As filed with the Securities and Exchange Commission on September 17, 1997
Registration No. 333-23063
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
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.)
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
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
CUC INTERNATIONAL INC.
707 SUMMER STREET
STAMFORD, CONNECTICUT 06901
(203) 324-9261
(NAME, ADDRESS, INCLUDING ZIP CODE,
AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
Copy to:
Amy N. Lipton, Esq.
Senior Vice President and
General Counsel
CUC International Inc.
707 Summer Street
Stamford, Connecticut 06901
(203) 324-9261
================================================================================
Approximate date of commencement of proposed sale to the public: From time to
time after this Registration Statement becomes effective.
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, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [x]
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. [_] __________
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. [_]
SUBJECT TO COMPLETION, DATED SEPTEMBER 17, 1997
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.
PROSPECTUS
CUC INTERNATIONAL INC.
$550,000,000
Aggregate Principal Amount of
3% Convertible Subordinated Notes Due February 15, 2002
17,959,205
Shares of Common Stock
($.01 Par Value)
This Prospectus relates to the offer and sale, from time to time, by
the Selling Securityholders listed herein of up to $550,000,000 aggregate
principal amount of the 3% Convertible Subordinated Notes Due February 15, 2002
(the "Notes") of CUC International Inc., a Delaware corporation ("CUC" or the
"Company"), and up to 17,959,205 shares (the "Shares", and collectively with the
Notes, the "Securities") of the common stock, $.01 par value (the "Common
Stock"), of the Company issuable upon conversion of the Notes in full. The Notes
were issued under an Indenture dated as of February 11, 1997 (the "Indenture"),
between the Company and Marine Midland Bank, as trustee (the "Trustee").
Interest on the Notes is payable semi-annually on February 15 and August 15 of
each year, commencing on August 15, 1997. The Notes are convertible, in whole or
in part, at the option of the holder at any time prior to the close of business
on February 15, 2002, unless previously redeemed, into shares of Common Stock at
a conversion price of $30.625 per share (equivalent to a conversion rate of
32.6531 shares of Common Stock per $1,000 principal amount of the Notes),
subject to adjustment in certain circumstances. See "Description of Notes -
Conversion Rights". The Notes are redeemable at the Company's option at any time
on and after February 15, 2000 at the redemption prices specified therein,
together with accrued and unpaid interest thereon to the date of redemption. See
"Description of Notes - Optional Redemption". In the event of a Change-in-
Control (as defined in the Indenture), each holder of Notes may require the
Company to purchase its Notes, in whole or in part, at a purchase price equal to
100% of the principal amount of Notes to be purchased, plus accrued and unpaid
interest thereon to the purchase date, for cash or, at the Company's election,
Common Stock (valued at 95% of the average closing sale prices of the Common
Stock for the five trading days ending on and including the third trading day
prior to the purchase date). See "Description of Notes - Purchase at Option of
Holders Upon a Change-in-Control".
All of the Securities offered hereby are being offered for sale and
sold, from time to time, by the Selling Securityholders. None of the proceeds
from the sale of the Securities by the Selling Securityholders will be received
by the Company. The Company has agreed to bear certain expenses incident to the
registration of the Securities under federal or state securities laws and to
indemnify the Selling Securityholders against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Securities Act").
The Notes are general unsecured obligations of the Company and
subordinated in right of payment to all existing and future Senior Debt (as
defined in the Indenture) of the Company. The Company is party to a bank credit
facility pursuant to which up to $500.0 million has been made available for
borrowing by the Company on a revolving basis, subject to certain limitations
specified therein. As of the date of this Prospectus, there were no borrowings
outstanding under such facility and the entire committed amount of the facility
was available to the Company for borrowing. Any such borrowings would constitute
Senior Debt. In addition, the Notes are effectively subordinated in right of
payment to all indebtedness and other liabilities that may be incurred by any
subsidiary of the Company. The Indenture does not restrict the incurrence,
assumption or guaranty of indebtedness, including Senior Debt, by the Company or
any subsidiary thereof. See "Description of Notes - Subordination".
The Securities may be offered for sale by the Selling
Securityholders from time to time in transactions effected through the
facilities of any national securities exchange or U.S. automated inter-dealer
quotation system of a registered national securities association on which the
Securities are then listed, admitted to unlisted trading privileges or included
for quotation, in privately negotiated transactions, or in a combination of such
methods of sale. Such methods of sale may be conducted at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Securityholders may effect such
transactions directly, or indirectly through underwriters, broker-dealers or
agents acting on their behalf, and in connection with such sales, such
broker-dealers or agents may receive compensation in the form of commissions,
concessions, allowances or discounts from the Selling Securityholders and/or the
purchasers of the Securities for whom they may act as agent or to whom they sell
Securities as principal or both (which commissions, concessions, allowances or
discounts might be in excess of customary amounts thereof). To the extent
required, the names of any agents, broker-dealers or underwriters, the amount
and nature of any commissions, concessions, allowances or discounts and any
other required information with respect to any particular offer of Securities by
the Selling Securityholders, will be set forth in a Prospectus Supplement. See
"Selling Securityholders" and "Plan of Distribution."
The Selling Securityholders and any underwriters, dealers or agents
which participate in the distribution of the Securities may be deemed to be
"underwriters" within the meaning of the Securities Act, and any commission
received by them and any profit realized on the resale of the Securities
purchased by them may be deemed to constitute underwriting commissions,
concessions, allowances or discounts under the Securities Act. See "Plan of
Distribution."
On February 11, 1997, the Company completed the issuance and sale of
the Notes to Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated, Allen &
Company Incorporated, Alex. Brown & Sons Incorporated, Furman Selz LLC and
Hambrecht & Quist LLC, as initial purchasers (collectively, the "Purchasers"),
in an unregistered private placement conducted pursuant to Regulation D under
the Securities Act (the "Unregistered Notes Placement"). The Purchasers
subsequently advised the Company that they resold $484,565,000 principal amount
of the Notes in the United States to "qualified institutional buyers" in
reliance on Rule 144A under the Securities Act (the "Rule 144A Notes") and
$57,150,000 principal amount of Notes outside of the United States in offshore
transactions to investors in reliance on Regulation S under the Securities Act
(the "Regulation S Notes"). In addition, Goldman, Sachs & Co. notified the
Company that it resold in the United States $8,285,000 principal amount of the
Notes to four institutions that at the time of such resale were "accredited
investors" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act (the "Institutional Notes"). Such resales were contemplated by
the Unregistered Notes Placement and all $550,000,000 aggregate principal amount
of the 144A Notes, the Regulation S Notes and the Institutional Notes (including
the Common Stock issuable upon conversion thereof) have been included in the
Registration Statement of which this Prospectus is a part, in accordance with
the terms and subject to the conditions of the registration rights agreement
described below, to permit secondary trading of the Notes and the underlying
Shares without restriction under the Securities Act.
The Company has filed the Registration Statement of which this
Prospectus is a part to satisfy its obligations under a certain registration
rights agreement dated as of February 11, 1997 entered into with a
representative of the Purchasers on behalf of all Holders (as defined in the
Indenture) of the Notes (and holders of record of the Shares issued upon
conversion thereof). See "Description of Notes - Registration Rights".
The Rule 144A Notes have been designated for trading in the Private
Offerings, Resales and Trading through Automated Linkages (PORTAL) market of the
National Association of Securities Dealers, Inc. The Company does not intend to
apply for listing of the Notes on any securities exchange or for inclusion of
the Notes on any automated inter-dealer quotation system.
The Common Stock is listed on the New York Stock Exchange, Inc.
("NYSE") under the symbol "CU." The closing sale price of the Common Stock as
reported on the NYSE Composite Tape on September 11, 1997 was $281/8 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is ___________ __, 1997.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). Copies of reports, proxy statements,
information statements and other information filed by the Company with the
Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and also are available for inspection at the Commission's regional
offices located at 500 West Madison, Suite 1400, Chicago, Illinois 60661 and 7
World Trade Center, Suite 1300, New York, New York 10048, and at the
Commission's Web site at (http://www.sec.gov). Copies of such material also can
be obtained at prescribed rates from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Such reports,
proxy statements, information statements and other information may also be
inspected at the offices of the NYSE at 20 Broad Street, New York, New York
10005.
The Company has filed with the Commission a Registration Statement
on Form S-3 (together with all amendments thereto, the "Registration Statement")
under the Securities Act with respect to the Securities. This Prospectus does
not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily complete
and, with respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission,
reference is made to the exhibit for a more complete description of the matter
involved, and each such statement is deemed qualified in its entirety by such
reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents (and the amendments thereto) previously
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, 1997 (the "CUC 10-K"), filed
with the Commission on May 1, 1997;
(ii) The Company's Quarterly Reports on Form
10-Q for its fiscal quarters ended April 30, 1997 and July 31, 1997
(the "CUC 10-Qs"), filed with the Commission on June 16, 1997 and
September 15, 1997;
(iii) The Company's Current Reports on Form
8-K, filed with the Commission on February 4, 1997, February 13,
1997, February 26, 1997, March 17, 1997, May 29, 1997 and August
14, 1997, and all other reports filed pursuant to Section 13(a) or
15(d) of the Exchange Act since January 31, 1997 and prior to the
date of this Prospectus;
(iv) The Joint Proxy Statement/Prospectus of
CUC International Inc. and HFS Incorporated (the "CUC/HFS Proxy")
on Schedule 14A filed with the Commission on August 28, 1997; 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 so 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.
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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.
No person is authorized in connection with any offering made hereby
to give any information or to make any representation other than as contained in
this Prospectus and, if given or made, such information or representation must
not be relied upon as having been authorized by the Company, any Selling
Securityholder or any underwriter. This Prospectus does not constitute an offer
to sell or a solicitation of an offer to buy any of the Securities offered
hereby to any person in any jurisdiction in which it is unlawful to make any
such offer or solicitation. Neither the delivery of this Prospectus nor any sale
made hereunder shall under any circumstance imply that there has been no change
in the affairs of the Company since the date hereof.
4
SUMMARY
The following summary is qualified in its entirety by the
information set forth elsewhere in this Prospectus and incorporated by reference
herein. Unless the context otherwise requires, references in this Prospectus to
"CUC" and the "Company" refer to CUC International Inc. and its consolidated
subsidiaries.
THE COMPANY
The Company is a leading technology-driven, membership-based
consumer services company, providing over 70 million members with access to a
variety of goods and services worldwide. These memberships include such
components as shopping, travel, auto, dining, home improvement, lifestyle,
vacation exchange, credit card and checking account enhancement packages,
financial products and discount programs. The Company also administers insurance
package programs which are generally combined with discount shopping and travel
for credit union members, distributes welcoming packages which provide new
homeowners with discounts for local merchants, and provides travelers with
value-added tax refunds. The Company believes that it is the leading provider of
membership-based consumer services of these types in the United States. The
Company's membership activities are conducted principally through its Comp-U-
Card division and the Company's wholly-owned subsidiaries, FISI*Madison
Financial Corporation, Benefit Consultants, Inc., Interval International Inc.,
Entertainment Publications, Inc. and SafeCard Services, Inc., acquired as part
of the Company's acquisition of Ideon Group, Inc. ("Ideon").
The Company also offers consumer software in various multimedia
forms through the CUC Software Division. During its fiscal year ended January
31, 1997, the Company acquired Davidson & Associates, Inc. ("Davidson"), Sierra
On-Line, Inc. ("Sierra") and Knowledge Adventure, Inc. ("KA"). Davidson, Sierra
and KA develop, publish, manufacture and distribute educational, entertainment
and personal productivity interactive multimedia products for home and school
use. These products incorporate characters, themes, sound, graphics, music and
speech in ways that are engaging to the user for multimedia PC's, including
CD-ROM-based PC systems, and selected emerging platforms.
Recent Developments. On May 27, 1997, the Company entered into an
Agreement and Plan of Merger with HFS Incorporated, a Delaware corporation
("HFS"), pursuant to which, upon the terms and subject to the conditions
specified therein, HFS will be merged with and into the Company, with the
Company as the surviving corporation in such merger (the "HFS Merger"). HFS is a
global services provider, providing services to consumers through intermediaries
in the travel and real estate industries. Upon completion of the HFS Merger, the
Company, as the surviving company in the HFS Merger, will change its name to
Cendant Corporation. In the HFS Merger, each share of issued and outstanding HFS
common stock will be converted into the right to receive 2.4031 shares of Common
Stock. Completion of the HFS Merger is subject, among other things, to approval
by the shareholders of CUC and HFS. The HFS Merger will be accounted for in
accordance with the pooling-of-interests method of accounting. The Company
believes that the HFS Merger will not constitute a Change-in-Control under the
Indenture for the Notes. See "Description of Notes--Purchase at Option of
Holders upon a Change-in-Control" and "Mergers & Sales of Assets by the
Company."
On August 13, 1997, the Company entered into a Share Purchase
Agreement with Hebdo Mag International Inc. ("Hebdo Mag"), certain stockholders
of Hebdo Mag (the "Hebdo Mag Stockholders") and Getting to Know You of Canada
Ltd., an indirect wholly-owned subsidiary of the Company ("Subsidiary"),
pursuant to which Subsidiary agreed to acquire (the "Hebdo Mag Acquisition") all
of the outstanding capital stock of Hebdo Mag in exchange for the issuance of
shares of preferred stock of Subsidiary exchangeable for shares of Common Stock
(the "Hebdo Acquisition Shares") and the assumption of certain options of Hebdo
Mag exchanged for comparable options to acquire shares of Common Stock,
5
such Hebdo Acquisition Shares and options having an aggregate value of
approximately $440 million. Based in Paris, France, Hebdo Mag is an
international publisher of over 150 titles and distributor of classified
advertising information with operations in twelve countries, including Canada,
France, Sweden, Hungary, the United States, Italy, Russia and Holland. The Hebdo
Mag Acquisition is subject to customary closing conditions, including the
expiration of any applicable waiting period under the Hart- Scott-Rodino
Antitrust Improvements Act of 1976, the Investment Canada Act, the Canada
Competition Act and the Swedish Competition Act, as well as the effectiveness of
a registration statement required to be filed by the Company with respect to the
resale by the Hebdo Mag Stockholders of the Hebdo Acquisition Shares. The Hebdo
Mag Acquisition will be accounted for in accordance with the
pooling-of-interests method of accounting.
The Company from time to time explores and conducts discussions with
regard to acquisitions and other strategic corporate transactions in its
industries and in other businesses. Historically, the Company has been involved
in numerous transactions of various magnitudes for consideration which included
cash or securities (including Common Stock) or combinations thereof. The Company
will evaluate and pursue appropriate acquisition and combination opportunities
as they arise. No assurance can be given with respect to the timing, likelihood
or financial or business effect of any possible transaction. In the past,
acquisitions by the Company have involved both relatively small acquisitions and
acquisitions which have been significant, including the HFS Merger.
-----------
The Company's principal executive offices are located at 707 Summer
Street, Stamford, Connecticut 06901, and its telephone number is (203) 324-9261.
6
THE OFFERING
Common Stock
Common Stock Offered by Selling .....
Securityholders................... 17,959,205 shares.
Common Stock Offered by
the Company....................... None.
Notes
Notes Offered by Selling
Securityholders................... $550,000,000 principal amount.
Notes Offered by the Company......... None.
Interest Payment Dates............... February 15 and August 15,
commencing on August 15, 1997.
Convertibility....................... The Notes are convertible into
shares of Common Stock at any
time, unless previously redeemed
or repurchased, at the conversion
rate set forth below. Holders of
Notes called for redemption will
be entitled to convert their
Notes to and including, but not
after, the close of business on
the date fixed for redemption.
Conversion Rate...................... The Notes are convertible at a
rate of 32.6531 shares of Common
Stock per $1,000 principal amount
of Notes (equivalent to a
conversion price of $30.625 per
share), subject to adjustment in
certain events.
Optional Redemption.................. The Notes may be redeemed at the
option of the Company at any time
on or after February 15, 2000, in
whole or in part, at the
redemption prices set forth
herein, plus accrued interest to
the redemption date. See
"Description of Notes-Optional
Redemption."
Sinking Fund......................... None.
Unregistered Notes Placement......... On February 11, 1997, the Company
completed the issuance and sale
of the Notes to the Purchasers in
the Unregistered Notes Placement.
The Purchasers subsequently
advised the Company that they
resold $484,565,000 principal
amount of the Rule 144A Notes in
the United States to "qualified
institutional
7
buyers" in reliance on Rule 144A
under the Securities Act and
$57,150,000 principal amount of
the Regulation S Notes outside of
the United States in offshore
transactions to investors in
reliance on Regulation S under
the Securities Act. In addition,
Goldman, Sachs & Co. notified the
Company that it resold in the
United States $8,285,000
principal amount of the
Institutional Notes to four
institutions that at the time of
such resale were "accredited
investors" within the meaning of
Rule 501(a)(1), (2), (3) or (7)
under the Securities Act. Such
resales were contemplated by the
Unregistered Notes Placement and
all $550,000,000 aggregate
principal amount of the Rule 144A
Notes, the Regulation S Notes and
the Institutional Notes
(including the Shares issuable
upon conversion thereof) have
been included in the Registration
Statement of which this
Prospectus is a part, in
accordance with the terms and
subject to the conditions of the
Registration Rights Agreement, to
permit secondary trading of the
Notes (and the Shares issuable
upon conversion thereof) without
restriction under the Securities
Act.
Denomination and Registration
of Notes........................... The Rule 144A Notes are
represented by a global Note (the
"Restricted Global Note") in
fully registered form, without
interest coupons, which was
deposited with a custodian for,
and registered in the name of The
Depository Trust Company in New
York, New York ("DTC"). The
Regulation S Notes are
represented by a global Note in
fully registered form, without
interest coupons (the "Regulation
S Global Note," and together with
the Restricted Global Note, the
"Global Notes"), which was
deposited with a custodian for
and registered in the name of a
nominee of, DTC in New York, New
York for the account of Morgan
Guaranty Trust Company of New
York, Brussels office, as
operator of the Euroclear System
("Euroclear") and for the account
of Citibank, N.A., as operator of
Cedel Bank, S.A. ("Cedel").
Beneficial interests in the
Global Notes will be shown on,
and transfers thereof will be
effected only through, records
maintained by DTC and its
participants, including Euroclear
and Cedel. Unless certain
conditions specified in the
Indenture are met, certificated
Notes will not be issued in
exchange for beneficial interests
in the Global Notes. See
"Description of Notes-Form,
Denomination, Transfer, Exchange
and Book - Entry Procedures."
8
Purchase at Option of
Holders Upon Change-in-
Control ......................... In the event of a
Change-in-Control, each Holder of
Notes may require the Company to
purchase its Notes, in whole or
in part, at a purchase price of
100% of the principal amount
thereof, plus accrued and unpaid
interest thereon to the purchase
date. The purchase price is
payable in cash or, at the
election of the Company but
subject to the satisfaction of
certain conditions on its part,
in Common Stock (valued at 95% of
the average closing sale prices
of the Common Stock for the five
trading days immediately
preceding and including the third
trading day prior to the purchase
date). The Company believes that
the HFS Merger will not
constitute a Change-in-Control
under the Indenture. See
"Summary--The Company- Recent
Developments" and "Description of
Notes- Purchase at Option of
Holders upon a Change in
Control."
Subordination........................ The Notes are subordinated in
right of payment to all existing
and future Senior Debt of the
Company. The Company is party to
a bank credit facility pursuant
to which up to $500.0 million has
been made available for borrowing
by the Company on a revolving
basis, subject to certain
limitations specified therein. As
of the date of this Prospectus,
there were no borrowings
outstanding under such facility
and the entire committed amount
of the facility was available to
the Company for borrowing. Any
such borrowings would constitute
Senior Debt.
