As filed with the Securities and Exchange Commission on March 10, 1997
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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. [_]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE(1)
==================================================================================================================================
Proposed Maximum Proposed Maximum
Title of Each Class of Securities to be Amount to be Offering Price Aggregate Offering Amount of Registration
Registered Registered Per Unit (1) Price (1) Fee
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
3% Convertible Subordinated Notes Due $550,000,000 100% $550,000,000 $166,666.67
February 15, 2002
- ----------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.01 per share 17,959,205(2) - - -
==================================================================================================================================
<FN>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(i) under the Securities Act of 1933, as amended (the
"Securities Act").
(2) Such number represents the maximum number of shares of underlying Common
Stock that are issuable upon conversion of the 3% Convertible Subordinated
Notes Due February 15, 2002 registered hereby.
</FN>
</TABLE>
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act or until the Registration Statement shall become effective on
such date as the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
================================================================================
<PAGE>
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.
SUBJECT TO COMPLETION, DATED MARCH 10, 1997
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 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 on or after May 12, 1997 and 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. 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
<PAGE>
"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 March 6, 1997 was $23-3/8 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.
<PAGE>
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, 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.
3
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents (and the amendments thereto) filed by the
Company (File No. 1-10308) with the Commission pursuant to the Exchange Act are
incorporated herein by reference and are made a part hereof:
(i) The Company's Annual Report on Form 10-K for its fiscal
year ended January 31, 1996 (the "CUC 10-K"), filed with the Commission on April
26, 1996;
(ii) The Company's Quarterly Report on Form 10-Q for its
fiscal quarter ended April 30, 1996, filed with the Commission on June 14, 1996;
(iii) The Company's Quarterly Report on Form 10-Q for its
fiscal quarter ended July 31, 1996, filed with the Commission on September 16,
1996;
(iv) The Company's Quarterly Report on Form 10-Q for its
fiscal quarter ended October 31, 1996 filed with the Commission on December 13,
1996;
(v) The Company's Current Reports on Form 8-K, filed with the
Commission on February 21, 1996, February 22, 1996, March 12, 1996, April 22,
1996, August 5, 1996, August 14, 1996, September 17, 1996, September 19, 1996,
September 26, 1996, October 7, 1996, October 28, 1996, January 22, 1997, January
31, 1997, February 4, 1997, February 13, 1997 and February 26, 1997; and
(vi) The description of the Common Stock contained in the
Company's Registration Statements on Form 8-A, filed with the Commission on July
27, 1984 and August 15, 1989, including any amendment or report filed for the
purposes of updating such description.
All documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and prior
to the termination of the offering made hereby shall be deemed to be
incorporated herein by reference and to be a part hereof on and from the date of
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference in this Prospectus shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or incorporated herein by reference or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein modified or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
Copies of all documents incorporated by reference, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into such documents), will be provided without charge to each
person, including any beneficial owner, to whom a copy of this Prospectus has
been delivered upon the written or oral request of such person. Requests for
such copies should be directed to the Company, 707 Summer Street, Stamford,
Connecticut 06901, Attention: Secretary, telephone: (203) 324-9261.
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
<PAGE>
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
GENERAL
The Company is a leading technology-driven, membership-based consumer
services company that provides more than 63.8 million customers worldwide with
access to home shopping, travel, insurance, automobile, dining, home
improvement, lifestyle club, checking account enhancement and discount coupon
programs. Together with leading banks, retailers, oil companies, credit unions,
charitable organizations and other institutions, the Company offers significant
cost savings and convenience shopping for a wide array of high-quality consumer
goods and services.
The Company's goal is to be the leading consumer services content
provider as well as to broaden its membership base through untapped distribution
channels, global expansion and the interactive marketplace. Management believes
that the Company is uniquely positioned to lead in the expanding interactive
marketplace by combining its existing direct marketing expertise with exciting
new electronic media. During the Company's fiscal year ended January 31, 1997
("Fiscal 1997"), the Company completed the acquisitions of two interactive media
companies: Davidson & Associates, Inc. ("Davidson") and Sierra On-Line, Inc.
("Sierra"). See "-Fiscal 1997 Transactions".
Membership-Based Consumer Services. The Company's core business is
providing consumer services through individual, wholesale and discount program
memberships ("memberships"). Individual memberships, whereby members pay
directly for services and the Company pays the associated marketing costs,
include Shoppers Advantage(R), Travelers Advantage(R), AutoVantage(R) and
insurance products. Individual membership fees generally range between $10 and
$250 per year. Wholesale memberships include enhancement packages sold through
banks and credit unions, and insurance products sold through credit unions, for
which the Company acts as a third- party administrator. The fees for these
memberships generally range between $6 and $50 per year. Discount Program
memberships, which are sold primarily through fundraising institutions,
merchant-sponsored or general advertising, include the Entertainment(R) and Gold
C(R) coupon book programs. Fees for these memberships generally range from $10
to $50 per year.
Distribution Channels. The Company markets its memberships through a
variety of distribution channels. The Company reaches consumers through
financial institutions or other organizations (by direct marketing or direct
sales force), merchant-sponsored or general advertising, and fundraising
institutions such as schools and charitable organizations.
5
<PAGE>
Interactive Media. As discussed below under "-Fiscal 1997
Transactions", the Company recently completed the acquisitions of Davidson and
Sierra.
Davidson and Sierra develop, publish, manufacture and distribute
high-quality educational/entertainment (or "entertainment") and personal
productivity (or "how to") interactive multimedia products for home and school
use. These products incorporate characters, themes, sound, graphics, music and
speech in ways that the Company believes are engaging to the user, and are
designed for multimedia PC's, including CD-ROM-based PC systems, and selected
emerging platforms. Davidson's and Sierra's products are offered through a
variety of distribution channels, including specialty retailers, mass
merchandisers, discounters and schools.
GROWTH STRATEGY
Management anticipates that the Company's continued growth will derive
from:
o Building its Core Business. Management intends to access new distribution
channels, develop new services and enhance existing services. For example, the
Company recently introduced its "Transfer Plus" program through which its
services are cross-marketed to customers of other providers that offer products
and services which complement those offered by the Company. Using this new
distribution channel, a hotel chain, for example, can "transfer" a customer who
has made a hotel reservation by telephone to a marketing representative of the
Company who, in turn, markets CUC's discount travel services to that consumer.
Examples of new and enhanced services recently introduced by the Company include
the Gardening Club (through which consumers gain access to a variety of
gardening information and purchasing discounts) and Entertainment Gold (an
enhanced version of the Company's traditional Entertainment product).
o Acquiring Complementary Businesses. The Company has completed multiple
acquisitions in recent years. Management intends to continue to aggressively
pursue the Company's expansion through the selective acquisition of
complementary businesses. Such acquisitions enable the Company to offer
additional services (such as the hunting, fishing, gardening and other lifestyle
club memberships offered by North American Outdoor Group, Inc.) and acquire new
distribution channels (such as the "new mover" distribution channel acquired
through the Company's acquisitions of Welcome Wagon International, Inc. and
Getko Group Inc.). More recently, the Company acquired Ideon Group, Inc.
