underwriters under the 
International Underwriting Agreement; the arrangements made by such Selling 
Stockholder for such custody, and the appointment by such Selling Stockholder 
of the Attorneys-in-Fact by the Power of Attorney, are to that extent 
irrevocable; the obligations of the Selling Stockholders hereunder and under 
the International Underwriting Agreement shall not be terminated by operation 
of law, whether by the death or incapacity of any individual Selling 
Stockholder or, in the case of an estate or trust, by the death or incapacity 
of any executor or trustee or the termination of such estate or trust, or in 
the case of a partnership or corporation, by the dissolution of such 
partnership or corporation, or by the occurrence of any other event; if any 
individual Selling Stockholder or any such executor or trustee should die or 
become incapacitated, or if any such estate or trust should be terminated, or 
if any such partnership or corporation should be dissolved, or 

                                       -8-


if any other such event should occur, before the delivery of the Shares
hereunder, certificates representing the Shares shall be delivered by or on
behalf of the Selling Stockholders in accordance with the terms and conditions
of this Agreement, of the International Underwriting Agreement and of the
Custody Agreement; and actions taken by the Attorneys-in-Fact pursuant to the
Powers of Attorney shall be as valid as if such death, incapacity, termination, 
dissolution or other event had not occurred, regardless of whether or not the 
Custodian, the Attorneys-in-Fact, or any of them, shall have received notice 
of such death, incapacity, termination, dissolution or other event.

     2.  Subject to the terms and conditions herein set forth, (a) each of the 
Selling Stockholders agrees, severally and not jointly, to sell to each of 
the Underwriters, and each of the Underwriters agrees, severally and not 
jointly, to purchase from each of the Selling Stockholders at a purchase 
price per share of $    the number of Firm Shares (to be adjusted by you so 
as to eliminate fractional shares) determined by multiplying the aggregate 
number of Firm Shares to be sold by each of the Selling Stockholders as set 
forth opposite their respective names in Schedule II hereto by a fraction, 
the numerator of which is the aggregate number of Firm Shares to be purchased 
by such Underwriter as set forth opposite the name of such Underwriter in 
Schedule I hereto and the denominator of which is the aggregate number of 
Firm Shares to be purchased by all the Underwriters from all the Selling 
Stockholders hereunder and (b) in the event and to the extent that the 
Underwriters shall exercise the election to purchase Optional Shares as 
provided below, each of the Selling Stockholders agrees, severally and not 
jointly, to sell to each of the Underwriters, and each of the Underwriters 
agrees, severally and not jointly, to purchase from each of the Selling 
Stockholders, at a purchase price per share set forth in clause (a) of this 
Section 2, that portion of the number of Optional Shares as to which such 
election shall have been exercised (to be adjusted by you so as to eliminate 
fractional shares) determined by multiplying such number of Optional Shares 
by a fraction the numerator of which is the maximum number of Optional Shares 
which such Underwriter is entitled to purchase as set forth opposite the name 
of such Underwriter in Schedule I hereto and the denominator of which is the 
maximum number of the Optional Shares which all of the Underwriters are 
entitled to purchase hereunder.

     The Selling Stockholders, as and to the extent indicated in Schedule II 
hereto, hereby grant, severally and not jointly, to the Underwriters the 
right to purchase at their election up to 1,980,000 Optional Shares, at the 
purchase price per share set forth in the paragraph above, for the sole 
purpose of covering over-allotments in the sale of the Firm Shares.  Any such 
election to purchase Optional Shares shall be made in proportion to the 
number of Optional Shares to be sold by each Selling Stockholder.  Any such 
election to purchase Optional Shares may be exercised by written notice from 
you to the Attorneys-in-Fact, given on or prior to November 12, 1996 and 
setting forth the aggregate number of Optional Shares to be purchased and the 
date on which such Optional Shares are to be delivered, as determined by you 
but in no event earlier than the First Time of Delivery (as defined in 
Section 4 hereof) or, unless you and the Attorneys-in-Fact otherwise agree in 
writing, earlier than two business days after the date of such notice or 
later than November 15, 1996.

                                       -9-  




    3. Upon the authorization by you of the release of the Firm Shares, the 
several Underwriters propose to offer the Firm Shares for sale upon the terms 
and conditions set forth in the Prospectus.

     4. (a) The Shares to be purchased by each Underwriter hereunder, in 
definitive form, and in such denominations and registered in such names as 
Goldman, Sachs & Co. may request upon at least forty-eight hours' prior 
notice to the Selling Stockholders, shall be delivered by or on behalf of the 
Selling Stockholders to Goldman, Sachs & Co. for the account of such 
Underwriter, against payment by such Underwriter or on its behalf of the 
purchase price therefor by certified or official bank check or checks, 
payable to the order of [the Custodian] in immediately available (same-day) 
funds, all at the office of Goldman, Sachs & Co., 85 Broad Street, New York, 
New York 10004.  The time and date of such delivery and payment shall be, 
with respect to the Firm Shares, 9:30 a.m., New York City time, on October 
__, 1996 or such other time and date as you and the Selling Stockholders may 
agree upon in writing, and, with respect to the Optional Shares, 9:30 a.m., 
New York City time, on the date specified by you in the written notice given 
by you of the Underwriters' election to purchase such Optional Shares, or 
such other time and date as you and the Selling Stockholders may agree upon 
in writing.  Such time and date for delivery of the Firm Shares is herein 
called the "First Time of Delivery", such time and date for delivery of the 
Optional Shares, if not the First Time of Delivery, is herein called the 
"Second Time of Delivery", and each such time and date for delivery is herein 
called a "Time of Delivery".  Such certificates will be made available for 
checking and packaging at least twenty-four hours prior to each Time of 
Delivery at the office of Goldman, Sachs & Co.

     (b) The documents to be delivered at each Time of Delivery by or on behalf 
of the parties hereto pursuant to Section 7 hereof, including the 
cross-receipt for the Shares and any additional documents requested by the 
Underwriters pursuant to Section 7(i) hereof, will be delivered at the 
offices of Sullivan & Cromwell, 125 Broad Street, New York, New York 10004 
(the "Closing Location"), and the Shares will be delivered at the Designated 
Office, all at each Time of Delivery.  A meeting will be held at the Closing 
Location at 3:00 p.m., New York City time, on the New York Business Day next 
preceding each Time of Delivery, at which meeting the final drafts of the 
documents to be delivered pursuant to the preceding sentence will be 
available for review by the parties hereto.  For the purposes of this Section 
4, "New York Business Day" shall mean each Monday, Tuesday, Wednesday, 
Thursday and Friday which is not a day on which banking institutions in New 
York are generally authorized or obligated by law or executive order to close.

     5. The Company agrees with each of the Underwriters:

     (a) To prepare the Prospectus in a form approved by you and to file such 
Prospectus pursuant to Rule 424(b) under the Act not later than the 
Commission's close of business on the second business day following the 
execution and delivery of this Agreement, or, if applicable, such earlier 
time as may be required by Rule 430A(a)(3) under the Act; to make no further 
amendment or any supplement to the Registration Statement or Prospectus prior 
to the last Time of Delivery unless approved by you promptly after reasonable 
notice thereof; to advise you, promptly after it receives notice thereof, of 
the time when the Registration Statement, or any

                                  -10-



amendment thereto, has been filed or becomes effective or any supplement to 
the Prospectus or any amended Prospectus has been filed and to furnish you 
copies thereof; to file promptly all reports and any definitive proxy or 
information statements required to be filed by the Company with the 
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act 
subsequent to the date of the Prospectus and for so long as the delivery of a 
prospectus is required in connection with the offering or sale of the Shares; 
to advise you, promptly after it receives notice thereof, of the issuance by 
the Commission of any stop order or of any order preventing or suspending the 
use of any Preliminary Prospectus or prospectus, of the suspension of the 
qualification of the Shares for offering or sale in any jurisdiction, of the 
initiation or threatening of any proceeding for any such purpose, or of any 
request by the Commission for the amending or supplementing of the 
Registration Statement or Prospectus or for additional information; and, in 
the event of the issuance of any stop order or of any order preventing or 
suspending the use of any Preliminary  Prospectus or prospectus or suspending 
any such qualification, to use promptly its best efforts to obtain its 
withdrawal;

     (b) Promptly from time to time to take such action as you may reasonably 
request to qualify the Shares for offering and sale under the securities laws 
of such jurisdictions in the United States as you may request and to comply 
with such laws so as to permit the continuance of sales and dealings therein 
in such jurisdictions for as long as may be necessary to complete the 
distribution of the Shares, provided that in connection therewith the Company 
shall not be required to qualify as a foreign corporation or to file a 
general consent to service of process in any jurisdiction;

     (c) Prior to 10:00 a.m., New York City time, on the New York Business Day 
next succeeding the date of this Agreement and from time to time, to furnish 
the Underwriters with copies of the Prospectus in New York City in such 
quantities as you may reasonably request, and, if the delivery of a 
prospectus is required at any time prior to the expiration of nine months 
after the time of issue of the Prospectus in connection with the offering or 
sale of the Shares and if at such time any events shall have occurred as a 
result of which the Prospectus as then amended or supplemented would include 
an untrue statement of a material fact or omit to state any material fact 
necessary in order to make the statements therein, in the light of the 
circumstances under which they were made when such Prospectus is delivered, 
not misleading, or, if for any other reason it shall be necessary during such 
same period to amend or supplement the Prospectus or to file under the 
Exchange Act any document incorporated by reference in the Prospectus in 
order to comply with the Act or the Exchange Act, to notify you and upon your 
request to file such document and to prepare and furnish without charge to 
each Underwriter and to any dealer in securities as many copies as you may 
from time to time reasonably request of an amended Prospectus or a supplement 
to the Prospectus which will correct such statement or omission or effect 
such compliance, and in case any Underwriter is required to deliver a 
prospectus in connection with sales of any of the Shares at any time nine 
months or more after the time of issue of the Prospectus, upon your request 
but at the expense of such Underwriter, to prepare and deliver to such 
Underwriter as many

                                  -11-



copies as you may request of an amended or supplemented 
Prospectus complying with Section 10(a)(3) of the Act;

     (d) To make generally available to its securityholders as soon as 
practicable, but in any event not later than eighteen months after the 
effective date of the Registration Statement (as defined in Rule 158(c)), an 
earning statement of the Company and its subsidiaries (which need not be 
audited) complying with Section 11(a) of the Act and the rules and 
regulations of the Commission thereunder (including at the option of the 
Company Rule 158);

     (e) During the period beginning from the date hereof and continuing to and 
including the date 90 days after the date of the Prospectus, not to offer, 
sell, contract to sell or otherwise dispose of any securities of the Company 
(other than (i) pursuant to employee stock option and purchase plans existing,
or on the conversion or exchange of convertible or exchangeable securities 
outstanding, on the date of this Agreement, or (ii) the issuance of Stock in
connection with the acquisition by the Company of the business, assets or
capital stock of another company or pursuant to a purchase, business
combination or merger agreement, pursuant to which, in any single transaction,
not more than 25,000,000 shares of Common Stock are issued or exchanged) which
are substantially similar to the Stock, or which are convertible or
exchangeable for securities which are substantially similar to the Stock,
without your prior written consent;

     (f) To furnish to its stockholders as soon as practicable after the end of 
each fiscal year an annual report (including a balance sheet and statements 
of income, stockholders' equity and cash flow of the Company and its 
consolidated subsidiaries certified by independent public accountants) and, 
as soon as practicable after the end of each of the first three quarters of 
each fiscal year (beginning with the fiscal quarter ending after the 
effective date of the Registration Statement), consolidated summary financial 
information of the Company and its subsidiaries for such quarter in 
reasonable detail;

     (g) During a period of three years from the effective date of the 
Registration Statement, to furnish to you copies of all reports or other 
communications (financial or other) furnished to stockholders, and deliver to 
you (i) as soon as they are available, copies of any reports and financial 
statements furnished to or filed with the Commission or any national 
securities exchange on which any class of securities of the Company is 
listed; and (ii) such additional information concerning the business and 
financial condition of the Company as you may from time to time reasonably 
request (such financial statements to be on a consolidated basis to the 
extent the accounts of the Company and its subsidiaries are consolidated in 
reports furnished to its stockholders generally or to the Commission);

                                  -12-




     (h) If the Company elects to rely upon Rule 462(b), the Company shall file
a Rule 462(b) Registration Statement with the Commission in compliance with 
Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of this 
Agreement, and the Company shall at the time of filing either pay to the 
Commission the filing fee for the Rule 462(b) Registration Statement or give 
irrevocable instructions for the payment of such fee pursuant to Rule 111(b) 
under the Act.

