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PROSPECTUS SUPPLEMENT
(To Prospectus dated October 20, 1999)
15,000,000 SPECIAL FELINE PRIDESSM
CENDANT CORPORATION
This is an offering to holders of Rights of up to 15,000,000 special
FELINE PRIDES of Cendant Corporation, a Delaware corporation. The special
FELINE PRIDES consist of units referred to as special Income PRIDES.
Holders of Rights may subscribe for two special FELINE PRIDES for every
three Rights which they submit as part of their subscription. The special
Income PRIDES are identical to our outstanding Income PRIDES, referred to
as the current Income PRIDES, which are traded on the New York Stock
Exchange. Unless the Rights are exercised prior to February 14, 2001, they
will expire without value. In order to exercise Rights, three Rights must
be submitted with two Income PRIDES or two growth PRIDES, at which time the
exercising holder will receive two new FELINE PRIDES. On February 16, 2001,
the settlement date, the holder of each current FELINE PRIDES will purchase
1.3514 shares of our common stock designated CD common stock, assuming the
market value of our common stock remains less than $37. On that same date,
the holder of each new FELINE PRIDES will purchase 2.3036 shares of our
common stock. Combining the Rights and the current FELINE PRIDES therefore
results in a holder receiving more shares of our common stock upon
settlement.
This offering is made in accordance with a stipulation of settlement
agreement we have entered into, the material terms of which are described
in a prospectus dated October 20, 1999 covering the issuance and sale of
new and additional FELINE PRIDES, and which is incorporated by reference
into this prospectus supplement.
The special FELINE PRIDES are being offered only to persons who hold
Rights and must be subscribed for no later than February 14, 2001. The
offering price for the special FELINE PRIDES has been set at $20.56 per
special Income PRIDES, which is equal to 105% of the theoretical value of
the current Income PRIDES, as determined on February 7, 2001 pursuant to an
agreed upon formula. The closing price of our current Income PRIDES on the
New York Stock Exchange on February 7,2001 was $19.66. We have been advised
that the current Income PRIDES have been consistently trading at a price
below 102% of their theoretical value recently. If that remains the case,
holders of Rights would be advised to purchase current Income PRIDES in the
open market (NYSE symbol: "CDPrI") rather than purchase special FELINE
PRIDES from us. On February 7, 2001, the last reported sale price of our
common stock on the NYSE was $13.80 per share.
Because this offer is being made shortly before the settlement date
for our FELINE PRIDES, holders of Rights who subscribe for special FELINE
PRIDES will not receive special FELINE PRIDES or the new FELINE PRIDES
receivable upon exercise of the Rights. Instead, the holders of Rights who
purchase special FELINE PRIDES from us will be required to submit their
Rights and the funds for the purchase of the special FELINE PRIDES prior to
the close of business on February 14, 2001, and will receive on February
16, 2001 the following:
o the shares of our common stock designated CD common stock to
which they will be entitled upon settlement of the new FELINE
PRIDES; and
o a cash payment of $0.9375 per special Income PRIDES subscribed
for, in respect of the accrued cash distributions on the new
Income PRIDES receivable upon exercise of the Rights. Further
details regarding the cash payment can be found under the
heading "The Offering."
INVESTING IN THE SPECIAL FELINE PRIDES INVOLVES RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE S-4 OF THIS PROSPECTUS SUPPLEMENT.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
passed upon the adequacy or accuracy of this prospectus supplement or the
prospectus to which it relates. Any representation to the contrary is a
criminal offense.
The date of this prospectus supplement is February 7, 2001.
SM Service Mark of Merrill Lynch & Co., Inc.