("Ideon"), which strengthened the Company's existing credit card registration
and loss notification services. See "-Fiscal 1997 Transactions".
o Expanding Internationally. The Company plans to continue the rapid expansion
of its business outside of the United States. In Europe, for example, five major
European banks currently participate in the Company's enhancement business
(representing access to more than 15 million consumers) and the Company has
continued to develop relationships with other major European financial
institutions, and to market additional services to these institutions. The
Company is also expanding in Japan and other Asian countries.
o Developing Interactive Media Channels. Management believes that the ability to
deliver its services via interactive multimedia channels (e.g., the Internet,
consumer online services, interactive television and other emerging channels)
represents a significant opportunity. Members who access the Company's services
by interactive media channels renew memberships at higher rates and are less
costly to service than those members who access by telephone. Management
endeavors to position the Company's services to make
6
<PAGE>
them accessible through a wide range of interactive media. Management plans to
create a single, all-encompassing Web site that will enable consumers to access
the Company's consumer services.
FISCAL 1997 TRANSACTIONS
Davidson Acquisition. On July 24, 1996, the Company acquired all of the
outstanding capital stock of Davidson for a purchase price of approximately $1.0
billion (the "Davidson Acquisition"). Pursuant to the Davidson Acquisition,
approximately 45.1 million shares of Common Stock were issued to the former
holders of Davidson common stock. The Davidson Acquisition was accounted for as
a pooling-of-interests.
Sierra Acquisition. In addition, on July 24, 1996, the Company acquired
all of the outstanding capital stock of Sierra for a purchase price of
approximately $858.0 million (the "Sierra Acquisition"). Pursuant to the Sierra
Acquisition, approximately 38.4 million shares of Common Stock were issued to
the former holders of Sierra common stock. The Sierra Acquisition was accounted
for as a pooling-of-interests.
Ideon Acquisition. On August 7, 1996, the Company acquired all of the
outstanding capital stock of Ideon for a purchase price of approximately $393.0
million (the "Ideon Acquisition"). Pursuant to the Ideon Acquisition,
approximately 16.6 million shares of Common Stock were issued to the former
holders of Ideon common stock. The Ideon Acquisition was accounted for as a
pooling-of-interests. Ideon is a holding company with three principal business
units: SafeCard Services, Incorporated ("SafeCard"), Wright Express Corporation
("Wright Express") and National Leisure Group, Inc. ("NLG"). SafeCard, which is
the largest subsidiary of Ideon, is a provider of credit card enhancement and
continuity products and services. Wright Express is a provider of information
processing, information management and financial services to commercial car, van
and truck fleets in the United States. NLG is a provider of vacation travel
packages and cruises directly to consumers in association with established
retailers and warehouse clubs throughout New England, New York and New Jersey
and with credit card issuers and travel club members nationwide.
-----------
The Company's principal executive offices are located at 707 Summer
Street, Stamford, Connecticut 06901, and its telephone number is (203) 324-9261.
7
<PAGE>
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
on or after May 12, 1997, 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
8
<PAGE>
Notes in the United States to
"qualified institutional 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."
9
<PAGE>
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).
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
encumbering its properties and
assets or to make payments and
distributions on account of its
equity securities.
Registration Rights....................... The Company has agreed to file the
Registration Statement in respect of
the Notes and the Common Stock
issuable upon the conversion thereof
pursuant to the Registration Rights
Agreement. Upon the failure by the
Company to comply with certain of
its obligations under such
agreements, additional interest with
respect to the Notes will be
payable. 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
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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.
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USE OF PROCEEDS
The Securities are being offered hereby solely for the accounts of the
Selling Securityholders 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."
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<PAGE>
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.
Additional interest may be payable on the Notes in the amounts and under the
circumstances described under "-Registration Rights" below.
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 after May 12, 1997 and 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, 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
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<PAGE>
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").
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<PAGE>
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.
15
<PAGE>
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 Notes 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.
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<PAGE>
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
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<PAGE>
other office or agency of the Company maintained for such purpose, in U.S.
currency by dollar check or 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 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 has agreed for the benefit of the Holders of Notes (and the holders
of record of the Common Stock issued upon conversion thereof) that, at its
expense, it will (i) file the Registration Statement with the Commission not
later than May 12, 1997 with respect to the resale, from time to time, of the
Notes and the Common Stock issuable upon conversion thereof (collectively, the
"Registrable Securities"), (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, 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
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<PAGE>
of the Company determines in good faith that it is in the best interests of the
Company to suspend such use and the Company provides the Holders with written
notice of such suspension.
If (i) on or prior to May 12, 1997, the Registration Statement has not
been filed with the Commission, or (ii) on or prior to August 10, 1997, such
Registration Statement is not declared effective by the Commission (each, a
"Registration Default"), additional interest will accrue on the Notes from and
including the day on which such Registration Default first occurs to but
excluding the day on which such Registration Default is cured. Any such
additional interest will be paid semi-annually in arrears, with the first
semi-annual payment due on the first Interest Payment Date in respect of the
Notes following the date on which such additional interest begins to accrue, and
will accrue at a rate per annum equal to an additional one-quarter of one
percent (0.25%) of the principal amount of the Notes to and including the 90th
day following the day on which such Registration Default first occurs, which
rate will increase to one-half of one percent (0.50%) from and after the day
after such 90th day. If the Registration Statement ceases to be effective or the
Company suspends the use of this Prospectus that is part of the Registration
Statement (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 will increase by an additional one-quarter of one
percent (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 day on
which the Registration Statement thereafter becomes effective or this Prospectus
becomes available for use. The Company will have 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 shall not 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
shall be deemed also to refer to any additional interest that may be payable as
described in this paragraph.
The Company has agreed to give notice of its intention to make such
filing (the "Filing Notice") to each of the Holders of the Notes in the same
manner as the Company would give notice to Holders of Notes under the Indenture.
Such notice shall seek, among other things, a determination from each of such
Holders as to whether such Holder elects to have its Notes and the Common Stock
issuable on conversion thereof registered for sale pursuant to the Registration
Statement.
Any beneficial owner who so elects to register securities for sale
pursuant to the Registration Statement will be required to be named as a selling
security holder in this Prospectus, may be required to deliver this Prospectus
to purchasers in connection with such sales, will be subject to certain civil
liability provisions under the Securities Act in connection with such sales and
will be bound by the provisions of the Registration Rights Agreement which are
applicable to a beneficial owner making such election (including certain
indemnification provisions as described below).
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
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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 holders 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 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 beginning on or after May 12, 1997
and 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
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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 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
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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 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".
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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 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.
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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.
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, 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
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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 total voting power of all shares of capital stock entitled to
vote generally in the election of directors 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 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.
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.
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
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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 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
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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.
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.
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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"). Sierra, the Company's wholly-owned
subsidiary, also had outstanding as of March 4, 1997 approximately $24.0 million
aggregate principal amount of its 61/2% Convertible Subordinated Notes due 2001
(the "61/2% Convertible Subordinated Notes").
COMMON STOCK
As of March 4, 1997, there were outstanding approximately 403.6 million
shares of Common Stock and approximately 8,746 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 March 4, 1997, were convertible into an aggregate of approximately 3.1
million shares of Common Stock, the Notes which, as of March 4, 1997, were
convertible into an aggregate of 17,959,205 shares of Common Stock, the
approximately 48.3 million shares of Common Stock reserved by the Company for
issuance as of March 4, 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 March 4, 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.
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
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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 contain such an election. A "business combination"
includes mergers, sales of assets and other transactions resulting
29
<PAGE>
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
Each of the Selling Securityholders listed below is 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 beneficially owned by each Selling Securityholder. Such information
has been obtained from the Selling Securityholders or such other sources as the
Company deems reliable. [To the Company's knowledge and except as otherwise
disclosed herein, 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 predecessors or 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
30
<PAGE>
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.