     6. The Company covenants and agrees with each of the Selling Stockholders 
and with the several Underwriters that the Company will pay or cause to be 
paid the following:  (i) the fees, disbursements and expenses of the 
Company's counsel and accountants in connection with the registration of the 
Shares under the Act and all other expenses in connection with the 
preparation, printing and filing of the Registration Statement, any 
Preliminary Prospectus and the Prospectus and amendments and supplements 
thereto and the mailing and delivering of copies thereof to the Underwriters 
and dealers; (ii) the cost of printing or producing any Agreement among 
Underwriters, this Agreement, the International Underwriting Agreement, the 
Agreement between Syndicates, the Selling Agreements, the Blue Sky Memorandum 
and any other documents in connection with the offering, purchase, sale and 
delivery of the Shares; (iii) all expenses in connection with the 
qualification of the Shares for offering and sale under state securities laws 
as provided in Section 5(b) hereof, including the reasonable fees and 
disbursements of counsel for the Underwriters in connection with such 
qualification and in connection with the Blue Sky survey; (iv) the filing 
fees incident to securing any required review by the National Association of 
Securities Dealers, Inc. of the terms of the sale of the Shares; (v) the cost 
of preparing stock certificates; (vi) the cost and charges of any transfer 
agent or registrar; and (vii) all other costs and expenses incident to the 
performance of its obligations hereunder which are not otherwise specifically 
provided for in this Section.  Each of the Selling Stockholders covenants and 
agrees with the Company and the Several Underwriters that such Selling 
Stockholder will pay or cause to be paid all costs and expenses incident to 
the performance of such Selling Stockholder's obligations hereunder which are 
not otherwise specifically provided for in this Section, including (i) any 
fees and expenses of counsel for such Selling Stockholder, (ii) such Selling 
Stockholder's pro rata share of the fees and expenses of the 
Attorneys-in-Fact and the Custodian, and (iii) all expenses (including 
discounts, commissions and fees of the Underwriters, selling brokers and 
dealers) and taxes incident to the sale and delivery of the Shares to be sold 
by such Selling Stockholder to the Underwriters hereunder.  In connection 
with clause (b)(iii) of the preceding sentence, Goldman, Sachs & Co. agree to 
pay New York State stock transfer tax, and such Selling Stockholder agrees to 
reimburse Goldman, Sachs & Co. for associated carrying costs if such tax 
payment is not rebated on the day of payment and for any portion of such tax 
payment not rebated.  It is understood, however, that, except as provided in 
this Section, Section 8 and Section 11 hereof, the Underwriters will pay all 
of their own costs and expenses, including the fees of their counsel, stock 
transfer taxes on resale of any of the Shares by them, and any advertising 
expenses connected with any offers they may make.

     7. The obligations of the Underwriters hereunder, as to the Shares to be 
delivered at each Time of Delivery, shall be subject, in their discretion, to 
the condition that all representations and warranties and other statements of 
the Company and of the Selling Stockholders herein are, at and as of such 
Time of Delivery, true and correct, the condition

                                  -13-



that the Company and the Selling Stockholders shall have performed all of its 
and their obligations hereunder theretofore to be performed, and the 
following additional conditions:

     (a) The Prospectus shall have been filed with the Commission pursuant to 
Rule 424(b) within the applicable time period prescribed for such filing by 
the rules and regulations under the Act and in accordance with Section 5(a) 
hereof; if the Company has elected to rely upon Rule 462(b), the Rule 462(b) 
Registration Statement shall have become effective by 10:00 P.M., Washington 
D.C. time, on the date of this Agreement; no stop order suspending the 
effectiveness of the Registration Statement or any part thereof shall have 
been issued and no proceeding for that purpose shall have been initiated or 
threatened by the Commission; and all requests for additional information on 
the part of the Commission shall have been complied with to your reasonable 
satisfaction;

     (b) Sullivan & Cromwell, counsel for the Underwriters, shall have furnished
to you such opinion or opinions, dated such Time of Delivery, with respect to 
the incorporation of the Company, the validity of the Shares being delivered 
at such Time of Delivery, the Registration Statement, the Prospectus, and 
other related matters as you may reasonably request, and such counsel shall 
have received such papers and information as they may reasonably request to 
enable them to pass upon such matters;

     (c) (i) Amy Lipton, Esq., General Counsel of the Company, shall have
furnished to you her written opinion (a draft of each such opinion is 
attached as Annex I(a) hereto), dated such Time of Delivery, in form and 
substance satisfactory to you, to the effect that:

     (A) The Company has been duly qualified as a foreign corporation for the 
transaction of business and is in good standing under the laws of each other 
jurisdiction in which it owns or leases properties, or conducts any business, 
so as to require such qualification, or is subject to no material liability 
or disability by reason of failure to be so qualified in any such 
jurisdiction (such counsel being entitled to rely in respect of the opinion 
in this clause upon opinions of local counsel and in respect of matters of 
fact upon certificates of officers of the Company, provided that such counsel 
shall state that they believe that both you and she are justified in relying 
upon such opinions and certificates and shall attach executed copies of each 
such opinion or certificate to such counsel's opinion);

     (B) Each Subsidiary of the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its 
jurisdiction of incorporation; and all of the issued shares of capital stock 
of each such Subsidiary have been duly and validly authorized and issued, are 
fully paid and non-assessable, and (except for directors' qualifying shares) 
are owned directly or indirectly by the Company, free and clear of all liens, 
encumbrances, equities or claims (such counsel being entitled to rely in 
respect of the opinion in this clause upon opinions of local counsel and in 
respect of matters of fact upon certificates of officers of the Company or 
its subsidiaries, provided that

                                  -14-




such counsel shall state that she believe that both you and they are 
justified in relying upon such opinions and certificates and shall attach 
executed copies of each such opinion or certificate to such counsel's 
opinion);

     (C) To the best of such counsel's knowledge and other than as set forth in
the Prospectus, there are no legal or governmental proceedings pending to 
which the Company or any of its subsidiaries is a party or of which any 
property of the Company or any of its subsidiaries is the subject which, if 
determined adversely to the Company or any of its subsidiaries, would 
individually or in the aggregate have a material adverse effect on the 
consolidated financial position, stockholders' equity or results of 
operations of the Company and its subsidiaries taken as a whole; and, to the 
best of such counsel's knowledge, no such proceedings are overtly threatened 
or contemplated by governmental authorities (it being understood that such 
counsel need make no inquiry or independent investigation of such 
governmental authorities as to such matters) or overtly threatened by others;

     (D) The compliance by the Company with all of the provisions of this 
Agreement and the International Underwriting Agreement and the consummation 
of the transactions herein and therein contemplated will not conflict with or 
result in a breach or violation of any of the terms or provisions of, or 
constitute a default under, any indenture, mortgage, deed of trust, loan 
agreement or other agreement or instrument known to such counsel to which the 
Company or any of its subsidiaries is a party or by which the Company or any 
of its subsidiaries is bound or to which any of the property or assets of the 
Company or any of its subsidiaries is subject, nor will such action result in 
any violation of the provisions of the Certificate of Incorporation or 
By-laws of the Company or any statute or any order, rule or regulation known 
to such counsel of any court or governmental agency or body having 
jurisdiction over the Company or any of its subsidiaries or any of their 
properties;

   (E) The documents incorporated by reference in the Prospectus or any further
amendment or supplement thereto made by the Company prior to such Time of 
Delivery (other than the financial statements and the notes thereto and the 
other financial data included in the Registration Statement or the Prospectus 
as to which such counsel need express no opinion), when they became effective 
or were filed with the Commission, as the case may be, complied as to form in 
all material respects with the requirements of the Act or the Exchange Act, 
as applicable, and the rules and regulations of the Commission thereunder; 
and although such counsel has not independently verified and is not passing 
upon and assumes no responsibility for the accuracy, completeness or fairness 
of the statements contained in the documents incorporated by reference in the 
Prospectus, no facts have come to such counsel's attention which lead such 
counsel to believe that any of such documents, when such documents became 
effective or were so filed, as the case may be, contained, in the case of a 
registration statement which became effective under the Act, an untrue 
statement of a material fact, or omitted to state a material fact

                                  -15-



required to be stated therein or necessary to make the statements therein not 
misleading, or, in the case of other documents which were filed under the 
Exchange Act with the Commission, an untrue statement of a material fact or 
omitted to state a material fact necessary in order to make the statements 
therein, in the light of the circumstances under which they were made when 
such documents were so filed, not misleading (other than the financial 
statements and notes thereto and the other financial data included in the 
documents incorporated by reference in the Prospectus as to which counsel 
need express no opinion or belief);

     (F) The statements made in the Prospectus under the captions "Management's 
Discussion and Analysis of Financial Condition and Results of Operations -- 
Liquidity and Capital Resources; Inflation; Seasonality", and "Selling 
Stockholders" insofar as they purport to constitute summaries of the
provisions of the documents therein described are accurate and correct in all
material respects, and the description of capital stock of the Company 
contained in the Company's Registration Statements on Form 8-A, as amended,
referred to under the caption "Incorporation of Certain Documents by
Reference", insofar as they purport to constitute summaries of the terms of
the Stock and other capital stock of the Company, are accurate and correct in
all material respects;

     (G) The Registration Statement and the Prospectus and any further
amendments and supplements thereto made by the Company prior to such Time of 
Delivery (other than the financial statements and the notes thereto and the 
other financial data included in the Registration Statement or the 
Prospectus, as to which such counsel need express no opinion) comply as to 
form in all material respects with the requirements of the Act and the rules 
and regulations thereunder, although such counsel has not independently 
verified and is not passing upon and assumes no responsibility for the 
accuracy, completeness or fairness of the statements contained in the 
Registration Statement or the Prospectus, except for those covered by her 
opinion in subsection (F) of this Section 7(c); no facts have come to such 
counsel's attention which lead such counsel to believe that, as of its 
effective date, the Registration Statement or any further amendment thereto 
made by the Company prior to such Time of Delivery (other than the financial 
statements and the notes thereto and the other financial data included in the 
Registration Statement or the Prospectus, as to which such counsel need 
express no opinion or belief) contained an untrue statement of a material 
fact or omitted to state a material fact required to be stated therein or 
necessary to make the statements therein not misleading or that, as of its 
date, the Prospectus or any further amendment or supplement thereto made by 
the Company prior to such Time of Delivery (other than the financial 
statements and the notes thereto and the other financial data included in the 
Registration Statement or the Prospectus, as to which such counsel need 
express no opinion or belief) contained an untrue statement of a material 
fact or omitted to state a material fact necessary to make the statements 
therein, in light of the circumstances in which they were made, not 
misleading or that, as of such Time of Delivery,


                                  -16-




either the Registration Statement or the Prospectus or any further amendment 
or supplement thereto made by the Company prior to such Time of Delivery 
(other than the financial statements and the notes thereto and the other 
financial data included in the Registration Statement or the Prospectus, as 
to which such counsel need express no opinion or belief) contains an untrue 
statement of a material fact or omits to state a material fact necessary to 
make the statements therein, in light of the circumstances in which they were 
made, not misleading; and they do not know of any amendment to the 
Registration Statement required to be filed or of any contracts or other 
documents required to be filed as an exhibit to the Registration Statement or 
required to be incorporated by reference into the Prospectus or required to 
be described in the Registration Statement or the Prospectus which are not 
filed or incorporated by reference or described as required (other than the 
financial statements and notes thereto and the other financial data included 
in the documents incorporated by reference in the Prospectus as to which 
counsel need express no opinion or belief); and

     (H) Neither the Company nor any of its subsidiaries is in violation of its
Certificate of Incorporation or By-laws or in default in the performance or 
observance of any material obligation, agreement, covenant or condition 
contained in any indenture, mortgage, deed of trust, loan agreement, lease or 
other agreement or instrument to which it is a party or by which it or any of 
its properties may be bound.

     In rendering such opinion, such counsel may state that she expresses no 
opinion as to the laws of any jurisdiction other than the laws of the State 
of New York and Illinois, the corporate laws of the State of Delaware and the 
federal laws of the United States;

     (d) Robert T. Tucker, Esq., Secretary of the Company, shall have furnished 
to you his written opinion (a draft of each such opinion is attached as 
Annex I(b) hereto), dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that:

     (A) The Company has an authorized capitalization as set forth in the 
Company's Quarterly Report on Form 10-Q for the six months ended July 31, 
1996 as incorporated by reference in the Prospectus, and all of the shares of 
capital stock of the Company (including the Shares being delivered at such 
Time of Delivery) have been duly and validly authorized and issued and are 
fully paid and non-assessable; and the Shares conform to the description of 
the Stock contained in the Company's Registration Statements on Form 8-A, 
as amended, referred to under the caption "Incorporation of Certain Documents
by Reference" in the Prospectus;

     (e) (i) Weil, Gotshal & Manges LLP, counsel for the Company, shall have 
furnished to you their written opinion (a draft of each such opinion is 
attached as

                                  -17-




Annex I(c) hereto), dated such Time of Delivery, in form and substance 
satisfactory to you, to the effect that:

     (A) The Company has been duly incorporated and is validly existing as a 
corporation in good standing under the laws of the State of Delaware, with 
corporate power and authority to own its properties and conduct its business 
as described in the Prospectus;

     (B) The Company has an authorized capitalization as set forth in the 
Company's Quarterly Report on Form 10-Q for the six months ended July 31, 
1996 as incorporated by reference in the Prospectus, and all of the Shares 
being delivered at such Time of Delivery have been duly and validly 
authorized and issued and are fully paid and non-assessable; and the Shares 
conform to the description of the Stock contained in the Company's 
Registration Statements on Form 8-A referred to under the caption 
"Incorporation of Certain Documents by Reference" in the Prospectus;

     (C) This Agreement and the International Underwriting Agreement have been 
duly authorized, executed and delivered by the Company;