TABLE OF CONTENTS
Page
THE OFFERING ........................................................S-3
RISK FACTORS.........................................................S-4
PRICE RANGE OF COMMON STOCK AND DIVIDENDS............................S-6
USE OF PROCEEDS......................................................S-6
CERTAIN FEDERAL INCOME TAX CONSEQUENCES..............................S-7
THE OFFERING
The purpose of this offering is to provide holders of Rights, which
will expire without value unless they are exercised on or prior to February
14, 2001, with a source of FELINE PRIDES so they can exercise their Rights,
even if the demand for FELINE PRIDES for those purposes pushes the trading
price of FELINE PRIDES in the market above 105% of the theoretical value of
the current FELINE PRIDES, as determined pursuant to an agreed upon
formula. We have been advised that the current Income PRIDES have been
consistently trading at a price below 102% of their theoretical value
recently. If that remains the case, holders of Rights would be advised to
purchase current Income PRIDES in the open market (NYSE symbol: "CDPrI")
rather than purchase special FELINE PRIDES from us. The offering price for
the special FELINE PRIDES has been set at $20.56 per special Income PRIDES.
The closing price of our current Income PRIDES on the NYSE on February 7,
2001 was $19.66.
If you wish to place an order for special FELINE PRIDES, you must, no
later than 5:00 p.m. (New York City time) on February 14, 2001, submit to
Bank One Trust Company, National Association, the rights agent for the
offering, through the facilities of DTC (1) three Rights for every two
special FELINE PRIDES for which you wish to subscribe, (2) a Letter of
Transmittal to subscribe for the special FELINE PRIDES and (3) your cash
payment for the subscription price of the special FELINE PRIDES. ANY
SUBSCRIPTIONS FOR SPECIAL FELINE PRIDES SUBMITTED TO BANK ONE ON OR PRIOR
TO FEBRUARY 7, 2001 WILL NOT BE ACCEPTED.
You will only be entitled to buy up to that number of special FELINE
PRIDES needed to exercise the Rights you submit with your special FELINE
PRIDES subscription. IF YOU HOLD YOUR RIGHTS IN PHYSICAL CERTIFICATED FORM
YOU WILL NOT BE ABLE TO EXERCISE YOUR RIGHTS UNLESS YOU FIRST DEPOSIT YOUR
PHYSICAL RIGHTS CERTIFICATE WITH YOUR SECURITIES CUSTODIAN AND INSTRUCT
YOUR SECURITIES CUSTODIAN TO DEPOSIT THE PHYSICAL RIGHTS CERTIFICATE WITH
DTC. If time will not permit you to deliver your Rights prior to 5:00 p.m.
(New York City time) on February 14, 2001, then you may submit a Notice of
Guaranteed Delivery in place of your Rights. By submitting a Notice of
Guaranteed Delivery, you are guaranteeing that you will deliver your Rights
no later than the close of business on February 20, 2001. IN ORDER TO
UTILIZE THIS GUARANTEED DELIVERY PROCEDURE TO EXERCISE YOUR RIGHTS FOR
SPECIAL FELINE PRIDES, YOU MUST STILL SUBMIT YOUR LETTER OF TRANSMITTAL AND
YOUR CASH PAYMENT FOR THE SPECIAL FELINE PRIDES TOGETHER WITH THE NOTICE OF
GUARANTEED DELIVERY PRIOR TO THE CLOSE OF BUSINESS ON FEBRUARY 14, 2001.
On February 16, 2001, holders of Rights that have completed their
special FELINE PRIDES subscription as described above will receive the
shares of our common stock to which they will be entitled upon settlement
of the new FELINE PRIDES and a cash payment of $0.9375 per special Income
PRIDES for which they subscribed. This cash payment reflects accrued
interest and contract adjustment payments on the new Income PRIDES
receivable upon exercise of the Rights for the quarterly payment period
ended February 16, 2001. Neither the special FELINE PRIDES nor the new
FELINE PRIDES will be listed on any national securities exchange.
In the event that you do not submit your Rights to the rights agent
as described above, any payment that you have made will be returned to you
and your Rights will expire at the close of business on February 14, 2001
without any further notice from us. Letters of Transmittal may be obtained
by either contacting Wingspan Investment Services, Inc. , the subscription
agent for the offering, at (800) 977-9464, or over the Internet at
http://www.bankone.com/cendantprides.
RISK FACTORS
Your investment in the FELINE PRIDES will involve risks. You should
carefully consider the following discussion of risks as well as other
information contained in this prospectus.