The Securities are being registered hereby to permit secondary trading of the
Securities without restriction under the Securities Act. See "Plan of
Distribution."
31
<PAGE>
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP PRINCIPAL
AT MARCH , 1997(1) NUMBER AMOUNT
--------------------------------------------------------------
PERCENT- OF SHARES OF NOTES
PRINCIPAL AGE OF PERCENT- COVERED COVERED
NUMBER OF AMOUNT COMMON AGE OF BY THIS BY THIS
SELLING SECURITYHOLDERS SHARES(2) OF NOTES STOCK(3) NOTES PROSPECTUS(2) PROSPECTUS
- ----------------------- --------- --------- ----------- ------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
American National Banking $ 30,000 * 980 $30,000
& Trust Company of Chicago
c/o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717
Bank of New York (The) 49,020,000 8.9% 1,600,655 49,020,000
925 Patterson Plank Rd.
Secaucus, NJ 07094
Bankers Trust Company 16,870,000 3.1 550,858 16,870,000
c/o BT Services Tennessee, Inc.
Custody Services
648 Grassmere Park Road
Nashville, TN 37211
Bear Stearns 9,480,000 1.7 309,551 9,480,000
c/o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717
Bank One Trust Company, N.A./DBII 20,000 * 653 20,000
235 West Schrock Road
Brooksedge, VIII
Westerville, OH 43081-0393
Bank One Trust Company N.A. 800,000 * 26,122 800,000
235 West Schrock Road
Westerville, OH 43081-0393
Boatmen's Trust Company 1,724,000 * 56,294 1,724,000
100 N. Broadway
St. Louis, MO 63102
Boston Safe Deposit & Trust Co. 54,860,000 10.0 1,791,349 54,860,000
c/o Mellon Bank N.A.
Three Mellon Bank Center
Room 153-3015
Pittsburgh, PA 15259
Brown Brothers Harriman & Co. 5,050,000 * 164,898 5,050,000
63 Wall Street, 8th Floor
New York, NY 10005
Bankers Trust/BT Holdings 500,000 * 16,327 500,000
(New York) Inc.
130 Liberty Street
32nd Floor
New York, NY 10006
BT Securities Fixed Income 1,500,000 * 48,980 1,500,000
One Bankers Trust Plaza
New York, NY 10006
Chase Manhattan Bank 21,298,000 3.9 695,446 21,298,000
Two Chase Manhattan Plaza
5th Floor
New York, NY 10081
32
<PAGE>
<CAPTION>
BENEFICIAL OWNERSHIP PRINCIPAL
AT MARCH , 1997(1) NUMBER AMOUNT
---------------------------------------------------------------
PERCENT- OF SHARES OF NOTES
PRINCIPAL AGE OF PERCENT- COVERED COVERED
NUMBER OF AMOUNT COMMON AGE OF BY THIS BY THIS
SELLING SECURITYHOLDERS SHARES(2) OF NOTES STOCK(3) NOTES PROSPECTUS(2) PROSPECTUS
- ----------------------- --------- --------- ----------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Chase Manhattan Bank 400,000 * 13,061 400,000
Correspondent Clearing
Services
4 New York Plaza
11th Floor
New York, NY 10014
Chase Manhattan Bank/Chemical 3,255,000 * 106,286 3,255,000
Auto Settle Department
4 New York Plaza
4th Floor
New York, NY 10004
Chase Manhattan Bank, Trust 1,100,000 * 35,918 1,100,000
Two Chase Manhattan Plaza
5th Floor
New York, NY 10081
Chase Manhattan Bank 6,860,000 1.2 224,000 6,860,000
Trust Co. of California
Two Chase Manhattan Plaza
5th Floor
New York, NY 10081
Citicorp Services, Inc. 42,345,000 7.7 1,382,696 42,345,000
P.O. Box 30576
Tampa, FL 33630-3576
Comerica Bank 15,000 * 490 15,000
411 W. Lafayette Capital
Change-Proxy
Detroit, MI 48286
Corestates Bank N.A. 4,175,000 * 136,327 4,175,000
P.O. Box 7618
F.C. #1-9-1-21
Philadelphia, PA 19106-7618
Custodial Trust Company 8,445,000 1.5 275,755 8,445,000
101 Carnegie Center
Princeton, NJ 08540
Dillon, Read & Co., Inc. 1,005,000 * 32,816 1,005,000
120 Wall Street
New York, NY 10005
Fiduciary Trust Company, 750,000 * 24,490 750,000
International
2 World Trade Center
96th Floor
New York, NY 10048-0772
First Tennessee Bank, N.A. 935,000 * 30,531 935,000
(Memphis)
4385 Poplae Avenue
Memphis, TN 38117
Firstar Trust Company 1,130,000 * 36,898 1,130,000
777 East Wisconsin Avenue
Milwaukee, WI 53202
33
<PAGE>
<CAPTION>
BENEFICIAL OWNERSHIP PRINCIPAL
AT MARCH , 1997(1) NUMBER AMOUNT
---------------------------------------------------------------
PERCENT- OF SHARES OF NOTES
PRINCIPAL AGE OF PERCENT- COVERED COVERED
NUMBER OF AMOUNT COMMON AGE OF BY THIS BY THIS
SELLING SECURITYHOLDERS SHARES(2) OF NOTES STOCK(3) NOTES PROSPECTUS(2) PROSPECTUS
- ----------------------- --------- --------- ----------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Fleet Bank of Massa- 1,018,000 * 33,241 1,018,000
chusetts, N.A.
c/o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717
First National Bank of Chicago 1,260,000 * 41,143 1,260,000
One First National Plaza
Suite 0417
Chicago, IL 60670
First National Bank of Omaha 1,870,000 * 61,061 1,870,000
One First National Center
Omaha, NE 68102
First of America Bank- 130,000 * 4,245 130,000
Michigan, N.A.
225 N. Rose Street N-3
Kalamazoo, MI 49007
Goldman, Sachs & Co. 5,310,000 * 173,388 5,310,000
c/o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717
Goldman Sachs International 700,000 * 22,857 700,000
85 Broad Street
New York, NY 10004
Harris Trust & Savings Bank 30,000 * 980 30,000
Proxy Operations
111 West Monroe Street, 1130
Chicago, IL 60690
Investors Fiduciary Trust 80,000 * 2,612 80,000
Company/SSB
Global Proxy Unit, A5NW
P.O. Box 1631
Boston, MA 02105-1631
Investors Bank & Trust/M.F. 10,075,000 1.8 328,980 10,075,000
Custody
89 South Street
6th Floor
Corp. Action Dept.
Boston, MA 02111
Investors Bank & Trust Co. 75,000 * 2,449 75,000
89 South Street
6th Floor
Corp. Action Dept.
Boston, MA 02111
Julius Baer Securities Inc. 450,000 * 14,694 450,000
330 Madison Avenue
New York, NY 10017
Key Bank National Association 2,750,000 * 89,796 2,750,000
4900 Tiedeman Road
Brooklyn, OH 44144
34
<PAGE>
<CAPTION>
BENEFICIAL OWNERSHIP PRINCIPAL
AT MARCH , 1997(1) NUMBER AMOUNT
---------------------------------------------------------------
PERCENT- OF SHARES OF NOTES
PRINCIPAL AGE OF PERCENT- COVERED COVERED
NUMBER OF AMOUNT COMMON AGE OF BY THIS BY THIS
SELLING SECURITYHOLDERS SHARES(2) OF NOTES STOCK(3) NOTES PROSPECTUS(2) PROSPECTUS
- ----------------------- --------- --------- ----------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
LaSalle National Bank 160,000 * 5,224 160,000
c/o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717
Lehman Brothers, Inc. 4,490,000 * 146,612 4,490,000
c/o BSSC
Att: Proxy Dept.