     (D) The compliance by the Company with all of the provisions of this 
Agreement and the International Underwriting Agreement and the consummation 
by the Company of the transactions herein and therein contemplated will not 
conflict with or result in a breach or violation of the provisions of the 
Certificate of Incorporation or By-laws of the Company or any New York, 
Delaware corporate or U.S. Federal law, rule or regulation (other than 
foreign and state securities or Blue Sky laws, as to which such counsel need 
not express any opinion, and other than Federal securities laws, as to which 
such counsel need not express any opinion except as otherwise set forth 
herein), or any judgment, writ, injunction, decree, order or ruling of any 
court or governmental authority binding on the Company or any of its 
Subsidiaries of which such counsel is aware;

     (E) No consent, approval, authorization, order, registration or 
qualification of or with any New York, Delaware corporate or U.S. Federal 
governmental authority is required for the consummation by the Company of the 
transactions contemplated by the Underwriting Agreement and the International 
Underwriting Agreement, except for the registration under the Act of the 
Shares, and such consents, approvals, authorizations, registrations or 
qualifications as may be required under state or foreign securities or Blue 
Sky laws as to which such counsel need not express any opinion;

     (F) The documents filed by the Company with the Commission and referred to 
under the caption "Certain Documents Incorporated by Reference" in the 
Prospectus or any further amendment or supplement thereto made by the Company 
prior to such Time of Delivery (other than the financial statements and 
schedules and the notes thereto and the other financial and accounting

                                  -18-



data included in the Registration Statement or the Prospectus or any further 
amendment or supplement thereto as to which such counsel need express no 
opinion or belief), when they became effective or were filed with the 
Commission, as the case may be, complied as to form in all material respects 
with the requirements of the Act or the Exchange Act, as applicable, and the 
rules and regulations of the Commission thereunder.  Such counsel shall 
additionally state that it has participated in conferences with directors, 
officers and other representatives of the Company, representatives of the 
Selling Shareholders, representatives of the independent public accountants 
for the Company, representatives of the Underwriters and representatives of 
counsel for the Underwriters, at which conferences the contents of the 
Registration Statement and the Prospectus and related matters were discussed, 
and although such counsel has not independently verified and is not passing 
upon and assumes no responsibility for the accuracy, completeness or fairness 
of the statements contained in such documents, no facts have come to such 
counsel's attention which lead such counsel to believe that any of such 
documents, when such documents became effective or were so filed, as the case 
may be, contained, in the case of a registration statement which became 
effective under the Act, an untrue statement of a material fact, or omitted 
to state a material fact required to be stated therein or necessary to make 
the statements therein not misleading, or, in the case of other documents 
which were filed under the Exchange Act with the Commission, an untrue 
statement of a material fact or omitted to state a material fact necessary in 
order to make the statements therein, in the light of the circumstances under 
which they were made when such documents were so filed, not misleading (other 
than the financial statements and schedules and notes thereto and the other 
financial and accounting data included in the documents incorporated by 
reference in the Prospectus as to which counsel need express no opinion or 
belief);

     (G) The description of the Stock of the Company, contained in the Company's
Registration Statements on Form 8-A, as amended, referred to under the 
caption "Incorporation of Certain Documents by Reference", insofar as they 
purport to constitute summaries of the terms of the Stock, and the statements 
set forth in the International Prospectus under the caption "Certain United 
States Federal Tax Consequences to Non-U.S. Stockholders" insofar as they 
purport to summarize the provisions of the laws referred to therein, are 
accurate and correct in all material respects; and

     (H) The Registration Statement and the Prospectus and any further
amendments and supplements thereto made by the Company prior to such Time of 
Delivery (other than the financial statements and schedules and related notes 
thereto and the other financial and accounting data included in the 
Registration Statement or the Prospectus, as to which such counsel need 
express no opinion or belief) comply as to form in all material respects with 
the requirements of the Act and the rules and regulations thereunder.  Such 
counsel shall additionally state that it has participated in conferences with 
directors, officers and other representatives of the Company, representatives 
of the

                                  -19-




Selling Stockholders, representatives of the independent public accountants 
for the Company, representatives of the Underwriters and representatives of 
counsel for the Underwriters, at which conferences the contents of the 
Registration Statement and the Prospectus and related matters were discussed, 
and although such counsel has not independently verified and is not passing 
upon and assumes no responsibility for the accuracy, completeness or fairness 
of the statements contained in the Registration Statement or the Prospectus, 
except for those covered by their opinion in subsection (G) of this Section 
7(d); no facts have come to such counsel's attention which lead such counsel 
to believe that the Registration Statement, as of its effective date, or any 
further amendment thereto made by the Company prior to such Time of Delivery 
(other than the financial statements and schedules and the related notes 
thereto and the other financial and accounting data included in the 
Registration Statement or the Prospectus, as to which such counsel need 
express no opinion or belief) contained an untrue statement of a material 
fact or omitted to state a material fact required to be stated therein or 
necessary to make the statements therein not misleading, or that the 
Prospectus, as of its date, or any further amendment or supplement thereto 
made by the Company prior to such Time of Delivery (other than the financial 
statements and schedules and the related notes thereto and the other 
financial and accounting data included in the Registration Statement or the 
Prospectus, as to which such counsel need express no opinion or belief) 
contained an untrue statement of a material fact or omitted to state a 
material fact required to be stated therein or necessary to make the 
statements therein, in light of the circumstances in which they were made, 
not misleading (it being understood that such counsel express no view with 
respect to the financial statements and related notes, and the other 
financial and accounting data included in the Registration Statement or 
Prospectus) or that, as of such Time of Delivery, either the Registration 
Statement or the Prospectus or any further amendment or supplement thereto 
made by the Company prior to such Time of Delivery (other than the financial 
statements and the notes thereto and the other financial data included in the 
Registration Statement or the Prospectus, as to which such counsel need 
express no opinion or belief) contains an untrue statement of a material fact 
or omits to state a material fact necessary to make the statements therein, 
in light of the circumstances in which they were made, not misleading (it 
being understood that such counsel express no view with respect to the 
financial statements and related notes, and the other financial and 
accounting data included in the Registration Statement or Prospectus); and to 
such counsel's knowledge, there are no contracts or other documents of a 
character required to be filed or incorporated by reference as an exhibit to 
the Registration Statement or required to be described or incorporated by 
reference in the Registration Statement or the Prospectus which were not 
filed, incorporated by reference or described as required (other than the 
financial statements and notes thereto and the other financial data included 
in the documents incorporated by reference in the Prospectus as to which 
counsel need express no opinion or belief).

                                  -20-



     In rendering such opinion, such counsel may state that they express no 
opinion as to the laws of any jurisdiction other than the laws of the State 
of New York, the corporate laws of the State of Delaware and the federal laws 
of the United States;

     (e) Gibson, Dunn & Crutcher, counsel for the Selling Stockholders, as 
indicated in Schedule II, shall have furnished to you their written opinion 
with respect to each of the Selling Stockholders (a draft of each such 
opinion is attached as Annex I(d) hereto), dated such Time of Delivery, in 
form and substance satisfactory to you, to the effect that:

     (i) A Power of Attorney and a Custody Agreement have been duly executed
and delivered by such Selling Stockholder and constitute valid and binding 
agreements of such Selling Stockholder in accordance with their terms;

     (ii) This Agreement and the International Underwriting Agreement have been 
duly authorized, executed and delivered by such Selling Stockholder; and the 
sale of the Shares to be sold by such Selling Stockholder hereunder and 
thereunder and the compliance by such Selling Stockholder with all of the 
provisions of this Agreement and the International Underwriting Agreement, 
the Power of Attorney and the Custody Agreement and the consummation of the 
transactions herein and therein contemplated will not conflict with or result 
in a breach or violation of any terms or provisions of, or constitute a 
default under, any indenture, mortgage, deed of trust, loan agreement or 
other agreement or instrument known to such counsel to which such Selling 
Stockholder is a party or by which such Selling Stockholder is bound or to 
which any of the property or assets of such Selling Stockholder is subject, 
except for such conflicts, breaches, violations or defaults that will not 
have a material adverse effect on the Company and its subsidiaries taken as a 
whole or on the transactions contemplated hereby or by the International 
Underwriting Agreement, nor will such action result in any violation of the 
provisions of or the trust agreement of such Selling Stockholder if such 
Selling Stockholder is a trustee, or the Articles of Partnership of such 
Selling Stockholder if such Selling Stockholder is a partnership, or any 
statute or any order, rule or regulation known to such counsel of any court 
or governmental agency or body having jurisdiction over such Selling 
Stockholder or the property of such Selling Stockholder;

     (iii) No consent, approval, authorization or order of any court known to 
such counsel or governmental agency or body is required for the consummation 
of the transactions contemplated by this Agreement and the International 
Underwriting Agreement in connection with the Shares to be sold by such 
Selling Stockholder hereunder and under the International Underwriting 
Agreement, except such as have been obtained under the Act (as to which such 
counsel need express no opinion) and such as may be required under state 
securities or Blue Sky laws in connection with the purchase and distribution 
of such Shares by the Underwriters and the International Underwriters (as to 
which such counsel need express no opinion); and

                                  -21-



     (iv)  Upon payment for and delivery of the Shares in accordance with the 
terms of this Agreement and the International Underwriting Agreement, the 
Underwriters and the International Underwriters shall have acquired such 
Shares, free and clear of all liens, encumbrances, equities or claims, 
assuming the Underwriters and International Underwriters are acquiring such 
Shares in good faith and without notice of any such lien, encumbrance, equity 
or claim or any other adverse claim within the meaning of the Uniform 
Commercial Code.

     In rendering such opinion, such counsel may state that they express no 
opinion as to the laws of any jurisdiction other than the laws of the State 
of California, the corporate laws of the State of Delaware and the federal 
laws of the United States and in rendering the opinion in subparagraphs (ii) 
and (iii) such counsel may rely upon a certificate of such Selling Stockholder 
in respect of matters of fact as to (i) ownership of and liens, encumbrances, 
equities or claims on the Shares sold by such Selling Stockholder, 
(ii) indentures, mortgages, deeds of trust, loan agreements or other agreements 
or instruments to which such Selling Stockholder is a party or to which the 
Shares are subject and (iii) the existence of any order, writ or injunction to 
which the Selling Stockholder or the Shares are subject, provided that such 
counsel shall state that they believe that both you and they are justified 
in relying upon such certificate and shall attach an executed copy of such 
certificate to such opinion;

   (f)  On the date of the Prospectus at a time prior to the execution of this 
Agreement, at 10:00 a.m., New York City time, on the effective date of any 
post-effective amendment to the Registration Statement filed subsequent to 
the date of this Agreement and also at each Time of Delivery, Ernst & Young 
LLP shall have furnished to you a letter or letters, dated the respective 
date of delivery thereof, in form and substance satisfactory to you, to the 
effect set forth in Annex II(a) hereto; on the date of the Prospectus at a 
time prior to the execution of this Agreement, at 10:00 a.m., New York City 
time, on the effective date of any post-effective amendment to the 
Registration Statement filed subsequent to the date of this Agreement and 
also at each Time of Delivery, Deloitte & Touche LLP, KPMG Peat Marwick LLP 
and Price Waterhouse LLP shall have furnished to you letters, dated such 
date, in form and substance satisfactory to you, to the effect set forth in 
Annexes II(b), (c) and (d), respectively, hereto; the executed copies of the 
letters delivered prior to the execution of this Agreement are attached as 
Annex III(a), (b), (c) and (d) hereto, respectively, and a draft of the form 
of letters to be delivered on the effective date of any post-effective 
amendment to the Registration Statement and as of each Time of Delivery are 
attached as Annexes IV(a), (b), (c) and (d) hereto, respectively;

   (g)(i) Neither the Company nor any of its subsidiaries shall have sustained
since the date of the latest audited financial statements included or 
incorporated by reference in the Prospectus any loss or interference with its 
business from fire, explosion, flood or other calamity, whether or not 
covered by insurance, or from any labor dispute or court or governmental 
action, order or decree, otherwise than as set forth or contemplated in the 
Prospectus, and (ii) since the respective dates as of which information is 
given in the Prospectus, there shall not have been any change in the


                                  -22-





capital stock (other than increases in the outstanding common stock of the 
Company as a result of the issuance of stock pursuant to any of the Company's 
existing stock option plans or employee stock purchase plans or upon the 
conversion of convertible securities outstanding on the date of this 
Agreement, in accordance with the descriptions of such plans and convertible 
securities in the Prospectus) or long-term debt or (other than any increase 
of less than $20,000,000 incurred in the ordinary course of business of the 
Company and its subsidiaries or any decrease) short-term debt of the Company 
or any of its subsidiaries or any change, or any development involving a 
prospective change, in or affecting the business, management, financial 
position, stockholders' equity or results of operations of the Company and 
its subsid-iaries taken as a whole, otherwise than as set forth or 
contemplated in the Prospectus, the effect of which, in any such case 
described in clause (i) or (ii), is in the judgment of the Representatives so 
material and adverse as to make it impracticable or inadvisable to proceed 
with the public offering or the delivery of the Shares being delivered at 
such Time of Delivery on the terms and in the manner contemplated in the 
Prospectus;

     (h)  On or after the date hereof there shall not have occurred any of the 
following:  (i) a suspension or material limitation in trading in securities 
generally on the New York Stock Exchange; (ii) a general moratorium on 
commercial banking activities in New York declared by either Federal or New 
York State authorities; or (iii) the outbreak or escalation of hostilities 
involving the United States or the declaration by the United States of a 
national emergency or war, if the effect of any such event specified in this 
clause (iii) in your judgment makes it impracticable or inadvisable to 
proceed with the public offering or the delivery of the Shares being 
delivered at such Time of Delivery on the terms and in the manner 
contemplated by the Prospectus;

     (i)  The Shares to be sold by the Selling Stockholders at such Time of 
Delivery shall have been duly listed on the New York Stock Exchange;

    (j) The Company and the Selling Stockholder shall have furnished or caused 
to be furnished to you at such Time of Delivery certificates of officers of 
the Company and of the Selling Stockholders, respectively, satisfactory to 
you as to the accuracy of the representations and warranties of the Company 
and the Selling Stockholders, respectively, herein at and as of such Time of 
Delivery, as to the performance by the Company and the Selling Stockholders 
of all of their respective obligations hereunder to be performed at or prior 
to such Time of Delivery, and as to such other matters as you may reasonably 
request, and the Company shall have furnished or caused to be furnished 
certificates as to the matters set forth in subsections (a) and (g) of this 
Section, and as to such other matters as you may reasonably request; and

     (k)  The Company shall have complied with the provisions of Section 5(c) 
hereof with respect to the furnishing of prospectuses on the New York 
Business Day next succeeding the date of this Agreement.

