EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE NO.
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2(a) Agreement and Plan of Merger dated as of February 19, 1996, among CUC
International Inc., Stealth Acquisition I Corp. and Davidson & Associates, Inc.
(filed as Exhibit 2A to CUC International's Current Report on Form 8-K dated
March 12, 1996).*
2(b) Agreement and Plan of Merger dated as of February 19, 1996, as amended, among
CUC International Inc., Larry Acquisition Corp. and Sierra On-Line, Inc. (filed
as Exhibit 2B to CUC International's Current Report on Form 8-K dated March 12,
1996).*
2(c) Agreement and Plan of Merger dated as of April 19, 1996, among CUC International
Inc., IG Acquisition Corp. and Ideon Group, Inc. (filed as Exhibit 10.21 to CUC
International's Annual Report on Form 10-K for the fiscal year ended January 31,
1996, dated April 10, 1996).*
4 Form of certificate evidencing shares of CUC International Common Stock (filed
as Exhibit 4.1 to CUC International's Registration Statement (No. 33-44453), on
Form S-4 dated December 19, 1991).*
5 Opinion of as to the legality of CUC International's Common Stock.
8 Tax opinion of Gibson, Dunn & Crutcher
9(a) Shareholders Agreement dated as of February 19, 1996, among CUC International
Inc. and the holders of Davidson Common Stock party thereto (filed as Exhibit
10A to CUC International's Current Report on Form 8-K dated March 12, 1996).*
9(b) Shareholders Agreement dated as of February 19, 1996, among CUC International
Inc. and the holders of Sierra On-Line, Inc. Common Stock party thereto (filed
as Exhibit 10B to CUC International's Current Report on Form 8-K dated March 12,
1996).*
15.1 Letter from Ernst & Young LLP re: unaudited interim financial information
15.2 Letter from Price Waterhouse LLP re: unaudited interim financial information
23.1 Consent of Robert T. Tucker, Esq. (included in Exhibit 5).
23.2 Consent of Gibson, Dunn & Crutcher (included in Exhibit 8).
23.3 Consent of KPMG Peat Marwick LLP.
23.4 Consent of Ernst & Young LLP.
23.5(a) Consent of Deloitte & Touche LLP.
23.5(b) Consent of Deloitte & Touche LLP.
23.6 Consent of Price Waterhouse LLP.
24 Power of Attorney (included as part of the signature page of this Registration
Statement).
- ------------
* Incorporated herein by reference.
(c) See exhibits 5 and 8 in Item 21(a) above.
EXHIBIT 5
---------
ROBERT T. TUCKER
ATTORNEY AT LAW
61 PURCHASE ST. (914) 967-8105
RYE, N.Y. 10580 FAX: (914) 967-8161
June 21, 1996
CUC International Inc.
707 Summer Street
Stamford, CT 06901
Ladies and Gentlemen:
I refer to the Registration Statement (the "Registration Statement")
on Form S-4 being filed by CUC International Inc. ("CUC") under the
Securities Act of 1933, as amended (the "Securities Act") with the Securities
and Exchange Commission (the "Commission"), relating to the registration
of up to 30,039,606 shares of common stock par value $ .01 per share of CUC
(the "Shares") to be issued to the shareholders of Davidson & Associates, Inc.
("Davidson") in connection with the merger of CUC's wholly owned subsidiary,
Stealth Acquisition Corp. I ("Merger Sub"), into and with Davidson, all as set
forth in the Agreement and Plan of Merger dated February 19, 1996, among
CUC, Davidson and Merger Sub (the "Merger Agreement").
I have examined copies of (i) the Registration Statement; (ii) the Restated
Certificate of Incorporation and By-Laws of the Company, each as amended
to date; (iii) certain resolutions of the Board of Directors of the Company
relating to the issuance of the Shares pursuant to the terms of the
Agreement and Plan of Merger; and (iv) the Agreement and Plan of Merger.
I have also examined originals, photostatic or certified copies, of such
records of the Company, certificates of officers of the Company and of
public officials and such other documents as I have deemed relevant and
necessary as the basis for the opinions set forth below. In such
examinations, I have assumed the genuineness of all signatures, the
authenticity of all documents submitted to me as originals, the conformity
to original documents of all copies submitted to me as certified, conformed
or photostatic copies, and the authenticity of all originals of such copies.
Page 2
Based upon the foregoing, I am of the opinion that the issuance of the
Shares has been duly authorized by CUC and that the Shares, when issued and
delivered to the Shareholders of Davidson in accordance with the Merger
Agreement, will be legally issued, fully paid and non-assessable.