In addition, the Notes are
effectively subordinated to all
indebtedness and other
liabilities that may be incurred
by any subsidiary of the Company.
The Indenture does not restrict
the incurrence, assumption or
guaranty of any indebtedness,
including Senior Debt, by the
Company or any subsidiary
thereof. In addition, the
Indenture does not restrict the
ability of the Company or any of
its subsidiaries to create liens
and security interests or
otherwise encumber its properties
and assets or to make payments
and distributions on account of
its equity securities.
Registration Rights.................. The Company has filed the
Registration Statement (of which
this Prospectus is a part) in
respect of the Notes and the
Common Stock issuable upon the
conversion thereof pursuant to
the Registration Rights
Agreement. Due to the failure by
the Company to comply with
certain of its obligations under
such agreement, additional
interest accrued on the Notes
from and including August 10,
1997 to but excluding
9
September __, 1997 (the effective
date of the Registration
Statement of which this
Prospectus is a part). See
"Description of
Notes--Registration Rights."
Listing ......................... The Rule 144A Notes have been
designated for trading on the
Private Offerings, Resales and
Trading through Automated
Linkages (PORTAL) Market of the
National Association of
Securities Dealers, Inc. The
Common Stock is listed on the
NYSE under the symbol "CU." The
Company does not intend to apply
for listing of the Notes on any
securities exchange or for
inclusion of the Notes on any
automated inter-dealer quotation
system.
Indenture Trustee.................... Marine Midland Bank.
Governing Law........................ The Indenture and the Notes are
governed by the laws of the State
of New York.
SEE "DESCRIPTION OF NOTES" FOR DEFINITIONS OF CERTAIN TERMS USED ABOVE.
10
USE OF PROCEEDS
The Securities are being offered hereby solely for the accounts of
the Selling Securityholders listed herein pursuant to the Registration Rights
Agreement. The Company will not receive any proceeds from the sale of the
Securities. See "Description of Notes - Registration Rights" and "Selling
Securityholders."
RATIO OF EARNINGS TO FIXED CHARGES
The information set forth below has been derived from the
consolidated financial statements of the Company.
YEAR ENDED JANUARY 31, SIX MONTHS ENDED
-----------------------------------------
1997 1996 1995 1994 1993 JULY 31, 1997
------- -------- ------- --------- ------ ----------------
Ratio of Earnings
to Fixed Charges(1) 15.20x 12.80x 17.29x 16.13x 11.09x 16.08x
- --------------------
(1) For purposes of the foregoing ratio, earnings consist of
pretax income from operations plus fixed charges. The
Company's fixed charges consist of (i) interest, whether
expensed or capitalized, (ii) amortization of debt
expense, including any discount or premium, whether
expensed or capitalized, and (iii) the component of
rental expense determined by management to be
representative of the interest factor thereon. Prior to
February 11, 1997, none of the Notes was outstanding.
Accordingly, for all periods indicated except for the
six months ended July 31, 1997, no interest on the
Notes, paid or accrued, is combined with fixed charges
in calculating the foregoing ratio.
11
DESCRIPTION OF NOTES
The Notes were issued under the Indenture, a copy of which has been
filed by the Company with the Commission. The Indenture is subject to and is
governed by the Trust Indenture Act of 1939, as amended. The following summary
of certain provisions of the Indenture does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all the provisions
of the Indenture, copies of which will be available for inspection at the
Corporate Trust Office of the Trustee in The City of New York. All capitalized
terms used in this Section and not defined herein or elsewhere in this
Prospectus have the respective meanings assigned to them in the Indenture.
GENERAL
The Notes are general unsecured subordinated obligations of the
Company, limited to $550,000,000 aggregate principal amount, and will mature on
February 15, 2002. Payment in full of the principal amount of the Notes will be
due on February 15, 2002 at a price of 100% of the principal amount thereof.
The Notes bear interest at the rate of 3% per annum from February
11, 1997 or from the most recent Interest Payment Date to which interest has
been paid or provided for, payable semi-annually on February 15 and August 15 of
each year, commencing August 15, 1997, until the principal thereof is paid or
made available for payment, to the Person in whose name the Note (or any
Predecessor Note) is registered at the close of business on the preceding
February 1 or August 1, as the case may be. Interest on the Notes at such rate
will be computed on the basis of a 360-day year, comprised of twelve 30-day
months. As described under "Registration Rights" below, additional interest
accrued on the Notes from and including August 10, 1997 to but excluding
September __, 1997 (the effective date of the Registration Statement of which
this Prospectus is a part).
The Notes are convertible into shares of Common Stock initially at
the conversion rate stated on the front cover of this Prospectus, subject to
adjustment upon the occurrence of certain events described under "-Conversion
Rights," at any time prior to the close of business on February 15, 2002, unless
previously redeemed or repurchased.
The Notes are redeemable at the option of the Company, at any time
on or after February 15, 2000, in whole or in part, at the redemption prices set
forth below under "-Optional Redemption," plus accrued interest to the
redemption date. The Notes also are subject to repurchase by the Company at the
option of the Holders under certain circumstances, as described below under
"-Repurchase at Option of Holders Upon a Change-In-Control."
The principal of, premium, if any, and interest on the Notes are
payable, and the Notes may be surrendered for registration of transfer, exchange
and conversion, at the office or agency of the Company in The Borough of
Manhattan, The City of New York. In addition, payment of interest may, at the
option of the Company, be made by check mailed to the address of the Person
entitled thereto as it appears in the Security Register. See "-Payment and
Conversion." Payments, transfers, exchanges and conversions relating to
beneficial interests in Notes issued in book-entry form are subject to the
procedures applicable to Global Notes described below.
The Company has appointed the Trustee at its Corporate Trust Office
as paying agent, transfer agent, registrar and conversion agent for the Notes.
In such capacities, the Trustee is responsible for, among other things, (i)
maintaining a record of the aggregate holdings of Notes represented by each
Global Note (as defined below) and accepting Notes for exchange and registration
of transfer, (ii) ensuring that payments of principal, premium, if any, and
interest received by the Company from the Trustee in respect of the Notes are
duly paid to DTC or its nominees, (iii) transmitting to the Company any notices
from Holders of the Notes, (iv) accepting conversion notices
12
and related documents and transmitting the relevant items to the Company, and
(v) delivering certificates for Common Stock issued upon conversion of the
Notes.
The Company will cause each transfer agent to act as a registrar and
will cause to be kept at the office of each such transfer agent a register in
which, subject to such reasonable regulations as it may prescribe, the Company
will provide for registration of transfers of the Notes. The Company may vary or
terminate the appointment of any paying agent, transfer agent or conversion
agent, or appoint additional or other such agents or approve any change in the
office through which any such agent acts, provided that there shall at all times
be maintained by the Company, a paying agent, a transfer agent and a conversion
agent in the Borough of Manhattan, The City of New York. The Company will cause
notice of any resignation, termination or appointment of the Trustee or any
paying agent, transfer agent or conversion agent, and of any change in the
office through which any such agent will act, to be provided to Holders of the
Notes.
No service charge will be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
FORM, DENOMINATION, TRANSFER, EXCHANGE AND BOOK-ENTRY PROCEDURES
The Regulation S Notes are represented by the Regulation S Global
Note in definitive, fully registered form, without interest coupons, are
registered in the name of CEDE & Co., as nominee of DTC, and have been deposited
with the Trustee as custodial agent for DTC for the accounts of Euroclear and
Cedel.
The Rule 144A Notes are represented by the Restricted Global Note in
definitive, fully registered form, without interest coupons, are registered in
the name of CEDE & Co., as nominee of DTC, and have been deposited with the
Trustee as custodial agent for DTC.
The Institutional Notes were issued in registered, certificated
(i.e., not book-entry) form, without interest coupons, and may not be exchanged
for beneficial interests in any Global Note except in accordance with the
transfer and certification requirements described below under "- Exchanges of
Certificated Notes for Book-Entry Notes."
All Notes were issued in fully registered form, without exception,
in denominations of $1,000 and integral multiples in excess thereof. No service
charge will be made for any registration of transfer or exchange of Notes, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Exchanges between the Restricted Global Note and the Regulation S
Global Note. Beneficial interests in the Restricted Global Note may be exchanged
for beneficial interests in the Regulation S Global Note and vice versa only in
connection with a transfer of such interest. Such transfers are subject to
compliance with the certification requirements described below.
A beneficial interest in the Restricted Global Note may be
transferred to a person who takes delivery in the form of an interest in the
Regulation S Global Note only upon receipt by the Trustee of a written
certification on behalf of the transferor (in the form provided in the
Indenture) to the effect that such transfer is being made in accordance with
Rule 904 of Regulation S or (if available) Rule 144 under the Securities Act (a
"Regulation S Global Note Certificate").
13
Any beneficial interest in one of the Global Notes that is exchanged
for an interest in the other Global Note will cease to be an interest in such
Global Note and will become an interest in the other Global Note. Accordingly,
such interest thereafter will be subject to all transfer restrictions and other
procedures applicable to beneficial interests in such other Global Note for as
long as it remains such an interest.
Pursuant to an agreement in effect between the Trustee and DTC, the
Trustee has represented to and agreed with DTC that: (i) each Global Note will
remain in its possession, as custodial agent for DTC, and will be maintained by
it as a "Balance Certificate", (ii) on each day on which the Trustee is open for
business and on which it receives an instruction originated by a participant
through DTC's Deposit/Withdraw at Custodian ("DWAC") system to increase such
participant's account by a specified principal amount (a "Deposit Instruction"),
prior to 6:30 p.m. (Eastern Time) on the date it receives the Deposit
Instruction it shall either approve or cancel such instruction through the DWAC
System, (iii) on each day on which the Trustee is open for business and on which
it receives an instruction originated by a participant through the DWAC system
to decrease the participant's account by a specified principal amount (a
"Withdrawal Instruction"), prior to 6:30 p.m. (Eastern Time) on the date it
receives the Withdrawal Instruction it shall either approve or cancel such
instruction through the DWAC System, and (iv) its approval of a Deposit
Instruction or a Withdrawal Instruction will be deemed to constitute receipt by
DTC of a new, reissued or reregistered certificated Global Note, on registration
of transfer to the name of Cede & Co. for the principal amount of Notes
evidenced by the Balance Certificate after the Deposit Instruction or Withdrawal
Instruction is effected. Accordingly, any exchange of a beneficial interest in
the Regulation S Global Note for a beneficial interest in the Restricted Global
Note or vice versa will be effected in DTC by means of an instruction originated
by the Trustee, as custodial agent for DTC, through the DWAC system. In
connection with any such exchange, appropriate adjustments will be made in the
records of the Security Registrar to reflect a decrease in the principal amount
of such Regulation S Global Note and a corresponding increase in the principal
amount of such Restricted Global Note or vice versa, as applicable.
Exchanges of Book-Entry Notes for Certificated Notes. A beneficial
interest in a Global Note may not be exchanged for a Note in certificated form
unless (i) DTC (x) notifies the Company that it is unwilling or unable to
continue as Depositary for the Global Note or (y) has ceased to be a clearing
agency registered under the Exchange Act and in either case the Company
thereupon fails to appoint a successor Depositary, (ii) the Company, at its
option, notifies the Trustee in writing that it elects to cause the issuance of
the Notes in certificated form or (iii) there shall have occurred and be
continuing an Event of Default or any event which after notice or lapse of time
or both would be an Event of Default with respect to the Notes. In all cases,
certificated Notes delivered in exchange for any Global Note or beneficial
interests therein will be registered in the names, and issued in any approved
denominations, requested by or on behalf of the Depositary (in accordance with
its customary procedures). Any certificated Note issued in exchange for an
interest in the Global Note will bear the legend restricting transfers that is
borne by such Global Note. Any such exchange will be effected through the DWAC
System and an appropriate adjustment will be made in the records of the Security
Registrar to reflect a decrease in the principal amount of the relevant Global
Note.
Exchanges of Certificated Notes for Book-Entry Notes. Institutional
Notes, which have been issued in certificated form, may not be exchanged for
beneficial interests in any Global Note unless such exchange occurs in
connection with a transfer of such Institutional Notes that complies with Rule
144A, in the case of an exchange for an interest in the Restricted Global Note,
or Regulation S or (if available) Rule 144, in the case of an exchange for an
interest in the Regulation S Global Note. In addition, in connection with any
such exchange and transfer, the Trustee must have received on behalf of the
transferor a Restricted Global Note Certificate or a Regulation S Global Note
Certificate, as applicable. Any such exchange will be effected through the DWAC
System and an appropriate adjustment will be made in the records of the Security
Registrar to reflect an increase in the principal amount of the relevant Global
Note.
14
Certain Book-Entry Procedures for Global Notes. Upon the issuance of
the Regulation S Global Note and the Restricted Global Note, DTC credited, on
its internal system, the respective principal amount of the individual
beneficial interests represented by such Global Notes to the accounts of persons
who have accounts with such depositary. Such accounts initially were designated
by or on behalf of the Purchasers. Ownership of beneficial interests in a Global
Note was limited to persons who maintain accounts with DTC ("participants") or
persons who hold interests through participants. Ownership of beneficial
interests in the Global Notes is shown on, and the transfer of that ownership
can be effected only through, records maintained by DTC or its nominee (with
respect to interests of participants) and the records of participants (with
respect to interests of persons other than participants).
So long as DTC, or its nominee, is the registered holder of a Global
Note, DTC or such nominee, as the case may be, will be considered the sole owner
and holder of the Notes represented by such Global Note for all purposes under
the Indenture and the Notes. Except in the limited circumstances described above
under "Exchanges of Book-Entry Notes for Certificated Notes", owners of
beneficial interests in a Global Note will not be entitled to have any portions
of such Global Note registered in their names, will not receive or be entitled
to receive physical delivery of Notes in definitive form and will not be
considered the owners or Holders of the Global Note (or any Notes represented
thereby) under the Indenture or the Notes.
Investors are entitled to hold their interests in the Regulation S
Global Note through any organizations (including Cedel and Euroclear) that are
participants in the DTC system. Cedel and Euroclear hold interests in the
Regulation S Global Note on behalf of their participants through customers'
securities accounts in their respective names on the books of their respective
depositaries, which, in turn, hold such interests in the Regulation S Global
Note in customers' securities accounts in the depositaries' names on the books
of DTC. Investors may hold their interests in the Restricted Global Note
directly through DTC, if they are participants in such system, or indirectly
through organizations which are participants in such system.
Payments of the principal of and interest on Global Notes will be
made to DTC or its nominee as the registered owner thereof. Neither the Company,
the Trustee nor any Paying Agent will have any responsibility or liability for
any aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Notes or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
DTC or its nominee, upon receipt of any payment of principal or
interest in respect of a Global Note representing any Notes held by it or its
nominee, will immediately credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Note for such Notes as shown on the records of DTC or its
nominee. Payments by participants to owners of beneficial interests in such
Global Note held through such participants will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers registered in "street name." Such payments will be the
responsibility of such participants.
Transfers between participants in DTC will be effected in accordance
with DTC's procedures therefor, and will be settled in same-day funds. The laws
of some U.S. states require that certain persons take physical delivery of
securities in definitive form. Consequently, the ability to transfer beneficial
interests in a Global Note to such persons may be limited. Because DTC can only
act on behalf of participants who, in turn, act on behalf of indirect
participants and certain banks, the ability of a person having a beneficial
interest in Global Notes to pledge such interest to persons or entities that do
not participate in the DTC system, or otherwise take actions in respect of such
interest, may be affected by the lack of a physical certificate evidencing such
interest. Transfers between participants in Euroclear and Cedel will be effected
in the ordinary course in accordance with their respective rules and operating
procedures.
15
Cross-market transfers between DTC, on the one hand, and directly or
indirectly through Euroclear or Cedel participants, on the other hand, will be
effected in DTC in accordance with DTC's rules on behalf of Euroclear or Cedel,
as the case may be, by its respective depositary; however, such cross-market
transactions will require the delivery of instructions to Euroclear or Cedel, as
the case may be, by the counterparty in such system in accordance with its rules
and procedures and within its established deadlines (Brussels time). Euroclear
or Cedel, as the case may be, will, if the transaction meets its settlement
requirements, deliver instructions to its respective depositary to take action
to effect final settlement on its behalf by delivering or receiving interests in
the Regulation S Global Note in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Cedel participants and Euroclear participants may not deliver instructions
directly to the depositaries for Cedel or Euroclear.
Because of time zone differences, the securities account of a
Euroclear or Cedel participant purchasing an interest in a Global Note from a
DTC participant will be credited during the securities settlement processing day
(which must be a business day for Euroclear and Cedel) immediately following the
DTC settlement date and such credit of any transactions in interests in a Global
Note settled during such processing day will be reported to the relevant
Euroclear or Cedel participant on such day. Cash received in Euroclear or Cedel
as a result of sales of interests in a Global Note by or through a Euroclear or
Cedel participant to a DTC participant will be received with value on the DTC
settlement date but will be available in the relevant Euroclear or Cedel cash
account only as of the business day following settlement in DTC.
DTC has advised the Company that it will take any action permitted
to be taken by a holder of Notes (including the presentation of Notes for
exchange as described below) only at the direction of one or more participants
to whose account with DTC interests in the Global Notes are credited and only in
respect of such portion of the aggregate principal amount of the Notes as to
which such participant or participants has or have given such direction.
However, if there is an Event of Default under the Notes, DTC will exchange the
Global Notes for legended certificated Notes in definitive form, which it will
distribute to its participants.
DTC has advised the Company as follows: DTC is a limited purpose
trust company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code, as amended, and a "Clearing Agency" registered pursuant
to the provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need for
physical transfer and delivery of certificates. Participants include securities
brokers and dealers, banks, trust companies and clearing corporations and may
include certain other organizations. Indirect access to the DTC system is
available to other entities such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a participant,
either directly or indirectly ("indirect participants").
ALTHOUGH DTC, CEDEL AND EUROCLEAR HAVE AGREED TO THE FOREGOING
PROCEDURES TO FACILITATE TRANSFERS OF INTERESTS IN THE REGULATION S GLOBAL NOTE
AND IN THE RESTRICTED GLOBAL NOTE AMONG THEIR RESPECTIVE PARTICIPANTS, THEY ARE
UNDER NO OBLIGATION TO PERFORM OR CONTINUE TO PERFORM SUCH PROCEDURES, AND SUCH
PROCEDURES MAY BE DISCONTINUED AT ANY TIME. NEITHER THE COMPANY NOR THE TRUSTEE
TAKES ANY RESPONSIBILITY FOR THE PERFORMANCE BY DTC, CEDEL OR EUROCLEAR OR THEIR
RESPECTIVE PARTICIPANTS OR INDIRECT PARTICIPANTS OF THEIR RESPECTIVE OBLIGATIONS
UNDER THE RULES AND PROCEDURES GOVERNING THEIR OPERATIONS.
PAYMENT AND CONVERSION
Principal of the Notes will be payable in U.S. dollars against
surrender of the Notes at the office or agency of the Company designated by it
for such purpose in the Borough of Manhattan, The City of New York, and at any
other office or agency of the Company maintained for such purpose, in U.S.
currency by dollar check or by transfer
16
to a dollar account (such a transfer to be made only to a Holder of an aggregate
principal amount of Notes in excess of $5,000,000 and only if such Holder shall
have furnished wire instructions to the Trustee in writing no later than 15 days
prior to the relevant payment date) maintained by the Holder with a bank in the
United States. Payment of interest on a Note may be made by dollar check mailed
to the address of the person entitled thereto as such address shall appear in
the Security Register, or, upon written application by the Holder to the
Security Registrar setting forth instructions not later than the relevant Record
Date, by transfer to a dollar account (such a transfer to be made only to a
Holder of an aggregate principal amount of Notes in excess of $5,000,000 and
only if such Holder shall have furnished wire instructions in writing to the
Trustee no later than 15 days prior to the relevant payment date) maintained by
the Holder with a bank in the United States.