     8.  (a)  The Company will indemnify and hold harmless each Underwriter 
against any losses, claims, damages or liabilities, joint or several, to 
which such Underwriter may



                                 -23-



become subject, under the Act or otherwise, insofar as such losses, claims, 
damages or liabilities (or actions in respect thereof) arise out of or are 
based upon an untrue statement or alleged untrue statement of a material fact 
contained in any Preliminary Prospectus, the Registration Statement or the 
Prospectus, or any amendment or supplement thereto, or arise out of or are 
based upon the omission or alleged omission to state therein a material fact 
required to be stated therein or necessary to make the statements therein not 
misleading, and will reimburse each Underwriter for any legal or other expenses 
reasonably incurred by such Underwriter in connection with investigating or 
defending any such action or claim as such expenses are incurred; provided, 
however, that the Company shall not be liable in any such case to the extent 
that any such loss, claim, damage or liability arises out of or is based upon 
an untrue statement or alleged untrue statement or omission or alleged 
omission made in any Preliminary Prospectus, the Registration Statement or the 
Prospectus or any such amendment or supplement in reliance upon and in 
conformity with written information furnished to the Company by any Underwriter 
through Goldman, Sachs & Co. expressly for use therein or by a Selling 
Stockholder expressly for use in the preparation of answers therein to 
Item 7 of Form S-3.

     (b)  Each of the Selling Stockholders will indemnify and hold harmless 
each Underwriter against any losses, claims, damages or liabilities, joint or 
several, to which such Underwriter may become subject, under the Act or 
otherwise, insofar as such losses, claims, damages or liabilities (or actions 
in respect thereof) arise out of or are based upon an untrue statement or 
alleged untrue statement of a material fact contained in any Preliminary 
Prospectus, the Registration Statement or the Prospectus, or any amendment or 
supplement thereto, or arise out of or are based upon the omission or alleged 
omission to state therein a material fact required to be stated therein or 
necessary to make the statements therein not misleading, in each case to the 
extent, but only to the extent, that such untrue statement or alleged untrue 
statement or omission or alleged omission was made in any Preliminary 
Prospectus, the Registration Statement or the Prospectus or any such 
amendment or supplement in reliance upon and in conformity with written 
information furnished to the Company by such Selling Stockholder expressly 
for use therein; and will reimburse each Underwriter for any legal or other 
expenses reasonably incurred by such Underwriter in connection with 
investigating or defending any such action or claim as such expenses are 
incurred; provided, however, that such Selling Stockholder shall not be 
liable in any such case to the extent that any such loss, claim, damage or 
liability arises out of or is based upon an untrue statement or alleged 
untrue statement or omission or alleged omission made in any Preliminary 
Prospectus, the Registration Statement or the Prospectus or any such 
amendment or supplement in reliance upon and in conformity with written 
information furnished to the Company by any Underwriter through Goldman, 
Sachs & Co. expressly for use therein; provided, however that the liability 
of each of the Selling Shareholders pursuant to this subsection (b) shall not 
exceed the product of the number of Shares sold by such Selling Shareholder 
(including any Optional Shares) and the initial public offering price as set 
forth in the Prospectus.

     (c)  Each Underwriter will indemnify and hold harmless the Company and 
each Selling Stockholder against any losses, claims, damages or liabilities 
to which the Company or such Selling Stockholder may become subject, under 
the Act or otherwise, insofar as such losses, claims, damages or liabilities 
(or actions in respect thereof) arise out of or are based

                                   -24-




upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in any Preliminary Prospectus, the Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such
Underwriter through you expressly for use therein; and will reimburse the
Company and each Selling Stockholder for any legal or other expenses
reasonably incurred by the Company or such Selling Stockholder in connection
with investigating or defending any such action or claim as such expenses
are incurred.

     (d)  Promptly after receipt by an indemnified party under subsection 
(a), (b) or (c) above of notice of the commencement of any action, such 
indemnified party shall, if a claim in respect thereof is to be made against 
an indemnifying party under such subsection, notify the indemnifying party in 
writing of the commencement thereof; but the omission so to notify the 
indemnifying party shall not relieve it from any liability which it may have 
to an y indemnified party otherwise than under such subsection.  In case any 
such action shall be brought against any indemnified party and it shall 
notify the indemnifying party of the commencement thereof, the indemnifying 
party shall be entitled to participate therein and, to the extent that it 
shall wish, jointly with any other indemnifying party similarly notified, to 
assume the defense thereof, with counsel satisfactory to such indemnified 
party (which shall not, except with the consent of the indemnified party, be 
counsel to the indemnifying party), and, after notice from the indemnifying 
party to such indemnified party of its election so to assume the defense 
thereof, the indemnifying party shall not be liable to such indemnified party 
under such subsection for any legal expenses of other counsel or any other 
expenses, in each case subsequently incurred by such indemnified party, in 
connection with the defense thereof other than reasonable costs of 
investigation.

     (e)  If the indemnification provided for in this Section 8 is 
unavailable to or insufficient to hold harmless an indemnified party under 
subsection (a), (b) or (c) above in respect of any losses, claims, damages or 
liabilities (or actions in respect thereof) referred to therein, then each 
indemnifying party, and, in addition, if each indemnifying party is a Selling 
Stockholder, the Company, shall contribute to the amount paid or payable by 
such indemnified party as a result of such losses, claims, damages or 
liabilities (or actions in respect thereof) in such proportions as is 
appropriate to reflect not only (i) the relative benefits received by the 
Selling Stockholders on the one hand and the Underwriters on the other from 
the offering of the Shares but also (ii) the relative fault of the Company, 
the Selling Stockholders and the Underwriters in connection with the 
statements or omissions which resulted in such losses, claims, damages or 
liabilities (or actions in respect thereof), as well as any other relevant 
equitable considerations.  The relative benefits received by the Selling 
Stockholders on the one hand and the Underwriters on the other shall be 
deemed to be in the same proportion as the total net proceeds from the 
offering of the Shares purchased under this Agreement (before deducting 
expenses) received by the Selling Stockholders bear to the total underwriting 
discounts and commissions received by the Underwriters with respect to the 
Shares purchased under this Agreement, in each case as set forth in the table 
on the cover page of

                                    -25-




the Prospectus.  The relative fault shall be determined 
by reference to, among other things, whether the indemnified party failed to 
give notice required under subsection (d) above and whether the untrue or 
alleged untrue statement of a material fact or the omission or alleged 
omission to state a material fact relates to information supplied by the 
Company, the Selling Stockholders or the Underwriters and the parties' 
relative intent, knowledge, access to information and opportunity to correct 
or prevent such statement or omission.  The Company, each of the Selling 
Stockholders and the Underwriters agree that it would not be just and 
equitable if contributions pursuant to this subsection (e) were determined by 
pro rata allocation (even if the Underwriters were treated as one entity for 
such purpose) or by any other method of allocation which does not take 
account of the equitable considerations referred to above in this subsection 
(e).  The amount paid or payable by an indemnified party as a result of the 
losses, claims, damages or liabilities (or actions in respect thereof) 
referred to above in this subsection (e) shall be deemed to include any legal 
or other expenses reasonably incurred by such indemnified party in connection 
with investigating or defending any such action or claim. Notwithstanding the 
provisions of this subsection (e), no Underwriter shall be required to 
contribute any amount in excess of the amount by which the total price at 
which the Shares underwritten by it and distributed to the public were 
offered to the public exceeds the amount of any damages which such 
Underwriter has otherwise been required to pay by reason of such untrue or 
alleged untrue statement or omission or alleged omission.  No person guilty 
of fraudulent misrepresentation (within the meaning of Section 11(f) of the 
Act) shall be entitled to contribution from any person who was not guilty of 
such fraudulent misrepresentation.  The Underwriters' obligations in this 
subsection (e) to contribute are several in proportion to their respective 
underwriting obligations and not joint.

     (f)  The obligations of the Company and the Selling Stockholders under 
this Section 8 shall be in addition to any liability which the Company and 
the respective Selling Stockholders may otherwise have and shall extend, upon 
the same terms and conditions, to each person, if any, who controls any 
Underwriter within the meaning of the Act; and the obligations of the 
Underwriters under this Section 8 shall be in addition to any liability which 
the respective Underwriters may otherwise have and shall extend, upon the 
same terms and conditions, to each officer and director of the Company 
(including any person who, with his consent, is named in the Registration 
Statement as about to become a director of the Company) and to each person, 
if any, who controls the Company or any Selling Stockholder within the 
meaning of the Act.

     9.  (a)  If any Underwriter shall default in its obligation to purchase 
the Shares which it has agreed to purchase hereunder at a Time of Delivery, 
you may in your discretion arrange for you or another party or other parties 
to purchase such Shares on the terms contained herein.  If within thirty-six 
hours after such default by any Underwriter you do not arrange for the 
purchase of such Shares, then the Selling Stockholders shall be entitled to a 
further period of thirty-six hours within which to procure another party or 
other parties satisfactory to you to purchase such Shares on such terms.  In 
the event that, within the respective prescribed periods, you notify the 
Selling Stockholders that you have so arranged for the purchase of such 
Shares, or the Selling Stockholders notify you that they have so arranged for 
the purchase of such Shares, you or the Selling Stockholders shall have the 
right to postpone such Time of Delivery for a period of not more than seven 
days, in order to effect whatever changes may thereby be made necessary in 
the Registration Statement or


                              -26-



the Prospectus, or in any other documents or arrangements, and the Company
agrees to file promptly any amendments to the Registration Statement or the
Prospectus which in your opinion may thereby be made necessary.  The term
"Underwriter" as used in this Agreement shall include any person substituted 
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Shares.

     (b)  If, after giving effect to any arrangements for the purchase of the 
Shares of a defaulting Underwriter or Underwriters by you and the Selling 
Stockholders as provided in subsection (a) above, the aggregate number of 
such Shares which remains unpurchased does not exceed one-eleventh of the 
aggregate number of all the Shares to be purchased at such Time of Delivery, 
then the Selling Stockholders shall have the right to require each 
non-defaulting Underwriter to purchase the number of shares which such 
Underwriter agreed to purchase hereunder (at such Time of Delivery) and, in 
addition, to require each non-defaulting Underwriter to purchase its pro rata 
share (based on the number of Shares which such Underwriter agreed to 
purchase hereunder) of the Shares of such defaulting Underwriter or 
Underwriters for which such arrangements have not been made; but nothing 
herein shall relieve a defaulting Underwriter from liability for its default.

     (c)  If, after giving effect to any arrangements for the purchase of the 
Shares of a defaulting Underwriter or Underwriters by you and the Selling 
Stockholders as provided in subsection (a) above, the aggregate number of 
such Shares which remains unpurchased exceeds one-eleventh of the aggregate 
number of all the Shares to be purchased at such Time of Delivery, or if the 
Selling Stockholders shall not exercise the right described in subsection (b) 
above to require non-defaulting Underwriters to purchase Shares of a 
defaulting Underwriter or Underwriters, then this Agreement (or, with respect 
to the Second Time of Delivery, the obligations of the Underwriters to 
purchase and of the Selling Stockholders to sell the Optional Shares) shall 
thereupon terminate, without liability on the part of any non-defaulting 
Underwriter or the Company or the Selling Stockholders, except for the 
expenses to be borne by the Company and the Selling Stockholders and the 
Underwriters as provided in Section 6 hereof and the indemnity and 
contribution agreements in Section 8 hereof; but nothing herein shall relieve 
a defaulting Underwriter from liability for its default.

     10.  The respective indemnities, agreements, representations, warranties 
and other statements of the Company, the Selling Stockholders and the several 
Underwriters, as set forth in this Agreement or made by or on behalf of them, 
respectively, pursuant to this Agreement, shall remain in full force and 
effect, regardless of any investigation (or any statement as to the results 
thereof) made by or on behalf of any Underwriter or any controlling person of 
any Underwriter, or the Company, or any of the Selling Stockholders, or any 
officer or director or controlling person of the Company, or any controlling 
person of any Selling Stockholder, and shall survive delivery of and payment 
for the Shares.