I hereby consent to the filing of this opinion with the Commission as
an Exhibit to the Registration Statement and to the reference to the
undersigned under the caption "Legal Matters" in the Registration Statement.
Very truly yours,
/s/ Robert T. Tucker
------------------------------------
Robert T. Tucker
RTT/kau
EXHIBIT 8
---------
June 21, 1996
(213) 229-7000
C19278-00010
Davidson & Associates, Inc.
19840 Pioneer Avenue
Torrance, California 90503
Re: Registration Statement on Form S-4
Gentlemen:
We are acting as counsel to Davidson & Associates, Inc., a California
corporation (the "Company") in connection with the merger (the "Merger") of
Stealth Acquisition I Corp ("Acquisition Sub"), a California corporation and
a wholly owned subsidiary of CUC International, Inc., a Delaware corporation
("Parent"), with and into the Company. You have requested our opinion as to
the material federal income tax consequences of the Merger to holders of
Company common stock, $.00025 par value. The Merger will be effected pursuant
to the terms and conditions of the Agreement and Plan of Merger (the "Merger
Agreement") dated as of February 19, 1996, among the Company, Parent and
Stealth Acquisition II Corp., a Delaware corporation and predecessor to
Acquisition Sub. The Merger Agreement is attached as Exhibit 2(a) to
Registration Statement on Form S-4 (the "Registration Statement") filed on
the date hereof with the Securities and Exchange Commission in connection with
the Merger. This opinion is being rendered pursuant to Section 5.2(d) of the
Merger Agreement.
In rendering our opinion, we have examined the Merger Agreement and
have, with your permission, relied upon, and assumed as correct now and as of
the Effective Time, (i) the factual information contained in the Registration
Statement, (ii) the representations and covenants contained in the Agreement,
(iii) certain factual representations made by the Company, Parent,
Acquisition Sub, and Robert M. Davidson and Janice G. Davidson (the "Major
Shareholders"), which are attached hereto and made part hereof, and (iv) such
other materials as we have deemed necessary or appropriate as a basis for our
opinion.
Davidson & Associates, Inc.
June 21, 1996
Page 2
On the basis of the information, representations and covenants
contained in the foregoing materials, we hereby confirm our opinion set
forth under the caption "Merger--Certain Federal Income Tax Consequences"
in the Registration Statement.
This opinion expresses our views only as to federal income tax laws
in effect as of the date hereof, including the Internal Revenue Code of
1986, as amended, applicable Treasury Regulations, published rulings and
administrative practices of the Internal Revenue Service (the "Service")
and court decisions. This opinion represents our best legal judgment as
to the matters addressed herein, but is not binding on the Service or the
courts. Furthermore, the legal authorities upon which we rely are subject
to change either prospectively or retroactively. Any change in such
authorities or any change in the facts or representations, or any past or
future actions by the Company, Parent, Acquisition Sub, or the Major
Shareholders contrary to such representations might adversely affect the
conclusions stated herein.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and further consent to the use of our name under
the caption "The Merger--Certain Federal Income Tax Consequences" in the
Registration Statement and the offering circular that forms a part thereof.
Very truly yours,
/s/ GIBSON, DUNN & CRUTCHER LLP
GIBSON, DUNN & CRUTCHER LLP
June 3, 1996
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, CA 90071-3197
Gentlemen:
This letter is being delivered to you pursuant to Section 4.15 of the
Agreement and Plan of Merger (the "Agreement"), dated as of February 19, 1996,
among Davidson & Associates, Inc., a California corporation (the "Company"), CUC
International Inc., a Delaware corporation ("Parent"), and Stealth Acquisition
II Corp., a Delaware corporation and a wholly owned subsidiary of Parent
(together with its successors and assigns, "Acquisition Sub"). Unless otherwise
indicated, capitalized terms not defined herein have the meaning set forth in
the Agreement.