Any payment on a Note due on any day which is not a Business Day
need not be made on such day, but may be made on the next succeeding Business
Day with the same force and effect as if made on such due date, and no interest
shall accrue on such payment for the period from and after such date. "Business
Day," when used with respect to any place of payment, place of conversion or any
other place, as the case may be, means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in such place of
payment, place of conversion or other place, as the case may be, are authorized
or obligated by law or executive order to close.
Notes may be surrendered for conversion at the office or agency of
the Company in the Borough of Manhattan, The City of New York, at any other
office or agency of the Company maintained for such purpose and at the office or
agency of any additional conversion agent appointed by the Company. In the case
of Global Notes, conversion will be effected by DTC upon notice from the holder
of a beneficial interest in a Global Note in accordance with its rules and
procedures. Notes surrendered for conversion must be accompanied by a conversion
notice and any payments in respect of interest, as applicable, as described
below under "-Conversion Rights."
REGISTRATION RIGHTS
The holders of the Notes (and the Common Stock issuable upon
conversion thereof) are entitled to the benefits of a certain registration
rights agreement dated as of February 11, 1997, between the Company and the
Purchasers (the "Registration Rights Agreement"). Pursuant to the Registration
Rights Agreement, the Company agreed at its expense for the benefit of the
Holders of Notes (and the holders of record of the Common Stock issued upon
conversion thereof), to: (i) file the Registration Statement with the Commission
not later than May 12, 1997 with respect to the resale, from time to time, by
the Selling Securityholders listed herein, of up to $550,000,000 aggregate
principal amount of the Notes and up to 17,959,205 shares of the Common Stock
issuable upon conversion thereof (collectively, the "Registrable Securities")
(the "Filing Covenant"), (ii) use its reasonable best efforts to cause the
Registration Statement to be declared effective by the Commission as promptly as
practicable but not later than August 10, 1997 (the "Effectiveness Covenant"),
and (iii) use its reasonable best efforts to maintain the Registration Statement
continuously effective under the Securities Act until the earliest of the
following dates (the "Expiration Date"): (a) the third anniversary of the later
of the (x) date the Registration Statement is first declared effective by the
Commission (the "effective time") and (y) February 11, 1997, (b) such time as
all Registrable Securities covered by the Registration Statement have been sold
pursuant thereto, transferred pursuant to Rule 144 under the Securities Act or
otherwise transferred in a manner that results in a new security not subject to
transfer restrictions under the Securities Act being delivered pursuant to the
Indenture and (c) such time as, in the opinion of counsel, all of the
Registrable Securities held by nonaffiliates of the Company are eligible for
resale pursuant to Rule 144(k) (or any successor or analogous rule) under the
Securities Act and the legend restricting the transfer thereof appearing on the
certificates therefor has been removed. Notwithstanding the foregoing, the
Company is permitted to suspend the use of the Prospectus that is part of the
Registration Statement for a period not to exceed 90 days (whether or not
consecutive) in any 12-month period (any such period hereinafter referred to as
a "blackout period"), if the Board of Directors of the Company determines in
good faith that it is in the best
17
interests of the Company to suspend such use and the Company provides the
Holders with written notice of such suspension.
The Filing Covenant was satisfied upon the initial filing of the
Registration Statement with the Commission on March 10, 1997. However, the
Effectiveness Covenant was not satisfied, because the Registration Statement was
not declared effective by the Commission on or prior to August 10, 1997 (the
"Registration Default"). As a result of the Registration Default, additional
interest accrued on the Notes from and including August 10, 1997 (the date on
which the Registration Default first occurred) to but excluding September __,
1997 (the date on which the Registration Default was cured, i.e., the date the
Registration Statement was declared effective by the Commission). Such
additional interest was paid and is to be paid semi-annually in arrears on
August 15, 1997 and February 15, 1998, respectively, and accrued during the
period of the Registration Default at a rate per annum equal to an additional
0.25% of the principal amount of the Notes (i.e., an aggregate interest rate of
3.25% per annum). If the Registration Statement ceases to be effective or the
Company suspends the use of this Prospectus (whether pursuant to a blackout
period or otherwise) at any time after the effective time and prior to the
Expiration Date for a period in excess of 90 days, whether or not consecutive,
during any 12-month period, then the interest rate borne by the Notes would
increase by an additional 0.25% of the principal amount thereof per annum from
and including the 91st day of ceased effectiveness or suspension to but
excluding the first date on which the Registration Statement thereafter becomes
effective or this Prospectus becomes available for use. The Company has no other
liabilities for monetary damages with respect to its registration obligations;
provided, however, that in the event the Company breaches, fails to comply with,
defaults in its performance of, or violates certain provisions of the
Registration Rights Agreement, the Purchasers, the Holders and beneficial owners
of the Securities (including Common Stock issuable upon conversion of the Notes)
may be entitled to, and the Company has agreed not to contest or oppose the
granting of any, equitable relief, including specific performance, injunctive
relief and declaratory orders. Any reference herein or in the Indenture or the
Notes to interest includes any additional interest that may be payable as
described in this paragraph.
The Registration Rights Agreement provides that holders of a
majority of the Registrable Securities may elect to have one underwritten
offering of Registrable Securities. The managing underwriter(s) for any such
offering must be selected by Holders of a majority of the Registrable Securities
to be included in the underwritten offering and must be reasonably acceptable to
the Company.
The Company has further agreed to pay all fees and expenses incident
to the filing of the Registration Statement and maintaining its effectiveness
for resales of Registrable Securities. In addition, in the event of an
underwritten offering, the Company has agreed to pay the fees and expenses
incurred by it in connection with such offering including those of its
independent counsel and accountants, and to pay up to a maximum of $75,000 for
the fees and expenses of a single counsel selected by a plurality of all Holders
of the Notes holding an aggregate of not less than 25% of the Registrable
Securities included in such offering to represent them in connection with such
offering. The holders participating in such offering will be responsible (on a
pro rata basis based on the principal amount of Registrable Securities included
in such offering) for all fees and expenses of such counsel in excess of
$75,000. Except as provided in the preceding sentence, each holder of
Registrable Securities included in the Registration Statement will be
responsible for all underwriting discounts, concessions, allowances and
commissions payable in connection with the sale of such holder's Registrable
Securities and any other fees and expenses incurred by it in connection with the
Registration Statement.
The Company has agreed to indemnify the holders of Registrable
Securities against certain liabilities, including liabilities under the
Securities Act, provided that any holder seeking indemnification did not use a
prospectus during a blackout period or an outdated prospectus after the Company
has provided such holder an updated prospectus, and each holder of Registrable
Securities included in the Registration Statement is obligated to indemnify the
Company, any other Holder and any underwriters participating in the offering of
Registrable
18
Securities against any liability with respect to information furnished by such
Holder in writing to the Company expressly for use in the Registration
Statement.
This summary of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to and qualified in its
entirety by reference to all the provisions of the Registration Rights
Agreement, a copy of which is available to holders of Notes for inspection at
the offices of the Company specified above or at the Corporate Trust Office of
the Trustee in the City of New York or upon request to the Company.
CONVERSION RIGHTS
The Holder of any Note has the right at any time prior to the close
of business on February 15, 2002, at the Holder's option, to convert any portion
of the principal amount of a Note that is an integral multiple of $1,000 into
shares of Common Stock, unless previously redeemed or repurchased, at a
conversion rate of the number of shares per $1,000 principal amount of Notes
shown on the front cover of this Prospectus (the "Conversion Rate") subject to
adjustment as described below. The right to convert a Note called for redemption
or delivered for repurchase will terminate at the close of business on the
Redemption Date or Repurchase Date for such Note, unless the Company defaults in
making the payment due upon redemption or repurchase, as the case may be.
The right of conversion attaching to any Note may be exercised by
the Holder by delivering the Note at the office or agency of the Company in The
Borough of Manhattan, The City of New York, at any other office or agency of the
Company maintained for such purpose and at the office or agency of any
additional conversion agent appointed by the Company, accompanied by a duly
signed and completed notice of conversion, a copy of which may be obtained from
the Trustee and any conversion agent. The conversion date will be the date on
which the Note and the duly signed and completed notice of conversion are so
delivered. As promptly as practicable on or after the conversion date, the
Company will issue and deliver to the Trustee a certificate or certificates for
the number of full shares of Common Stock issuable upon conversion, together
with payment in lieu of any fraction of a share or, at the Company's option,
rounded up to the next whole number of shares; such certificate will be sent by
the Trustee to the Conversion Agent for delivery to the Holder. Such shares of
Common Stock issuable upon conversion of the Notes, in accordance with the
provisions of the Indenture, will be fully paid and nonassessable and may bear
restrictive legends governing their transfer as provided in the Indenture.
Any Note surrendered for conversion during the period from the close
of business on any Regular Record Date next preceding any Interest Payment Date
to the opening of business on such Interest Payment Date (except Notes (or
portions thereof) called for redemption on a Redemption Date or repurchasable on
a Repurchase Date occurring, in either case, within such period) must be
accompanied by payment of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of such Notes being surrendered
for conversion. The interest payable on any Interest Payment Date with respect
to any Note (or portion thereof, if applicable) which has been called for
redemption on a Redemption Date, or is repurchasable on a Repurchase Date,
occurring, in either case, during the period from the close of business on the
Regular Record Date next preceding such Interest Payment Date to the opening of
business on such Interest Payment Date, which Note is surrendered for conversion
(in whole or in part) during such period, shall be paid upon conversion to the
Holder in an amount equal to the interest that would have been payable on the
portion of such Note that is being called for redemption or is being repurchased
and is being converted if such portion had been converted as of the close of
business on such Interest Payment Date. The interest so payable on any Interest
Payment Date in respect of any Note (or portion thereof, as the case may be)
which has not been called for redemption on a Redemption Date, or is not
eligible for repurchase on a Repurchase Date, occurring, in either case, during
the period from the close of business on the Regular Record Date next preceding
such Interest Payment Date to the opening of business on such Interest Payment
Date, which Note (or portion thereof, as the case may be) is surrendered for
conversion during such period, shall be paid to the Holder of such Note as of
such Regular Record Date. Interest payable on any Interest Payment Date in
respect of
19
any Note surrendered for conversion on or after such Interest Payment Date shall
be paid to the Holder of such Note as of the next preceding Regular Record Date,
notwithstanding the exercise of the right of conversion.
As a result of the foregoing provisions, Holders that surrender
Notes for conversion on a date that is not an Interest Payment Date will not
receive any interest for the period from the Interest Payment Date next
preceding the date of conversion to the date of conversion or for any later
period, even if the Notes are surrendered after a notice of redemption has been
given (except for the payment of interest on Notes called for redemption on a
Redemption Date or repurchasable on a Repurchase Date between a Regular Record
Date and the Interest Payment Date to which it relates, as provided above). No
other payment or adjustment for interest, or for any dividends in respect of
Common Stock, will be made upon conversion. Holders of Common Stock issued upon
conversion will not be entitled to receive any dividends payable to holders of
Common Stock as of any record date before the close of business on the
conversion date. No fractional shares will be issued upon conversion but, in
lieu thereof, the Company will calculate an appropriate amount to be paid in
cash on the basis set forth in the Indenture or, at its option, round up to the
next whole number of shares.
A Holder delivering a Note for conversion will not be required to
pay any taxes or duties in respect of the issue or delivery of Common Stock on
conversion. However, the Company shall not be required to pay any tax or duty
which may be payable in respect of any transfer involved in the issue or
delivery of the Common Stock in a name other than that of the Holder of the
Note. Certificates representing shares of Common Stock will not be issued or
delivered unless the person requesting such issue has paid to the Company the
amount of any such tax or duty or has established to the satisfaction of the
Company that such tax or duty has been paid.
The Conversion Rate is subject to adjustment in certain events,
including (a) dividends (and other distributions) payable in Common Stock on
shares of capital stock of the Company, (b) the issuance to all holders of
Common Stock of certain rights, options or warrants entitling them to subscribe
for or purchase Common Stock at less than the then current market price
(determined as provided in the Indenture) of Common Stock as of the record date
for holders entitled to receive such rights, options or warrants, (c)
subdivisions, combinations and reclassifications of Common Stock, (d)
distributions to all holders of Common Stock of evidences of indebtedness of the
Company, shares of capital stock or other property (including securities, but
excluding those dividends, rights, options, warrants and distributions referred
to in clauses (a) and (b) above, dividends and distributions paid exclusively in
cash and distributions upon mergers or consolidations to which the next
succeeding paragraph applies), (e) distributions consisting exclusively of cash
(excluding any cash portion of distributions referred to in (d) above, or cash
distributed upon a merger or consolidation to which the next succeeding
paragraph applies) to all holders of Common Stock in an aggregate amount that,
combined together with (i) other such all-cash distributions made within the
preceding 12 months in respect of which no adjustment has been made and (ii) any
cash and the fair market value of other consideration payable in respect of any
tender offer by the Company or any of its Subsidiaries for Common Stock, to the
extent that the cash and value of any other consideration included in such
payment per share of Common Stock exceeds the current market price per share of
Common Stock on the trading day next succeeding the date of payment (the
"Current Market Price"), concluded within the preceding 12 months in respect of
which no adjustment has been made, exceeds 12.5% of the Company's market
capitalization (being the product of the then current market price of the Common
Stock and the number of shares of Common Stock then outstanding) on the record
date for such distribution and (f) the successful completion of a tender offer
made by the Company or any of its subsidiaries for Common Stock, to the extent
that the cash and value of any other consideration included in such payment per
share of Common Stock exceeds the Current Market Price at such time, the
aggregate amount of which, together with (i) any cash and other consideration in
excess of the then current market price paid in a tender offer by the Company or
any of its Subsidiaries for Common Stock expiring within the 12 months preceding
the expiration of such tender offer in respect of which no adjustment has been
made and (ii) the aggregate amount of any such all-cash distributions referred
to in (e) above to all holders of Common Stock within the 12 months preceding
the expiration of such tender offer in respect of which no adjustments have been
made, exceeds 12.5% of the Company's market capitalization on the expiration of
such tender offer. The Company
20
reserves the right to make such increases in the conversion rate in addition to
those required in the foregoing provisions as it considers to be advisable in
order that any event treated for income tax purposes as a dividend or
distribution of stock or issuance of rights or warrants to purchase or subscribe
for stock will not be taxable to the recipients. No adjustment of the conversion
rate will be required to be made until the cumulative adjustments amount to 1.0%
or more of the conversion rate. The Company shall compute any adjustments to the
conversion price pursuant to this paragraph and will give notice to the Holders
of any such adjustments.
In case of any consolidation or merger of the Company with or into
another Person or any merger of another Person into the Company (other than a
merger which does not result in any reclassification, conversion, exchange or
cancellation of the Common Stock), or in the case of any conveyance, sale,
transfer or lease of all or substantially all of the properties and assets of
the Company, each Note then outstanding will, without the consent of the Holder
of any Note, become convertible only into the kind and amount of securities,
cash and other property receivable upon such consolidation, merger, sale,
conveyance, lease or other transfer by a holder of the number of shares of
Common Stock into which such Note was convertible immediately prior thereto
(assuming such holder of Common Stock failed to exercise any rights of election
and that such Note was then convertible).
The Company from time to time may increase the Conversion Rate by
any amount for any period of at least 20 days, in which case the Company shall
give at least 15 days' notice of such increase, if the Board of Directors has
made a determination that such increase would be in the best interests of the
Company, which determination shall be conclusive. No such increase shall be
taken into account for purposes of determining whether the closing price of the
Common Stock exceeds the Conversion Price (as defined below) by 105% in
connection with an event which otherwise would be a Change-in-Control.
If at any time the Company makes a distribution of property to its
shareholders which would be taxable to such shareholders as a dividend for
federal income tax purposes (e.g., distributions of evidences of indebtedness or
assets of the Company, but generally not stock dividends on Common Stock or
rights to subscribe for Common Stock) and, pursuant to the anti-dilution
provisions of the Indenture, the number of shares into which Notes are
convertible is increased, such increase may be deemed for federal income tax
purposes to be the payment of a taxable dividend to Holders of Notes. See
"Certain United States Federal Tax Considerations-United States Holders".
SUBORDINATION
The payment of the principal of, premium, if any, and interest on
the Notes (including amounts payable on any redemption or repurchase) is
subordinated in right of payment to the extent set forth in the Indenture to the
prior full and final payment of all Senior Debt of the Company. "Senior Debt"
means the principal of (and premium, if any) and interest (including all
interest accruing subsequent to the commencement of any bankruptcy or similar
proceeding, whether or not a claim for post-petition interest is allowable as a
claim in any such proceeding) on, and all fees and other amounts (including
collection expenses, attorney's fees and late charges) owing with respect to,
the following, whether direct or indirect, absolute or contingent, secured or
unsecured, due or to become due, outstanding at the date of execution of the
Indenture or thereafter incurred, created or assumed: (a) indebtedness of the
Company for money borrowed or evidenced by bonds, debentures, notes or similar
instruments, (b) reimbursement obligations of the Company with respect to
letters of credit, bankers' acceptances and similar facilities issued for the
account of the Company, (c) every obligation of the Company issued or assumed as
the deferred purchase price of property or services purchased by the Company,
excluding any trade payables and other accrued current liabilities incurred in
the ordinary course of business, (d) obligations of the Company as lessee under
leases required to be capitalized on the balance sheet of the lessee under
United States generally accepted accounting principles, (e) obligations of the
Company under interest rate and currency swaps, caps, floors, collars or similar
arrangements intended to protect the Company against fluctuations in interest or
currency exchange rates, (f) indebtedness of others of the kinds described in
the preceding clauses (a) through (e) that the Company has
21
assumed, guaranteed or otherwise assured the payment thereof, directly or
indirectly, and/or (g) deferrals, renewals, extensions and refundings of, or
amendments, modifications or supplements to, any indebtedness or obligation
described in the preceding clauses (a) through (f) whether or not there is any
notice to or consent of the Holders of Notes; provided, however, that the
following shall not constitute Senior Debt: (i) any particular indebtedness or
obligation that is owed by the Company to any of its direct and indirect
Subsidiaries and (ii) any particular indebtedness, deferral, renewal, extension
or refunding if it is expressly stated in the governing terms or in the
assumption thereof that the indebtedness involved is not senior in right of
payment to the Notes or that such indebtedness is pari passu with or junior to
the Notes.
No payment on account of principal of or premium, if any, or
interest on the Notes may be made if (a) there shall have occurred and be
continuing (i) a default in the payment of any Senior Debt or (ii) any other
default with respect to any Senior Debt permitting the holders thereof to
accelerate the maturity thereof, provided that, in the case of this clause (ii),
such default shall not have been cured or waived or ceased to exist after
written notice of such default shall have been given to the Company and the
Trustee by any holder of Senior Debt, or (b) in the event any judicial
proceeding shall be pending with respect to any such default in payment or event
of default. Upon any acceleration of the principal due on the Notes or payment
or distribution of assets of the Company to creditors upon any dissolution,
winding up, liquidation or reorganization, whether voluntary or involuntary, or
in bankruptcy, insolvency, receivership or other proceedings, all amounts due on
all Senior Debt must be paid in full before the Holders of the Notes are
entitled to receive any payment. By reason of such subordination, in the event
of insolvency of the Company, creditors of the Company who are holders of Senior
Debt may recover more, ratably, than the Holders of the Notes, and such
subordination may result in a reduction or elimination of payments to the
Holders of the Notes. The Company is party to a bank credit facility pursuant to
which up to $500.0 million has been made available for borrowing by the Company
on a revolving basis, subject to certain limitations specified therein. As of
the date of this Prospectus, there were no borrowings outstanding under such
facility and the entire committed amount of the facility was available to the
Company for borrowing. Any such borrowings would constitute Senior Debt.