     11.  If this Agreement shall be terminated pursuant to Section 9 hereof, 
neither the Company nor the Selling Stockholders shall then be under any 
liability to any Underwriter except as provided in Section 6 and Section 8 
hereof; but, if for any other reason any Shares are not delivered by or on 
behalf of the Selling Stockholders as provided herein, each of the Selling 
Stockholders pro rata (based on the number of Shares to be sold by such 
Selling Stockholder hereunder) will reimburse the Underwriters through you 
for all out-of-pocket

                                  -27-




expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for
the purchase, sale and delivery of the Shares not so delivered, but the Company
and the Selling Stockholders shall then be under no further liability to any
Underwriter in respect of the Shares not so delivered except as provided in
Section 6 and Section 8 hereof.

     12.  In all dealings hereunder, you shall act on behalf of each of the 
Underwriters, and the parties hereto shall be entitled to act and rely upon 
any statement, request, notice or agreement on behalf of any Underwriter made 
or given by you jointly or by Goldman, Sachs & Co. on behalf of you as the 
representatives; and in all dealings with any Selling Stockholder hereunder, 
you and the Company shall be entitled to act and rely upon any statement, 
request, notice or agreement on behalf of such Selling Stockholder made or 
given by any or all of the Attorneys-in-Fact for such Selling Stockholder.

     All statements, requests, notices and agreements hereunder shall be in 
writing, and if to the Underwriters shall be delivered or sent by mail, telex 
or facsimile transmission to you as the representatives in care of Goldman, 
Sachs & Co., 85 Broad Street, New York, New York 10004, Attention:  
Registration Department; if to any Selling Stockholder shall be delivered or 
sent by mail, telex or facsimile transmission to counsel for such Selling 
Stockholder at its address set forth in Schedule II hereto; and if to the 
Company shall be delivered or sent by mail, telex or facsimile transmission 
to the address of the Company set forth in the Registration Statement, 
Attention:  Secretary; provided, however, that any notice to an Underwriter 
pursuant to Section 8(c) hereof shall be delivered or sent by mail, telex or 
facsimile transmission to such Underwriter at its address set forth in its 
Underwriters' Questionnaire, or telex constituting such Questionnaire, which 
address will be supplied to the Company or the Selling Stockholders by you 
upon request.  Any such statements, requests, notices or agreements shall 
take effect upon receipt thereof.

     13.  This Agreement shall be binding upon, and inure solely to the 
benefit of, the Underwriters, the Company and the Selling Stockholders and, 
to the extent provided in Sections 8 and 10 hereof, the officers and 
directors of the Company and each person who controls the Company, any 
Selling Stockholder or any Underwriter, and their respective heirs, 
executors, administrators, successors and assigns, and no other person shall 
acquire or have any right under or by virtue of this Agreement.  No purchaser 
of any of the Shares from any Underwriter shall be deemed a successor or 
assign by reason merely of such purchase.

     14.  Time shall be of the essence of this Agreement.  As used herein, 
the term "business day" shall mean any day when the Commission's office in 
Washington, D.C. is open for business.

     15.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE 
WITH THE LAWS OF THE STATE OF NEW YORK.

     16.  This Agreement may be executed by any one or more of the parties 
hereto in any number of counterparts, each of which shall be deemed to be an 
original, but all such counterparts shall together constitute one and the 
same instrument.


                                      -28-





     If the foregoing is in accordance with your understanding, please sign 
and return to us eight (8) counterparts hereof, and upon the acceptance 
hereof by you, on behalf of each of the Underwriters, this letter and such 
acceptance hereof shall constitute a binding agreement among each of the 
Underwriters, the Company and each of the Selling Stockholders.  It is 
understood that your acceptance of this letter on behalf of each of the 
Underwriters is pursuant to the authority set forth in a form of Agreement 
among Underwriters (U.S. Version), the form of which shall be furnished to 
the Company and the Selling Stockholders for examination, upon request, but 
without warranty on your part as to the authority of the signers thereof.
















                                    -29- 








    Any person executing and delivering this Agreement as Attorney-in-Fact for
a Selling Stockholder represents by so doing that he has been duly appointed as 
Attorney-in-Fact by such Selling Stockholder pursuant to a validly existing 
and binding Power of Attorney which authorizes such Attorney-in-Fact to take 
such action.



                                       Very truly yours,

                                       CUC International Inc.

                                       By:______________________
                                          Name:  Amy N. Lipton
                                          Title: Sr. VP & General Counsel

                                       Robert M. Davidson
                                       Janice G. Davidson
                                       Robert M. Davidson Charitable
                                         Remainder Unitrust
                                       Janice G. Davidson Charitable
                                         Remainder Unitrust
                                       The John R. Davidson Trust
                                       The Elizabeth Davidson Trust
                                       The Emilie A. Davidson Trust

                                       By:_________________________
                                          Name:
                                          Title: Attorney-in-Fact

                                       As Attorney-in-Fact acting on behalf
                                         of each of the Selling Stockholders
                                         named in Schedule II to this Agreement.

Accepted as of the date hereof

Goldman, Sachs & Co.
Morgan Stanley & Co, Incorporated
Bear Stearns & Co. Inc.
Donaldson, Lufkin & Jenrette
  Securities Corporation,
Smith Barney Inc.,

By:________________________________ 
        (Goldman, Sachs & Co.)


On behalf of each of the Underwriters

                                    -30-







                                    SCHEDULE I




                                                              Number of Optional
                                                                Shares to be
                                            Total Number of     Purchased if
                                             Firm Shares to     Maximum Option
                                              be Purchased       Exercised
             Underwriter                    ----------------    -------------
                            

Goldman, Sachs & Co. .....................

Morgan Stanley & Co, Incorporated ........

Bear Stearns & Co. Inc. ..................

Donaldson, Lufkin & Jenrette Securities
  Corporation.............................

Smith Barney Inc. ........................



                                                --------------    ------------
               Total ......................        13,200,000       1,980,000
                                                ===============   ============

                                       -31-




                                 SCHEDULE II

                                                             Number of Optional
                                         Total Number of      Shares to be Sold
                                           Firm Shares to         if Maximum
                                              be Sold          Option Exercised
                                         ---------------     -------------------

The Selling Stockholder(s):

Robert M. Davidson                             240,000                   0

Janice G. Davidson                             240,000                   0

Robert M. Davidson Charitable Remainder
   Unitrust                                  6,000,000             990,000

Janice G. Davidson Charitable Remainder
   Unitrust                                  6,000,000             990,000

The John R. Davidson Trust                     240,000                   0

The Elizabeth Davidson Trust                   240,000                   0

The Emilie A. Davidson Trust                   240,000                   0


     Total ...........................      13,200,000           1,980,000
                                            ==========           =========

- ------------
     (a)  This Selling Stockholder is represented by Gibson, Dunn & Crutcher,
and has appointed [NAME OF ATTORNEYS-IN-FACT (NOT LESS THAN TWO)], and each of 
them, as the Attorneys-in-Fact for such Selling Stockholder.


                                     -32-




                                                                      ANNEX I(a)


                    [Form of Opinion of Amy Lipton, Esq.]





                                                                      ANNEX I(b)



                    [Form of Opinion of Robert T. Tucker, Esq.]







                                                                      ANNEX I(c)



                    [Form of Opinion of Weil, Gotshal & Manges]






                                                                      ANNEX I(d)


                 [Form of Opinion of Gibson, Dunn & Crutcher]







                                                                     ANNEX II(a)


     Pursuant to Section 7(f) of the Underwriting Agreement, Ernst & 
Young LLP shall furnish letters to the Underwriters to the effect that:

     (i)  They are independent certified public accountants with respect to the 
Company and its subsidiaries within the meaning of the Act and the applicable 
published rules and regulations thereunder;

     (ii)  In their opinion, the financial statements and any supplementary 
financial information and schedules audited by them and included or 
incorporated by reference in the Registration Statement or the Prospectus 
comply as to form in all material respects with the applicable accounting 
requirements of the Act or the Exchange Act, as applicable, and the related 
published rules and regulations thereunder; and, if applicable, they have 
made a review in accordance with standards established by the American 
Institute of Certified Public Accountants of the consolidated interim 
financial statements;

    (iii)  They have made a review in accordance with standards established by 
the American Institute of Certified Public Accountants of the unaudited 
condensed consolidated statements of income, consolidated balance sheets and 
consolidated statements of cash flows or included in the Company's Quarterly 
Report on Form 10-Q incorporated by reference into the Prospectus; and on the 
basis of specified procedures including inquiries of officials of the Company 
who have responsibility for financial and accounting matters regarding 
whether the unaudited condensed consolidated financial statements referred to 
in paragraph (vi)(A) below comply as to form in all material respects with 
the applicable accounting requirements of the Exchange Act as it applies to 
Form 10-Q and the related published rules and regulations, nothing came to 
their attention that caused them to believe that the unaudited condensed 
consolidated financial statements do not comply as to form in all material 
respects with the applicable accounting requirements of the Exchange Act as 
it applies to Form 10-Q and the related published rules and regulations;

     (iv)  They have compared the information in the Prospectus under selected 
captions with the disclosure requirements of Regulation S-K and on the basis 
of limited procedures specified in such letter nothing came to their 
attention as a result of the foregoing procedures that caused them to believe 
that this information does not conform in all material respects with the 
disclosure requirements of Item 301 of Regulation S-K;

     (v)  On the basis of limited procedures, not constituting an audit in 
accordance with generally accepted auditing standards, consisting of a 
reading of the unaudited financial statements, a reading of the latest 
available minutes of the Company and its subsidiaries since the date of the 
latest audited financial statements included or incorporated by reference in 
the Prospectus, inquiries of officials of the Company and its subsidiaries 
responsible for financial and accounting matters and such other inquiries and 
procedures as may be specified in such letter, nothing came to their 
attention that caused them to believe that:





  (A)  the unaudited condensed consolidated statements of income, consolidated 
balance sheets and consolidated statements of cash flows included or 
incorporated by reference in the Company's Quarterly Reports on Form 10-Q 
incorporated by reference in the Prospectus do not comply as to form in all 
material respects with the applicable accounting requirements of the Exchange 
Act as it applies to Form 10-Q and the related published rules and 
regulations thereunder or are not in conformity with generally accepted 
accounting principles applied on a basis substantially consistent with the 
basis for the audited consolidated statements of income, consolidated balance 
sheets and consolidated statements of cash flows included or incorporated by 
reference in the Company's Annual Report on Form 10-K for the most recent 
fiscal year;

   (B) as of a specified date not more than five days prior to the date of such
letter, there have been any changes in the consolidated capital stock (other 
than issuances of capital stock upon exercise of options and stock 
appreciation rights, upon earn-outs of performance shares and upon 
conversions of convertible securities, in each case which were outstanding on 
the date of the latest balance sheet included or incorporated by reference in 
the Prospectus) or any increase in the consolidated long-term debt or 
short-term debt of the Company and its subsidiaries, or any decreases in 
consolidated net current assets or net assets or other items specified by the 
Representatives, or any increases in any items specified by the 
Representatives, in each case as compared with amounts shown in the latest 
balance sheet included or incorporated by reference in the Prospectus, except 
in each case for changes, increases or decreases which the Prospectus 
discloses have occurred or may occur or which are described in such letter; 
and

   (C) for the period from the date of the latest financial statements included
or incorporated by reference in the Prospectus to the specified date referred 
to in Clause (E) there were any decreases in consolidated net revenues or 
operating profit or the total or per share amounts of consolidated net income 
or other items specified by the Representatives, or any increases in any 
items specified by the Representatives, in each case as compared with the 
comparable period of the preceding year and with any other period of 
corresponding length specified by the Representatives, except in each case 
for increases or decreases which the Prospectus discloses have occurred or 
may occur or which are described in such letter; and

     (vi)  In addition to the audit referred to in their report(s) included or 
incorporated by reference in the Prospectus and the limited procedures, 
inspection of minute books, inquiries and other procedures referred to in 
paragraphs (iii) and (iv) above, they have carried out certain specified 
procedures, not constituting an audit in accordance with generally accepted 
auditing standards, with respect to certain amounts, percentages and 
financial information specified by the Representatives which are derived from 
the general accounting records of the Company and its subsidiaries, which 
appear in the Prospectus (excluding documents incorporated by reference) or 
in Part II of, or in



                                    -2-




exhibits and schedules to, the Registration Statement specified by the 
Representatives or in documents incorporated by reference in the Prospectus 
specified by the Representatives, and have compared certain of such amounts,
percentages and financial information with the accounting records of the
Company and its subsidiaries and have found them to be in agreement.













                                    -3-




                                                                     ANNEX II(b)


     Pursuant to Section 7(f) of the Underwriting Agreement, Deloitte 
& Touche LLP shall furnish letters to the Underwriters to the effect that:


     (i)  As of         , 1996, and during the period covered by the financial 
statements on which they reported, they were independent certified public 
accountants with respect to Sierra On-Line, Inc. and subsidiaries 
("Sierra") within the meaning of the Act and the applicable published rules 
and regulations thereunder.

     (ii)  They have audited the financial statements of Sierra that Ernst &
Young LLP rely on or reference in Ernst & Young LLP's letters delivered
pursuant to Section 7(e) and their report dated October   , 1996.]