After due inquiry and investigation regarding the meaning of and
factual support for the following representations, the undersigned hereby
certifies and represents that, assuming the Merger were to occur on the date
hereof and without waiver of the condition set forth in Section 5.3(f) of the
Agreement, the following facts are true:
1. Pursuant to the Merger, Acquisition Sub will merge with and into
the Company, and the Company will acquire all of the assets and liabilities of
Acquisition Sub. Specifically, the assets transferred to the Company pursuant
to the Merger will represent at least ninety percent (90%) of the fair market
value of the net assets and at least seventy percent (70%) of the fair market
value of the gross assets held by Acquisition Sub immediately prior to the
Merger. In addition, at least ninety percent (90%) of the fair market value of
the net assets and at least seventy percent (70%) of the fair market value of
the gross assets held by the Company immediately prior to the Merger will
continue to be held by the Company immediately after the Merger. For the
purpose of determining the percentage of the Company's and Acquisition Sub's net
and gross assets held by the Company immediately following the Merger, the
following assets will be treated as property held by Acquisition Sub or the
Company, as the case may be, immediately prior but not subsequent to the Merger:
(i) assets used by the Company or Acquisition Sub (other than assets transferred
from Parent to Acquisition Sub for such purpose) to pay shareholders perfecting
dissenters' rights or other expenses or liabilities incurred in connection with
the Merger and (ii) assets used to make distributions, redemptions or other
payments in respect of stock of the Company (except for regular, normal
distributions) or in respect of rights to acquire such stock (including payments
treated as such for tax purposes) that are made in contemplation of the Merger
or that are related thereto;
2. Other than in the ordinary course of business or pursuant to its
obligations under the Agreement, the Company has not disposed of any of its
assets (including any distribution of assets with respect to, or in redemption
of, stock) since January 1, 1995;
3. The Company's principal reasons for participating in the Merger
are bona fide business purposes unrelated to taxes;
4. The Company has no outstanding warrants, options, convertible
securities or any other type of right to acquire the Company stock (or any other
equity interest in the Company) or to vote (or restrict or otherwise control the
vote of) shares of stock of the
Company which, if exercised, would affect Parent's acquisition and retention of
Control of the Company;
5. In the Merger, shares of stock of the Company representing
"Control" of the Company will be exchanged solely for shares of voting stock of
Parent. For purposes of this paragraph, shares of the stock of Company
exchanged in the Merger for cash and other property (including, without
limitation, cash paid to shareholders of the Company perfecting dissenters'
rights or in lieu of fractional shares of Parent voting stock) will be treated
as shares of stock of the Company outstanding on the date of the Merger but not
exchanged for shares of voting stock of Parent. As used in this letter,
"Control" shall consist of direct ownership of shares of stock possessing at
least eighty percent (80%) of the total combined voting power of shares of all
classes of stock entitled to vote and at least eighty percent (80%) of the total
number of shares of all other classes of stock of the corporation. For purposes
of determining Control, a person shall not be considered to own shares of voting
stock if rights to vote such shares (or to restrict or otherwise control the
voting of such shares) are held by a third party (including a voting trust)
other than an agent of such person;
6. The payment of cash in lieu of fractional shares of Parent stock
is solely for the purpose of avoiding the expense and inconvenience to Parent of
issuing fractional shares and does not represent separately bargained for
consideration. The total cash consideration that will be paid in the Merger to
the Company shareholders in lieu of fractional shares of Parent stock will not
exceed one (1) percent of the total consideration that will be issued in the
Merger to the Company shareholders in exchange for their Shares;
7. The Company has no plan or intention to issue additional shares
of stock after the Merger, or take any other action, that would result in Parent
losing Control of the Company;
8. The Company has no plan or intention to sell or otherwise dispose
of any of its assets or of any of the assets acquired from Acquisition Sub in
the Merger except for dispositions made in the ordinary course of business or
payment of expenses, including payments to shareholders of the Company
perfecting dissenters' rights, incurred by the Company pursuant to the Merger
and except for transfers described in both Section 368(a)(2)(C) of the Code and
Treasury Regulation Section 1.368-2(j)(4);
9. Following the Merger, the Company will continue its historic
business or use a significant portion of its historic business assets in a
business;
10. The liabilities of the Acquisition Sub assumed by the Company and
the liabilities to which the transferred assets of Acquisition Sub are subject
were incurred by Acquisition Sub in the ordinary course of its business;
11. The fair market value of the Company's assets will, at the
Effective Time of the Merger, exceed the aggregate liabilities of the Company
plus the amount of liabilities, if any, to which such assets are subject;
12. The Company is not an "investment company" within the meaning of