P.O. Box 29198
Brooklyn, NY 11202-9198
Lehman Brothers International 5,000,000 * 163,266 5,000,000
(Europe)-Prime Broker (LBI)
200 Vesey Street
New York, NY 10285
M&I Marshall & Ilsley Bank 55,000 * 1,796 55,000
Marshall & Ilsley Trust Co.
1000 North Water Street
P.O. Box 2977
Milwaukee, WI 53202
Mercantile, Safe Deposit 2,405,000 * 78,531 2,405,000
and Trust Company
766 Old Hammonds Ferry Road
Proxy Unit #230-20
Linthicum, MD 21090
Merrill Lynch Professional 2,000,000 * 65,306 2,000,000
Clearing Corp.
20 Broad Street
New York, NY 10005
Merrill Lynch, Pierce, 12,990,000 2.4 424,164 12,990,000
Fenner & Smith Safekeeping
4 Corporate Place
Corporate Park 287
2nd Floor
Piscataway, NJ 08855
Merrill Lynch - Debt 7,750,000 1.4 253,062 7,750,000
Securities
4 Corporate Place
Corporate Park 287
Piscataway, NJ 08855
Montgomery Securities 5,500,000 1.0 179,592 5,500,000
c/o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717
Morgan (J.P.) Securities Inc. 4,650,000 * 151,837 4,650,000
60 Wall Street
6th Floor
New York, NY 10260
Morgan Stanley & Co., Incorporated 10,095,000 1.8 329,633 10,095,000
One Pierepont Plaza
7th Floor
Brooklyn, NY 11201
35
<PAGE>
<CAPTION>
BENEFICIAL OWNERSHIP PRINCIPAL
AT MARCH , 1997(1) NUMBER AMOUNT
--------------------------------------------------------------
PERCENT- OF SHARES OF NOTES
PRINCIPAL AGE OF PERCENT- COVERED COVERED
NUMBER OF AMOUNT COMMON AGE OF BY THIS BY THIS
SELLING SECURITYHOLDERS SHARES(2) OF NOTES STOCK(3) NOTES PROSPECTUS(2) PROSPECTUS
- ----------------------- --------- --------- ----------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
National City Bank 250,000 * 8,163 250,000
1900 East 9th Street
Cleveland, OH 44114
NBD Bank 5,595,000 1.0 182,694 5,595,000
611 Woodward Avenue
Detroit, MI 48226
Norwest Bank Minnesota 3,530,000 * 115,265 3,530,000
National Association
733 Marquette Avenue
Minneapolis, MN 55479-0056
Northern Trust Company 7,030,000 1.3 229,551 7,030,000
801 S. Canal C-In
Chicago, IL 60607
Old Kent Bank 695,000 * 22,694 695,000
4420 44th Street SE
Kentwood, MI 49512
PaineWebber, Inc. 1,000,000 * 32,653 1,000,000
1000 Harbor Blvd.
Weehawken, NJ 07087
PNC National Association 2,395,000 * 78,204 2,395,000
1835 Market Street
11 Penn Center
15th Floor
Philadelphia, PA 19103
Prudential Securities Incorporated 2,850,000 * 91,592 2,850,000
111 8th Avenue
4th Floor
New York, NY 10011
Republic New York Securities Corp. 260,000 * 8,490 260,000
c/o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717
Robertson, Stephens & Company, L.P. 3,900,000 * 127,347 3,900,000
555 California Street
Suite 2600
San Francisco, CA 94104
Salomon Brothers Inc. 730,000 * 23,837 730,000
c/o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717
Sanwa Bank California 3,220,000 * 105,143 3,220,000
P.O. Box 513507
Los Angeles, CA 90051-3507
Smith Barney, Inc. 200,000 * 6,531 200,000
333 W. 34th Street
New York, NY 10001
36
<PAGE>
<CAPTION>
BENEFICIAL OWNERSHIP PRINCIPAL
AT MARCH , 1997(1) NUMBER AMOUNT
--------------------------------------------------------------
PERCENT- OF SHARES OF NOTES
PRINCIPAL AGE OF PERCENT- COVERED COVERED
NUMBER OF AMOUNT COMMON AGE OF BY THIS BY THIS
SELLING SECURITYHOLDERS SHARES(2) OF NOTES STOCK(3) NOTES PROSPECTUS(2) PROSPECTUS
- ----------------------- --------- --------- ----------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
SBC Warburg Inc. 14,810,000 2.7 483,592 14,810,000
141 W. Jackson Blvd.
Chicago, IL 60604
Societe Generale Custody 2,000,000 * 65,306 2,000,000
50 Rockefeler Plaza
New York, NY 10020
SSB-Custodian 108,925,000 19.8 3,556,739 108,925,000
Global Proxy Unit, A5NW
P.O. Box 1631
Boston, MA 02105-1631
Sun Trust Bank 7,043,000 1.3 229,976 7,043,000
c/o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717
UMB Bank, N.A. 265,000 * 8,653 265,000
P.O. Box 419260
Kansas City, MO 64141-6260
Bank of California (The) 390,000 * 12,735 390,000
Safekeeping Department
475 Sansome Street
11th Floor
San Francisco, CA 94145
Wachovia Bank North Carolina 1,242,000 * 40,555 1,242,000
100N. Main Street, NC 37121
Winston-Salem, NC 27150
Wells Fargo Bank, National Association 5,690,000 1.0 185,796 5,690,000
26610 West Agoura Road
Calabasas, CA 91307
Yasuda Bank & Trust Company (USA) 1,000,000 * 32,653 1,000,000
666 Fifth Avenue
8th Floor
New York, NY 10103
First Bank, N.A. 1,135,000 * 37,061 1,135,000
c/o ICE Proxy Services
71 Executive Blvd.
Farmingdale, NY 11735
Chase Manhattan Bank/Chemical 57,150,000 10.4 1,866,125 57,150,000
Auto Seattle Department
4 New York Plaza
4th Floor
New York, NY 10004
Booth & Co. 1,705,000 * 55,673 1,705,000
c/o Northern Trust Company
P.O. Box 92303
Chicago, IL 60675
Bost & Co. 250,000 * 8,163 250,000
Mellon Bank
P.O. Box 3195
Pittsburgh, PA 15230-3195
37
<PAGE>
<CAPTION>
BENEFICIAL OWNERSHIP PRINCIPAL
AT MARCH , 1997(1) NUMBER AMOUNT
---------------------------------------------------------------
PERCENT- OF SHARES OF NOTES
PRINCIPAL AGE OF PERCENT- COVERED COVERED
NUMBER OF AMOUNT COMMON AGE OF BY THIS BY THIS
SELLING SECURITYHOLDERS SHARES(2) OF NOTES STOCK(3) NOTES PROSPECTUS(2) PROSPECTUS
- ----------------------- --------- --------- ----------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Salkeld & Co. 2,450,000 * 80,000 2,450,000
c/o Bankers Trust Co.