     (iii)  As of          , 1996, and during the period covered by the 
financial statements on which they reported, they were independent certified 
public accountants with respect to Advance Ross Corporation and subsidiaries 
("Advance") within the meaning of the Act and the applicable published 
rules and regulations thereunder.

(iv)  They have audited the financial statements of Advance that Ernst & 
Young LLP rely on or reference in Ernst & Young LLP's letters delivered 
pursuant to Section 7(e) and their report dated October   , 1996.





                                                                     ANNEX II(c)



     Pursuant to Section 7(f) of the Underwriting Agreement, KPMG Peat 
Marwick LLP shall furnish letters to the Underwriters to the effect that:

     (i)  As of         , 1996, and during the period covered by the financial 
statements on which they reported, they were independent certified public 
accountants with respect to Davidson & Associates, Inc. ("Davidson") within 
the meaning of the Act and the applicable published rules and regulations 
thereunder.

     (ii)  They have audited the financial statements of Davidson that Ernst & 
Young LLP rely on or reference in Ernst & Young LLP's letters delivered 
pursuant to Section 7(e) and their report dated October   , 1996.






                                                                     ANNEX II(d)

     Pursuant to Section 7(f) of the Underwriting Agreement, Price 
Waterhouse LLP shall furnish letters to the Underwriters to the effect that:

     (i)  As of        , 1996, and during the period covered by the financial 
statements on which they reported, we were independent certified public 
accountants with respect to Ideon Group, Inc. ("Ideon") within the meaning 
of the Act and the applicable published rules and regulations thereunder.

     (ii)  They have audited the financial statements of Ideon that Ernst &
Young LLP rely on or reference in Ernst & Young LLP's letters delivered
pursuant to Section 7(e) and their report dated October   , 1996.







                                                   S&C Draft of October 9, 1996




                                     CUC INTERNATIONAL INC.

                                          COMMON STOCK
                                     PAR VALUE $.01 PER SHARE

                                         ----------------

                                       UNDERWRITING AGREEMENT
                                       (INTERNATIONAL VERSION)
                                         -------------------- 


                                                        October __, 1996


Goldman Sachs International,
Morgan Stanley & Co.
  International Limited,
Bear, Stearns International Limited,
Donaldson, Lufkin & Jenrette
  Securities Corporation,
Smith Barney Inc.,
 As representatives of the several Underwriters
  named in Schedule I hereto,
c/o Goldman Sachs International Limited,
Peterborough Court,
133 Fleet Street,
London EC4A 2BB,
England.

Dear Sirs:

     Certain stockholders named in Schedule II hereto (the "Selling
Stockholders") of CUC International Inc., a Delaware corporation (the
"Company"), propose, subject to the terms and conditions stated herein, 
to sell to the Underwriters named in Schedule I hereto (the "Underwriters")
an aggregate of 3,300,000 shares (the "Firm Shares") and, at the election of the
Underwriters, up to 495,000 additional shares (the "Optional Shares") of 
Common Stock, par value $.01 per share ("Stock"), of the Company (the Firm 
Shares and the Optional Shares which the Underwriters elect to purchase 
pursuant to Section 2 hereof are herein collectively called the "Shares").

     It is understood and agreed to by all parties that the Selling 
Stockholders are concurrently entering into an agreement, a copy of which is 
attached hereto (the "U.S. Underwriting Agreement"), providing for the sale 
by the Selling Stockholders of up to a total of 15,180,000 shares of Stock 
(the "U.S. Shares"), including the over-allotment option thereunder, through 
arrangements with certain underwriters in the United States (the "U.S. 
Underwriters"), for whom Goldman, Sachs & Co. Morgan Stanley & Co. 
Incorporated, Bear,




Stearns & Co. Inc., Donaldson, Lufkin & Jenrette Securities Corporation and 
Smith Barney Inc., are acting as representatives.  Anything herein or therein 
to the contrary notwithstanding, the respective closings under this Agreement 
and the U.S. Underwriting Agreement are hereby expressly made conditional on 
one another.  The Underwriters hereunder and the U.S. Underwriters are 
simultaneously entering into an Agreement between U.S. and International 
Underwriting Syndicates (the "Agreement between the Syndicates") which 
provides, among other things, for the transfer of shares of Stock between the 
two syndicates and for consultation by the Lead Managers hereunder with 
Goldman, Sachs & Co. prior to exercising the rights of the Underwriters under 
Section 7 hereof.  Two forms of prospectus are to be used in connection with 
the offering and sale of shares of Stock contemplated by the foregoing, one 
relating to the Shares hereunder and the other relating to the U.S. Shares.  
The latter form of prospectus will be identical to the former except for 
certain substitute pages. Except as used in Sections 2, 3, 4, 9 and 11 
herein, and except as context may otherwise require, references hereinafter 
to the Shares shall include all the shares of Stock which may be sold 
pursuant to either this Agreement or the U.S. Underwriting Agreement, and 
references herein to any prospectus whether in preliminary or final form, and 
whether as amended or supplemented, shall include both the U.S. and the 
international versions thereof.

      In addition, this Agreement incorporates by reference certain 
provisions from the U.S. Underwriting Agreement (including the related 
definitions of terms, which are also used elsewhere herein) and, for purposes 
of applying the same, references (whether in these precise words or their 
equivalent) in the incorporated provisions to the "Underwriters" shall be to 
the Underwriters hereunder, to the "Shares" shall be to the Shares hereunder 
as just defined, to "this Agreement" (meaning therein the U.S. Underwriting 
Agreement) shall be to this Agreement (except where this Agreement is already 
referred to or as the context may otherwise require) and to the 
representatives of the Underwriters or to Goldman, Sachs & Co. shall be to 
the addressees of this Agreement and to Goldman Sachs International ("GSI"), 
and, in general, all such provisions and defined terms shall be applied 
MUTATIS MUTANDIS as if the incorporated provisions were set forth in  full 
herein having regard to their context in this Agreement as opposed to the 
U.S. Underwriting Agreement.

      1.  The Company and each of the several Selling Stockholders hereby 
make to the Underwriters the same respective representations, warranties and 
agreements as are set forth in Section 1 of the U.S. Underwriting Agreement, 
which Section is incorporated herein by this reference.

     2.  Subject to the terms and conditions herein set forth, (a) each of 
the Selling Stockholders agrees, severally and not jointly, to sell to each 
of the Underwriters, and each of the Underwriters agrees, severally and not 
jointly, to purchase from each of the Selling Stockholders at a purchase 
price per share of $_____ the number of Firm Shares (to be adjusted by you so 
as to eliminate fractional shares) determined by multiplying the aggregate 
number of Firm Shares to be sold by each of the Selling Stockholders as set 
forth opposite their respective names in Schedule II hereto by a fraction, 
the numerator of which is the aggregate number of Firm Shares to be purchased 
by such Underwriter as set forth opposite the name of such Underwriter in 
Schedule I hereto and the denominator of which is the aggregate number of 
Firm Shares to be purchased by all the Underwriters from all the Selling

                                       -2-



Stockholders hereunder and (b) in the event and to the extent that the 
Underwriters shall exercise the election to purchase Optional Shares as 
provided below, each of the Selling Stockholders agrees, severally and not 
jointly, to sell to each of the Underwriters, and each of the Underwriters 
agrees, severally and not jointly, to purchase from each of the Selling 
Stockholders, at the purchase price per share set forth in clause (a) of this 
Section 2, that portion of the number of Optional Shares as to which such 
election shall have been exercised (to be adjusted by you so as to eliminate 
fractional shares) determined by multiplying such number of Optional Shares 
by a fraction the numerator of which is the maximum number of Optional Shares 
which such Underwriter is entitled to purchase as set forth opposite the name 
of such Underwriter in Schedule I hereto and the denominator of which is the 
maximum number of the Optional Shares which all of the Underwriters are 
entitled to purchase hereunder.

     The Selling Stockholders, as and to the extent indicated in Schedule II 
hereto, hereby grant, severally and not jointly, to the Underwriters the 
right to purchase at their election up to 495,000 Optional Shares, at the 
purchase price per share set forth in the paragraph above, for the sole 
purpose of covering over-allotments in the sale of the Firm Shares.  Any such 
election to purchase Optional Shares shall be made in proportion to the 
number of Optional Shares to be sold by each Selling Stockholder.  Any such 
election to purchase Optional Shares may be exercised only by written notice 
from you to the Attorneys-in-Fact, given within a period of 30 calendar days 
after the date of this Agreement and setting forth the aggregate number of 
Optional Shares to be purchased and the date on which such Optional Shares 
are to be delivered, as determined by you but in no event earlier than the 
First Time of Delivery (as defined in Section 4 hereof) or, unless you and 
the Attorneys-in-Fact otherwise agree in writing, earlier than two or later 
than ten business days after the date of such notice.

     3.  Upon the authorization by GSI of the release of the Firm Shares, the 
several Underwriters propose to offer the Firm Shares for sale upon the terms 
and conditions set forth in the Prospectus and in the forms of Agreement 
among Underwriters (International Version) and Selling Agreements, which have 
been previously submitted to the Company by you.  Each Underwriter hereby 
makes to and with the Company and the Selling Stockholders the 
repre-sentations and agreements of such Underwriter as a member of the 
selling group contained in Sections 3(d) and 3(e) of the form of Selling 
Agreements.

     4.  (a) The Shares to be purchased by each Underwriter hereunder, in 
definitive form, and in such authorized denominations and registered in such 
names as Goldman, Sachs & Co. may request upon at least forty-eight hours' 
prior notice to the Selling Stockholders, shall be delivered by or on behalf 
of the Selling Stockholders to GSI for the account of such Underwriter, 
against payment by such Underwriter or on behalf of such Underwriter of the 
purchase price therefor by certified or official bank check or checks, 
payable to the order of the Custodian in immediately available (same-day) 
funds, all at the office of Goldman, Sachs & Co., 85 Broad Street, New York, 
New York 10004.  The time and date of such delivery and payment shall be, 
with respect to the Firm Shares, 9:30 a.m., New York City time, on October 
__, 1996 or at such other time and date as you and the Selling Stockholders 
may agree upon in writing, and, with respect to the Optional Shares, 9:30 
a.m., New York City time, on the date specified by you in the written notice 
given by you of the

                                       -3-


Underwriters' election to purchase such Optional Shares, or at such other 
time and date as you and the Selling Stockholders may agree upon in writing.  
Such time and date for delivery of the Firm Shares is herein called the 
"First Time of Delivery", such time and date for delivery of the Optional 
Shares, if not the First Time of Delivery, is herein called the "Second Time 
of Delivery", and each such time and date for delivery is herein called a 
"Time of Delivery".  Such certificates will be made available for checking 
and packaging at least twenty-four hours prior to each Time of Delivery at 
the office of Goldman, Sachs & Co.

     (b)  The documents to be delivered at each Time of Delivery by or on 
behalf of the parties hereto pursuant to Section 7 of the U.S. Underwriting 
Agreement, including the cross-receipt for the Shares and any additional 
documents requested by the Underwriters pursuant to Section 7(j) of the U.S. 
Underwriting Agreement, will be delivered at the offices of Sullivan & 
Cromwell, 125 Broad Street, New York, New York 10004 (the "Closing Location") 
at 3:00 p.m., New York City time, on the New York Business Day next preceding 
each Time of Delivery, at which meeting the final drafts of the documents to 
be delivered pursuant to the preceding sentence will be available for review 
by the parties hereto.  For the purposes of this Section 4, "New York 
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday 
which is not a day on which banking institutions in New York are generally 
authorized or obligated by law or executive order to close.

     5.  The Company hereby makes with the Underwriters the same agreements 
as are set forth in Section 5 of the U.S. Underwriting Agreement, which 
Section is incorporated herein by this reference.

     6.  The Company, each of the Selling Stockholders, and the Underwriters 
hereby agree with respect to certain expenses on the same terms as are set 
forth in Section 6 of the U.S. Underwriting Agreement, which Section is 
incorporated herein by this reference.

     7.  Subject to the provisions of the Agreement between Syndicates, the 
obligations of the Underwriters hereunder shall be subject, in their 
discretion, at each Time of Delivery to the condition that all 
representations and warranties and other statements of the Company and the 
Selling Stockholders herein are, at and as of such Time of Delivery, true and 
correct, the condition that the Company and the Selling Stockholders shall 
have performed all of their respective obligations hereunder theretofore to 
be performed, and additional conditions identical to those set forth in 
Section 7 of the U.S. Underwriting Agreement, which Section is incorporated 
herein by this reference.

     8.  (a)  The Company will indemnify and hold harmless each Underwriter 
against any losses, claims, damages or liabilities, joint or several, to 
which such Underwriter may become subject, under the Act or otherwise, 
insofar as such losses, claims, damages or liabilities (or actions in respect 
thereof) arise out of or are based upon an untrue statement or alleged untrue 
statement of a material fact contained in any Preliminary Prospectus, the 
Registration Statement or the Prospectus, or any amendment or supplement 
thereto, or arise out of or are based upon the omission or alleged omission 
to state therein a material fact required to be stated therein or necessary 
to make the statements therein not misleading, and will reimburse each 
Underwriter for any legal or other expenses reasonably incurred by such 
Underwriter in connection with investigating or defending any such action or 
claim as such

                                       -4-



expenses are incurred; PROVIDED, HOWEVER, that the Company shall not be 
liable in any such case to the extent that any such loss, claim, damage or 
liability arises out of or is based upon an untrue statement or alleged 
untrue statement or omission or alleged omission made in any Preliminary 
Prospectus, the Registration Statement or the Prospectus or any such 
amendment or supplement in reliance upon and in conformity with written 
information furnished to the Company by any Underwriter through Goldman, 
Sachs & Co. expressly for use therein. or by a Selling Stockholder expressly 
for use in the preparation of answers therein to Item 7 of Form S-3.