Sections 368(a)(2)(F)(iii) and (iv) of the Code;
13. The Company is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the Code;
14. There is no plan or intention ("Plan) on the part of the
shareholders of the Company who own five percent or more of the Company stock
and, after due inquiry with
2
its officers and directors, the Company has no knowledge of, and believes that
there does not exist, any Plan on the part of the remaining shareholders of the
Company to engage in a sale, exchange, transfer, distribution (including,
without limitation, a distribution by a partnership to its partners or by a
corporation to its stockholders), pledge, disposition or any other transaction
which results in a reduction in the risk of ownership or a direct or indirect
disposition (a "Sale") of shares of Parent stock received in the Merger that
would reduce ownership by shareholders of the Company of Parent stock to a
number of shares having a value as of the effective time of the Merger of less
than fifty percent (50%) of the aggregate fair market value, immediately prior
to the Merger, of all outstanding shares of the Company stock. For purposes of
this paragraph, shares of the Company stock (i) with respect to which a
shareholder of the Company receives consideration in the Merger other than
shares of Parent stock (including, without limitation, cash received pursuant to
the exercise of dissenter's rights or in lieu of fractional shares of Parent
stock) and/or (ii) with respect to which a Sale occurs prior to and in
contemplation of the Merger, shall be considered outstanding shares of stock of
the Company exchanged for shares of Parent stock in the Merger and then disposed
of pursuant to a Plan;
15. The fair market value of the shares of Parent stock received by
each shareholder of the Company will be approximately equal to the fair market
value of the shares of stock of the Company surrendered in exchange therefor and
the aggregate consideration received by shareholders of the Company in exchange
for their shares of stock of the Company will be approximately equal to the fair
market value of all of the outstanding shares of stock of the Company
immediately prior to the Merger;
16. Acquisition Sub, Parent, the Company and the shareholders of the
Company will each pay separately its or their own expenses relating to the
Merger;
17. There is no intercorporate indebtedness existing between Parent
and the Company or between Acquisition Sub and the Company that was issued,
acquired, or will be settled at a discount as a result of the Merger;
18. The terms of the Agreement are the product of arm's length
negotiations;
19. None of the compensation received by any shareholder-employees of
the Company will be separate consideration for, or allocable to, any of their
shares of stock of the Company; none of the shares of Parent stock received by
any shareholder-employees of the Company will be separate consideration for, or
allocable to, any employment agreement or any covenants not to compete; and the
compensation paid to any shareholder-employees of the Company will be for
services actually rendered and will be commensurate with amounts paid to third
parties bargaining at arm's length for similar services;
20. To the best knowledge of the Company, during the past five (5)
years, none of the outstanding shares of capital stock of the Company, including
the right to acquire or vote any such shares, have directly or indirectly been
owned by Parent.;
21. Factual statements contained in the Registration Statement on
Form S-4 of Parent filed with the Securities and Exchange Commission in
connection with the Merger, which Registration Statement includes the Proxy
Statement-Prospectus of the Company are true, correct and complete in all
material respects;
22. The Company is authorized to make all of the representations set
forth herein; and
3
23. The Agreement represents the full and complete agreement among
Parent, Acquisition Sub and the Company regarding the Merger, and there are no
other written or oral agreements regarding the Merger.
It is understood that (i) your opinions will be based on the
representations set forth herein and on the statements contained in the
Agreement (including all schedules and exhibits thereto) and documents related
thereto, and (ii) your opinions will be subject to certain limitations and
qualifications including that they may not be relied upon if any such
representations are not accurate in all material respects.
Notwithstanding anything herein to the contrary, the undersigned makes
no representations regarding any actions or conduct of the Company pursuant to
Parent's exercise of control over the Company after the Merger. It is
understood that your opinions will not address any tax consequence of the Merger
or any action taken in connection therewith except as expressly set forth in
such opinions.
Very truly yours,
DAVIDSON & ASSOCIATES, INC.,
A CALIFORNIA CORPORATION
By: /s/ Robert M. Davidson
----------------------------------
Title: CEO
------------------------------
4
June 3, 1996
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, CA 90071-3197
Gentlemen:
This letter is being delivered to you pursuant to Section 4.15 of the
Agreement and Plan of Merger (the "Agreement"), dated as of February 19, 1996,
among Davidson & Associates, Inc., a California corporation (the "Company"),
CUC International Inc., a Delaware corporation ("Parent"), and Stealth
Acquisition II Corp., a Delaware corporation and a wholly owned subsidiary of
Parent (together with its successors and assigns, "Acquisition Sub"). Unless
otherwise indicated, capitalized terms not defined herein have the meanings set
forth in the Agreement.