DISCOVERY OF ACCOUNTING IRREGULARITIES AND RELATED LITIGATION AND
GOVERNMENT INVESTIGATIONS
We were created in December 1997, through the merger of HFS
Incorporated into CUC International with CUC surviving and changing its
name to Cendant Corporation. On April 15, 1998, we announced that in the
course of transferring responsibility for our accounting functions from
Cendant personnel associated with CUC prior to the merger to Cendant
personnel associated with HFS before the merger and preparing for the
reporting of first quarter 1998 financial results, we discovered accounting
irregularities in some of the CUC business units. As a result, we, together
with our counsel and assisted by auditors, immediately began an intensive
investigation.
As a result of the findings of the investigations, we restated our
previously reported financial results for 1997, 1996 and 1995 and the six
months ended June 30, 1998.
Since the April 15, 1998 announcement of the discovery of accounting
irregularities in the former CUC business units, approximately 70 lawsuits
claiming to be class actions, three lawsuits claiming to be brought
derivatively on our behalf and several individual lawsuits and arbitration
proceedings have been commenced in various courts and other forums against
us and other defendants by or on behalf of persons claiming to be
stockholders of Cendant and persons claiming to have purchased or otherwise
acquired securities or options issued by CUC or Cendant between May 1995
and August 1998.
The Securities and Exchange Commission and the United States Attorney
for the District of New Jersey are also conducting investigations relating
to the matters referenced above. As a result of the findings from our
internal investigations, our management has made all adjustments considered
necessary by us, which are reflected in our previously filed restated
financial statements for the years ended December 31, 1997, 1996 and 1995
and for the six months ended June 30, 1998. On June 14, 2000, pursuant to
an offer of settlement made by us, the SEC issued an Order Instituting
Public Administrative Proceedings Pursuant to Section 21C of the Securities
Exchange Act of 1934, Making Findings and Imposing a Cease and Desist
Order. In the Order, the SEC found that we had violated certain financial
reporting provisions of the Securities Exchange Act of 1934 and ordered us
to cease and desist from committing any future violations of such
provisions. No financial penalties were imposed against us.
On December 7, 1999, we announced that we reached a preliminary
agreement to settle the principal securities class action pending against
us in the U.S. District Court in Newark, New Jersey. Under the agreement,
we would pay the class members approximately $2.85 billion in cash. The
definitive settlement document was approved by the U.S. District Court by
order dated August 14, 2000. Certain persons who objected to various
aspects of the settlement have appealed the District Court's orders
approving the settlement, the plan of allocation of the settlement fund and
awarding of attorneys' fees and expenses to counsel for the lead
plaintiffs. No appeals challenging the fairness of the $2.85 billion
settlement amount were filed. The U.S. Court of Appeals for the Third
Circuit recently issued a briefing schedule for the appeals. No date for
oral arguments of the appeals has been fixed. Accordingly, we will not be
required to fund the settlement amount of $2.85 billion for some time.
However, the settlement agreement required us to post collateral in the
form of credit facilities and/or surety bonds by November 13, 2000, which
we have done.
Pursuant to a stipulation of settlement agreement we have entered,
the material terms of which are described in the prospectus dated October
20, 1999, and which is incorporated herein by reference, the court issued
several orders approving the issuance of an aggregate of 26,020,626 Rights
to authorized claimants under the settlement agreement. We distributed
20,686,855 Rights on March 14, 2000, 70,800 Rights on July 11, 2000,
1,387,000 Rights on July 27, 2000, 1,657,391 Rights on January 12, 2001 and
303,792 Rights on January 16, 2001. In addition, subject to approval by the
court, we may issue up to 2,020,000 additional Rights to authorized
claimants in accordance with the settlement agreement.
The above actions do not encompass all litigation asserting claims
associated with accounting irregularities. We do not believe that it is
feasible to predict the final outcome or resolution of these unresolved
proceedings. An adverse outcome from these unresolved proceedings could be
material with respect to earnings in any given reporting period. However,
as we have previously stated in our public filings, we do not believe that
the impact of these unresolved proceedings should result in a material
liability to us in relation to our financial position or liquidity.