     (b)  Each of the Selling Stockholders will indemnify and hold harmless 
each Underwriter against any losses, claims, damages or liabilities, joint or 
several, to which such Underwriter may become subject, under the Act or 
otherwise, insofar as such losses, claims, damages or liabilities (or actions 
in respect thereof) arise out of or are based upon an untrue statement or 
alleged untrue statement of a material fact contained in any Preliminary 
Prospectus, the Registration Statement or the Prospectus, or any amendment or 
supplement thereto, or arise out of or are based upon the omission or alleged 
omission to state therein a material fact required to be stated therein or 
necessary to make the statements therein not misleading, in each case to the 
extent, but only to the extent, that such untrue statement or alleged untrue 
statement or omission or alleged omission was made in any Preliminary 
Prospectus, the Registration Statement or the Prospectus or any such 
amendment or supplement in reliance upon and in conformity with written 
information furnished to the Company by such Selling Stockholder expressly 
for use therein; and will reimburse each Underwriter for any legal or other 
expenses reasonably incurred by such Underwriter in connection with 
investigating or defending any such action or claim as such expenses are 
incurred; PROVIDED, HOWEVER, that such Selling Stockholder shall not be 
liable in any such case to the extent that any such loss, claim, damage or 
liability arises out of or is based upon an untrue statement or alleged 
untrue statement or omission or alleged omission made in any Preliminary 
Prospectus, the Registration Statement or the Prospectus or any such 
amendment or supplement in reliance upon and in conformity with written 
information furnished to the Company by any Underwriter through Goldman, 
Sachs & Co. expressly for use therein; PROVIDED, HOWEVER that the liability 
of each of the Selling Shareholders pursuant to this subsection (b) shall not 
exceed the product of the number of Shares sold by such Selling Shareholder 
(including any Optional Shares) and the initial public offering price as set 
forth in the Prospectus.

     (c)  Each Underwriter will indemnify and hold harmless the Company and 
each Selling Stockholder against any losses, claims, damages or liabilities 
to which the Company or such Selling Stockholder may become subject, under 
the Act or otherwise, insofar as such losses, claims, damages or liabilities 
(or actions in respect thereof) arise out of or are based upon an untrue 
statement or alleged untrue statement of a material fact contained in any 
Preliminary Prospectus, the Registration Statement or the Prospectus, or any 
amendment or supplement thereto, or arise out of or are based upon the 
omission or alleged omission to state therein a material fact required to be 
stated therein or necessary to make the statements therein not misleading, in 
each case to the extent, but only to the extent, that such untrue statement 
or alleged untrue statement or omission or alleged omission was made in any 
Preliminary Prospectus, the Registration Statement or the Prospectus or any 
such amendment or supplement in reliance upon and in conformity with written 
information furnished to the

                                       -5-



Company by such Underwriter through GSI expressly for use therein; and will 
reimburse the Company and each Selling Stockholder for any legal or other 
expenses reasonably incurred by the Company or such Selling Stockholder in 
connection with investigating or defending any such action or claim as such 
expenses are incurred.

     (d)  Promptly after receipt by an indemnified party under subsection 
(a), (b) or (c) above of notice of the commencement of any action, such 
indemnified party shall, if a claim in respect thereof is to be made against 
an indemnifying party under such subsection, notify the indemnifying party in 
writing of the commencement thereof; but the omission so to notify the 
indemnifying party shall not relieve it from any liability which it may have 
to any indemnified party otherwise than under such subsection.  In case any 
such action shall be brought against any indemnified party and it shall 
notify the indemnifying party of the commencement thereof, the indemnifying 
party shall be entitled to participate therein and, to the extent that it 
shall wish, jointly with any other indemnifying party similarly notified, to 
assume the defense thereof, with counsel satisfactory to such indemnified 
party (who shall not, except with the consent of the indemnified party, be 
counsel to the indemnifying party), and, after notice from the indemnifying 
party to such indemnified party of its election so to assume the defense 
thereof, the indemnifying party shall not be liable to such indemnified party 
under such subsection for any legal expenses of other counsel or any other 
expenses, in each case subsequently incurred by such indemnified party, in 
connection with the defense thereof other than reasonable costs of 
investigation.

     (e)  If the indemnification provided for in this Section 8 is 
unavailable to or insufficient to hold harmless an indemnified party under 
subsection (a), (b) or (c) above in respect of any losses, claims, damages or 
liabilities (or actions in respect thereof) referred to therein, then each 
indemnifying party, and, in addition, if each indemnifying party is a Selling 
Stockholder, the Company, shall contribute to the amount paid or payable by 
such indemnified party as a result of such losses, claims, damages or 
liabilities (or actions in respect thereof) in such proportions as is 
appropriate to reflect not only (i) the relative benefits received by the 
Selling Stockholders on the one hand and the Underwriters on the other from 
the offering of the Shares but also (ii) the relative fault of the Company, 
the Selling Stockholders and the Underwriters in connection with the 
statements or omissions which resulted in such losses, claims, damages or 
liabilities (or actions in respect thereof), as well as any other relevant 
equitable considerations.  The relative benefits received by the Selling 
Stockholders on the one hand and the Underwriters on the other shall be 
deemed to be in the same proportion as the total net proceeds from the 
offering of the Shares purchased under this Agreement (before deducting 
expenses) received by the Selling Stockholders bear to the total underwriting 
discounts and commissions received by the Underwriters with respect to the 
Shares purchased under this Agreement, in each case as set forth in the table 
on the cover page of the Prospectus.  The relative fault shall be determined 
by reference to, among other things, whether the indemnified party failed to 
give notice required under subsection (d) above and whether the untrue or 
alleged untrue statement of a material fact or the omission or alleged 
omission to state a material fact relates to information supplied by the 
Company, the Selling Stockholders or the Underwriters and the parties' 
relative intent, knowledge, access to information and opportunity to correct 
or prevent such statement or omission.  The Company, each of the Selling 
Stockholders and the Underwriters agree that it would not be just and 
equitable if contributions pursuant to this subsection (e) were determined by 
pro rata

                                       -6-



allocation (even if the Underwriters were treated as one entity for such 
purpose) or by any other method of allocation which does not take account of 
the equitable considerations referred to above in this subsection (e).  The 
amount paid or payable by an indemnified party as a result of the losses, 
claims, damages or liabilities (or actions in respect thereof) referred to 
above in this subsection (e) shall be deemed to include any legal or other 
expenses reasonably incurred by such indemnified party in connection with 
investigating or defending any such action or claim. Notwithstanding the 
provisions of this subsection (e), no Underwriter shall be required to 
contribute any amount in excess of the amount by which the total price at 
which the Shares underwritten by it and distributed to the public were 
offered to the public exceeds the amount of any damages which such 
Underwriter has otherwise been required to pay by reason of such untrue or 
alleged untrue statement or omission or alleged omission.  No person guilty 
of fraudulent misrepresentation (within the meaning of Section 11(f) of the 
Act) shall be entitled to contribution from any person who was not guilty of 
such fraudulent misrepresentation.  The Underwriters' obligations in this 
subsection (e) to contribute are several in proportion to their respective 
underwriting obligations and not joint.

     (f)  The obligations of the Company and the Selling Stockholders under 
this Section 8 shall be in addition to any liability which the Company and 
the respective Selling Stockholders may otherwise have and shall extend, upon 
the same terms and conditions, to each person, if any, who controls any 
Underwriter within the meaning of the Act; and the obligations of the 
Underwriters under this Section 8 shall be in addition to any liability which 
the respective Underwriters may otherwise have and shall extend, upon the 
same terms and conditions, to each officer and director of the Company and to 
each person, if any, who controls the Company or any Selling Stockholder 
within the meaning of the Act.

     9.  (a)  If any Underwriter shall default in its obligation to purchase 
the Shares which it has agreed to purchase hereunder at a Time of Delivery, 
you may in your discretion arrange for you or another party or other parties 
to purchase such Shares on the terms contained herein.  If within thirty-six 
hours after such default by any Underwriter you do not arrange for the 
purchase of such Shares, then the Selling Stockholders shall be entitled to a 
further period of thirty-six hours within which to procure another party or 
other parties satisfactory to you to purchase such Shares on such terms.  In 
the event that, within the respective prescribed periods, you notify the 
Selling Stockholders that you have so arranged for the purchase of such 
Shares, or the Selling Stockholders notify you that they have so arranged for 
the purchase of such Shares, you or the Selling Stockholders shall have the 
right to postpone such Time of Delivery for a period of not more than seven 
days, in order to effect whatever changes may thereby be made necessary in 
the Registration Statement or the Prospectus, or in any other documents or 
arrangements, and the Company agrees to file promptly any amendments to the 
Registration Statement or the Prospectus which in your opinion may thereby be 
made necessary.  The term "Underwriter" as used in this Agreement shall 
include any person substituted under this Section with like effect as if such 
person had originally been a party to this Agreement with respect to such 
Shares.

     (b)  If, after giving effect to any arrangement for the purchase of the 
Shares of a defaulting Underwriter or Underwriters by you and the Selling 
Stockholders as provided in subsection (a) above, the aggregate number of 
such Shares which remains unpurchased does not exceed one-eleventh of the 
aggregate number of all the Shares to be purchased at such

                                       -7-



Time of Delivery, then the Selling Stockholders shall have the right to 
require each non-defaulting Underwriter to purchase the number of shares 
which such Underwriter agreed to purchase hereunder at such Time of Delivery 
and, in addition, to require each non-defaulting Underwriter to purchase its 
pro rata share (based on the number of Shares which such Underwriter agreed 
to purchase hereunder) of the Shares of such defaulting Underwriter or 
Underwriters for which such arrangements have not been made; but nothing 
herein shall relieve a defaulting Underwriter from liability for its default.

     (c)  If, after giving effect to any arrangements for the purchase of the 
Shares of a defaulting Underwriter or Underwriters by you and the Selling 
Stockholders as provided in subsection (a) above, the aggregate number of 
such Shares which remains unpurchased exceeds one-eleventh of the aggregate 
number of all the Shares to be purchased at such Time of Delivery, or if the 
Selling Stockholders shall not exercise the right described in subsection (b) 
above to require non-defaulting Underwriters to purchase Shares of a 
defaulting Underwriter or Underwriters, then this Agreement (or, with respect 
to the Second Time of Delivery, the obligations of the Underwriters to 
purchase and of the Selling Stockholders to sell the Optional Shares) shall 
thereupon terminate, without liability on the part of any non-defaulting 
Underwriter or the Company or the Selling Stockholders, except for the 
expenses to be borne by the Company and the Selling Stockholders and the 
Underwriters as provided in Section 6 hereof and the indemnity and 
contribution agreements in Section 8 hereof; but nothing herein shall relieve 
a defaulting Underwriter from liability for its default.

     10.  The respective indemnities, agreements, representations, warranties 
and other statements of the Company, the Selling Stockholders and the several 
Underwriters, as set forth in this Agreement or made by or on behalf of them, 
respectively, pursuant to this Agreement, shall remain in full force and 
effect, regardless of any investigation (or any statement as to the results 
thereof) made by or on behalf of any Underwriter or any controlling person of 
any Underwriter, or the Company or any of the Selling Stockholders, or any 
officer or director or controlling person of the Company or any controlling 
person of any Selling Stockholder, and shall survive delivery of and payment 
for the Shares.

     11.  If this Agreement shall be terminated pursuant to Section 9 hereof, 
neither the Company nor the Selling Stockholders shall then be under any 
liability to any Underwriter except as provided in Section 6 and Section 8 
hereof; but, if for any other reason any Shares are not delivered by or on 
behalf of the Selling Stockholders as provided herein, each of the Selling 
Stockholders pro rata (based on the number of Shares to be sold by such 
Selling Stockholder hereunder) will reimburse the Underwriters through GSI 
for all out-of-pocket expenses approved in writing by GSI, including fees and 
disbursements of counsel, reasonably incurred by the Underwriters in making 
preparations for the purchase, sale and delivery of the Shares not so 
delivered, but the Company and the Selling Stockholders shall then be under 
no further liability to any Underwriter in respect of the Shares not so 
delivered except as provided in Section 6 and Section 8 hereof.

     12.  In all dealings hereunder, you shall act on behalf of each of the 
Underwriters, and the parties hereto shall be entitled to act and rely upon 
any statement, request, notice or agreement on behalf of any Underwriter made 
or given by you jointly or by GSI on behalf of you as the representatives of 
the Underwriters; and in all dealings with any

                                       -8-



Selling Stockholder hereunder, you and the Company shall be entitled to act 
and rely upon any statement, request, notice or agreement on behalf of such 
Selling Stockholder made or given by any or all of the Attorneys-in-Fact for 
such Selling Stockholder.