P.O. Box 704
Church Street Station
New York, NY 10008-0704
Pondware & Co. 3,880,000 * 126,694 3,880,000
c/o State Street bank
P.O. Box 5756
Boston, MA 02206-5756
Total $550,000,000 100% 17,959,205 $550,000,000
<FN>
- --------------------------------------------
* 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. On March 4, 1997, the Company had 403,597,021 shares of Common Stock
outstanding. Unless otherwise indicated, all shares of Common Stock are
held directly with sole voting and dispositive power.
(2) Includes shares of Common Stock issuable upon conversion of the Notes.
This information will be completed by amendment.
(3) This information will be completed by amendment.
</FN>
</TABLE>
38
<PAGE>
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. [In addition, this discussion is
generally limited to the tax consequences to initial holders.] 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 SECURITIES 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 (i) a citizen or resident
(as defined in Section 7701(b)(l) of the Code) of the United States, (ii) a
corporation organized under the laws of the United States or any political
subdivision thereof or therein, (iii) an estate the income of which is subject
to U.S. federal income tax regardless of its source, or (iv) for tax years
beginning before December 31, 1996, a trust the income of which is subject to
U.S. federal income tax regardless of its source or, for tax years beginning
after December 31, 1996 (and, if the trustee so elects, for tax years beginning
after August 20, 1996), a trust if a United States court is able to exercise
primary supervision over the administration of that trust and one or more United
States fiduciaries have the authority to control all substantial decisions of
such trust (a "U.S. Holder"). 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.
MARKET DISCOUNT
Generally, the market discount rules discussed below will not apply to
a U.S. Holder who acquired a Note when it was originally issued. These rules
would apply, however, to any original U.S. Holder whose tax basis in the Note is
less than such Note's "issue price" (i.e., the first price at which a
substantial amount of the Notes are sold).
39
<PAGE>
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 (other than the amount
attributable to the conversion feature of the Note) 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.
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.
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TAX BASIS
A U.S. Holder's adjusted tax basis in a Note will be equal to the
purchase price paid by such U.S. Holder for such Note increased by the amount of
any market discount included in income with respect to the Note and reduced by
the amount of any amortizable bond premium applied to reduce interest on the
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. Holders of Notes
could therefore have taxable income as a result of an event pursuant to which
they received no cash or property. Generally, a U.S. Holder's tax basis in a
Note will be increased by the amount of any such constructive dividend.
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
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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 ("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, (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 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
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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
backup withholding, any gain realized by a Non-U.S. Holder on the sale, exchange
or redemption of a Note 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 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.
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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 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.
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United States Foreign Investment in Real Property Tax Act
Under the Foreign Investment in Real Property Tax Act ("FIRPTA"), a
foreign person who disposes of a "United States real property interest"
generally is required to recognize gain or loss that is subject to United States
federal income tax. In addition, any person who acquires a "United States real
property interest" from a foreign person must deduct and withhold a tax equal to
10% of the amount realized by the foreign transferor. A "United States real
property interest" generally includes any interest (other than an interest
solely as a creditor) in a United States corporation unless it is established
under specific procedures that the corporation is not (and was not for the prior
five-year period) a "United States real property holding corporation". The
Company does not believe that it is a United States real property holding
corporation as of the date hereof, although it has not conducted or obtained an
appraisal of its assets to determine whether it is now or will be a United
States real property holding corporation, if it is not established that the
Company is not a United States real property holding corporation, then, unless
an exemption applies, both the Common Stock and the Notes would be treated as
United States real property interests, and the disposition of either Common
Stock or Notes by a Non-United States Holder would be subject to FIRPTA tax and
withholding.
However, an interest in a United States corporation generally will not
be treated as a United States real property interest if, at any time during the
calendar year, any class of stock of the corporation is "regularly traded" on an
established securities market (the "regularly-traded exemption"). The Company
believes that the Company's Common Stock is regularly traded on an established
securities market within the meaning of the applicable regulations, although
there can be no assurance that the Common Stock will remain regularly traded.
The remainder of this discussion assumes that the Common Stock is and will
remain, regularly traded on an established securities market. Except as
described below, shares of Common Stock and Notes held by a Non-United States
Holder will generally not be treated as United States real property interests,
and the disposition of such shares and Notes (including a conversion or
redemption of the Notes) by a Non-United States Holder will not be subject to
FIRPTA tax or withholding.
The regularly-traded exemption is not available to a regularly traded
interest (such as the Common Stock) if such interest is owned by a person who
beneficially owns (actually or constructively) more than 5% of the total fair
market value of that class of interests at any time during the five-year period
ending on the date of disposition of such interest or other applicable
determination date. Accordingly, the sale or other disposition of Common Stock
by a Non-United States Holder whose aggregate beneficial ownership has exceeded
that 5% threshold, will be subject to income taxation under FIRPTA. However,
under a special rule, such dispositions should not be subject to FIRPTA
withholding.
The regularly-traded exemption is also not available to a
"non-regularly traded" class of interest in a United States corporation that is
convertible into a regularly traded class of interests in the corporation if, on
the date such non-regularly traded interest was acquired by its present holder,
such interest had a fair market value greater than the fair market value on that
date of 5% of the regularly traded class of the corporation's stock into which
it is convertible. (Interests of a non-regularly traded class acquired over a
period of time will be aggregated for purposes of applying the 5% test described
above.) Accordingly, the sale, exchange, conversion or redemption by a
Non-United States Holder of Notes which, on an applicable determination date,
had a fair market value greater than 5% of the Common Stock, will be subject to
FIRPTA tax and withholding. A Non-United States Holder who sells or otherwise
disposes of Notes may be required to inform its transferee whether such Notes
constitute a United States real property interest. The foregoing discussion
assumes that the Notes constitute interests that are non-regularly traded
interests convertible into a regularly traded class of interests. It is not
entirely certain how the regularly-traded exemption will apply if the Notes
become "regularly traded" within the meaning of the FIRPTA rules.
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Any investor that may approach or exceed 5% ownership, either alone or
in conjunction with related persons, should consult its own tax advisor
concerning the United States tax consequences that may result.
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.
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
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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 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 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, 1995 and 1994, are
based in part on the report of Deloitte & Touche LLP, independent auditors of
Advance Ross Corporation ("ARC"). The consolidated financial statements included
in its Current Report on Form 8-K dated July 24, 1996 (which was filed with the
Commission on September 17, 1996) also have been audited by Ernst & Young LLP,
as set forth in their report included therein and incorporated herein by
reference which, as to the years ended January 31, 1996, 1995 and 1994, are
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 auditors of Ideon and as to the years ended January
31, 1995 and 1994, are based in part on the report of Deloitte & Touche LLP,
independent auditors of ARC. The financial statements and schedule referred to
above are incorporated herein by reference in reliance upon such reports given
upon the authority of such firms as experts in accounting and auditing.
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With respect to the unaudited condensed consolidated interim financial
information for the three-month periods and the nine-month periods ended October
31, 1996 and October 31, 1995, incorporated by reference in this Prospectus,
Ernst & Young LLP have reported that they have applied limited procedures in
accordance with professional standards for a review of such information.
However, their separate report, included in the Company's Quarterly Report on
Form 10-Q for the quarter ended October 31, 1996, 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 that report is not a
"report" or a "part" of the Registration Statement prepared or certified by the
auditors within the meaning of Sections 7 and 11 of the Securities Act.
The consolidated financial statements included in the CUC 10-K and in
the Company's Current Report on Form 8-K filed with the Commission on September
17, 1996 have not been adjusted to give effect to the three-for-two stock split
of the Common Stock effected on October 21, 1996.