In addition, the Notes will be effectively subordinated to all
indebtedness and other liabilities (including trade payables and lease
obligations) of the Company's subsidiaries.
The Indenture does not limit the ability of the Company or any of
its subsidiaries to incur indebtedness, including Senior Debt.
OPTIONAL REDEMPTION
The Notes may not be redeemed prior to the close of business on
February 15, 2000. Thereafter, the Notes may be redeemed, in whole or in part,
at the option of the Company, upon not less than 30 nor more than 60 days' prior
notice as provided under "-Notices" below, at the redemption prices set forth
below. Such redemption prices (expressed as a percentage of principal amount)
are as follows for the 12-month period beginning on February 15th of the
following years:
YEAR Redemption
- ---- Price
-----
2000................................................... 101.20%
2001................................................... 100.60%
and thereafter at a redemption price equal to 100% of the principal amount, in
each case together with accrued interest to the redemption date.
22
PURCHASE AT OPTION OF HOLDERS UPON A CHANGE-IN-CONTROL
If a Change-in-Control (as defined below) occurs, each Holder of
Notes will have the right, at the Holder's option, to require the Company to
purchase all of such Holder's Notes, or any portion of the principal amount
thereof that is equal to $1,000 or an integral multiple of $1,000 in excess
thereof, on the date (the "Purchase Date") that is 45 days after the date of the
Company Notice (as defined below), at a price in cash equal to 100% of the
principal amount of the Notes to be purchased, together with interest accrued to
the Purchase Date (the "Purchase Price").
The Company may, at its option, in lieu of paying the Purchase Price
in cash, pay the Purchase Price by issuing shares of Common Stock. The number of
shares of Common Stock tendered in payment will be determined by dividing the
Purchase Price by the value of the Common Stock, which for this purpose shall be
equal to 95% of the average of the closing sale prices of the Common Stock for
the five consecutive Trading Days ending on and including the third Trading Day
preceding the Purchase Date. Such payment may not be made in Common Stock unless
the Company satisfies certain conditions with respect thereto prior to the
Purchase Date as provided in the Indenture.
On or before the 30th day after the occurrence of a
Change-in-Control, the Company is obligated to give to all Holders of the Notes
notice, as provided in the Indenture (the "Company Notice"), of the occurrence
of such Change-in-Control and of the purchase right arising as a result thereof.
To exercise the purchase right, a Holder of Notes must deliver on or before the
fifth day prior to the Purchase Date irrevocable written notice to the Trustee
of the Holder's exercise of such right, together with the Notes with respect to
which the right is being exercised.
A Change-in-Control shall be deemed to have occurred at such time as
there shall occur: (i) the acquisition by any Person of beneficial ownership,
directly or indirectly, through a purchase, merger or other acquisition
transaction or series of transactions, of shares of capital stock of the Company
entitling such Person to exercise 50% or more of the total voting power of all
shares of capital stock of the Company entitled to vote generally in elections
of directors ("Voting Power"), other than any such acquisition by the Company or
any employee benefit plan of the Company; or (ii) any consolidation or merger of
the Company with or into any other Person, any merger of another Person into the
Company, or any conveyance, transfer, sale, lease or other disposition of all or
substantially all of the properties and assets of the Company to another Person
(other than (a) any such transaction (x) which does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock and (y) pursuant to which holders of Common Stock immediately prior
to such transaction have the entitlement to exercise, directly or indirectly,
50% or more of the Voting Power of the continuing or surviving person
immediately after such transaction and (b) any merger which is effected solely
to change the jurisdiction of incorporation of the Company and results in a
reclassification, conversion or exchange of outstanding shares of Common Stock
into solely shares of common stock); provided, however, that a Change-in-Control
shall not be deemed to have occurred if the closing sale price per share of the
Common Stock for any five Trading Days within the period of 10 consecutive
Trading Days ending immediately after the later of the date of the
Change-in-Control or the date of the public announcement of the
Change-in-Control (in the case of a Change-in-Control under clause (i) above) or
ending immediately before the Change-in-Control (in the case of a
Change-in-Control under clause (ii) above) shall equal or exceed 105% of the
Conversion Price of the Notes in effect on each such Trading Day. The
"Conversion Price" is equal to $1,000 divided by the Conversion Rate.
"Beneficial owner" shall be determined in accordance with Rule 13d-3 under the
Exchange Act. "Person" includes any syndicate or group which would be deemed to
be a "person" under Section 13(d)(3) of the Exchange Act.
The Company may, to the extent permitted by applicable law, at any
time purchase Notes in the open market or by tender at any price or by private
agreement. Subject to certain limitations imposed by the Purchase Agreement with
the Purchasers, any Note so purchased by the Company may be reissued or resold
or may, at the
23
Company's option, be surrendered to the Trustee for cancellation. Any Notes
surrendered as aforesaid may not be reissued or resold and will be cancelled
promptly.
The foregoing provisions would not necessarily afford Holders of the
Notes protection in the event of highly leveraged or other transactions
involving the Company that may adversely affect Holders.
The Company believes that the HFS Merger will not constitute a
Change-in-Control. As described above, a final determination of such matter
cannot be made until the HFS Merger is completed and the relative percentage
ownership of the Voting Power of the Company (as the continuing person in the
HFS Merger) by holders of Common Stock immediately prior to the HFS Merger can
be calculated. However, based on current information, the Company believes that
holders of Common Stock immediately prior to the HFS Merger will have the
entitlement to exercise, directly or indirectly, 50% or more of the Voting Power
of the Company following consummation of the HFS Merger.
MERGERS AND SALES OF ASSETS BY THE COMPANY
The Company will not consolidate with or merge into any other Person
or, directly or indirectly, convey, transfer, sell or lease all or substantially
all of its properties and assets to any Person, and the Company will not permit
any Person to consolidate with or merge into the Company or convey, transfer,
sell or lease all or substantially all of its properties and assets to the
Company, unless (a) the Person formed by such consolidation or into or with
which the Company is merged or the Person to which the properties and assets of
the Company are so conveyed, transferred, sold or leased, is a corporation,
limited liability company, partnership or trust organized and existing under the
laws of the United States, any State thereof or the District of Columbia and
shall expressly assume the due and punctual payment of the principal of and,
premium, if any, and interest on the Notes and the performance of the other
covenants of the Company under the Indenture and shall have provided for
conversion rights as described above under "-Conversion Rights", (b) immediately
after giving effect to such transaction, no Event of Default, and no event
which, after notice or lapse of time or both, would become an Event of Default,
shall have occurred and be continuing, and (c) the Company shall have provided
to the Trustee an Officer's Certificate and Opinion of Counsel as provided in
the Indenture. The Company (a) as the resulting Person in the HFS Merger, will
satisfy the condition set forth in clause (a) of the preceding sentence; (b)
believes that consummation of the HFS Merger will not result in the occurrence
of an Event of Default; and (c) will provide to the Trustee prior to or
substantially contemporaneously with the consummation of the HFS Merger an
Officer's Certificate and Opinion of Counsel as provided in the Indenture.
EVENTS OF DEFAULT
The following are Events of Default under the Indenture: (a) failure
to pay principal of or premium, if any, on any Note when due, whether or not
such payment is prohibited by the subordination provisions of the Indenture, (b)
failure to pay any interest on any Note when due, continuing for 30 days,
whether or not such payment is prohibited by the subordination provisions of the
Indenture; (c) default in the Company's obligation to provide notice of a
Change-in-Control; (d) failure to perform any other material covenant or
warranty of the Company in the Indenture (other than the Company's registration
obligations described above under "-Registration Rights" (and set forth in
Section 10.11 of the Indenture) for which the payment of additional interest as
therein described shall be the exclusive monetary remedy for default),
continuing for 60 days after written notice to the Company by the Trustee or the
Holders of at least 25% in aggregate principal amount of Outstanding Notes; (e)
failure to pay when due the principal of, or acceleration of, any indebtedness
for money borrowed by the Company in excess of $75.0 million if such
indebtedness is not discharged, or such acceleration is not annulled, within 30
days after written notice to the Company by the Trustee or the Holders of at
least 10% in aggregate principal amount of Outstanding Notes; and (f) certain
events of bankruptcy, insolvency or reorganization of the Company. Subject to
the provisions of the Indenture relating to the duties of the Trustee in case an
Event of Default shall occur and be continuing, the
24
Trustee is under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless such Holders
shall have offered to the Trustee reasonable indemnity. Subject to such
provisions for the indemnification of the Trustee, the Holders of a majority in
aggregate principal amount of the Outstanding Notes have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee.
If an Event of Default (other than an Event of Default specified in
clause (f) above) occurs and is continuing, either the Trustee or the Holders of
not less than 25% in aggregate principal amount of the Outstanding Notes may
accelerate the maturity of all Notes. If an Event of Default specified in clause
(f) occurs and is continuing, the principal of and any accrued interest on all
of the Notes then Outstanding shall ipso facto become due and payable
immediately without any declaration or other act on the part of the Trustee or
any Holder.
At any time after a declaration of acceleration has been made but
before a judgment or decree based on acceleration has been issued, the Holders
of a majority in aggregate principal amount of Outstanding Notes may, under
certain circumstances as set forth in the Indenture, rescind and annul such
acceleration if all Events of Default, other than the nonpayment of accelerated
principal and interest, have been cured or waived as provided in the Indenture.
For information as to waiver of defaults, See "-Modification and Waiver."
No Holder of any Note has any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such Holder shall
have previously given to the Trustee written notice of a continuing Event of
Default and unless also the Holders of at least 25% in aggregate principal
amount of the Outstanding Notes shall have made written request, and offered
reasonable indemnity, to the Trustee to institute such proceeding as trustee,
and the Trustee shall not have received from the Holders of a majority in
aggregate principal amount of the Outstanding Notes a direction inconsistent
with such request and shall have failed to institute such proceeding within 60
days. However, such limitations do not apply to a suit instituted by a Holder of
a Note for the enforcement of payment of the principal of or premium, if any, or
interest on such Note on or after the respective due dates expressed in such
Note or of the right to convert such Note in accordance with the Indenture.
The Company is required to furnish to the Trustee annually a
statement as to the performance by the Company of certain of its obligations
under the Indenture and as to any default in such performance.
MODIFICATION AND WAIVER
The Indenture contains provisions permitting the Company and the
Trustee to enter into a supplemental indenture for certain limited purposes
without the consent of the Holders. Generally, modifications and amendments of
the Indenture can only be made with the written consent of the Holders of not
less than a majority in principal amount of the Notes at the time Outstanding.
However, no such modification or amendment may, without the consent of the
Holder of each Outstanding Note affected thereby, (a) change the Stated Maturity
of the principal of, or any installment of interest on, any Note, (b) reduce the
principal amount of, or the premium, if any, or rate of interest on, any Note,
(c) modify the provisions with respect to the repurchase right of the Holders in
a manner adverse to the Holders, (d) change the place or currency of payment of
principal of, premium, if any, or interest on any Note, (e) impair the right to
institute suit for the enforcement of any payment on or with respect to, or the
right to convert, any Note, (f) except as otherwise permitted or contemplated by
provisions concerning consolidation, merger, conveyance, transfer, sale or lease
of all or substantially all of the property and assets of the Company, adversely
affect the right to convert Notes, (g) modify the subordination provisions in a
manner adverse to the Holders of the Notes, (h) reduce the above-stated
percentage of aggregate principal amount of Outstanding Notes necessary for
waiver of compliance with certain provisions of the Indenture or for waiver of
certain defaults or (i) modify the obligation of the Company to deliver
information required under Rule 144A to permit resales of Notes and Common Stock
issuable upon conversion thereof in the event the Company ceases to be subject
to certain reporting requirements under the United States securities laws.
25
The Holders of a majority in aggregate principal amount of
Outstanding Notes may waive compliance by the Company with certain restrictive
provisions of the Indenture. The Holders of a majority in aggregate principal
amount of the Outstanding Notes may waive any past default by the Company under
the Indenture, except a default in the payment of principal, premium, if any, or
interest or a default in any covenant or provision which under the Indenture
cannot be modified or amended without the consent of each Holder of Outstanding
Notes.
NOTICES
Notice to Holders of the Notes will be given by mail to the
addresses of such Holders as they appear in the Security Register. Such notices
will be deemed to have been given on the date of mailing of the notice.
Notice of a redemption of Notes will be given at least once not less
than 30 nor more than 60 days prior to the Redemption Date (which notice shall
be irrevocable) and will specify the Redemption Date and the Redemption Price.
GOVERNING LAW
The Indenture and the Notes are governed by the laws of the State of
New York.
THE TRUSTEE
The Trustee for the holders of Notes issued under the Indenture is
Marine Midland Bank, 140 Broadway, New York, New York 10005.
26
DESCRIPTION OF CAPITAL STOCK
The following summary description is qualified in its entirety by
reference to the Company's Amended and Restated Certificate of Incorporation
(the "Certificate of Incorporation") and By-Laws currently in effect (the
"ByLaws"), which are available to investors in the Securities upon request to
the Company. The authorized capital stock of the Company consists of 600,000,000
shares of Common Stock, $.01 par value, and 1,000,000 shares of Preferred Stock,
$.01 par value ("Preferred Stock"). In connection with the HFS Merger, the
Company intends to amend its Certificate of Incorporation to increase its total
authorized Common Stock to 2,000,000,000 shares, $.01 par value, and to increase
its total authorized Preferred Stock to 10,000,000 shares, $.01 par value. Such
amendment is subject to approval of the HFS Merger by the shareholders of CUC
and the shareholders of HFS. Sierra, the Company's wholly-owned subsidiary, also
had outstanding as of July 31, 1997 approximately $20.3 million aggregate
principal amount of its 61/2% Convertible Subordinated Notes due 2001 (the
"61/2% Convertible Subordinated Notes").
COMMON STOCK
As of August 28, 1997, there were outstanding approximately 410.7
million shares of Common Stock and approximately 9,140 holders of record
thereof. The holders of Common Stock are entitled to one vote for each share of
Common Stock held of record on all matters submitted to a vote of stockholders
generally (including with respect to the election of directors) and the
Certificate of Incorporation does not provide for cumulative voting for the
election of directors. Holders of Common Stock have no preemptive, subscription
or redemption rights and have no rights to convert their Common Stock into any
other securities. Other than the 61/2% Convertible Subordinated Notes which, as
of July 31, 1997, were convertible into an aggregate of approximately 2.7
million shares of Common Stock, the Notes which, as of August 28, 1997, were
convertible into an aggregate of 17,959,205 shares of Common Stock, the
approximately 47.1 million shares of Common Stock reserved by the Company for
issuance as of July 31, 1997 upon the exercise of qualified and non-qualified
options pursuant to various senior executive and employee stock option plans
currently in effect and the 600,000 shares of Common Stock reserved for issuance
as of August 28, 1997 upon exercise of certain outstanding warrants to purchase
the Common Stock, there are no outstanding securities of the Company which, as
of the date of this Prospectus, are convertible into, or exercisable or
exchangeable for, shares of Common Stock.
The Common Stock is listed on the NYSE under the symbol "CU."
All outstanding shares of Common Stock are, and upon issuance
pursuant to conversion of the Notes will be, validly issued, fully paid and
non-assessable. Subject to the prior rights, if any, of holders of any
outstanding class or series of capital stock having a preference in relation to
the Common Stock as to distributions upon the dissolution, liquidation or
winding-up of the Company, and as to dividends, holders of Common Stock are
entitled to share ratably in all assets of the Company which remain after the
payment in full of all debts and liabilities of the Company, and to receive
ratably such dividends as may be declared by the Company's Board of Directors
from time to time out of funds and other assets legally available therefor.
PREFERRED STOCK
The Company's Board of Directors may, without further action of the
holders of Common Stock, issue one or more series of Preferred Stock, fix the
dividend rate, conversion rights, voting rights, rights and terms of redemption
(including sinking fund provisions), redemption prices, liquidation preferences
and other terms of any unissued series of Preferred Stock and determine the
designation of and the number of shares constituting any such series.
27
No Preferred Stock is presently outstanding nor has the Company's
Board of Directors fixed the terms of any series of Preferred Stock to be issued
in the future. The issuance of Preferred Stock, while providing desirable
flexibility in connection with prospective business combination transactions
involving the Company and its subsidiaries and other corporate purposes, may
have the effect of making it more difficult for a third party to acquire a
majority of the outstanding voting stock of the Company.
ANTI-TAKEOVER PROVISIONS
Certain provisions of the Certificate of Incorporation and Bylaws
summarized below may effectively delay, defer or prevent the commencement or
consummation of tender offers, mergers, recapitalizations, business combinations
and other transactions involving a change-in-control of the Company, including
transactions involving the payment of a premium over the prevailing market price
of the Common Stock and other transactions which holders of the Common Stock
might consider to be in their best interests.
Classified Board. A classified board is a corporate board on which a
certain number (but not all) of the directors are elected on a rotating basis
each year. The Delaware General Corporation Law (the "DGCL") permits (but does
not require) the implementation of a classified board of directors, pursuant to
which a corporation's directors can be divided into as many classes with
staggered terms of office, with only one class of directors standing for
election each year. The By-Laws provide for a classified board which is divided
into three classes serving staggered terms of office, with one class of
directors elected annually.
No Stockholder Action by Written Consent. The Certificate of
Incorporation also prohibits stockholder action by written consent in lieu of a
meeting. As a result, stockholder action can be taken only at an annual or
special meeting of stockholders. This prevents the holders of a majority of the
outstanding voting stock of the Company from using the written consent procedure
to take stockholder action without giving all the stockholders of the Company
entitled to vote on a proposed action the opportunity to participate in
determining the proposed action. In addition, the Certificate of Incorporation
and By-Laws provide that special meetings of stockholders may be called only by
the Chairman of the Board, the President or the Board of Directors of the
Company pursuant to a resolution approved by a majority of the entire Board of
Directors.
"Fair Price Provision". Under the DGCL and the Certificate of
Incorporation, an agreement of merger, sale, lease or exchange of all or
substantially all of the Company's assets must be approved by the Company's
Board of Directors and adopted by the holders of a majority of the outstanding
shares of stock entitled to vote thereon. However, the Certificate of
Incorporation includes what generally is referred to as a "fair price
provision," which requires the affirmative vote of the holders of at least 80%
of the outstanding shares of capital stock entitled to vote generally in the
election of the Company's directors, voting together as a single class, to
approve certain business combination transactions (including certain mergers,
recapitalizations and the issuance or transfer of securities of the Company or a
subsidiary having an aggregate fair market value of $10.0 million or more)
involving the Company or a subsidiary and an owner or any affiliate of an owner
of 5% or more of the outstanding shares of capital stock entitled to vote,
unless either (i) such business combination is approved by a majority of
disinterested directors, or (ii) the shareholders receive a "fair price" for
their Company securities and certain other procedural requirements are met. The
Certificate of Incorporation provides that this provision may not be repealed or
amended in any respect except by the affirmative vote of the holders of not less
than 80% of the outstanding shares of capital stock entitled to vote generally
in the election of the Company's directors.