     All statements, requests, notices and agreements hereunder shall be in 
writing, and if to the Underwriters shall be delivered or sent by mail, telex 
or facsimile transmission to the Underwriters in care of GSI, Peterborough 
Court, 133 Fleet Street, London EC4A 2BB, England, Attention:  Equity Capital 
Markets, Telex No. 887902, facsimile transmission no. (071) 774-1550; if to 
any Selling Stockholder shall be delivered or sent by mail, telex or 
facsimile transmission to counsel for such Selling Stockholder at its address 
set forth in Schedule II hereto; and if to the Company shall be delivered or 
sent by mail, telex or facsimile transmission to the address of the Company 
set forth in the Registration Statement, Attention: Secretary; provided, 
however, that any notice to an Underwriter pursuant to Section 8(c) hereof 
shall be delivered or sent by mail, telex or facsimile transmission to such 
Underwriter at its address set forth in its Underwriters' Questionnaire, or 
telex constituting such Questionnaire, which address will be supplied to the 
Company or the Selling Stockholders by GSI upon request.  Any such 
statements, requests, notices or agreements shall take effect upon receipt 
thereof.

     13.  This Agreement shall be binding upon, and inure solely to the 
benefit of, the Underwriters, the Company and the Selling Stockholders and, 
to the extent provided in Section 8 and Section 10 hereof, the officers and 
directors of the Company and each person who controls the Company, any 
Selling Stockholder or any Underwriter, and their respective heirs, 
executors, administrators, successors and assigns, and no other person shall 
acquire or have any right under or by virtue of this Agreement.  No purchaser 
of any of the Shares from any Underwriter shall be deemed a successor or 
assign by reason merely of such purchase.

     14.  Time shall be of the essence of this Agreement.

     15.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE 
WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA.

     16.  This Agreement may be executed by any one or more of the parties 
hereto in any number of counterparts, each of which shall be deemed to be an 
original, but all such counterparts shall together constitute one and the 
same instrument.

     If the foregoing is in accordance with your understanding, please sign 
and return to us eight (8) counterparts hereof, and upon the acceptance 
hereof by you, on behalf of each of the Underwriters, this letter and such 
acceptance hereof shall constitute a binding agreement among each of the 
Underwriters, the Company and each of the Selling Stockholders.  It is 
understood that your acceptance of this letter on behalf of each of the 
Underwriters is pursuant to the authority set forth in a form of Agreement 
among Underwriters (International Version), the form of which shall be 
furnished to the Company and the Selling Stockholders for examination upon 
request, but without warranty on your part as to the authority of the signers 
thereof.

                                       -9-



     Any person executing and delivering this Agreement as Attorney-in-Fact 
for a Selling Stockholder represents by so doing that he has been duly 
appointed as Attorney-in-Fact by such Selling Stockholder pursuant to a 
validly existing and binding Power of Attorney which authorizes such 
Attorney-in-Fact to take such action.

                                       Very truly yours,

                                       CUC International Inc.


                                       By:------------------------------
                                          Name:  Amy N. Lipton
                                          Title: Sr. VP & General Counsel

                                       Robert M. Davidson
                                       Janice G. Davidson
                                       Robert M. Davidson Charitable
                                                            Remainder Unitrust
                                       Janice G. Davidson Charitable
                                                            Remainder Unitrust
                                       The John R. Davidson Trust
                                       The Elizabeth Davidson Trust
                                       The Emilie A. Davidson Trust



                                       By:------------------------------
                                          Name:
                                          Title:  Attorney-in-Fact

                                       As Attorney-in-Fact acting on
                                        behalf of each of the Selling
                                        Stockholders named in Schedule II
                                        to this Agreement.

Goldman Sachs International,
Morgan Stanley & Co.
  International Limited,
Bear, Stearns International Limited,
Donaldson, Lufkin & Jenrette
  Securities Corporation,
Smith Barney Inc.

By:  Goldman Sachs International


By:------------------------------
        (Attorney-in-Fact)

On behalf of each of the Underwriters


                                       -10-




                                  SCHEDULE I


                                                              Number of Optional
                                                                 Shares to be
                                        Total Number of          Purchased if
                                        Firm Shares to          Maximum Option
       Underwriter                      to be Purchased           Exercised
       -----------                      ---------------       -----------------

Goldman Sachs International............

Morgan Stanley & Co.
   International Limited...............

Bear, Stearns International Limited....

Donaldson, Lufkin & Jenrette
  Securities Corporation...............

Smith Barney Inc. .....................
                   
                                           ---------                 ---------
     Total.............................    3,300,000                  495,000
                                           =========                 =========





                                  SCHEDULE II




                                                             Number of Optional
                                        Total Number of       Shares to be Sold
                                        Firm Shares to           if Maximum
                                            be Sold           Option Exercised
                                        ---------------      ------------------
The Selling Stockholder(s):

Robert M. Davidson(a)                       60,000                     0
Janice G. Davidson(a)                       60,000                     0
Robert M. Davidson Charitable
Remainder Unitrust(a)                    1,500,000               247,500
Janice G. Davidson Charitable
Remainder Unitrust(a)                    1,500,000               247,500
The John R. Davidson Trust(a)               60,000                     0
The Elizabeth Davidson Trust(a)             60,000                     0
The Emilie A. Davidson Trust(a)             60,000                     0
                                         ---------               -------
         Total.....................      3,300,000               495,000
                                         =========               =======


- --------

     (a)  This Selling Stockholder is represented by Gibson, Dunn & Crutcher
and has appointed [NAME OF ATTORNEYS-IN-FACT (NOT LESS THAN TWO)], and each 
of them, as the Attorneys-in-Fact for such Selling Stockholder.




                                                                   Exhibit 5.1

                           Weil, Gotshal & Manges LLP
     (A Limited Liability Partnership Including Professional Corporations)
                              767 Fifth Avenue
                           New York, New York 10153 
                               (212) 310-8000                             
                             Fax: (212) 310-8007                            


                                 October 9, 1996


The Board of Directors
CUC International Inc.
707 Summer Street
Stamford, CT 06901

Re: CUC International Inc./
    Registration Statement
    on Form S-3
    (No. 333-13537)
    -----------------------

Ladies and Gentlemen:

     We have acted as counsel to CUC International Inc., a Delaware 
corporation (the "Company"), in connection with the preparation and filing of 
the Company's Registration Statement on Form S-3 (No 333-13537) (the 
"Registration Statement") under the Securities Act of 1933, as amended (the 
"Securities Act"), relating to the underwritten resale by the Selling 
Stockholders (in the manner described in the prospectus (the "Prospectus") 
under the caption "Underwriting" contained in the Registration Statement) of 
up to an aggregate of 18,975,000 shares of Common Stock, $.01 par value (the 
"Common Stock"), of the Company (which includes for this purpose options 
granted to the U.S. Underwriters and the International Underwriters to 
purchase up to an aggregate of 2,475,000 additional shares of Common Stock, 
solely to cover over-allotments).

     In so acting, we have reviewed the Registration Statement, including the 
Prospectus contained therein, and the Restated Certificate of Incorporation 
and the Bylaws of the Company in effect on the date hereof. In addition, we 
have examined originals or copies, certified or otherwise identified to our 
satisfaction, of such corporate records, agreements, documents and other 
instruments, and such certificates or comparable documents of public 
officials and of officers and representatives of the Company, and have made 
such inquiries of such officers and representatives, as we have deemed 
relevant and necessary as a basis for the opinions hereinafter set forth.

     In such examination, we have assumed the genuineness of all signatures, 
the legal capacity of natural persons, the authenticity of all documents 
submitted to us as originals, the conformity to original documents of all 
documents submitted to us as certified or photostatic copies and the 
authenticity of the originals of such latter documents. As to all questions 
of fact material to this opinion that have not been independently 
established, we have relied upon certificates or comparable documents of 
officers and representatives of the Company.

     Based on the foregoing, and subject to the qualifications stated herein, 
we are of the opinion that:

     1.  The Company is a corporation duly incorporated and validly existing 
under the laws of the State of Delaware.





The Board of Directors
CUC International Inc.
October 9, 1996
Page 2


     2.  The shares of Common Stock to be sold by the Selling Stockholders in 
the manner described under the captions "Selling Stockholders" and 
"Underwriting" in the Prospectus contained in the Registration Statement have 
been duly authorized and, after giving effect to the Company's three-for-two 
"split" of the Common Stock payable on October 21, 1996 to holders of record 
of the Common Stock on October 7, 1996, will be, validly issued, fully paid 
for and nonassessable.

     The opinions expressed herein are limited to the corporate laws of the 
State of Delaware, and we express no opinion as to the effect on the matters 
covered by this letter of the laws of any other jurisdiction.

     The opinions expressed herein are rendered solely for your benefit in 
connection with the transactions described herein. These opinions may not be 
used or relied upon by any other person, nor may this letter or any copies 
thereof be furnished to a third party, filed with a governmental agency, 
quoted, cited or otherwise referred to without our prior written consent.

     We hereby consent to the filing of this opinion as Exhibit 5.1 to the 
Registration Statement and to the references to this firm under the heading 
"Validity of Common Stock" in the Prospectus, without admitting that we are 
"experts" under the Securities Act or the rules and regulations promulgated 
thereunder with respect to any part of the Registration Statement or 
Prospectus contained, or any of the documents incorporated by reference, 
therein.

                                       Very truly yours,

                                       /s/ Weil, Gotshal & Manges LLP



                                                                    EXHIBIT 15.1






CUC INTERNATIONAL INC. AND SUBSIDIARIES

EXHIBIT 15--LETTER RE: UNAUDITED INTERIM FINANCIAL INFORMATION

October 4, 1996

Shareholders and Board of Directors
CUC International Inc.

We are aware of the incorporation by reference in the Registration Statement
(Amendment No. 1 to Form S-3) of CUC International Inc. for the registration of
12,650,000 shares (pre-stock split) of its common stock of our reports dated
May 22, 1996 and September 4, 1996 relating to the unaudited condensed
consolidated interim financial statements of CUC International Inc. that are
included in its Quarterly Reports on Form 10-Q for the quarters ended April 30,
1996 and July 31, 1996.

Pursuant to Rule 436(c) of the Securities Act of 1933, our reports are not a 
part of the registration statement prepared or certified by accountants 
within the meaning of Section 7 or 11 of the Securities Act of 1933.

                                                 /s/ Ernst & Young LLP

                                                 ERNST & YOUNG LLP

Stamford, Connecticut



                                                                    EXHIBIT 23.2

                           Consent of Independent Auditors


We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Amendment No. 1 to Form S-3) and related Prospectus of
CUC International Inc. for the registration of 12,650,000 shares (pre-stock
split) of its common stock and to the incorporation by reference therein of our
report dated March 19, 1996, with respect to the consolidated financial
statements of CUC International Inc. included in its Annual Report on Form 10-K
for the year ended January 31, 1996 and our report dated September 12, 1996 with
respect to the supplemental consolidated financial statements of CUC
International Inc. included in its Current Report on Form 8-K dated July 24,
1996, filed with the Securities and Exchange Commission.


                                            /s/ Ernst & Young LLP

                                            ERNST & YOUNG LLP

Stamford, Connecticut
October 4, 1996



                                                                    EXHIBIT 23.3

                 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement of Amendment One to Form S-3
(No. 333-13537) of CUC International Inc. of our reports dated February 2, 1996
and December 5, 1994, relating to the consolidated financial statements of Ideon
Group, Inc., which appears in the Current Report on Form 8-K of CUC
International Inc. filed with the Securities and Exchange Commission on or about
September 12, 1996. We also consent to the reference to us under the heading
"Experts."



/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Tampa, Florida
October 4, 1996



                                                                EXHIBIT 23.4
                                 ACCOUNTANTS' C0NSENT





The Board of Directors
Davidson & Associates, Inc.

We consent to the incorporation by reference in this Amendment No. 1 to the
registration statement on Form S-3 (No. 333-13537) of our report dated February
21, 1996 with respect to the consolidated balance sheets of Davidson &
Associates, Inc. and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of earnings, shareholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1995,
and to the reference to our firm under the heading "Experts" in the prospectus.




/s/ KPMG Peat Marwick LLP

Long Beach, California
October 4, 1996



EXHIBIT 23.5



INDEPENDENT AUDITORS' CONSENT
- --------------------------------------------------------------------------------


We consent to the incorporation by reference in this Amendment No. 1 to 
Registration Statement of CUC International Inc. on Form S-3 of our report
dated June 24, 1996 (relating to the consolidated financial statements of
Sierra On-Line, Inc. and subsidiaries for the year ended March 31, 1996, not
presented separately therein), appearing in the CUC International Inc. Current
Report on Form 8-K (filed with the Securities and Exchange Commission on
September 17, 1996), and to the reference to us under the heading "Experts" in
the Prospectus, which is part of this Registration Statement.




/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP
Seattle, Washington

October 8, 1996



                                                                    EXHIBIT 23.6

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-13537 of CUC International Inc. on Form S-3 of
our report dated March 13, 1995 (relating to the financial statements of Advance
Ross Corporation as of December 31, 1994 and for the years ended December 31,
1994 and 1993, not presented separately therein), appearing in the CUC
International Inc. Form 8-K (filed with the Securities and Exchange Commission
on September 17, 1996) and to the reference to us under the heading "Experts" in
the Prospectus, which is part of this Registration Statement.




/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP
Chicago, Illinois

October 4, 1996