After due inquiry and investigation regarding the meaning of and
factual support for the following representation, the undersigned hereby certify
and represent that, assuming the Merger were to occur on the date hereof and
without waiver of the condition set forth in Section 5.3(f) of the Agreement,
the following facts are true:
1. Pursuant to the Merger, Acquisition Sub will merge with and into
the Company, and the Company will acquire all of the assets and liabilities of
Acquisition Sub. Specifically, the assets transferred to the Company pursuant
to the Merger will represent at least ninety percent (90%) of the fair market
value of the net assets and at least seventy percent (70%) of the fair market
value of the gross assets held by Acquisition Sub immediately prior to the
Merger. In addition, at least ninety percent (90%) of the fair market value of
the net assets and at least seventy percent (70%) of the fair market value of
the gross assets held by the Company immediately prior to the Merger will
continue to be held by the Company immediately after the Merger. For the
purpose of determining the percentage of the Company's and Acquisition Sub's net
and gross assets held by the Company immediately following the Merger, the
following assets will be treated as property held by Acquisition Sub or the
Company, as the case may be, immediately prior but not subsequent to the Merger:
(i) assets used by the Company or Acquisition Sub (other than assets transferred
from Parent to Acquisition Sub for such purpose) to pay shareholders perfecting
dissenter's rights or other expenses or liabilities incurred in connection with
the Merger and (ii) assets used to make distributions, redemptions or other
payments in respect of stock of the Company (except for regular, normal
distributions) or in respect of rights to acquire such stock (including payments
treated as such for tax purposes) that are made in contemplation of the Merger
or that are related thereto;
2. Acquisition Sub was formed solely for the purpose of consummating
the transactions contemplated by the Agreement and at no time will Acquisition
Sub conduct any business activities or other operations, or dispose of any of
its assets, other than pursuant to its obligations under the Agreement;
3. Parent's principal reasons for participating in the Merger are
bona fide business purposes not related to taxes;
4. Prior to the Merger, Parent will be in "Control" of Acquisition
Sub. As used in this letter, "Control" shall consist of direct ownership of
shares of stock possessing at least eighty percent (80%) of the total combined
voting power of all classes of stock entitled to vote and at least eighty
percent (80%) of the total number of shares of all other classes of stock of the
corporation. For purposes of determining Control, a person shall not be
considered to own shares of voting stock if rights to vote such shares (or to
restrict or otherwise control the voting of such shares) are held by a third
party (including a voting trust) other than an agent of such person;
5. In the Merger, shares of stock of the Company representing
Control of the Company will be exchanged solely for shares of voting stock of
Parent. For purposes of this paragraph, shares of stock of the Company
exchanged in the Merger for cash and other property (including, without
limitation, cash paid to shareholders of the Company perfecting dissenters'
rights or in lieu of fractional shares of Parent voting stock) will be treated
as shares of stock of the Company outstanding on the date of the Merger but not
exchanged for shares of voting stock of Parent;
6. The payment of cash in lieu of fractional shares of Parent stock
is solely for the purpose of avoiding the expense and inconvenience to Parent of
issuing fractional shares and does not represent separately bargained for
consideration. The total cash consideration that will be paid in the Merger to
the Company shareholders in lieu of fractional shares of Parent stock will not
exceed one (1) percent of the total consideration that will be issued in the
Merger to the Company shareholders in exchange for their Shares;
7. Parent has no plan or intention to cause the Company to issue
additional shares of stock after the Merger, or take any other action, that
would result in Parent losing Control of the Company;
8. Parent has no plan or intention to reacquire any of its stock
issued pursuant to the Merger;
9. Parent has no plan or intention to liquidate the Company; to
merge the company with or into another corporation, including Parent or its
affiliates; to sell, distribute or otherwise dispose of the stock of the
Company; or to cause the Company to sell or otherwise dispose of any of its
assets or of any assets acquired from Acquisition Sub, except for dispositions
made in the ordinary course of business or payment of expenses, including
payments to shareholders of the Company perfecting dissenters' rights, incurred
by the Company pursuant to the Merger and except for transfers described in both
Section 368(a)(2)(C) of the Code and Treasury Regulation Section 1.368-2(j)(4);
10. In the Merger, Acquisition Sub will have no liabilities assumed
by the Company and will not transfer to the Company any assets subject to
liabilities, except to the extent incurred in connection with the transactions
contemplated by the Agreement;
11. Following the Merger, the Company will continue its historic
business or use a significant portion of its historic business assets in a
business;
12. During the past five (5) years, none of the outstanding shares of
capital stock of the Company, including the right to acquire or vote any such
shares, have directly or indirectly been owned by Parent;
2
13. Neither Parent nor Acquisition Sub is an "investment company"
within the meaning of Sections 368(a)(2)(F)(iii) and (iv) of the Code;
14. The liabilities of Acquisition Sub assumed by Target and the
liabilities to which the transferred assets of Acquisition Sub are subject were
incurred by Acquisition Sub in the ordinary course of its business;
15. The fair market value of the Parent stock received by each
stockholder of the Company will be approximately equal to the fair market value
of the stock of the Company surrendered in exchange therefor, and the aggregate
consideration received by shareholders of the Company in exchange for their
stock of the Company will be approximately equal to the fair market value of all
of the outstanding shares of stock of the Company immediately prior to the
Merger;
16. Acquisition Sub, Parent, the Company and the shareholders of the
Company will each pay separately its or their own expenses relating to the
Merger;
17. There is no intercorporate indebtedness existing between Parent
and the Company or between Acquisition Sub and the Company that was issued,
acquired or will be settled at a discount as a result of the Merger;
18. The terms of the Agreement are the product of arm's-length
negotiations;
19. None of the compensation received by any shareholder-employee of
the Company will be separate consideration for, or allocable to, any of their
shares of stock of the Company; none of the shares of Parent stock received by
any shareholder-employee of the Company will be separate consideration for, or
allocable to, any employment agreement or any covenants not to compete; and the
compensation paid to any shareholder-employee of the Company will be for
services actually rendered and will be commensurate with amounts paid to third
parties bargaining at arm's-length for similar services;
20. Factual statements contained in the Registration Statement on
Form S-4 of Parent filed with the Securities and Exchange Commission in
connection with the Merger, which Registration Statement includes the Proxy
Statement-Prospectus of the Company are true, correct and complete in all
material respects;
21. Parent and Acquisition Sub are authorized to make all of the
representations set forth herein; and
22. The Agreement represents the full and complete agreement among
Parent, Acquisition Sub and the Company regarding the Merger, and there are no
other written or oral agreements regarding the Merger.