Delaware Business Combination Statute. Section 203 of the DGCL also
prohibits certain business combinations between a Delaware corporation, the
shares of which are listed on a national securities exchange, and an "interested
stockholder" for a period of three years following the time that such person
became an "interested stockholder" without board approval, unless certain
conditions are met and unless the corporation's charter contains a provision
expressly electing not to be governed by such provisions. The Certificate of
Incorporation does not
28
contain such an election. A "business combination" includes mergers, sales of
assets and other transactions resulting in a financial benefit to the interested
stockholder. Subject to certain exceptions, unless the transaction is approved
by the board of directors and the holders of at least 66-2/3% of the outstanding
voting stock of the corporation (excluding shares held by the interested
stockholder), Section 203 prohibits significant business transactions such as a
merger with, disposition of assets to or receipt of disproportionate financial
benefits by the interested stockholder, or any other transaction that would
increase the interested stockholder's proportionate ownership of any class or
series of the corporation's stock. The statutory prohibition does not apply if,
upon the consummation of the transaction in which any person becomes an
interested stockholder, the interested stockholder owns at least 85% of the
outstanding voting stock of the corporation (excluding shares held by persons
who are both officers and directors or by certain employee stock plans).
Charter Amendments. The Certificate of Incorporation
requires the approval of the holders of at least 80% of the outstanding voting
stock to amend provisions thereof relating to: (i) the number, election, term
and nomination of directors and newly created directorships, vacancies in
directorships and the removal of directors; (ii) certain business combinations;
(iii) the amendment of certain By-Law provisions relating to stockholder
meetings and directors; and (iv) stockholder action without a meeting. All other
amendments to the Certificate of Incorporation must be approved by the
affirmative vote of the holders of a majority of the outstanding shares entitled
to vote thereon.
Removal of Directors. The Certificate of Incorporation
and By-Laws provide that any and all directors can be removed, with or without
cause, by the affirmative vote of the holders of at least 80% of the combined
voting power of the outstanding shares of stock entitled to vote for the
election of directors.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is Bank of
Boston, c/o Boston Equiserve, Mail Stop 45-02-64, P.O. Box 644, Boston,
Massachusetts 02102-0644.
SELLING SECURITYHOLDERS
The Selling Securityholders may from time to time offer and sell
pursuant to this Prospectus any or all of the Notes and the Shares of Common
Stock issued upon conversion thereof. The term Selling Securityholder includes
the Holders listed below and the beneficial owners of the Notes and their
respective transferees, pledgees, donees or their successors.
Each of the Selling Securityholders listed below is either a
Purchaser or a transferee of a Purchaser party to the Registration Rights
Agreement, and has agreed to be bound by the terms applicable to the transferor
thereunder. Pursuant to the Registration Rights Agreement, the Company has filed
the Registration Statement of which this Prospectus forms a part and has also
agreed to bear certain expenses related thereto and to indemnify each Selling
Securityholder against certain liabilities, including liabilities arising under
the federal securities laws.
The Company has filed with the Commission the Registration Statement
of which this Prospectus forms a part with respect to the sale by the Selling
Securityholders of the Securities from time to time through the facilities of
any national securities exchange or U.S. automated inter-dealer quotation system
of a registered national securities association on which the Securities are then
listed, admitted to unlisted trading privileges or included for quotation, in
privately negotiated transactions or otherwise, as more fully described under
"Description of Notes - Registration Rights" and "Plan of Distribution."
The table below sets forth information with respect to the Selling
Securityholders and the respective principal amounts of the Notes and Shares of
Common Stock into which such Notes are convertible beneficially
29
owned by each Selling Securityholder as of April 13, 1997 (although certain of
such information has been updated subsequent to such date upon written
instructions delivered to the Company by certain of the Selling
Securityholders). Such information has been obtained from the Selling
Securityholders or such other sources as the Company deems reliable. To the
Company's knowledge, none of the Selling Securityholders has, or within the past
three years has had, any position, office or other material relationship with
the Company or any of its affiliates. Although the Selling Securityholders may
offer for sale from time to time all or a portion of the Securities pursuant to
this Prospectus, the table below assumes that all of the Securities will be
offered and sold by the Selling Securityholders. In addition, the Selling
Securityholders identified below may have sold, transferred or otherwise
disposed of all or a portion of their Securities since the date on which they
provided the Company with information regarding their Securities in transactions
exempt from the registration requirements of the Securities Act. Information
concerning Selling Securityholders may change from time to time and, to the
extent required, will be set forth in Supplements to this Prospectus. The
Securities are being registered hereby to permit secondary trading of the
Securities without restriction under the Securities Act. See "Plan of
Distribution."
30
Beneficial Ownership
at April 13, 1997(1)
--------------------
Principal Number of Shares Principal Amount of
Amount of Percentage Covered by this Notes Covered by
Selling Securityholder Notes of Notes Prospectus(2) this Prospectus
--------- ---------- ---------------- ---------------------
Westcore Growth & Income Fund $ 250,000 * 8,163 $ 250,000
c/o Denver Investment Advisors LLC
1225 17th Street, 26th Floor
Denver, CO 80202
UNC Foundation Inc. $ 200,000 * 6,530 $ 200,000
c/o Denver Investment Advisors LLC
1225 17th Street, 26th Floor
Denver, CO 80202
Endowments, Inc. $ 800,000 * 26,122 $ 800,000
c/o Capital Research & Mgmt. Co.
333 South Hope Street
Los Angeles, CA 90071
AMCAP Fund, Inc. $ 6,000,000 1.1% 195,918 $ 6,000,000
c/o Capital Research & Mgmt. Co.
333 South Hope Street
Los Angeles, CA 90071
University of Massachusetts $ 1,000,000 * 32,653 $ 1,000,000
Medical Center
c/o Income Research & Management
100 Federal Street, 29th Floor
Boston, MA 02110
Tufts Associated Health Plan $ 1,000,000 * 32,653 $ 1,000,000
c/o Income Research & Mgmt.
100 Federal Street, 29th Floor
Boston, MA 02110
Beneficial Standard Life $ 550,000 * 17,959 $ 550,000
Convertible Fund
11825 N. Pennsylvania
Carmel, IN 46032
Evergreen Income & Growth Fund $ 3,000,000 * 97,959 $ 3,000,000
Evergreen Keystone Funds
200 Berkeley Street
Boston, MA 02116-5034
SparInvest Austria $ 1,250,000 * 40,816 $ 1,250,000
Kapitalanlagegesellschaft m.b.h.
Obere Donaustr. 19
1020 Vienna
Austria
31
OCM Convertible Trust $ 4,645,000 * 151,673 $ 4,645,000
c/o Oaktree Capital Management, LLC
550 South Hope Street, 22nd Floor
Los Angeles, CA 90071
OCM Convertible Ltd. Partnership $ 250,000 * 8,163 $ 250,000
c/o Oaktree Capital Management, LLC
550 South Hope Street, 22nd Floor
Los Angeles, CA 90071
Delta Air Lines Master Trust $ 3,165,000 * 103,346 $ 3,165,000
c/o Oaktree Capital Management, LLC
550 South Hope Street, 22nd Floor
Los Angeles, CA 90071
State Employees Retirement Fund $ 1,265,000 * 41,306 $ 1,265,000
of the State of Delaware
c/o Oaktree Capital Management, LLC
550 South Hope Street, 22nd Floor
Los Angeles, CA 90071
State of Connecticut Combined $ 3,890,000 * 127,020 $ 3,890,000
Investment Funds
c/o Oaktree Capital Management, LLC
550 South Hope Street, 22nd Floor
Los Angeles, CA 90071
Vanguard Convertible Securities Fund, $ 2,870,000 * 93,714 $ 2,870,000
Inc.
c/o Oaktree Capital Management, LLC
550 South Hope Street, 22nd Floor
Los Angeles, CA 90071
Hughes Aircraft Company Master $ 1,590,000 * 51,918 $ 1,590,000
Retirement Trust
c/o Oaktree Capital Management, LLC
550 South Hope Street, 22nd Floor
Los Angeles, CA 90071
Partner Reinsurance Company Ltd. $ 325,000 * 10,612 $ 325,000
c/o Oaktree Capital Management, LLC
550 South Hope Street, 22nd Floor
Los Angeles, CA 90071
32
Colonial Penn Insurance $ 630,000 * 20,571 $ 630,000
40 West 57th Street, 15th Floor
New York, NY 10019
Ramius Fund, L.P. $ 130,000 * 4,244 $ 130,000
40 West 57th Street, 15th Floor
New York, NY 10019
Norwest Bank N.A. $ 3,000,000 * 97,959 $ 3,000,000
733 Marquett Avenue, 5th Floor
Minneapolis, MN 55479-0047
UBS Securities LLC $ 2,000,000 * 65,306 $ 2,000,000
299 Park Avenue
New York, NY 10171-0026
The Northwestern Mutual Life $ 5,000,000 * 163,265 $ 5,000,000
Insurance Co.
720 East Wisconsin Avenue
Milwaukee, WI 53202
Transamerica Life Insurance and $ 8,000,000 1.5% 261,224 $ 8,000,000
Annuity Co.
1150 S. Olive Street
Los Angeles, CA 90015
South Dakota Retirement System $ 1,000,000 * 32,653 $ 1,000,000
South Dakota Investment Council
4009 W. 49th Street, Suite 300
Sioux Falls, SD 57106
CALPERS $ 3,000,000 * 97,959 $ 3,000,000
Lincoln Plaza
400 P Street, Suite 3492
Sacramento, CA 95814
Kellner, DiLeo & Co. $ 2,000,000 * 65,306 $ 2,000,000
900 Third Avenue, Suite 1000
New York, NY 10022
MainStay VP Convertible Portfolio $ 1,000,000 * 32,653 $ 1,000,000
c/o MacKay Shields Financial Corp.
9 West 57th Street, 37th Floor
New York, NY 10019
33
MainStay Convertible Fund $ 25,450,000 4.6% 831,020 $ 25,450,000
c/o MacKay Shields Financial Corp.
9 West 57th Street, 37th Floor
New York, NY 10019
New York Life Separate Account #7 $ 4,000,000 * 130,612 $ 4,000,000
c/o MacKay Shields Financial Corp.
9 West 57th Street, 37th Floor
New York, NY 10019
Brown & Williamson Convertible $ 300,000 * 9,795 $ 300,000
c/o MacKay Shields Financial Corp.
9 West 57th Street, 37th Floor
New York, NY 10019
Argent Classic Convertible Arbitrage $ 6,000,000 1.1% 195,918 $ 6,000,000
Fund LP
591 West Putnam Avenue
Greenwich, CT 06830
Argent Classic Convertible Arbitrage $ 2,000,000 * 65,306 $ 2,000,000
(Bermuda), Ltd.
10 Queen Street
Hamilton, Bermuda HMEX
Salomon Brothers Inc $ 480,000 * 15,673 $ 480,000
8800 Hidden River Parkway
Tampa, FL 33637
Glen Eagles Fund, L.P. $ 130,000 * 4,244 $ 130,000
40 West 57th Street, 57th Floor
New York, NY 10019
Hick Investment Ltd. $ 130,000 * 4,244 $ 130,000
40 West 57th Street, 57th Floor
New York, NY 10019
AARP Growth & Income Fund $ 14,000,000 2.5% 457,142 $14,000,000
Two International Place
Boston, MA 02110-4103
Scudder Growth & Income Fund $ 14,000,000 2.5% 457,142 $14,000,000
Two International Place
Boston, MA 02110-4103
34
Dunham & Associates $ 16,000 * 522 $ 16,000
c/o Nicholas-Applegate Capital Mgmt.
600 W. Broadway, 32nd Floor
San Diego, CA 92101
San Diego City Retirement $ 225,000 * 7,346 $ 225,000
c/o Nicholas-Applegate Capital Mgmt.
600 W. Broadway, 32nd Floor
San Diego, CA 92101
Dunham & Associates $ 4,000 * 130 $ 4,000
c/o Nicholas-Applegate Capital Mgmt.
600 W. Broadway, 32nd Floor
San Diego, CA 92101
Occidental College $ 70,000 * 2,285 $ 70,000
c/o Nicholas-Applegate Capital Mgmt.
600 W. Broadway, 32nd Floor
San Diego, CA 92101
San Diego County $ 975,000 * 31,836 $ 975,000
c/o Nicholas-Applegate Capital Mgmt.
600 W. Broadway, 32nd Floor
San Diego, CA 92101
Boston Museum of Fine Art $ 28,000 * 914 $ 28,000
c/o Nicholas-Applegate Capital Mgmt.
600 W. Broadway, 32nd Floor
San Diego, CA 92101
Engineers Joint Pension Fund $ 118,000 * 3,853 $ 118,000
c/o Nicholas-Applegate Capital Mgmt.
600 W. Broadway, 32nd Floor
San Diego, CA 92101
Wake Forest University $ 177,000 * 5,779 $ 177,000
c/o Nicholas-Applegate Capital Mgmt.
600 W. Broadway, 32nd Floor
San Diego, CA 92101
Nicholas-Applegate Income & Growth $ 735,000 * 24,000 $ 735,000
Fund
c/o Nicholas-Applegate Capital Mgmt.
600 W. Broadway, 32nd Floor
San Diego, CA 92101
35
Austin Firefighters $ 79,000 * 2,579 $ 79,000
c/o Nicholas-Applegate Capital Mgmt.
600 W. Broadway, 32nd Floor
San Diego, CA 92101
Baptist Hospital $ 73,000 * 2,383 $ 73,000
c/o Nicholas-Applegate Capital Mgmt.
600 W. Broadway, 32nd Floor
San Diego, CA 92101
Keystone Fund for Total Return $ 1,000,000 * 32,653 $ 1,000,000
c/o Keystone Investment Management
Co.
200 Berkeley Street
Boston, MA 02116
Bond Fund Series - Oppenheimer Bond $ 6,000,000 1.1% 195,918 $ 6,000,000
Fund for Growth
350 Linden Oaks
Rochester, NY 14625
Allstate Insurance Company $ 2,000,000 * 65,306 $ 2,000,000
3075 Sanders Road, Suite G613
Northbrook, IL 60062-7127
Allstate Life Insurance Company $ 5,500,000 1.0% 179,591 $ 5,500,000
3075 Sanders Road, Suite G5A
Northbrook, IL 60062-7127
Societe Generale Paris $ 2,000,000 * 65,306 $ 2,000,000
Marc/OTA/SGE 17 Cours Valmy
92987 Paris 4A Defense
Societe Generale Securities Corporation $ 1,500,000 * 48,979 $ 1,500,000
1221 Avenue of the Americas
6th Floor, Proxy Dept.
New York, NY 10020
BNY Hamilton Equity Income Fund $ 2,500,000 * 81,632 $ 2,500,000
The Bank of New York
90 Washington Street, 26th Floor
New York, NY 10286
Arkansas PERS $ 2,000,000 * 65,306 $ 2,000,000
c/o Froley, Revy Investment Co.
10900 Wilshire Blvd. #1050
Los Angeles, CA 90025
36
ICI American Holdings Pension $ 415,000 * 13,551 $ 415,000
c/o Froley, Revy Investment Co.
10900 Wilshire Blvd. #1050
Los Angeles, CA 90025
Zeneca Holdings Pension $ 415,000 * 13,551 $ 415,000
c/o Froley, Revy Investment Co.
10900 Wilshire Blvd. #1050
Los Angeles, CA 90025
Delaware State Retirement Fund - $ 1,030,000 * 33,632 $ 1,030,000
Froley, Revy
c/o Froley, Revy Investment Co.
10900 Wilshire Blvd. #1050
Los Angeles, CA 90025
PRIM Board $ 1,600,000 * 52,244 $ 1,600,000
c/o Froley, Revy Investment Co.
10900 Wilshire Blvd. #1050
Los Angeles, CA 90025
Southern Farm Bureau $ 515,000 * 16,816 $ 515,000
c/o Froley, Revy Investment Co.
10900 Wilshire Blvd. #1050
Los Angeles, CA 90025
Starvest Investment Grade $ 500,000 * 16,326 $ 500,000
c/o Froley, Revy Investment Co.
10900 Wilshire Blvd. #1050
Los Angeles, CA 90025
King County Medical $ 480,000 * 15,673 $ 480,000
c/o Froley, Revy Investment Co.
10900 Wilshire Blvd. #1050
Los Angeles, CA 90025
SAIF Corporation $ 4,000,000 * 130,612 $ 4,000,000
c/o Froley, Revy Investment Co.
10900 Wilshire Blvd. #1050
Los Angeles, CA 90025
Oregon Equity Fund $ 3,000,000 * 97,959 $ 3,000,000
c/o Froley, Revy Investment Co.
10900 Wilshire Blvd. #1050
Los Angeles, CA 90025
37
Island Insurance Convertible $ 200,000 * 6,530 $ 200,000
c/o Froley, Revy Investment Co.
10900 Wilshire Blvd. #1050
Los Angeles, CA 90025
Nalco Chemical Retirement Trust $ 170,000 * 5,551 $ 170,000
c/o Froley, Revy Investment Co.
10900 Wilshire Blvd. #1050
Los Angeles, CA 90025
Kapiolani Medical Center $ 150,000 * 4,897 $ 150,000
c/o Froley, Revy Investment Co.
10900 Wilshire Blvd. #1050
Los Angeles, CA 90025
Finance Factors Ltd. $ 700,000 * 22,857 $ 700,000
c/o Froley, Revy Investment Co.
10900 Wilshire Blvd. #1050
Los Angeles, CA 90025
Retirement Plan for Pilots of Hawaiian $ 150,000 * 4,897 $ 150,000
Airlines
c/o Froley, Revy Investment Co.
10900 Wilshire Blvd. #1050
Los Angeles, CA 90025
Hawaiian Airlines Employees Pension $ 100,000 * 3,265 $ 100,000
Plan - IAM
c/o Froley, Revy Investment Co.
10900 Wilshire Blvd. #1050
Los Angeles, CA 90025
Paloma Securities L.L.C. $ 8,910,000 1.6% 290,939 $ 8,910,000
Two American Lane
Greenwich, CT 06836
Sunrise Partners C.V. $ 2,200,000 * 71,836 $ 2,200,000
c/o Paloma Partners Management
Company
Two American Lane
Greenwich, CT 06836-2571
Goldman, Sachs & Company $ 38,630,000 7.0% 1,261,387 $38,630,000
One New York Plaza
New York, NY 10005
38
AIM Income Fund $ 1,000,000 * 32,653 $ 1,000,000
11 Greenway Plaza, Suite 1919
Houston, TX 77046
AIM High Yield Fund $ 3,000,000 * 97,959 $ 3,000,000
11 Greenway Plaza, Suite 1919
Houston, TX 77046
Public Employees' Retirement $ 1,000,000 * 32,653 $ 1,000,000
Association of Colorado
1300 Logan Street
Denver, CO 80203
TCW Convertible Value Fund $ 3,540,000 * 115,591 $ 3,540,000
c/o The TCW Group, Inc.
865 Sough Figueroa Street, 21st Fl.
Los Angeles, CA 90017
State of Michigan Employees Retirement $ 4,385,000 * 143,183 $ 4,385,000
Fund
c/o The TCW Group, Inc.
865 South Figueroa Street, 21st Fl.
Los Angeles, CA 90017
TCW Convertible Securities Fund $ 9,275,000 1.7% 302,857 $ 9,275,000
c/o The TCW Group, Inc.
865 South Figueroa Street, 21st Fl.
Los Angeles, CA 90017
Cincinnati Bell Telephone Convertible $ 1,910,000 * 62,367 $ 1,910,000
Value Fund
c/o The TCW Group, Inc.
865 South Figueroa Street, 21st Fl.
Los Angeles, CA 90017
North Dakota State Workers $ 1,750,000 * 57,142 $ 1,750,000
Compensation Fund
c/o The TCW Group, Inc.
865 South Figueroa Street, 21st Fl.
Los Angeles, CA 90017
TCW/DW Income & Growth Fund $ 1,110,000 * 36,244 $ 1,110,000
c/o The TCW Group, Inc.