INVESTMENT IN FELINE PRIDES REQUIRES HOLDERS TO PURCHASE COMMON STOCK
RESULTING IN THE RISK OF DECLINE IN EQUITY VALUE
The market value of the common stock issued to you under each
purchase contract on February 16, 2001 may be less than the price you paid
for the special FELINE PRIDES, in which case you will suffer an economic
loss as of February 16, 2001. Accordingly, you assume the risk that the
market value of the common stock may decline, and that decline could be
substantial.
THERE WILL BE LIMITATIONS ON OPPORTUNITY FOR EQUITY APPRECIATION
Your opportunity for equity appreciation afforded by investing in the
special FELINE PRIDES may be less than your opportunity for equity
appreciation if you directly invested in the common stock.
THE PRICE OF OUR COMMON STOCK IS SUBJECT TO POSSIBLE VOLATILITY
The market prices of Cendant common stock and of securities of the
publicly-held companies in the industry in which we operate have shown
volatility and sensitivity in response to many factors. These factors
include general market trends, public communications regarding litigation
and judicial decisions, legislative or regulatory actions, pricing trends,
competition, earnings, membership reports of particular industry
participants and acquisition activity. We cannot assure the level or
stability of the price of our securities at any time or the impact of the
foregoing or any other factors on those prices.
We urge you to obtain current market quotations for Cendant common
stock.
DILUTION OF THE COMMON STOCK MAY AFFECT THE SETTLEMENT RATE AND THE FELINE
PRIDES TRADING PRICES
The number of shares of common stock you are entitled to receive upon
the settlement of your purchase contract may be adversely affected due to
dilution of our common stock resulting from the issuance of additional
common stock or other equity interests.
The number of shares of common stock that you are entitled to receive
on February 16, 2001 is subject to adjustment for certain events arising
from stock splits and combinations, stock dividends and other actions by us
that modify our capital structure. We will not adjust the number of shares
of common stock that you are to receive on February 16, 2001 for other
events, including most offerings of common stock for cash by us or in
connection with acquisitions. We are not restricted from issuing additional
common stock during the term of the purchase contracts and have no
obligation to consider your interests for any reason.
If we issue additional shares of common stock, the price of the
common stock may be materially and adversely affected.
THE RIGHTS WERE ISSUED INITIALLY IN PHYSICAL CERTIFICATED FORM
The Rights were issued initially in physical certificated form.
Therefore, if any of your Rights certificates are mutilated, lost, stolen
or destroyed, you will have to provide evidence satisfactory to us and the
rights agent of the loss, theft or destruction of the Rights certificate
and indemnity or bond, if requested, also satisfactory to us and the rights
agent in order to receive a new Rights certificate. You may also be
required to pay any other reasonable charges as we or the rights agent may
prescribe. In addition, since the Rights may be exercised only if they are
deposited with DTC, it will be impossible for you to exercise them without
the assistance of your securities custodian. If you attempt to exercise
your Rights by delivering the executed physical Rights certificate to the
rights agent, the rights agent will reject your attempted exercise and
return your Rights certificate to you.
THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF PURCHASING, OWNING AND
DISPOSING OF FELINE PRIDES ARE NOT CLEAR
No statutory, judicial or administrative authority directly addresses
the treatment of the FELINE PRIDES or instruments similar to the FELINE
PRIDES for United States federal income tax purposes, or of the exchange of
Rights and current FELINE PRIDES or special FELINE PRIDES for new FELINE
PRIDES. As a result, the United States federal income tax consequences of
the purchase, ownership and disposition of special FELINE PRIDES are not
clear.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
Our common stock is listed and traded on the NYSE under the symbol
"CD". The following table provides, for the calendar quarters indicated,
the high and low closing sales prices per share on the NYSE for the periods
shown below as reported on the NYSE Composite Tape.
MARKET PRICE
------------
PERIOD HIGH LOW
---- ---
1999:
First Quarter...................................... $ 22 7/16 $15 5/16
Second Quarter..................................... 20 3/4 15 1/2
Third Quarter...................................... 22 5/8 17
Fourth Quarter..................................... 26 9/16 14 9/16
2000:
First Quarter...................................... 24 5/16 16 3/16
Second Quarter..................................... 18 3/4 12 1/4
Third Quarter...................................... 14 3/4 10 5/8
Fourth Quarter..................................... 12 9/16 8 1/2
2001:
First Quarter through February 7, 2001............. 13.80 9 5/8
We have never paid a cash dividend on our common stock. We do not
anticipate paying cash dividends on our capital stock in the foreseeable
future and intend to retain all earnings to finance the operations and
expansion of our business and the repurchase of common stock and debt
reduction. The payment of cash dividends in the future will depend on our
earnings, financial condition and capital needs and on other factors deemed
relevant by our board of directors at that time.