The consolidated financial statements of Ideon as of December 31, 1995
and 1994 and as of October 31, 1994, and for the year ended December 31, 1995,
the two months ended December 31, 1994 and each of the two years in the period
ended October 31, 1994, incorporated in this Prospectus by reference to the
Company's Current Report on Form 8-K filed with the Commission on September 17,
1996, have been so incorporated in reliance upon the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
accounting and auditing.
The consolidated financial statements and related financial statement
schedules of Davidson as of December 31, 1995 and 1994 and for the three years
in the period ended December 31, 1995, incorporated in this Prospectus by
reference to the Company's Current Report on Form 8-K filed with the Commission
on September 17, 1996, have been audited by KPMG Peat Marwick LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
The consolidated financial statements and related financial statement
schedule of Sierra as of March 31, 1996 and 1995 and for the three years in the
period ended March 31, 1996, incorporated in this Prospectus by reference to the
Company's Current Report on form 8-K filed with the Commission on September 17,
1996, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and has been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
The consolidated financial statements and related financial statement
schedule of ARC as of December 31, 1994 and for the two years ended December 31,
1994, incorporated in this Prospectus by reference to the CUC 10- K and the
Company's Current Report on Form 8-K filed with the Commission on September 17,
1996, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and have been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
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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 as having been authorized. This
Prospectus does not constitute an offer to sell or the solicitation of an offer
to buy any securities other than the securities to which it relates or an offer
to sell or the solicitation of an offer to buy such securities in any
circumstances in which such offer or solicitation is unlawful. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that the information contained herein is
correct as of any time subsequent to the date hereof.
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TABLE OF CONTENTS
PAGE
AVAILABLE INFORMATION..........................................................3
INCORPORATION OF CERTAIN INFORMATION BY
REFERENCE...................................................................4
SUMMARY........................................................................5
USE OF PROCEEDS...............................................................12
DESCRIPTION OF NOTES..........................................................13
DESCRIPTION OF CAPITAL STOCK..................................................28
SELLING SECURITYHOLDERS.......................................................30
CERTAIN UNITED STATES FEDERAL TAX
CONSIDERATIONS................................................................39
PLAN OF DISTRIBUTION..........................................................46
VALIDITY OF SECURITIES........................................................47
EXPERTS.......................................................................47
$550,000,000
CUC INTERNATIONAL INC.
3% CONVERTIBLE SUBORDINATED
Notes Due February 15, 2002
17,959,205 SHARES OF
COMMON STOCK
--------------------
PROSPECTUS
--------------------
________ __, 1997
================================================================================
<PAGE>
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............................
*Legal Fees and Expenses.................................
*Blue Sky Fees and Expenses..............................
*Printing and Engraving..................................
*Miscellaneous...........................................
Total.................................................... $
==============
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.
II-1
<PAGE>
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.
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
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 from Ernst & Young LLP regarding unaudited condensed
consolidated interim financial information of CUC International Inc.
23.0 Consent of Ernst & Young LLP
23.1 Consent of Price Waterhouse LLP (relating to the financial
statements of Ideon Group, Inc.)
23.2 Consent of Deloitte & Touche LLP (relating to the financial
statements of Sierra On-Line, Inc.)
23.3 Consent of Deloitte & Touche LLP (relating to the financial
statements of Advance Ross Corporation)
23.4 Consent of KPMG Peat Marwick (relating to the financial statements
of Davidson & Associates, Inc.)
23.5 Consent of Robert T. Tucker, Esq. (included in the opinion filed as
Exhibit 5.1).
24.0 Power of Attorney (included as part of the signature page to this
Registration Statement)
25.0 Statement of Eligibility and Qualification of Marine Midland Bank,
as trustee, on Form T-1.
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.
II-2
<PAGE>
(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
<PAGE>
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 10th day of
March, 1997.
CUC INTERNATIONAL INC.
By:/s/ Walter A. Forbes
-----------------------
Walter A. Forbes
Chief Executive Officer and
Chairman of the Board of Directors
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints
Walter A. Forbes and E. Kirk Shelton, and each and either of them, his or her
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including, without
limitation, post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Walter A. Forbes Chief Executive Officer and Chairman of the Board March 10, 1997
- ----------------------------------- Principal Executive Officer)
Walter A. Forbes
/s/ Cosmo Corigliano Senior Vice President and Chief Financial Officer March 10, 1997
- ----------------------------------- Principal Financial and Accounting Officer)
Cosmo Corigliano
/s/ Bartlett Burnap Director March 10, 1997
- -----------------------------------
Bartlett Burnap
/s/ T. Barnes Donnelley Director March 10, 1997
- -----------------------------------
T. Barnes Donnelley
/s/ Stephen A. Greyser Director March 10, 1997
- -----------------------------------
Stephen A. Greyser
/s/ Christopher K. McLeod Director March 10, 1997
- -----------------------------------
Christopher K. McLeod
/s/ Burton C. Perfit Director March 10, 1997
- -----------------------------------
Burton C. Perfit
/s/ Robert P. Rittereiser Director March 10, 1997
- -----------------------------------
Robert P. Rittereiser
/s/ Stanley M. Rumbough, Jr. Director March 10, 1997
- -----------------------------------
Stanley M. Rumbough, Jr.
/s/ E. Kirk Shelton Director March 10, 1997
- -----------------------------------
E. Kirk Shelton
II-4
<PAGE>
<S> <C> <C>
/s/ Kenneth A. Williams Director March 10, 1997
- -----------------------------------
Kenneth A. Williams
/s/ Janice G. Davidson Director March 10, 1997
- -----------------------------------
Janice G. Davidson
/s/ Robert M. Davidson Director March 10, 1997
- -----------------------------------
Robert M. Davidson
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
Exhibit
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 from Ernst & Young LLP regarding unaudited condensed consolidated
interim financial information of CUC International Inc.
23.0 Consent of Ernst & Young LLP
23.1 Consent of Price Waterhouse LLP (relating to the financial statements of
Ideon Group, Inc.).
23.2 Consent of Deloitte & Touche LLP (relating to the financial statements of
Sierra On-Line, Inc.).
23.3 Consent of Deloitte & Touche LLP (relating to the financial statements of
Advance Ross Corporation).
23.4 Consent of KPMG Peat Marwick (relating to the financial statements of
Davidson & Associates, Inc.).
23.5 Consent of Robert T. Tucker, Esq. (included in the opinion filed as
Exhibit 5.0).
24.0 Power of Attorney (included as part of the signature page to this
Registration Statement).
25.0 Statement of Eligibility and Qualification of Marine Midland Bank, as
trustee, on Form T-1.
II-6
Exhibit 5.0
Robert T. Tucker
ATTORNEY AT LAW
61 PURCHASE ST. (914) 967-8105
RYE, N.Y. 10580 FAX: (914) 967-8161
March 10, 1997
The Board of Directors
CUC International Inc.
707 Summer Street
Stamford, CT 60601
Ladies and Gentlemen:
I am the Corporate Secretary and counsel to CUC International
Inc., a Delaware corporation (the "Company"). In such capacity I have been
involved with the preparation and filing of the Registration Statement of the
Company on Form S-3 (the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"), relating to the intended resale from
time to time by the Selling Stockholders (in the manner described in the
prospectus (the "Prospectus") contained in the Registration Statement) of up to
$550,000,000 aggregate principal amount of the 3% Convertible Subordinated Notes
due February 15, 2002 (the "Notes") of the Company and up to 17,959,205 shares
of the common stock, $.01 par value (the "Common Stock"), of the Company
issuable upon conversion of the Notes.