It is understood that (i) your opinions will be based on the
completeness and accuracy of and compliance with, representations set forth
herein and on the statements contained in the Agreement (including all schedules
and exhibits thereto) and documents related thereto, and (ii) your opinions will
be subject to certain limitations and qualifications, including that they may
not be relied upon if any such representations are not accurate in all material
respect.
3
It is understood that your opinions will not address any tax
consequences of the Merger or any action taken in connection therewith except as
expressly set forth in such opinions.
Very truly yours,
CUC INTERNATIONAL INC.,
a DELAWARE CORPORATION
By: Cosmo Corigliano
----------------------------
Title: Senior Vice President
-------------------------
STEALTH ACQUISITION I CORP.,
a CALIFORNIA CORPORATION
By: Cosmo Corigliano
----------------------------
Title: Vice President
-------------------------
4
CONTINUITY OF INTEREST CERTIFICATE
Davidson & Associates, Inc.
19840 Pioneer Avenue
Torrance, CA 90503
Gibson, Dunn & Crutcher
333 South Grand Avenue
Los Angeles, CA 90071-3197
Gentlemen and Mesdames:
The undersigned, constituting all of the shareholders of Davidson &
Associates, Inc., a California corporation (the "Company"), who beneficially own
five (5) percent or more of the common stock of the Company (the "Company Common
Stock"), are aware that pursuant to an Agreement and Plan of Merger, dated as of
February 19, 1996 (the "Agreement"), made and entered into by and among the
Company, CUC International Inc., a Delaware corporation ("Parent"), and Stealth
Acquisition II Corp., a Delaware corporation and a wholly owned subsidiary of
Parent ("Acquisition"), pursuant to which it is contemplated that Acquisition
will merge with and into the Company in a transaction (the "Merger") in which
shares of Company Common Stock will be exchanged for shares of the common stock
of Parent ("Parent Common Stock").