USE OF PROCEEDS
All or substantially all of the proceeds from the sale of the special
Income PRIDES and from the common securities will be invested by Cendant
Capital III, the trust issuing the trust preferred securities underlying
the special Income PRIDES, in our debentures. We currently anticipate using
substantially all of the net proceeds from the sale of the debentures, if
any, for general corporate purposes which may include repaying outstanding
indebtedness, repurchasing our common stock and other purposes.
There will not be any proceeds to us from the exchange of the current
or special Income PRIDES and Rights for new Income PRIDES. Our issuance of
the debentures and the purchase contracts relating to the new FELINE PRIDES
will not result in the receipt of any cash proceeds but will be done to
settle the claims against us discussed in the prospectus dated October 20,
1999 covering the issuance and sale of new and additional FELINE PRIDES,
and which is incorporated by reference into this prospectus supplement.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain of the material United States
federal income tax consequences of (i) the purchase of special FELINE
PRIDES, (ii) the exchange of such special FELINE PRIDES and Rights for new
FELINE PRIDES, (iii) the receipt of the scheduled cash payment with respect
to such FELINE PRIDES, (iv) the transfer of the trust preferred security
that constitutes a part of such new FELINE PRIDES in satisfaction of a U.S.
holder's obligation under the corresponding purchase contract, (v) the
receipt of our common stock under a purchase contract, and (vi) the
ownership and disposition of such common stock. Unless otherwise stated,
the summary deals only with Rights, FELINE PRIDES, and shares of our common
stock that are held as capital assets (generally, assets held for
investment) by U.S. holders that tender Rights in this offering. The tax
treatment of a U.S. holder may vary depending on its particular situation.
This summary does not address all of the tax consequences that may be
relevant to holders that may be subject to special tax treatment such as,
for example, insurance companies, broker dealers, tax-exempt organizations,
or foreign taxpayers. In addition, this summary does not address the tax
consequences to shareholders, partners or beneficiaries of a holder of
Rights, FELINE PRIDES, or our common stock, nor does it address any aspects
of state, local, or foreign tax laws. This summary is based on the United
States federal income tax laws in effect as of the date hereof, which are
subject to change, possibly on a retroactive basis.
No statutory, administrative, or judicial authority directly
addresses the treatment of Rights or FELINE PRIDES or of instruments
similar to Rights or FELINE PRIDES for United States federal income tax
purposes. As a result, no assurance can be given that the Internal Revenue
Service (the "Service") will agree with the tax consequences described
herein.
For purposes of this summary, the term "U.S. holder" means a holder
of Rights, FELINE PRIDES, or our common stock that is, for United States
federal income tax purposes, (1) a citizen or resident of the United
States, (2) a corporation or partnership created or organized in or under
the laws of the United States or any state thereof or the District of
Columbia, (3) an estate the income of which is subject to United States
federal income taxation, regardless of its source, (4) a trust if a court
within the United States is able to exercise primary supervision over the
administration of such trust and one or more United States persons have the
authority to control all substantial decisions of such trust or (5) any
person or entity otherwise subject to United States federal income taxation
on a net basis in respect of its investment in Rights, FELINE PRIDES, or
our common stock.
The following summary does not address the tax consequences
associated with the acquisition or disposition of Rights, other than a
disposition of Rights pursuant to this offering.