In so acting, I have reviewed the Registration Statement,
including the Prospectus contained therein, the Restated Certificate of
Incorporation and the Amended and Restated Bylaws of the Company in effect on
the date hereof, and the Indenture dated as of February 11, 1997, between the
Company and Marine Midland Bank, as trustee (the "Indenture"). In addition, I
have examined originals or copies, certified or otherwise identified to my
satisfaction, of such corporate records, agreements, documents and other
instruments, and such certificates or comparable documents of public officials
and of officers and representatives of the Company, and have made such inquiries
of such officers and representatives, as I have deemed relevant and necessary as
a basis for the opinions hereinafter set forth.
In such examination, I have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to me as originals, the conformity to original documents of
all documents submitted to me as certified, conformed or photostatic copies and
the authenticity of the originals of such latter documents. As to all questions
of fact material to this opinion that have not been independently established, I
have relied upon certificates or comparable documents of officers and
representatives of the Company.
Based on the foregoing, and subject to the qualifications
stated herein, I am of the opinion that:
1. The Notes to be offered and sold by the Selling
Securityholders in the manner described under the captions "Selling
Securityholders" and "Plan of Distribution" in the Prospectus contained in the
Registration Statement have been duly authorized and validly issued and
constitute the legally binding obligations of the Company entitled to the
benefits of the Indenture in accordance with their terms, subject to applicable
bankruptcy,
<PAGE>
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors rights and remedies generally and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether a
proceeding is sought at law or in equity).
2. The Notes are convertible into shares of Common Stock in
accordance with their terms and the conditions thereto prescribed by the
Indenture, and the shares of Common Stock issuable upon conversion of the Notes
have been duly authorized and reserved for issuance upon such conversion and,
when issued and delivered by the Company in accordance with their terms and the
conditions thereto prescribed by the Indenture, will be validly issued, fully
paid and nonassessable.
The opinions expressed herein are limited to the corporate
laws of the State of Delaware and the federal laws of the United States, and I
express no opinion as to the effect on the matters covered by this letter of the
laws of any other jurisdiction.
The opinions expressed herein are rendered solely for your
benefit in connection with the transactions described herein. Those opinions may
not be used or relied upon by any other person, nor may this letter or any
copies thereof be furnished to a third party, filed with a governmental agency,
quoted, cited or otherwise referred to without our prior written consent.
I hereby consent to the filing of this opinion as Exhibit 5.0
to the Registration Statement and to the references to me under the heading
"Legal Matters" in the Prospectus, without admitting that I am an expert under
the Securities Act or the rules and regulations of the Commission thereunder
with respect to any part of the Registration Statement or Prospectus contained
therein.
Very truly yours,
/s/ Robert T. Tucker
CUC International Inc.
Exhibit 12- Computation Of the Ratio of Earnings to Fixed Charges
(amounts in thousands, except ratio)
<TABLE>
<CAPTION>
Year Ended January 31,
---------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Income from continuing operations
before income taxes $235,312 $256,931 $198,319 $117,434
Add:
Interest expense 7,409 6,536 5,105 7,298
Interest factor in rent 12,533 9,233 8,000 4,337
------- -------- -------- -------- --------
$ - $255,254 $272,700 $211,424 $129,069
======= ======== ======== ======== ========
Interest expense $ - $ 7,409 $ 6,536 $ 5,105 $ 7,298
Interest factor in rent 12,533 9,233 8,000 4,337
------- -------- -------- -------- --------
$ - $ 19,942 $ 15,769 $ 13,105 $ 11,635
======= ======== ======== ======== ========
Ratio of earnings to fixed charges - 12.80 17.29 16.13 11.09
======= ======== ======== ======== ========
</TABLE>
CUC INTERNATIONAL INC. AND SUBSIDIARIES
EXHIBIT 15 - LETTER RE: UNAUDITED INTERIM FINANCIAL INFORMATION
March 6, 1997
Shareholders and Board of Directors
CUC International Inc.
We are aware of the incorporation by reference in the Registration
Statement (Form S-3) of CUC International Inc. for the registration of
$550,000,000 of 3% Convertible Subordinated Notes and 17,959,205
shares of its common stock of our report dated December 2, 1996
relating to the unaudited condensed consolidated interim financial
statements of CUC International Inc. that are included in its
Quarterly Report on Form 10-Q for the quarter ended October 31, 1996.
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 23.0
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference of our firm under the caption "Experts" in
the Registration Statement (Form S-3) and related Prospectus of CUC
International Inc. for the registration of $550,000,000 of 3%
Convertible Subordinated Notes and 17,959,205 shares of its common
stock and to the incorporation by reference therein of our report
dated March 19, 1996, with respect to the consolidated financial
statements and schedule of CUC International Inc. included in its
Annual Report (Form 10-K) for the year ended January 31, 1996 and our
report dated September 12, 1996 with respect to the consolidated
financial statements of CUC International Inc. included in its Current
Report (Form 8-K) dated July 24, 1996, filed with the Securities and
Exchange Commission.
ERNST & YOUNG LLP
Stamford, Connecticut
March 6, 1997
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 of CUC
International Inc. of our reports dated February 2, 1996 and December
5, 1994, relating to the consolidated financial statements of Ideon
Group, Inc., which appears in the Current Report on Form 8-K of CUC
International, Inc. filed with the Securities and Exchange Commission
on or about September 17, 1996. We also consent to the reference to
us under the heading "Experts."
Price Waterhouse LLP
Tampa, Florida
March 6, 1997
Exhibit 23.2
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
June 24, 1996 (relating to the consolidated financial statements of
Sierra On-Line, Inc. and subsidiaries for the year end March 31, 1996,
not presented separately therein), appearing in the CUC International
Inc. Current Report on Form 8-K (filed with the Securities and
Exchange Commission on September 17, 1996) and, to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
Deloitte & Touche LLP
Seattle, Washington
March 6, 1997
Exhibit 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference of this Registration
Statement of CUC International Inc. on Form S-3 of our report dated
March 13, 1995 (relating to the financial statements of Advance Ross
Corporation as of December 31, 1994 and for the years ended December
31, 1994 and 1993, not presented separately therein), appearing in the
CUC International Inc. Annual Report on Form 10-K for the year ended
January 31, 1996 and the CUC International Inc. Current Report on Form
8-K (filed with the Securities and Exchange Commission on September
17, 1996) and to the reference to us under the heading "Experts" in
the Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Chicago, Illinois
March 6, 1997
Exhibit 23.4
ACCOUNTANTS' CONSENT
The Board of Directors
Davidson & Associates, Inc.
We consent to the incorporation by reference in the registration
statement on
Form S-3 of CUC International Inc. of our report dated February 21,
1996, with respect to the consolidated balance sheets of Davidson &
Associates, Inc. and subsidiaries as of December 31, 1995 and 1994 and
the related consolidated statements of earning, shareholders' equity,
and cash flows for each of the years in the three-year period ended
December 31, 1995, which report appears in the Form 8-K of CUC
International Inc. dated July 24, 1996, filed with the Commission on
September 17, 1996, and to the reference to our firm under the heading
"Experts" in the prospectus.