865 South Figueroa Street, 21st Fl.
Los Angeles, CA 90017
39
TCW/DW Total Return Trust $ 1,960,000 * 64,000 $ 1,960,000
c/o The TCW Group, Inc.
865 South Figueroa Street, 21st Fl.
Los Angeles, CA 90017
Medical Malpractice Insurance Assoc. $ 400,000 * 13,061 $ 400,000
c/o The TCW Group, Inc.
865 South Figueroa Street, 21st Fl.
Los Angeles, CA 90017
TCW Galileo Convertible Securities $ 1,030,000 * 33,632 $ 1,030,000
Fund
c/o The TCW Group, Inc.
865 South Figueroa Street, 21st Fl.
Los Angeles, CA 90017
Southern Farm Bureau Life Insurance $ 860,000 * 28,081 $ 860,000
c/o The TCW Group, Inc.
865 South Figueroa Street, 21st Fl.
Los Angeles, CA 90017
TCW Convertible Strategy Fund $ 2,450,000 * 80,000 $ 2,450,000
c/o The TCW Group, Inc.
865 South Figueroa Street, 21st Fl.
Los Angeles, CA 90017
North Dakota State Land Dept. $ 1,600,000 * 52,244 $ 1,600,000
c/o The TCW Group, Inc.
865 South Figueroa Street, 21st Fl.
Los Angeles, CA 90017
American Community Mutual Ins. Co. $ 130,000 * 4,244 $ 130,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
American Pioneer Life Insurance Co. of $ 40,000 * 1,306 $ 40,000
New York
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
American Progressive Life & Health $ 40,000 * 1,306 $ 40,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
40
American Public Entity Excess Pool $ 15,000 * 489 $ 15,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
BCS Life Insurance Co. $ 340,000 * 11,102 $ 340,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Associated Physicians Insurance Co. $ 10,000 * 326 $ 10,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Anthracite Mutual Fire Insurance Co. $ 10,000 * 326 $ 10,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Amwest Surety Insurance Co. $ 300,000 * 9,795 $ 300,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
American Republic Insurance Co. $ 400,000 * 13,061 $ 400,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Care America Life Insurance Co. $ 15,000 * 489 $ 15,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Catholic Mutual Relief Society of $ 150,000 * 4,897 $ 150,000
America
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Catholic Mutual Relief Society-Pension $ 200,000 * 6,530 $ 200,000
Plan
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
41
Catholic Relief Insurance Co of America $ 130,000 * 4,244 $ 130,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Central States Health & Life of Omaha $ 210,000 * 6,857 $ 210,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Century National Insurance Co. $ 370,000 * 12,081 $ 370,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
c/o AAM Advisors Inc. $ 30,000 * 979 $ 30,000
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Chrysler Insurance Company $ 2,000,000 * 65,306 $ 2,000,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Concord Life Insurance Co. $ 55,000 * 1,795 $ 55,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Condor Insurance $ 90,000 * 2,938 $ 90,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
CSA Fraternal Life $ 30,000 * 979 $ 30,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Farmers Home Mutual Insurance $ 190,000 * 6,204 $ 190,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
42
Federated Rural Electric Ins. Corp $ 80,000 * 2,612 $ 80,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
First Mercury Insurance Company $ 240,000 * 7,836 $ 240,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Frontier Insurance Company $ 600,000 * 19,591 $ 600,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Goodville Mutual Casualty Company $ 15,000 * 489 $ 15,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Gopher State Mutual Association $ 70,000 * 2,285 $ 70,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Goschenhoppen-Home Insurance Co. $ 40,000 * 1,306 $ 40,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Grain Dealers Mutual Insurance $ 45,000 * 1,469 $ 45,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Guarantee Trust Life Insurance $ 395,000 * 12,897 $ 395,000
Company
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Illinois Founders Insurance $ 25,000 * 816 $ 25,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
43
Lone Star Life Ins. Co. $ 700,000 * 22,857 $ 700,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Medico Life Ins. Co. $ 400,000 * 13,061 $ 400,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Medmarc Insurance Company $ 310,000 * 10,122 $ 310,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Midwest Securities Life $ 55,000 * 1,795 $ 55,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Midwestern National Life Ins. Co. of $ 250,000 * 8,163 $ 250,000
Ohio
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Millers Casualty Ins. Co. of Texas $ 140,000 * 4,571 $ 140,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Miller Mutual Fire Ins. Co. of Texas $ 960,000 * 31,346 $ 960,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Millville Mutual Insurance Co. $ 60,000 * 1,959 $ 60,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Mutual Protective Insurance Company $ 400,000 * 13,061 $ 400,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
44
National Chiropractic $ 100,000 * 3,265 $ 100,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Old Guard Fire Insurance Company $ 60,000 * 1,959 $ 60,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Old Guard Insurance Company $ 110,000 * 3,591 $ 110,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Ozark National Life Insurance Company $ 265,000 * 8,653 $ 265,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Phico Insurance Company $ 120,000 * 3,918 $ 120,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Physicians Mutual Insurance Company $ 80,000 * 2,612 $ 80,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Pioneer Insurance Company $ 50,000 * 1,632 $ 50,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Police & Fireman's Ins. Association $ 45,000 * 1,469 $ 45,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Reliable Life Insurance Company $ 400,000 * 13,061 $ 400,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
45
Secura Insurance, A Mutual Company $ 220,000 * 7,183 $ 220,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Standard Mutual Insurance Company $ 70,000 * 2,285 $ 70,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Texas Builders $ 40,000 * 1,306 $ 40,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
TransGuard Insurance Company Inc. $ 530,000 * 17,306 $ 530,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
United National Insurance Company $ 1,330,000 * 43,428 $ 1,330,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
United Teachers Associates Ins. $ 990,000 * 32,326 $ 990,000
Company
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Washington International $ 225,000 * 7,346 $ 225,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Western Home Insurance Company $ 110,000 * 3,591 $ 110,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Westward Life Insurance Company $ 20,000 * 653 $ 20,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
46
Wisconsin Lawyers Mutual Ins. Co. $ 50,000 * 1,632 $ 50,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Wisconsin Mutual Insurance Company $ 55,000 * 1,795 $ 55,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
World Insurance Company $ 280,000 * 9,142 $ 280,000
c/o AAM Advisors Inc.
30 N. LaSalle, 36th Floor
Chicago, IL 60602
Salomon Brothers Investors Fund Inc. $ 2,550,000 * 83,265 $ 2,550,000
c/o Salomon Brothers Asset
Management Inc.
Seven World Trade Center - 38th Floor
New York, NY 10048
Salomon Brothers Total Return Fund $ 300,000 * 9,795 $ 300,000
c/o Salomon Brothers Asset
Management Inc.
Seven World Trade Center - 38th Floor
New York, NY 10048
Salomon Brothers Fund Inc. $ 7,100,000 1.3% 231,836 $ 7,100,000
c/o Salomon Brothers Asset
Management Inc.
Seven World Trade Center - 38th Floor
New York, NY 10048
Motors Insurance Corporation $ 2,750,000 * 89,795 $ 2,750,000
c/o Salomon Brothers Asset
Management Inc.
Seven World Trade Center - 38th Floor
New York, NY 10048
47
General Motors Hourly Rate Employees $ 19,000,000 3.5% 620,408 $19,000,000
Pension Plan/General Motors Retirement
Program for Salaried Employees
c/o Salomon Brothers Asset
Management Inc.
Seven World Trade Center - 38th Floor
New York, NY 10048
Employers Reinsurance Corporation $ 4,000,000 * 130,612 $ 4,000,000
c/o Salomon Brothers Asset
Management Inc.
Seven World Trade Center - 38th Floor
New York, NY 10048
Instituto de Resseguros Do Brasil $ 75,000 * 2,448 $ 75,000
c/o Salomon Brothers Asset
Management Inc.
Seven World Trade Center - 38th Floor
New York, NY 10048
Salomon Brothers Equity Arbitrage $ 3,000,000 * 97,959 $ 3,000,000
Finance Limited I
c/o Salomon Brothers Asset
Management Inc.
Seven World Trade Center - 38th Floor
New York, NY 10048
Salomon Brothers Diversified Arbitrage $ 600,000 * 19,591 $ 600,000
Strategies Fund Limited
c/o Salomon Brothers Asset
Management Inc.
Seven World Trade Center - 38th Floor
New York, NY 10048
Salomon Brothers Capital Fund Inc. $ 5,000,000 * 163,265 $ 5,000,000
c/o Salomon Brothers Asset
Management Inc.
Seven World Trade Center - 38th Floor
New York, NY 10048
48
American Investors Life Insurance $ 3,000,000 * 97,959 $ 3,000,000
Company, Inc.
c/o Salomon Brothers Asset
Management Inc.
Seven World Trade Center - 38th Floor
New York, NY 10048
Hudson River Trust Growth Investors $ 750,000 * 24,489 $ 750,000
c/o Alliance Capital Management
1345 Avenue of the Americas
40th Floor
New York, NY 10105
The Hotel Union - ILWU Pension Trust $ 110,000 * 3,591 $ 110,000
c/o Alliance Capital Management
1345 Avenue of the Americas
40th Floor
New York, NY 10105
Hudson River Trust Growth & Income $ 705,000 * 23,020 $ 705,000
Fund
c/o Alliance Capital Management
1345 Avenue of the Americas
40th Floor
New York, NY 10105
Equitable Life Assurance Separate $ 2,390,000 * 78,040 $ 2,390,000
Account Convertibles
c/o Alliance Capital Management
1345 Avenue of the Americas
40th Floor
New York, NY 10105
Memphis Light, Water & Gas $ 935,000 * 30,530 $ 935,000
Retirement Fund
c/o Alliance Capital Management
1345 Avenue of the Americas
40th Floor
New York, NY 10105
The Hotel Union & Industry of Hawaii $ 310,000 * 10,122 $ 310,000
c/o Alliance Capital Management
1345 Avenue of the Americas
40th Floor
New York, NY 10105
49
David Lipscomb University General $ 70,000 * 2,285 $ 70,000
Endowment
c/o Alliance Capital Management
1345 Avenue of the Americas
40th Floor
New York, NY 10105
The First Foundation $ 240,000 * 7,836 $ 240,000
c/o Alliance Capital Management
1345 Avenue of the Americas
40th Floor
New York, NY 10105
Columbia/HCA Money Purchase Plan $ 700,000 * 22,857 $ 700,000
c/o Alliance Capital Management
1345 Avenue of the Americas
40th Floor
New York, NY 10105
Equitable Life Assurance Separate $ 160,000 * 5,224 $ 160,000
Account Balanced
c/o Alliance Capital Management
1345 Avenue of the Americas
40th Floor
New York, NY 10105
Hudson River Trust Balanced Fund $ 935,000 * 30,530 $ 935,000
c/o Alliance Capital Management
1345 Avenue of the Americas
40th Floor
New York, NY 10105
Pacific Horizon Capital Income Fund $ 3,485,000 * 113,796 $ 3,485,000
c/o Bank of America Capital
Management
221 North Wall Street - Suite 522
Spokane, WA 99201-0826
Pacific Innovation Trust Capital Income $ 55,000 * 1,796 $ 55,000
Fund
c/o Bank of America Capital
Management
221 North Wall Street - Suite 522
Spokane, WA 99201-0826
50
Bank of America Convertible Securities $ 240,000 * 7,837 $ 240,000
Fund
c/o Bank of America Capital
Management
221 North Wall Street - Suite 522
Spokane, WA 99201-0826
Employee Benefit Convertible Fund $ 120,000 * 3,918 $ 120,000
c/o Bank of America Capital
Management
221 North Wall Street - Suite 522
Spokane, WA 99201-0826
Equity Income Fund $ 2,700,000 * 88,163 $ 2,700,000
c/o Bank of America Capital
Management
221 North Wall Street - Suite 522
Spokane, WA 99201-0826
Chrysler Corporation Master Retirement $ 2,000,000 * 65,306 $ 2,000,000
Trust
c/o Oaktree Capital Management, LLC
550 South Hope Street, 22nd Floor
Los Angeles, CA 90071
Unnamed Holders of Notes and Shares $224,295,000 40.7% 7,389,224 $224,295,000
------------ ----- --------- ------------
or any future transferees, pledgees,
donees or successors of or from any
such unnamed holder
Total $550,000,000 100% 17,959,205 $550,000,000
- ------------------------
* Less than 1.0%
(1) The information contained in this table reflects "beneficial" ownership
of the Common Stock within the meaning of Rule 13d-3 under the Exchange Act.
With respect to all holders listed in the table above who have not publicly
disclosed in filings with the Commission or otherwise furnished to the Company
information as to beneficial ownership of the Securities or information as to
contractual or legal arrangements in respect thereof, the Company has not
conducted any independent inquiry or investigation to ascertain such information
and has relied exclusively on written questionnaires furnished to the Company
for the express purpose of including the information set forth therein in this
Prospectus. Certain ownership information set forth in this table has been
updated subsequent to April 13, 1997 upon written instructions delivered to the
Company by certain of the Selling Securityholders.
51
(2) Includes shares of Common Stock issuable upon conversion of the Notes only.
Represents the number of shares of Common Stock into which the Notes listed for
such Selling Securityholder in this table are convertible as of the date of this
Prospectus.
The per share conversion price and, therefore, the number of Shares of
Common Stock issuable upon conversion of the Notes is subject to adjustment
under certain circumstances. Accordingly, the number of shares of Common Stock
issuable upon conversion of the Notes may increase or decrease. In addition, the
Selling Securityholders identified above may have sold, transferred or otherwise
disposed of all or a portion of their Notes since the date on which they
provided the information regarding their Notes, in transactions exempt from the
registration requirements of the Securities Act.
Because the Selling Securityholders may, pursuant to this Prospectus,
offer all or some portion of the Notes or Shares of Common Stock issuable upon
conversion of the Notes, no estimate can be given as to the amount of the Notes
or Shares of Common Stock that will be held by the Selling Securityholders upon
termination of any such sales.
52
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following general discussion summarizes certain of the material
U.S. federal income tax aspects of the acquisition, ownership and disposition of
the Notes or Common Stock. This discussion is a summary for general information
only and does not consider all aspects of U.S. federal income tax that may be
relevant to the purchase, ownership and disposition of the Notes or Common Stock
by a prospective investor in light of such investor's personal circumstances.
This discussion also does not address the U.S. federal income tax consequences
of ownership of Notes or Common Stock not held as capital assets within the
meaning of Section 1221 of the U.S. Internal Revenue Code of 1986, as amended
(the "Code"), or the U.S. federal income tax consequences to investors subject
to special treatment under the U.S. federal income tax laws, such as dealers in
securities or foreign currency, tax exempt entities, banks, thrifts, insurance
companies or other financial institutions, persons that hold the Notes or Common
Stock as part of a "straddle", a "hedge" against currency risk or a "conversion
transaction," persons that have a "functional currency" other than the U.S.
dollar, and investors in pass-through entities. Moreover, the effect of any
applicable state, local or foreign tax laws is not discussed.
This discussion is based upon the Code, existing and proposed
regulations thereunder, and current administrative rulings and court decisions.
All of the foregoing is subject to change, possibly on a retroactive basis, and
any such change could affect the continuing validity of this discussion.
PERSONS CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR OWN
TAX ADVISORS CONCERNING THE APPLICATION OF FEDERAL INCOME TAX LAWS, AS WELL AS
THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION, TO THEIR PARTICULAR
SITUATIONS.
U.S. HOLDERS
The following discussion is limited to the U.S. federal income tax
consequences relevant to a holder of a Note that is a U.S. Holder. A U.S. Holder
is defined as (i) a citizen or resident (as defined in Section 7701(b)(l) of the
Code) of the United States, (ii) a corporation organized in or under the laws of
the United States or any political subdivision thereof, (iii) any estate other
than a Foreign Estate, or (iv) a U.S. Trust. A "Foreign Estate" means an estate
the income of which is not includable in gross income for U.S. federal income
tax purposes because it is from sources outside the United States and is not
effectively connected with the conduct of a trade or business within the United
States. A trust is a U.S. Trust if such trust is subject to U.S. federal income
tax regardless of the source of its income. For taxable years beginning after
December 31, 1996 (or for taxable years ending after August 20, 1996, if the
trustee has made an application election), a trust is a U.S. Trust if a court
within the United States is able to exercise primary supervision over the
administration of such trust, and one or more United States fiduciaries have the
authority to control all decisions of such trust. Certain U.S. federal income
tax consequences relevant to a holder other than a U.S. Holder are discussed
separately below.
STATED INTEREST
The stated interest on a Note will be taxable to a U.S. Holder as
ordinary interest income either at the time it accrues or is received depending
upon such U.S. Holder's method of accounting for federal income tax purposes.
For this purpose, interest will be deemed to accrue without regard to conversion
of the Notes. If the Company fails to comply with certain provisions of the
Registration Rights Agreement then additional interest will become payable with
respect to the Notes. See "Description of Notes--Registration Rights." Assuming
that the contingency that the Company will pay such additional interest is
"remote and incidental" within the meaning of applicable Treasury regulations,
the Company believes that such additional interest will be taxable to U.S.
Holders at the time it accrues or is received in accordance with each such
holder's method of accounting.
53
MARKET DISCOUNT
Gain recognized on the disposition (including a redemption) by a
subsequent purchaser of a Note that has accrued market discount will be treated
as ordinary income, and not capital gain, to the extent of the accrued market
discount, provided that the amount of market discount exceeds a statutorily
defined de minimis amount. "Market discount" is defined as the excess, if any,
of (i) the stated redemption price at maturity over (ii) the tax basis of the
debt obligation in the hands of the holder immediately after its acquisition.
Under the de minimis exception, there is no market discount if the
excess of the stated redemption price at maturity of the obligation over the
holder's tax basis in the obligation is less than 0.25% of the stated redemption
price at maturity multiplied by the number of complete years after the
acquisition date to the Note's date of maturity. Unless a holder elects
otherwise, the accrued market discount would be the amount calculated by
multiplying the market discount by a fraction, the numerator of which is the
number of days the obligation has been held by a holder and the denominator of
which is the number of days after the holder's acquisition of the obligation up
to and including its maturity date.
If a U.S. Holder of a Note acquired at market discount disposes of
such Note in any transaction other than a sale, exchange or involuntary
conversion, even though otherwise non-taxable (e.g., a gift), such U.S. Holder
will be deemed to have realized an amount equal to the fair market value of the
Note and would be required to recognize as ordinary income any accrued market
discount to the extent of the deemed gain. A U.S. Holder of a Note acquired at a
market discount also may be required to defer the deduction of all or a portion
of the interest on any indebtedness incurred or maintained to carry the Note
until it is disposed of in a taxable transaction.
A U.S. Holder of a Note acquired at market discount may elect to
include the market discount in income as it accrues. This election would apply
to all market discount obligations acquired by the electing U.S. Holder on or
after the first day of the first taxable year to which the election applies. The
election may be revoked only with the consent of the U.S. Internal Revenue
Service (the "Service"). If a U.S. Holder of a Note so elects to include market
discount in income currently, the above-discussed rules with respect to ordinary
income recognition resulting from sales and certain other disposition
transactions and to deferral of interest deductions would not apply.
BOND PREMIUM
If a U.S. Holder purchases a Note at a cost that is in excess of the
amount payable on maturity (which will be determined by reference to an earlier
call date if the call price would reduce the amount of the premium) (such excess
being the "bond premium"), a U.S. Holder may elect under Section 171 of the Code
to amortize such bond premium on a constant interest basis over the period from
the acquisition date to the maturity date of such Note (or, in certain
circumstances, until an earlier call date) and, except as future Treasury
regulations may otherwise provide, reduce the amount of interest included in
income in respect of the Note by such amount. A U.S. Holder who elects to
amortize bond premium must reduce its adjusted basis in the Note by the amount
of such allowable amortization. An election to amortize bond premium would apply
to all amortizable bond premium on all taxable bonds held at or acquired after
the beginning of the U.S. Holder's taxable year as to which the election is
made, and may be revoked only with the consent of the Service. No amortization
is allowed for any premium attributable to the conversion feature of a Note.