PURCHASE AND DISPOSITION OF NEW FELINE PRIDES
In General. We intend to take the position that a U.S. holder's (i)
purchase of special FELINE PRIDES, (ii) exchange of such special FELINE
PRIDES and Rights for new FELINE PRIDES, (iii) transfer of the trust
preferred security that constitutes a part of such new FELINE PRIDES in
satisfaction of a U.S. holder's obligation under the corresponding purchase
contract, and (iv) receipt of our common stock under the purchase contract
all should be treated as a single integrated transaction for United States
federal income tax purposes. Accordingly, (i) such a U.S. holder's purchase
of special FELINE PRIDES and the exchange of such special FELINE PRIDES for
new FELINE PRIDES both should be disregarded and (ii) the U.S. holder
should be treated as having used the Rights and cash to purchase our common
stock. Notwithstanding the foregoing, it is possible that the acquisition
of a special FELINE PRIDES will be treated as the acquisition of a unit
consisting of a trust preferred security and a purchase contract. For a
summary of certain of the U.S. federal income tax consequences of such
treatment, see the discussion of "Certain Federal Income Tax Consequences"
in the prospectus dated October 20, 1999 covering the issuance and sale of
new and additional FELINE PRIDES, which is incorporated by reference into
this prospectus supplement.
Treatment of Purchase, Ownership, and Disposition of FELINE PRIDES.
The Company intends to take the position that a U.S. holder of Rights who
subscribes for special FELINE PRIDES pursuant to this offering should
recognize capital gain or loss on the transfer of such Rights. Such capital
gain or loss should equal the difference between (i) the excess of the fair
market value of the Cendant common stock received under the purchase
contract over the amount of cash paid by such U.S. holder to purchase the
special FELINE PRIDES (net of any portion of the cash payment on the FELINE
PRIDES that is treated as a return of a portion of the cash used to
purchase the special FELINE PRIDES, as discussed below) and (ii) the U.S.
holder's tax basis in the surrendered Rights. Such capital gain or loss
should be short-term capital gain or loss. The deductibility of capital
losses is subject to limitations. A U.S. holder likely will be required to
include as income any portion of the cash payment received on the FELINE
PRIDES that is attributable to the period after the holder pays the
purchase price of the special FELINE PRIDES, while the portion of such cash
payment attributable to the period before such payment is made likely will
be treated as a return of a portion of the cash used to purchase the
special FELINE PRIDES. A U.S. holder of Rights could be required, however,
to include in its income the entire cash payment made on the FELINE PRIDES,
in which case no portion of such payment would be treated as a return of a
portion of such cash purchase price. See "The Offering," above.
Possible Alternative Treatments. There is no authority governing the
tax treatment of the transactions contemplated herein, and the Service
could contend that the Rights constitute options. Alternatively, the
Service could contend that the Rights are "stock rights" within the meaning
of Section 356 of the Internal Revenue Code and that the offering
contemplated herein constitutes a recapitalization. If either of the
contentions set forth in the two preceding sentences were accepted, a U.S.
holder would not recognize gain or loss on the transfer of the Rights.
Other alternative characterizations of the transactions described herein
could also apply, and holders of Rights are urged to consult their tax
advisors regarding these possible alternative characterizations and the tax
consequences thereof.
OWNERSHIP OF COMMON STOCK ACQUIRED UNDER THE PURCHASE CONTRACT
A distribution, if any, on our common stock paid out of our current
or accumulated earnings and profits, as determined for United States
federal income tax purposes, will constitute a dividend and will be
includible in income by a U.S. holder when received. Any dividend on our
common stock will be eligible for the dividends received deduction if
received by an otherwise qualifying corporate U.S. holder that meets the
holding period and other requirements for the dividends received deduction.
We do not currently pay dividends and do not anticipate paying dividends
for the forseeable future. Upon a disposition of our common stock, a U.S.
holder generally will recognize capital gain or loss equal to the
difference between the amount realized and the U.S. holder's adjusted tax
basis in our common stock. A holder's tax basis in our common stock
received pursuant to a special FELINE PRIDES should equal the basis of the
Rights surrendered in exchange for such special FELINE PRIDES, increased by
the amount of cash paid for such special FELINE PRIDES (net of any portion
of the cash payment received on the FELINE PRIDES that is treated as a
return of a portion of the cash used to purchase the special FELINE PRIDES,
as discussed above) and further increased by the amount of gain (or reduced
by the amount of any loss) recognized on such exchange.