1. The undersigned hereby represent, warrant, certify and covenant
as follows:
(a) Each of the undersigned currently is the beneficial owner of
that number and class of shares of Company Common Stock as set forth opposite
the undersigned's name on Schedule A hereto and did not acquire any of such
shares in contemplation of the Merger;
(b) The undersigned have not engaged in a Sale (as defined
below) of any shares of Company Common Stock in contemplation of the Merger;
(c) The undersigned have no plan or intention ("Plan") to
exercise dissenters' rights in connection with the Merger;
(d) There is no Plan on the part of the undersigned, and the
undersigned have no knowledge of and believe that there does not exist any Plan
on the part of the remaining holders of shares of Company Common Stock, to
engage in a sale, exchange, transfer, distribution (including a distribution by
a partnership to its partners or by a corporation to its stockholders),
redemption or reduction in any way of the undersigned's risk of ownership (by
short sale or otherwise), or other disposition, directly or indirectly (such
actions being collectively referred to herein as a "Sale"), or Sales of the
shares of Parent Common Stock to be received in the Merger such that the
aggregate fair market value, as of the Effective Time (as defined in the
Agreement), of shares subject to
such Sales would exceed fifty percent (50%) of the aggregate fair market value
of all shares of outstanding the Company Common Stock immediately prior to the
Merger. For purposes of the preceding sentence, shares of Company Common Stock
(or the portion thereof) (i) with respect to which a shareholder of the Company
receives consideration in the Merger other than shares of Parent Common Stock
(including, without limitation, cash received pursuant to the exercise of
dissenters' rights or in lieu of a fractional share of Parent Common Stock) or
(ii) with respect to which a Sale occurs prior to and in contemplation of the
Merger, shall be considered shares of outstanding Company Common Stock exchanged
for shares of Parent Common Stock in the Merger and then disposed of pursuant to
a Plan;
(e) For a two (2)-year period following the Merger, the
undersigned, in the aggregate, will retain ownership, and will not engage in a
Sale, of that number of shares of Parent Common Stock issued to the undersigned
in the Merger, which together with the shares of Parent Common Stock issued to
the remaining shareholders of the Company in the Merger, has an aggregate fair
market value as of the Effective Time (as defined in the Agreement) of fifty-
five percent (55%) or more of the total fair market value of all shares of
outstanding Company Common Stock immediately prior to the Merger. For purposes
of the preceding sentence, shares of Company Common Stock (or the portion
thereof) (i) with respect to which a shareholder of the Company receives
consideration in the Merger other than shares of Parent Common Stock (including,
without limitation, cash received pursuant to the exercise of dissenters' rights
or in lieu of a fractional share of Parent Common Stock) or (ii) with respect to
which a Sale occurs prior to and in contemplation of the Merger, shall be
considered shares of outstanding Company Common Stock exchanged for shares of
Parent Common Stock in the Merger and then disposed of during the two-year
period following the Merger;
(f) To the best of the knowledge of the undersigned, all of the
statements set forth in those certain "Officer's Certificates Regarding Certain
Tax Matters," attached as Exhibit C-2 and Exhibit C-3 to the Agreement, are
----------- -----------
true, correct and complete; and
(g) Except to the extent written notification to the contrary is
received by the Company from the undersigned prior to the Merger, the
representations and warranties and certifications contained herein shall be true
and correct at all times from the date hereof through the Effective Date (as
defined in the Agreement). The undersigned agree to promptly notify the Company
prior to the Merger if at any time after the date hereof and prior to the
Merger, the undersigned would no longer be able to make the representations,
warranties and covenants set forth herein.
2. The undersigned have been provided with a copy of the Agreement
(including all schedules and exhibits thereto) and have consulted with such
legal and financial counsel as the undersigned have deemed appropriate in
connection with the execution of this Certificate.
2
3. The undersigned understands that the Company and its
shareholders, as well as legal counsel to the Company (in connection with
rendering of an opinion that the Merger will be a "reorganization" within the
meaning of Section 368 of the Internal Revenue Code of 1986, as amended) will be
relying on (a) the truth and accuracy of the representations contained herein
and (b) the undersigned's performance of the obligations set forth herein.
3
IN WITNESS WHEREOF, the undersigned has executed this Certificate on
______________, 1996.
/s/ Robert M. Davidson
------------------------------
Robert M. Davidson
/s/ Janice G. Davidson
------------------------------
Janice G. Davidson
ROBERT M. DAVIDSON ELIZABETH A. DAVIDSON TRUST
CHARITABLE REMAINDER UNITRUST
By: /s/ Robert M. Davidson By: /s/ Robert M. Davidson
--------------------------- ---------------------------
Robert M. Davidson, Trustee Robert M. Davidson, Co-Trustee
JANICE G. DAVIDSON
CHARITABLE REMAINDER UNITRUST
By: /s/ Janice G. Davidson By: /s/ Janice G. Davidson
--------------------------- ---------------------------
Janice G. Davidson, Trustee Janice G. Davidson, Co-Trustee
JOHN R. DAVIDSON TRUST EMILIE A. DAVIDSON TRUST
By: /s/ Robert M. Davidson By: /s/ Robert M. Davidson
--------------------------- ---------------------------
Robert M. Davidson, Co-Trustee Robert M. Davidson, Co-Trustee
By: /s/ Janice G. Davidson By: /s/ Janice G. Davidson
--------------------------- ---------------------------
Janice G. Davidson, Co-Trustee Janice G. Davidson, Co-Trustee
4
SCHEDULE A
No. Shares of Company
Common Stock
Name and Address* Beneficially Owned
---------------- ------------------------
Robert M. Davidson 494,0751
Robert M. Davidson, as trustee of 9,000,0001
Robert M. Davidson Charitable Remainder
Unitrust
Robert M. Davidson, as co-trustee of 2,168,7502
Elizabeth A. Davidson Trust
Robert M. Davidson, as co-trustee of 2,168,7502
Emilie A. Davidson Trust2
Robert M. Davidson, as co-trustee of 2,168,7502
John R. Davidson Trust
Janice G. Davidson 488,4751
Janice G. Davidson, as trustee of 9,000,0001
Janice G. Davidson Charitable Remainder
Unitrust
Janice G. Davidson, as co-trustee of 2,168,7502
Elizabeth A. Davidson Trust
Janice G. Davidson, as co-trustee of 2,168,7502
Emilie A. Davidson Trust
Janice G. Davidson, as co-trustee of 2,168,7502
John R. Davidson Trust
--------------------
* c/o Robert M. Davidson and Janice G. Davidson, 19840
Pioneer Avenue,
Torrance, CA 90503; Telephone: (310) 793-0600;
Fax: (310) 793-0601.