If an election to amortize bond premium is not made, a U.S. Holder
must include the full amount of each interest payment in income in accordance
with its regular method of accounting and will generally receive a tax benefit
from the bond premium only upon computing its gain or loss upon the sale or
other disposition or payment of the principal amount of the Note.
54
TAX BASIS
A U.S. Holder's initial tax basis in a Note will be equal to the
purchase price paid by such U.S. Holder for such Note.
SALE OR REDEMPTION
Unless a nonrecognition provision applies, the sale, exchange,
redemption (including pursuant to an offer by the Company) or other disposition
of a Note will be a taxable event for federal income tax purposes. In such
event, a U.S. Holder will recognize gain or loss equal to the difference between
(i) the amount of cash plus the fair market value of any property received upon
such sale, exchange, redemption or other taxable disposition (other than in
respect of accrued and unpaid interest thereon) and (ii) the U.S. holder's
adjusted tax basis therein (other than any tax basis attributable to accrued and
unpaid interest). Subject to the discussion above under the caption "Market
Discount," such gain or loss should be capital gain or loss and will be long
term capital gain or loss if the Note had been held by the U.S. Holder for more
than one year at the time of such sale, exchange, redemption or other
disposition.
CONVERSION OF NOTE INTO COMMON STOCK
No gain or loss will be recognized for federal income tax purposes
on conversion of Notes solely into shares of Common Stock, except with respect
to any cash received in lieu of a fractional share or, in the case of both cash
and accrual basis taxpayers, any accrued interest not previously included in
income. To the extent the conversion is not treated as resulting in the payment
of interest, the tax basis for the shares of Common Stock received upon
conversion will be equal to the tax basis of the Notes converted into Common
Stock, and the holding period of the shares of Common Stock will include the
holding period of the Notes converted. Any accrued market discount not
previously included in income as of the date of the conversion of the Notes and
not recognized upon the conversion (e.g., as a result of the receipt of cash in
lieu of a fractional interest in a Note) should carry over to the Common Stock
received on conversion and be treated as ordinary income upon the subsequent
disposition of such Common Stock.
ADJUSTMENT OF CONVERSION PRICE
Section 305 of the Code treats as a distribution taxable as a
dividend (to the extent of the issuing corporation's current or accumulated
earnings and profits) certain actual or constructive distributions of stock with
respect to stock or convertible securities. Under Treasury regulations, an
adjustment in the conversion price, or the failure to make such an adjustment,
may, under certain circumstances be treated as a constructive dividend.
Generally, a U.S. Holder's tax basis in a Note will be increased by the amount
of any such constructive dividend.
55
BACK-UP WITHHOLDING
A U.S. Holder of Notes or Common Stock may be subject to "back-up
withholding" at a rate of 31% with respect to certain "reportable payments,"
including interest payments, dividend payments and, under certain circumstances,
principal payments on the Notes or proceeds from the disposition of Common
Stock. These back-up withholding rules apply if the U.S. Holder, among other
things, (i) fails to furnish a social security number or other taxpayer
identification number (TIN) certified under penalties of perjury within a
reasonable time after the request therefor, (ii) furnishes an incorrect TIN,
(iii) fails to report properly interest or dividends, or (iv) under certain
circumstances, fails to provide a certified statement, signed under penalties of
perjury, that the TIN furnished is the correct number and that such holder is
not subject to back-up withholding. A U.S. Holder who does not provide the
Company with its correct TIN also may be subject to penalties imposed by the
Service. Any amount withheld from a payment to a U.S. Holder under the back-up
withholding rules is creditable against the U.S. Holder's federal income tax
liability, provided the required information is furnished to the Service.
Back-up withholding will not apply, however, with respect to payments made to
certain holders, including corporations and tax exempt organizations, provided
their exemption from back-up withholding is properly established.
The Company will report to the U.S. Holders of Notes and Common
Stock and to the Service the amount of any "reportable payments" for each
calendar year and the amount of tax withheld, if any, with respect to such
payments.
NON-U.S. HOLDERS
The following discussion is limited to the U.S. federal income tax
consequences relevant to a Holder of a Note that is not a U.S. Holder, as
defined above ("Non-U.S. Holder").
For purposes of withholding tax on interest and dividends discussed
below, a non-resident alien or other non-resident fiduciary of an estate or
trust will be considered a Non-U.S. Holder. For purposes of the following
discussion, interest, dividends and gain on the sale exchange or other
disposition of a Note or Common Stock will be considered to be "U.S. trade or
business income" if such income or gain is (i) effectively connected with the
conduct of a U.S. trade or business or (ii) in the case of a treaty resident,
attributable to a permanent establishment (or, in the case of an individual, a
fixed base) in the United States.
STATED INTEREST
Generally any interest paid to a Non-U.S. Holder of a Note that is
not U.S. trade or business income will not be subject to U.S. tax if the
interest qualifies as "portfolio interest." Generally interest on the Notes will
qualify as portfolio interest if (i) the Non-U.S. Holder does not actually or
constructively own 10% or more of the total voting power of all voting stock of
the Company and is not a "controlled foreign corporation" with respect to which
the Company is a "related person" within the meaning of the Code, and (ii) the
beneficial owner, under penalty or perjury, certifies that the beneficial owner
is not a United States person and such certificate provides the beneficial
owner's name and address, and (iii) the Non-U.S. Holder is not a bank receiving
interest on an extension of credit made pursuant to a loan agreement made in the
ordinary course of its trade or business.
The gross amount of payments to a Non-U.S. Holder of interest that
do not qualify for the portfolio interest exception and that are not U.S. trade
or business income will be subject to U.S. federal income tax at the rate of
30%, unless a U.S. income tax treaty applies to reduce or eliminate withholding.
U.S. trade or business income will be taxed at regular U.S. rates rather than
the 30% gross rate. In the case of a Non-U.S. Holder that is a corporation, such
United States trade or business income may also be subject to the branch profits
tax (which is generally imposed on a foreign corporation on the actual or deemed
repatriation from the United States of earnings and profits attributable to
United States trade or business income) at a 30% rate. The branch profits tax
may not
56
apply (or may apply at a reduced rate) if a recipient is a qualified resident of
certain countries with which the United States has an income tax treaty. To
claim the benefit of a tax treaty or to claim exemption from withholding because
the income is U.S. trade or business income, the Non-U.S. Holder must provide a
properly executed Form 1001 or 4224 (or such successor forms as the Service
designates), as applicable, prior to the payment of interest. These forms must
be periodically updated. Under proposed regulations, the Forms 1001 and 4224
will be replaced by Form W-8. Also, under proposed regulations, a Non-U.S.
Holder who is claiming the benefits of a treaty may be required to obtain a U.S.
taxpayer identification number and to provide certain documentary evidence
issued by foreign governmental authorities to prove residence in the foreign
country. Certain special procedures are provided in the proposed regulations for
payments through qualified intermediaries.
DIVIDENDS
In general, dividends paid to a Non-U.S. Holder of Common Stock will
be subject to withholding of U.S. federal income tax at a 30% rate unless such
is reduced by an applicable income tax treaty. Dividends that are connected with
such holder's conduct of a trade or business in the United States (or U.S. trade
or business income) are generally subject to U.S. federal income tax at regular
rates, but are not generally subject to the 30% withholding tax if the Non-U.S.
Holder files the appropriate form with the payor, as discussed above. Any U.S.
trade or business income received by a Non-U.S. Holder that is a corporation may
also, under certain circumstances, be subject to an additional "branch profits
tax" at a 30% rate or such lower rate as may be applicable under an income tax
treaty. Dividends paid to an address in a foreign country generally are presumed
(absent actual knowledge to the contrary) to be paid to a resident of such
country for purposes of the withholding discussed above and for purposes of
determining the applicability of a tax treaty rate. Under proposed U.S. Treasury
regulations, not currently in effect, however, a Non-U.S. Holder of Common Stock
who wishes to claim the benefit of an applicable treaty rate would be required
to satisfy applicable certification and other requirements, which would include
the requirement that the Non-U.S. Holder file a form which contains the holder's
name and address or provides certain documentary evidence issued by foreign
governmental authorities to prove residence in the foreign country.
A Non-U.S. Holder of Common Stock that is eligible for a reduced
rate of U.S. withholding tax pursuant to an income treaty may obtain a refund of
any excess amounts currently withheld by filing an appropriate claim for a
refund with the Service.
CONVERSION
A Non-U.S. Holder generally will not be subject to U.S federal
income tax on the conversion of Notes into Common Stock, except with respect to
cash (if any) received in lieu of a fractional share or interest not previously
included in income. Cash in lieu of a fractional share may give rise to gain
that would be subject to the rules described below for the sale of Notes. Cash
or Common Stock treated as issued for accrued interest would be treated as
interest under the rules described above.
SALE, EXCHANGE OR REDEMPTION OF NOTES OR COMMON STOCK
Except as described below and subject to the discussion concerning
back-up withholding, any gain realized by a Non-U.S. Holder on the sale,
exchange or redemption of a Note or Common Stock generally will not be subject
to U.S. federal income tax, unless (i) such gain is U.S. trade or business
income, (ii) subject to certain exceptions, the Non-U.S. Holder is an individual
who holds the Note or Common Stock as a capital asset and is present in the
United States for 183 days or more in the taxable year of the disposition, (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 (including certain former citizens or
residents of the United States) and (iv) in the case of the disposition of
Common Stock, the Company has not been and does not become a U.S. real property
holding company.
57
FEDERAL ESTATE TAX
Notes held (or treated as held) by an individual who is not a
citizen or resident of the United States (for federal estate tax purposes) at
the time of his or her death will not be subject to U.S. federal estate tax
provided that the individual does not actually or constructively own 10% or more
of the total voting power of all voting stock of the Company and income on the
Notes was not U.S. trade or business income. Common Stock owned or treated as
owned by an individual who is not a citizen or resident of the United States
(for federal estate tax purposes) will be included in such individual's estate
for U.S. federal income tax purposes unless an applicable estate tax treaty
otherwise applies.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Company must report annually to the Service and to each Non-U.S.
Holder any interest or dividend that is subject to withholding, or that is
exempt from U.S. withholding tax pursuant to a tax treaty, or interest that is
exempt from U.S. tax under the portfolio interest exception. 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.
The Treasury regulations provide that backup withholding and
information reporting will not apply to payments of principal on the Notes or
Common Stock by the Company to a Non-U.S. Holder, if the Holder certifies as to
its non-U.S. status under penalties of perjury or otherwise establishes an
exemption (provided that neither the Company nor its paying agent has actual
knowledge that the holder is a United States person or that the conditions of
any other exemption are not, in fact, satisfied.)
The payment of the proceeds from the disposition of Notes or Common
Stock to or through the United States office of any broker, U.S. or foreign,
will be subject to information reporting and possible backup withholding unless
the owner certifies as its non-U.S. status under penalty of perjury or otherwise
establishes an exemption, provided that the broker does not have actual
knowledge that the Holder is a U.S. person or that the conditions of any other
exemption are not, in fact, satisfied. The payment of the proceeds from the
disposition of a Note to or through a non-U.S. office of a non-U.S. broker that
is not a U.S. related person will not be subject to information reporting or
backup withholding. For this purpose, a "U.S. related person" is (i) a
"controlled foreign corporation" for U.S. 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 United
States trade or business.
In the case of the payment of proceeds from the disposition of Notes
or Common Stock to or through a non-U.S. office of a broker that is either a
U.S. person or a U.S. related person, the regulations require information
reporting 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 knowledge to the
contrary. Backup withholding will not apply to payments made through foreign
offices of a broker that is not a U.S. person or a U.S. related person (absent
actual knowledge that the payee is a U.S. person).
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 U.S. federal income tax liability, provided that the
requisite procedures are followed.
58
THE COMPANY
The Company expects that interest on the Notes will be deductible for federal
income tax purposes. While it is possible that certain circumstances could occur
in the future that may limit the deductibility of such interest, the Company
does not presently believe that such conditions will arise.
THE PRECEDING DISCUSSION OF CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY,
EACH INVESTOR SHOULD CONSULT ITS OWN TAX ADVISER AS TO PARTICULAR TAX
CONSEQUENCES TO IT OF PURCHASING, HOLDING AND DISPOSING OF THE NOTES AND THE
COMMON STOCK OF THE COMPANY, INCLUDING THE APPLICABILITY AND EFFECT OF ANY
STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY PROPOSED CHANGES IN APPLICABLE
LAWS.
59
PLAN OF DISTRIBUTION
The Common Stock is listed on the NYSE under the symbol "CU". The
Rule 144A Notes have been designated for trading in the Private Offerings,
Resales and Trading through Automated Linkages (PORTAL) market of the National
Association of Securities Dealers, Inc. The Selling Securityholders have advised
the Company that the Securities may be sold from time to time by the Selling
Securityholders in transactions effected through the facilities of any national
securities exchange or U.S. automated interdealer quotation system of a
registered national securities association on which any of the Securities are
then listed, admitted to unlisted trading privileges or included for quotation,
in privately negotiated transactions or otherwise. The Securities also may be
sold in a single underwritten public offering if the holders of a majority of
the Registrable Securities so elect. See "Description of Notes-Registration
Rights." The Securities will be sold at prices and on terms then prevailing, at
prices related to the then-current market price of the Securities, or at
negotiated prices. The Company has been advised that the Selling Securityholders
may effect sales of the Securities directly, or indirectly by or through agents
or broker-dealers and that the Securities may be sold by one or more of the
following methods: (a) ordinary brokerage transactions, (b) purchases by a
broker-dealer as principal and resale by such broker-dealer for its own account
pursuant to this Prospectus, and (c) in "block" sale transactions. At the time a
particular offer is made, a Prospectus Supplement, if required, will be
distributed that sets forth the name or names of agents or broker-dealers, any
commissions, discounts, concessions or allowances and other terms constituting
selling compensation and any other required information. Moreover, in effecting
sales, broker-dealers engaged by any Selling Securityholder and/or the
purchasers of the Securities may arrange for other broker-dealers to participate
in the sale process. Broker- dealers will receive discounts, concessions,
allowances or commissions from the Selling Securityholders and/or the purchasers
of the Securities in amounts which will be negotiated prior to the time of sale.
Sales will be made only through broker-dealers registered as such in a subject
jurisdiction or in transactions exempt from such registration. The Company has
not been advised of any definitive selling arrangement at the date of this
Prospectus between any Selling Securityholder and any broker-dealer or agent.
In connection with the distribution of the Securities, certain of
the Selling Securityholders may enter into hedging transactions with
broker-dealers. In connection with such transactions, broker-dealers may engage
in short sales of the Securities in the course of hedging the positions they
assume with the Selling Securityholders. The Selling Securityholders may also
sell the Securities short and redeliver the Securities to close out the short
positions. The Selling Securityholders may also enter into option or other
transactions with broker-dealers which require the delivery of the Securities to
the broker-dealer. The Selling Securityholders may also loan or pledge the
Securities to a broker-dealer and the broker-dealer may sell the Securities so
loaned or, upon a default, the broker-dealer may effect sales of the pledged
shares. In addition to the foregoing, the Selling Security holders may from time
to time enter into other types of hedging transactions.
Any broker-dealer participating in any distribution of Securities in
connection with the offering made hereby may be deemed to be an "underwriter"
within the meaning of Section 2(11) of the Securities Act and may be required to
deliver a copy of this Prospectus, including a Prospectus Supplement, to any
person who purchases any of the Securities from or through such broker-dealer.
Under the Registration Rights Agreement, the Company is required to
comply with the requirements of Rule 144(c) under the Securities Act, as such
Rule may be amended from time to time (or any similar rule or regulation
hereafter adopted by the Commission), regarding the availability of current
public information to the extent required to enable the Selling Securityholders
to sell Securities without registration under the Securities Act pursuant to
Rule 144 (or any similar rule or regulation). In addition, the Company has
agreed to pay certain expenses incident to the filing of the Registration
Statement and maintaining its effectiveness for resales, from time to time, of
the Registrable Securities. The Selling Securityholders will be indemnified by
the Company against certain civil liabilities, including certain liabilities
under the Securities Act, or, to the extent such indemnification
60
is unavailable or otherwise limited, will be entitled to contribution in
connection therewith. The Company will not receive any of the proceeds from the
sale of the Securities by the Selling Securityholders.
VALIDITY OF SECURITIES
The validity of the Notes to be issued in the Offering is being
passed upon for the Company by Robert T. Tucker, Esq., Corporate Secretary of
the Company.
EXPERTS
The consolidated financial statements and schedule of the Company
appearing in the CUC 10-K incorporated by reference in this Prospectus 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 ended January 31, 1996 and 1995, is based in part on the reports of
Deloitte & Touche LLP, independent auditors of Sierra, KPMG Peat Marwick LLP,
independent auditors of Davidson, and Price Waterhouse LLP, independent
accountants of Ideon. The financial statements and schedule referred to above
are included 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, 1997 and 1996,
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 Form 10-Q for the period ended April 30, 1997,
incorporated herein by reference, states 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 the 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 financial statements of HFS and its consolidated subsidiaries,
except PHH Corporation ("PHH"), as of December 31, 1996 and 1995 and for each of
the three years in the period ended December 31, 1996, incorporated in this
Prospectus by reference from the CUC/HFS Proxy have been audited by Deloitte &
Touche LLP, as stated in their reports which are incorporated herein by
reference. The financial statements of PHH (consolidated with those of HFS) as
of December 31, 1996 and January 31, 1996 and for the year ended December 31,
1996 and each of the years in the two-year period ended January 31, 1996 have
been audited by KPMG Peat Marwick LLP, as stated in their report incorporated
herein by reference. Their report contains an explanatory paragraph that states
that PHH adopted the provisions of Statement of Financial Standards No. 122
"Accounting for Mortgage Service Rights" in the year ended January 31, 1996.
Such financial statements of HFS and its consolidated subsidiaries are
incorporated by reference herein in reliance upon the respective reports of such
firms given upon their authority as experts in accounting and auditing. All of
the foregoing firms are independent auditors.
The consolidated financial statements of Century 21 NORS as of and
for the year ended July 31, 1995, have been incorporated by reference herein
from the CUC/HFS Proxy in reliance upon the report dated January 12, 1995 of
White, Nelson & Co. LLP, independent certified public accountants, incorporated
by reference herein, given upon the authority of said firm as experts in
accounting and auditing.
The Independent Auditor's Report relating to the consolidated
financial statements of Century 21 Real Estate Inc. and subsidiaries as of and
for the years ended July 31, 1995, 1994 and 1993, has been incorporated by
reference herein from the CUC/HFS Proxy in reliance upon the report dated
September 25, 1995, of Tony H.
61
Davidson, CPA independent certified public accountant, incorporated by reference
herein, given upon the authority of said individual as experts in accounting and
auditing.
The consolidated balance sheets of Coldwell Banker Corporation
("Coldwell Banker") and subsidiaries as of December 31, 1995 and 1994 and the
related consolidated statements of operations, stockholders' equity (deficiency)
and cash flows for each of the two years in the period ended December 31, 1995,
have been incorporated by reference herein from the CUC/HFS Proxy in reliance
upon the report dated February 27, 1996 of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
The financial statements of Century 21 of Eastern Pennsylvania, Inc.