EACH INVESTOR SHOULD CONSULT ITS TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES OF ACQUIRING, OWNING, AND DISPOSING OF RIGHTS, FELINE PRIDES,
AND COMMON STOCK, INCLUDING THE APPLICATION AND EFFECT OF UNITED STATES
FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
PROSPECTUS
$1,195,410,000
CENDANT CORPORATION
DEBT SECURITIES, COMMON STOCK,
STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
----------
CENDANT CAPITAL III
CENDANT CAPITAL IV
CENDANT CAPITAL V
TRUST PREFERRED SECURITIES
GUARANTEED AS PROVIDED HEREIN BY
CENDANT CORPORATION
----------
Cendant Corporation may offer debt securities, stock purchase
contracts, stock purchase units and common stock.
Cendant Capital III, Cendant Capital IV and Cendant Capital V may
offer trust preferred securities that will be guaranteed by Cendant
Corporation to the extent described in this prospectus.
These securities may be offered from time to time, in amounts, on
terms and at prices that will be determined at the time they are offered
for sale. These terms and prices will be described in more detail in one or
more supplements to this prospectus, which will be distributed at the time
the securities are offered.
This offering is made pursuant to a court approved settlement,
entered into by Cendant Corporation on March 17, 1999.
----------
This prospectus may not be used to sell any of the securities unless
it is accompanied by a prospectus supplement.
----------
The common stock is listed on the New York Stock Exchange under the
trading symbol "CD." Each prospectus supplement offering any other
securities will state whether those securities are listed or will be listed
on any national securities exchange.
----------
The securities may be sold to or through underwriters, through
dealers or agents, directly to purchasers or through a combination of these
methods. If an offering of securities involves any underwriters, dealers or
agents, then the applicable prospectus supplement will name the
underwriters, dealers or agents and will provide information regarding any
fee, commission or discount arrangements made with those underwriters,
dealers or agents.
----------
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved these securities or
determined if this prospectus is truthful or complete. Any representation
to the contrary is a criminal offense.
The date of this prospectus is October 20, 1999.
TABLE OF CONTENTS
PROSPECTUS SUMMARY.....................................................3
THE COMPANY............................................................7
MATTERS RELATING TO THE ACCOUNTING IRREGULARITIES
AND ACCOUNTING POLICY CHANGE.....................................7
THE CENDANT TRUSTS.....................................................9
RATIO OF EARNINGS TO FIXED CHARGES....................................10
USE OF PROCEEDS.......................................................10
DESCRIPTION OF THE DEBT SECURITIES....................................10
DESCRIPTION OF COMMON STOCK...........................................22
DESCRIPTION OF TRUST PREFERRED SECURITIES OF THE CENDANT
TRUSTS................................................................24
DESCRIPTION OF TRUST GUARANTEES.......................................26
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS......29
PLAN OF DISTRIBUTION..................................................29
LEGAL OPINIONS........................................................30
EXPERTS...............................................................30
WHERE YOU CAN FIND MORE INFORMATION...................................30
PROSPECTUS SUMMARY
Four related companies will be offering the securities described in
this prospectus. These companies are Cendant Corporation, or Cendant, and
its wholly-owned subsidiaries, Cendant Capital III, Cendant Capital IV and
Cendant Capital V. The following table lists the securities to be offered
by each company:
Cendant Capital III, Cendant IV...... Trust preferred securities (guaranteed
Capital V (each a "Cendant trust") as provided herein by Cendant)
Cendant Corporation ("Cendant")...... Stock purchase contracts
Stock purchase units
Common stock
Debt securities
THE COMPANY
CENDANT
Cendant is one of the foremost consumer and business services
companies in the world. Cendant was created through the merger of HFS
Incorporated into CUC International in December 1997 with the resultant
corporation being renamed Cendant Corporation. Cendant provides the
fee-based services formerly provided by each of CUC and HFS, including
travel services, real estate services and membership-based consumer
services, to its customers throughout the world.