1 Shareholder has sole power with respect to such shares.
2 Shareholder has shared power with respect to such shares.
EXHIBIT 15.1
Letter Re: Unaudited Interim Financial Information
June 19, 1996
Board of Directors and Shareholders'
CUC International Inc.
We are aware of the incorporation by reference in the Proxy Statement of
Davidson & Associates, Inc. that is made a part of the Registration Statement
(Form S-4) and Prospectus of CUC International Inc. for the registration of
30,039,606 shares of its common stock of our report dated May 22, 1996
relating to the unaudited condensed consolidated interim financial statements
of CUC International Inc. that are included in its Forms 10-Q for the quarter
ended April 30, 1996.
Pursuant to Rule 436(c) of the Securities Act of 1933 our reports are not a
part of the registration statement prepared or certified by accountants
within the meaning of Section 7 or 11 of the Securities Act of 1933.
/s/Ernst & Young LLP
ERNST & YOUNG LLP
Stamford, Connecticut
EXHIBIT 15.2
PRICE WATERHOUSE LLP
June 18, 1996
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
We are aware that CUC International Inc. has included our report dated April 29,
1996, of Ideon Group, Inc. (issued pursuant to the provisions of Statement on
Auditing Standards No. 71), in the Prospectus constituting part of CUC
International Inc.'s Registration Statement on Form S-4 (related to Davidson &
Associates, Inc.) to be filed on or about June 18, 1996. We are also aware of
our responsibilities under the Securities Act of 1933.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Tampa, Florida
Exhibit 23.3
ACCOUNTANTS' CONSENT
The Board of Directors
Davidson & Associates, Inc.
We consent to the use of our reports incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the proxy statement/
prospectus relating to Davidson and Associates, Inc. and CUC International, Inc.
and the Form S-4 of CUC International, Inc. which includes such proxy
statement, dated June, 1996.
/s/ KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP
Long Beach, California
June 19, 1996
Exhibit 23.4
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 19, 1996, incorporated by reference in the
Proxy Statement of Davidson & Associates, Inc. that is made a part of the
Registration Statement (Form S-4) and Prospectus of CUC International Inc.
/s/Ernst & Young LLP
ERNST & YOUNG LLP
Stamford, Connecticut
June 19, 1996
EXHIBIT 23.5(a)
INDEPENDENT AUDITORS' CONSENT
- -----------------------------
We consent to the incorporation by reference in this Registration Statement
of CUC International, Inc. on Form S-4 of our report dated March 13, 1995,
appearing in the Annual Report on Form 10-K of Advance Ross Corporation
for the year ended December 31, 1994, and to the reference to us under the
heading "Experts" in the Proxy Statement of Davidson & Associates, Inc.,
which is part of this Registration Statement.
/s/Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Chicago, Illinois
June 17, 1996
Exhibit 23.5(b)
EXHIBIT
INDEPENDENT AUDITORS' CONSENT
- -------------------------------------------------------------------------------
We consent to the incorporation by reference in this Registration Statement of
CUC International Inc. on Form S-4 of our report dated February 13, 1996 on the
consolidated financial statements of Sierra On-Line, Inc. and subsidiaries for
the year ended March 31, 1995, appearing in the Quarterly Report on Form 10-Q/A
(filed with the Securities and Exchange Commission on May 15, 1996) for the
quarterly period ended December 31, 1995 of Sierra On-Line, Inc., and to the
reference to us under the heading "Experts" in the Proxy Statement of
Davidson & Associates, Inc., which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Seattle, Washington
June 19, 1996
Exhibit 23.6
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of CUC
International Inc. (related to Davidson & Associates, Inc.) of our
report dated February 2, 1996, appearing on page 39 of the Ideon Group,
Inc. Annual Report on Form 10-K for the year ended December 31, 1995. We
also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Tampa, Florida
June 18, 1996