(an "S" corporation) as of and for the years ended April 30, 1995 and 1994, have
been incorporated by reference herein from the CUC/HFS Proxy in reliance upon
the report dated June 22, 1995 of Woolard, Krajnik & Company, LLP, independent
certified public accountants, incorporated by reference herein, given upon the
authority of said firm as experts in accounting and auditing.
The consolidated statements of operations, stockholders' equity and
cash flows for the three months ended December 31, 1993 and the consolidated
statements of operations and cash flows for the nine months ended September 30,
1993 of Coldwell Banker and subsidiaries (formerly Coldwell Banker Residential
Holding Company and subsidiaries) have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report which is incorporated herein
from the CUC/HFS Proxy 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.
The consolidated financial statements of Avis, Inc. as of February
29, 1996 and February 28, 1995 and for each of the three years in the period
ended February 29, 1996 incorporated in this Prospectus by reference to the
CUC/HFS Proxy have been so incorporated in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
The combined financial statements of Resort Condominiums
International, Inc. as of and for the year ended December 31, 1995, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
dated February 23, 1996, except for Notes 9 to 11, as to which the date is
February 7, 1997, and have been incorporated herein by reference from the
CUC/HFS Proxy. Such financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
62
- ----------------------------------------- ---------------------------------
- ----------------------------------------- ---------------------------------
No person has been authorized
in connection with the offering made
hereby 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 $550,000,000
as having been authorized. This CUC INTERNATIONAL INC.
Prospectus does not constitute an offer 3% CONVERTIBLE SUBORDINATED
to sell or the solicitation of an offer NOTES DUE FEBRUARY 15, 2002
to buy any securities other than the
securities to which it relates or an 17,959,205 SHARES OF
offer to sell or the solicitation of an COMMON STOCK
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 the information contained herein is PROSPECTUS
correct as of any time subsequent to the
date hereof --------------------------
----------- _____________ __, 1997
TABLE OF CONTENTS
PAGE
AVAILABLE INFORMATION.....................3
INCORPORATION OF CERTAIN INFORMATION BY
REFERENCE..............................3
SUMMARY...................................5
USE OF PROCEEDS..........................11
RATIO OF EARNINGS TO FIXED CHARGES.......11
DESCRIPTION OF NOTES.....................12
DESCRIPTION OF CAPITAL STOCK.............27
SELLING SECURITYHOLDERS..................29
CERTAIN UNITED STATES FEDERAL TAX
CONSIDERATIONS...........................53
PLAN OF DISTRIBUTION.....................60
VALIDITY OF SECURITIES...................61
EXPERTS..................................61
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Securities and Exchange Commission Registration Fee...... $166,666.67
*Accounting Fees and Expenses............................ 30,000.00
*Legal Fees and Expenses................................. 40,000.00
*Miscellaneous........................................... 7,500.00
------------
Total.................................................... $244,166.67
============
As noted in Part I of this Registration Statement under "Plan of Distribution",
the Company has agreed to bear certain costs incident to the registration of
Securities and maintaining the effectiveness thereof.
* Estimated for purposes of completing information required pursuant to this
Item 14.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law
(the "DGCL") 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 contains 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.
As permitted by Section 102(b)(7) of the DGCL, 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.
II-1
The Company maintains policies insuring its officers
and directors against certain civil liabilities, including liabilities under the
Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL SCHEDULES
(a) Exhibits
2.0 Agreement and Plan of Merger dated as of May 27, 1997,
between CUC International Inc. and HFS Incorporated
(incorporated herein by reference to Exhibit 2.1 to the
Company's Current Report on Form 8-K filed with the
Commission on May 29, 1997).*
4.0 Indenture dated as of February 11, 1997, between CUC
International Inc. and Marine Midland Bank, as trustee
(incorporated herein by reference to Exhibit 4(a) of the
Company's Current Report on Form 8-K filed with the
Commission on February 13, 1997).*
4.1 Registration Rights Agreement dated as of February 11,
1997, between CUC International Inc. and
Goldman, Sachs & Co. for itself and on behalf of the other
Purchasers party thereto (incorporated
herein by reference to Exhibit 4(b) to the Company's
Current Report on Form 8-K filed with the
Commission on February 13, 1997).*
5.0 Opinion of Robert T. Tucker, Esq.*
12.0 Ratio of Earnings to Fixed Charges.
15.0 Letter of Ernst & Young LLP relating to the Unaudited
Interim Financial Information of CUC International Inc.
23.1 Consent of Ernst & Young LLP relating to the audited
financial statements of CUC International Inc.
23.2 Consent of Deloitte & Touche LLP relating to the audited
financial statements of HFS Incorporated.
23.3 Consent of Deloitte & Touche LLP relating to the audited
financial statements of Sierra On-Line, Inc.
23.4 Consent of KPMG Peat Marwick LLP relating to the audited
financial statements of Davidson & Associates, Inc.
23.5 Consent of Price Waterhouse LLP relating to the audited
financial statements of Ideon Group, Inc.
23.6 Consent of White, Nelson & Co. LLP relating to the audited
financial statements of Century 21 Region V.
23.7 Consent of Tony H. Davidson, CPA relating to the audited
financial statements of Century 21 Real Estate, Inc.
23.8 Consent of Coopers & Lybrand L.L.P. relating to the audited
financial statements of Coldwell Banker Corporation.
23.9 Consent of Deloitte & Touche LLP relating to the audited
financial statements of Coldwell Banker Corporation.
23.10 Consent of Price Waterhouse LLP relating to the audited
financial statements of Avis, Inc.
23.11 Consent of Ernst & Young LLP relating to the audited
financial statements of Resort Condominiums International,
Inc.
23.12 Consent of KPMG Peat Marwick LLP relating to the audited
financial statements of PHH Corporation.
23.13 Consent of Woolard, Krajnik & Company, LLP relating to the
audited financial statements of Century 21 of Eastern
Pennsylvania, Inc.
23.14 Consent of Robert T. Tucker, Esq. (included in the opinion
filed as Exhibit 5.0).*
24.0 Power of Attorney*
25.0 Statement of Eligibility and Qualification of Marine
Midland Bank, as trustee, on Form T-1.*
- ----------------
* Previously filed.
II-2
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement. To include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act each such post-effective amendment 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.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement 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.
(c) Insofar as indemnification for liabilities arising under the Securities Act
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 Commission such indemnification is
against public policy as expressed in the Securities 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
registered, 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 Securities Act and will be governed by the final
adjudication of such issue.
(d) The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act of 1939 as amended in accordance
with the rules and regulations prescribed by the Commission under Section
305(b)(2) of such Act.
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 16th day of
September, 1997.
CUC INTERNATIONAL INC.
By: /s/ E. KIRK SHELTON
--------------------
E. Kirk Shelton
President
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 Chairman of the Board September 16, 1997
- ---------------------------------------
Walter A. Forbes (Principal Executive Officer)
* Senior Vice President and Chief Financial Officer September 16, 1997
- ---------------------------------------
Cosmo Corigliano (Principal Financial and Accounting Officer)
* Director September 16, 1997
- ---------------------------------------
Bartlett Burnap
* Director September 16, 1997
- ---------------------------------------
T. Barnes Donnelley
* Director September 16, 1997
- ---------------------------------------
Stephen A. Greyser
* Director September 16, 1997
- ---------------------------------------
Christopher K. McLeod
* Director September 16, 1997
- ---------------------------------------
Burton C. Perfit
* Director September 16, 1997
- ---------------------------------------
Robert P. Rittereiser
* Director September 16, 1997
- ---------------------------------------
Stanley M. Rumbough, Jr.
/s/ E. KIRK SHELTON Director September 16, 1997
- ---------------------------------------
E. Kirk Shelton
* Director September 16, 1997
- ---------------------------------------
Kenneth A. Williams
- -----------------------
*By E. Kirk Shelton,
as attorney-in-fact
/s/ E. KIRK SHELTON September 16, 1997
- ---------------------------------------
E. Kirk Shelton,
as attorney-in-fact
II-4
INDEX TO EXHIBITS
Exhibit
- -------
12.0 Ratio of Earnings to Fixed Charges.
15.0 Letter of Ernst & Young LLP relating to Unaudited
Interim Financial Information of CUC
International Inc.
23.1 Consent of Ernst & Young LLP relating to the
audited financial statements of CUC International
Inc.
23.2 Consent of Deloitte & Touche LLP relating to the
audited financial statements of HFS Incorporated.
23.3 Consent of Deloitte & Touche LLP relating to the
audited financial statements of Sierra On-Line,
Inc.
23.4 Consent of KPMG Peat Marwick LLP relating to the
audited financial statements of Davidson &
Associates, Inc.
23.5 Consent of Price Waterhouse LLP relating to the
audited financial statements
of Ideon Group, Inc.
23.6 Consent of White, Nelson & Co. LLP relating to
the audited financial statements of Century 21
Region V.
23.7 Consent of Tony H. Davidson, CPA relating to the
audited financial statements
of Century 21 Real Estate, Inc.
23.8 Consent of Coopers & Lybrand L.L.P. relating to
the audited financial statements of Coldwell
Banker Corporation.
23.9 Consent of Deloitte & Touche LLP relating to the
audited financial statements of Coldwell Banker
Corporation.
23.10 Consent of Price Waterhouse LLP relating to the
audited financial statements of Avis, Inc.
23.11 Consent of Ernst & Young LLP relating to the
audited financial statements of
Resort Condominiums International, Inc.
23.12 Consent of KPMG Peat Marwick LLP relating to the
audited financial statements of PHH Corporation.
23.13 Consent of Woolard, Krajnik & Company, LLP
relating to the audited financial statements of
Century 21 of Eastern Pennsylvania, Inc.
II-5
EXHIBIT 12.0
Ratio of Earnings to Fixed Charges
(amounts in thousands, except ratios)
Six
Months
July 31, Year Ended January 31,
------------------------------------------------------------------------
1997 1997 1996 1995 1994 1993
Income from continuing
operations before $263,281 $276,241 $235,312 $256,931 $198,319 $117,434
income taxes
Add:
Interest expense 10,862 6,251 7,409 6,536 5,105 7,298
interest factor in rent 6,800 13,200 12,533 9,233 8,000 4,337
$280,943 $295,692 $255,254 $272,700 $211,424 $129,069
Interest expense $ 10,862 $ 6,251 $ 7,409 $ 6,536 $ 5,105 $ 7,298
Interest factor in rent 6,800 13,200 12,533 9,233 8,000 4,337
$ 17,662 $ 19,451 $ 19,942 $ 15,769 $ 13,105 $ 11,635
Ratio of earnings to fixed 16.08x 15.20x 12.80x 17.29x 16.13x 11.09x
charges
EXHIBIT 15.0
LETTER RE: UNAUDITED INTERIM FINANCIAL INFORMATION
September 15, 1997
Shareholders and Board of Directors
CUC International Inc.
We are aware of the incorporation by reference in the Registration Statement
(Form S-3) and related Prospectus of CUC International Inc. ("Company") for the
registration of up to 17,959,205 shares of its common stock in connection with
the Company's 3% Convertible Subordinated Notes of our report dated June 13,
1997 relating to the unaudited condensed consolidated interim financial
statements of CUC International Inc. that is included in its Quarterly Report on
Form 10-Q for the quarter ended April 30, 1997.
Pursuant to Rule 436(c) of the Securities Act of 1933 our report is 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.
ERNST & YOUNG LLP
Stamford, Connecticut
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of CUC International
Inc. ("Company") for the registration of up to 17,959,205 shares of its common
stock in connection with the Company's 3% Convertible Subordinated Notes and to
the incorporation by reference therein of our report dated March 10, 1997, with
respect to the consolidated financial statements and schedule of CUC
International Inc. included in its Annual Report (Form 10-K) for the year ended
January 31, 1997, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Stamford, Connecticut
September 15, 1997
EXHIBIT 23.2
Independent Auditors' Consent
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333- 23063 of CUC International Inc. on Form S-3 of
our report dated March 31, 1997 (May 27, 1997 as to Note 2a, April 30, 1997 as
to Note 2b) appearing in the HFS Incorporated Current Report on Form 8-K dated
July 16, 1997 and incorporated by reference in the Joint Proxy Statement of CUC
International Inc. and HFS Incorporated on Schedule 14A filed on August 28,
1997, and to the reference to us under the heading "Experts" in the Prospectus,
which is part of this Registration Statement.
Deloitte & Touche LLP
Parsippany, New Jersey
September 12, 1997
EXHIBIT 23.3
Independent Auditors' Consent
We consent to the incorporation by reference in Amendment No. 1 of Registration
Statement No. 333-23063 of CUC International Inc. on Form S-3 of our report
dated June 24, 1996 relating to the consolidated balance sheet of Sierra
On-Line, Inc. and subsidiaries for the year ended March 31, 1996 and the
consolidated statements of operations, stockholders' equity, and cash flows for
the two years ended March 31, 1996 (not presented separately therein), and, to
the reference to us under the heading "Experts" in the Prospectus, which is part
of this Registration Statement.
Deloitte & Touche LLP
Seattle, Washington
September 12, 1997
EXHIBIT 23.4
Consent of Independent Auditors
The Board of Directors
Davidson & Associates, Inc.
We consent to the use of our report incorporated herein by reference with
respect to the consolidated balance sheet of Davidson & Associates, Inc. and
subsidiaries as of December 31, 1995 and the related consolidated statements of
earnings, shareholders' equity, and cash flows and related schedule for each of
the years in the two-year period ended December 31, 1995, and to the reference
to our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
Long Beach, California
September 12, 1997
EXHIBIT 23.5
Consent of Independent Certified Public Accountants
We hereby consent to the incorporation by reference in the Prospectus
constitution part of the Registration Statement on Amendment No. 1 to Form S-3
(No. 333-23063) of CUC International Inc. of our report dated February 2, 1996,
relating to the consolidated financial statements of Ideon Group, Inc., which
appears in the Annual Report on Form 10-K of CUC International Inc. for the year
ended January 31, 1997. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Tampa, Florida
September 15, 1997
EXHIBIT 23.6
Independent Auditors' Consent
We consent to the incorporation by reference in this Registration Statement of
CUC International Inc. on Form S-3 of our report dated January 12, 1996, related
to the consolidated financial statements of Century 21 Region V (Business
Acquired By HFS Incorporated) as of and for the year ended July 31, 1995,
included in the HFS Incorporated Current Report on Form 8-K, as amended, dated
February 16, 1996, and incorporated by reference in the Joint Proxy Statement of
CUC International Inc. and HFS Incorporated on Schedule 14A filed on August 28,
1997, and to the reference to us under the heading "Experts" in the Prospectus,
which is part of this Registration Statement.
White, Nelson & Co. LLP
Anaheim, California
September 12, 1997
EXHIBIT 23.7
Independent Auditors' Consent
I consent to the incorporation by reference in this Registration Statement of
CUC International Inc. on Form S-3 of my report dated September 25, 1995 related
to the consolidated balance sheet of Century 21 Real Estate, Inc. and
subsidiaries as of July 31, 1995, 1994 and 1993 and the related statements of
income and retained earnings and cash flows for the years then ended included in
the HFS Incorporated Current Report on Form 8-K, as amended, dated February 16,
1996 and incorporated by reference in the Joint Proxy Statement of CUC
International Inc. and HFS Incorporated on Schedule 14A filed on August 28,
1997, and to the reference to me under the heading "Experts" in the Prospectus,
which is part of this registration statement.
Tony H. Davidson, CPA
Lake Oswego, Oregon
September 12, 1997
EXHIBIT 23.8
Consent of Independent Accountants
We consent to the incorporation by reference in this Registration Statement of
CUC International Inc. on Form S-3, as amended, of our report dated February 27,
1996 related to the consolidated financial statements of Coldwell Banker
Corporation and Subsidiaries as of December 31, 1995 and 1994, and for each of
the two years in the period ended December 31, 1995, incorporated by reference
in the Joint Proxy Statement/Prospectus of CUC International Inc. on Schedule
14A, dated August 28, 1997, and included in the HFS Incorporated Current Report
on Form 8-K/A dated May 8, 1996 (filed on or about March 21, 1997) and to the
reference to us under the heading "Experts" in this Prospectus, which is part of
this Registration Statement.
Coopers & Lybrand L.L.P.
Newport Beach, California
September 12, 1997
EXHIBIT 23.9
Independent Auditors' Consent
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333- 23063 of CUC International Inc. on Form S-3 of
our report dated March 11, 1994, related to the consolidated statements of
operations, stockholders' equity and cash flows for the three months ended
December 31, 1993 and the consolidated statements of operations and cash flows
for the nine months ended September 30, 1993 of Coldwell Banker Corporation and
subsidiaries (formerly Coldwell Banker Residential Holding Company and
subsidiaries) included in the HFS Incorporated Current Report on Form 8-K, as
amended, dated May 8, 1996 and incorporated by reference in the Joint Proxy
Statement of CUC International Inc. and HFS Incorporated on Schedule 14A filed
on August 28, 1997 and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
Deloitte & Touche LLP
Costa Mesa, California
September 12, 1997
EXHIBIT 23.10
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of CUC
International, Inc. of our report dated April 25, 1996, relating to the
financial statements of Avis, Inc. appearing in HFS Incorporated's Current
Report on Form 8-K, dated August 29, 1996, as amended (Form 8-K). The Form 8-K
is incorporated by reference in the Joint Proxy Statement/Prospectus of CUC
International and HFS Incorporated dated August 28, 1997. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Stamford, Connecticut
September 15, 1997
EXHIBIT 23.11
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of CUC International
Inc. ("Company") for the registration of up to 17,959,205 shares of its common
stock in connection with the Company's 3% Convertible Subordinated Notes and to
the incorporation by reference therein of our report dated February 23, 1996
(except notes 9-11, as to which the date is February 7, 1997), with respect to
the combined financial statements of Resort Condominiums International, Inc.,
its affiliates and subsidiaries for the year ended December 31, 1995, included
in the Current Report on Form 8-K/A of HFS Incorporated dated March 27, 1997,
filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Indianapolis, Indiana
September 15, 1997
EXHIBIT 23.12
Consent of Independent Auditors
The Board of Directors
PHH Corporation
We consent to the incorporation by reference in this Registration Statement of
CUC International Inc. ("CUC") on Form S-3 (No. 333-23063) of our report dated
April 30, 1997, with respect to the consolidated balance sheets of PHH
Corporation and subsidiaries (the "Company") at December 31, 1996 and January
31, 1996 and the related consolidated statements of income, stockholders'
equity, and cash flows for the year ended December 31, 1996 and each of the
years in the two year period ended January 31, 1996, which report appears in the
Form 8-K of HFS Incorporated dated July 16, 1997. We also consent to the
reference to our firm under the heading "Experts" in the Registration Statement.
Our report contains an explanatory paragraph that states the Company adopted the
provisions of Statement of Financial Accounting Standards No. 122, "Accounting
for Mortgage Servicing Rights," in the year ended January 31, 1996.
KPMG Peat Marwick LLP
Baltimore, Maryland
September 12, 1997
EXHIBIT 23.13
Independent Auditors' Consent
We consent to the incorporation by reference in the Registration Statement of
CUC INTERNATIONAL INC. on Form S-3 of our report dated June 22, 1995 (except for
Note 13, as to which the date is October 12, 1995), related to the financial
statements of Century 21 of Eastern Pennsylvania Inc. as of and for the years
ended April 30, 1995 and 1994, included in HFS Incorporated's Current Report on
Form 8-K dated February 16, 1996, and incorporated by reference in the Joint
Proxy Statement of CUC International Inc. and HFS Incorporated on Schedule 14A
filed on August 28, 1997, and to the reference to us under the heading "Experts"
in the Prospectus, which is part of the Registration Statement.
WOOLARD, KRAJNIK & COMPANY, LLP
Exton, Pennsylvania
September 12, 1997