KPMG Peat Marwick LLP
Long Beach, California
March 5, 1997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
-----------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
-----------
MARINE MIDLAND BANK
(Exact name of trustee as specified in its charter)
New York 16-1057879
(Jurisdiction of incorporation (I.R.S. Employer
or organization if not a U.S. Identification No.)
national bank)
140 Broadway, New York, N.Y. 10005-1180
(212) 658-1000 (Zip Code)
(Address of principal executive offices)
Warren L. Tischler
Senior Vice President
Marine Midland Bank
140 Broadway
New York, New York 10005-1180
Tel: (212) 658-6560
(Name, address and telephone number of agent for service)
CUC INTERNATIONAL INC.
(Exact name of obligor as specified in its charter)
Delaware 06-0918165
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
707 Summer Street
Stamford, Connecticut 06901
(203) 324-9261 (Zip Code)
(Address of principal executive offices)
3% COVERTIBLE SUBORDINATED NOTES DUE FEBRUARY 15, 2002
(Title of Indenture Securities)
<PAGE>
General
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory
authority to which it is subject.
State of New York Banking Department.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System,
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
None
<PAGE>
Item 16. List of Exhibits.
Exhibit
T1A(i) * - Copy of the Organization Certificate of
Marine Midland Bank.
T1A(ii) * - Certificate of the State of New York
Banking Department dated December
31, 1993 as to the authority of Marine
Midland Bank to commence business.
T1A(iii) - Not applicable.
T1A(iv) * - Copy of the existing By-Laws of Marine
Midland Bank as adopted on January
20, 1994.
T1A(v) - Not applicable.
T1A(vi) * - Consent of Marine Midland Bank
required by Section 321(b) of the Trust
Indenture Act of 1939.
T1A(vii) - Copy of the latest report of condition of
the trustee (December 31, 1996),
published pursuant to law or the
requirement of its supervisory or
examining authority.
T1A(viii) - Not applicable.
T1A(ix) - Not applicable.
* Exhibits previously filed with the Securities and Exchange Commission with
Registration No. 33-53693 and incorporated herein by reference thereto.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
Marine Midland Bank, a banking corporation and trust company organized under the
laws of the State of New York, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York on the 5th day of March, 1997.
MARINE MIDLAND BANK
By: /s/ Teresa S. Santos
------------------------
Teresa S. Santos
Assistant Corporate Trust Officer
<PAGE>
EXHIBIT T1A (VII)
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
<TABLE>
<CAPTION>
<S> <C>
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL Expires March 31, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
[ 1 ]
THIS FINANCIAL INFORMATION HAS NOT BEEN REVIEWED, OR CONFIRMED
FOR ACCURACY OR RELEVANCE, BY THE FEDERAL RESERVE SYSTEM. Please refer to page i,
Table of Contents, for
the required disclosure
of estimated burden.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR A BANK WITH DOMESTIC AND
FOREIGN OFFICES--FFIEC 031
REPORT AT THE CLOSE OF BUSINESS DECEMBER 31,
1996 (950630)
--------
(RCRI 9999)
This report is required by law; 12 U.S.C. ss.324 (State member banks); 12
U.S.C. ss. 1817 (State nonmember banks); and 12 U.S.C. ss.161 (National banks).
This report form is to be filed by banks with branches and consolidated
subsidiaries in U.S. territories and possessions, Edge or Agreement
subsidiaries, foreign branches, consoli-dated foreign subsidiaries, or
International Banking Facilities.
- --------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for
State member and National Banks.
I, Gerald A. Ronning, Executive VP & Controller
- -----------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that these Reports of Condition and Income
(including the supporting schedules) have been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and are true
to the best of my knowledge and believe.
/s/ Gerald A. Ronning
- ----------------------------------------------
Signature of Officer Authorized to Sign Report
1/27/97
- ----------------------------------------------
Date of Signature
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions. NOTE: These instructions may in some
cases differ from generally accepted accounting principles.
We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) and declare that it has
been examined by us and to the best of our knowledge and belief has been
prepared in conformance with the instructions issued by the appropriate Federal
regulatory authority and is true and correct.
/s/ Bernard J. Kennedy
- ----------------------------------------------
Director (Trustee)
/s/ Northrup R. Knox
- ----------------------------------------------
Director (Trustee)
/s/ Henry J. Nowak
- ----------------------------------------------
Director (Trustee)
- --------------------------------------------------------------------------------
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANK: Return the original and one copy to the appropriate
Federal Reserve District Bank.
STATE NONMEMBER BANKS: Return the original only in the special return address
envelope provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
NATIONAL BANKS: Return the original only in the special return address envelope
provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
- --------------------------------------------------------------------------------
FDIC Certificate Number 0 0 5 8 9
--- --- --- --- ---
(RCRI 9030)
<PAGE>
NOTICE
This form is intended to assist institutions with state publication
requirements. It has not been approved by any state banking authorities. Refer
to your appropriate state banking authorities for your state publication
requirements.
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the
Marine Midland Bank of Buffalo
- ------------------- ----------
Name of Bank City
in the state of New York, at the close of business
December 31, 1996
ASSETS
Thousands
of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances
currency and coin......................... $ 967,072
Interest-bearing balances ................ 1,867,936
Held-to-maturity securities............... 0
Available-for-sale securities............. 2,841,138
Federal Funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and of its Edge and Agreement
subsidiaries, and in IBFs:
Federal funds sold........................ 1,606,822
Securities purchased under
agreements to resell...................... 235,041
Loans and lease financing receivables:
Loans and leases net of unearned
income.............................14,555,533
LESS: Allowance for loan and lease
losses............................. 415,451
LESS: Allocated transfer risk reserve 0
Loans and lease, net of unearned
income, allowance, and reserve............ 14,140,082
Trading assets............................ 891,546
Premises and fixed assets (including
capitalized leases)....................... 189,690
Other real estate owned...................... 1,144
Investments in unconsolidated
subsidiaries and associated companies........ 0
Customers' liability to this bank on
acceptances outstanding...................... 17,549
Intangible assets............................ 187,259
Other assets................................. 399,875
Total assets................................. 23,345,154
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LIABILITIES
Deposits:
In domestic offices....................... 15,864,140
Noninterest-bearing...........4,242,927
Interest-bearing.............11,621,213
In foreign offices, Edge, and Agreement
subsidiaries, and IBFs....................... 3,036,069
Noninterest-bearing........... 0
Interest-bearing..............3,036,069
Federal funds purchased and securities sold
under agreements to repurchase in domestic
offices of the bank and its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds purchased................... 1,225,738
Securities sold under agreements to
repurchase................................ 58,491
Demand notes issued to the U.S. Treasury 181,786
Trading Liabilities.......................... 234,555
Other borrowed money:
With original maturity of one year
or less................................... 26,912
With original maturity of more than
one year.................................. 0
Mortgage indebtedness and obligations
under capitalized leases..................... 33,120
Bank's liability on acceptances
executed and outstanding..................... 17,549
Subordinated notes and debentures............ 397,522
Other liabilities............................ 386,942
Total liabilities............................ 21,462,824
Limited-life preferred stock and
related surplus.............................. 0
EQUITY CAPITAL
Perpetual preferred stock and related
surplus...................................... 0
Common Stock................................. 185,000
Surplus...................................... 1,633,431
Undivided profits and capital reserves....... 54,753
Net unrealized holding gains (losses)
on available-for-sale securities............. 9,146
Cumulative foreign currency translation
adjustments.................................. 0
Total equity capital......................... 1,882,330
Total liabilities, limited-life
preferred stock, and equity capital.......... 23,345,154