Cendant operates in four principal divisions: travel related
services, real estate related services, direct marketing related services
and other consumer and business services. Cendant's businesses provide a
wide range of complementary consumer and business services, which together
represent eight business segments.
o The travel related service businesses facilitate vacation
timeshare exchanges, and franchise car rental and hotel
businesses.
o The real estate related service businesses franchise real
estate brokerage businesses, provide home buyers with mortgages
and assist in employee relocation.
o The direct marketing related service businesses provide an
array of value driven products and services.
o The other consumer and business services include Cendant's tax
preparation services franchise, information technology
services, car parks and vehicle emergency support and rescue
services in the United Kingdom, financial products and other
consumer-related services.
As a franchisor of hotels, residential real estate brokerage offices,
car rental operations and tax preparation services, Cendant licenses the
owners and operators of independent businesses to use its brand names.
Cendant does not own or operate hotels, real estate brokerage offices, car
rental operations or tax preparation offices. Instead, Cendant provides its
franchisee customers with services designed to increase their revenue and
profitability. Cendant's principal executive offices are located at 9 West
57th Street, New York, New York 10019 and its telephone number is (212)
413-1800.
THE CENDANT TRUSTS
Each of the Cendant trusts is a business trust that was created under
the laws of the State of Delaware. Cendant is the sponsor of each Cendant
trust and owns all of the common securities of each Cendant trust. Each
Cendant trust is managed by three trustees. Cendant may dissolve any
Cendant trust at any time. Each Cendant trust's address is in care of
Cendant. Each Cendant trust's telephone number is (212) 413-1800.
THE SECURITIES
The securities that may be sold under this prospectus are: Cendant's
debt securities, common stock, stock purchase contracts relating to the
common stock; each trusts' trust preferred securities, which will be
guaranteed by Cendant; and stock purchase units consisting of stock
purchase contracts and trust preferred securities. The aggregate initial
offering price of all of the securities to be sold will not exceed
$1,195,410,000. At the time any of these securities are offered, a
prospectus supplement will be distributed that will describe in more detail
the specific terms and price of the securities being sold and whether those
securities will be sold to or through underwriters or by another means of
distribution.
STOCK PURCHASE CONTRACTS AND COMMON STOCK
Cendant may offer stock purchase contracts for the purchase of its
common stock, without stated value. The common stock is listed on the New
York Stock Exchange. The price and terms of the stock purchase contracts
will be determined at the time or times of offering. If Cendant offers its
stock purchase contracts, a prospectus supplement will provide information
about the terms of the offering, including the amount of common stock to be
sold, the purchase price of the common stock, the date or dates on which
the common stock will be purchased and any amounts that Cendant may be
required to pay to the holders of the stock purchase contracts.
TRUST PREFERRED SECURITIES
Each Cendant trust may offer its trust preferred securities, each of
which will represent an undivided beneficial ownership interest in the
assets of each Cendant trust. The price and terms of the trust preferred
securities will be determined at the time of offering. If a Cendant trust
offers its trust preferred securities, a prospectus supplement will provide
information about the terms of the offering, including the specific title
of the trust preferred securities, the aggregate number of trust preferred
securities to be sold, the stated liquidation amount and information
regarding the rights of holders of trust preferred securities to receive
cumulative cash distributions. This will include information regarding the
rate of payment, whether distributions can be extended or deferred, and
whether the trust preferred securities can be redeemed. Payments with
respect to the trust preferred securities will be fully and unconditionally
guaranteed by Cendant to the extent described in the prospectus supplement.
In connection with any sale of the trust preferred securities, each
Cendant trust will sell common securities to Cendant, each of which will
represent an undivided beneficial ownership interest in the assets of a
Cendant trust. Each Cendant trust expects to use the proceeds from the sale
of any trust preferred securities and common securities (collectively, the
"trust securities") to purchase debt securities from Cendant. The debt
securities may give Cendant the right to defer payments of interest on the
debt securities. If Cendant decides to defer interest payments on the debt
securities, then any distributions on the trust preferred securities would
be similarly deferred. At any time interest payments are being deferred,
Cendant would not be able to declare or pay any cash distributions with
respect to its respective capital stock or any debt securities ranking
junior to the debt securities. Holders of trust preferred securities would
not lose their cash distributions; rather, interest would continue to
accrue on the debt securities, and, as a result, distributions would
continue to accumulate on the trust preferred securities until paid. The
prospectus supplement will provide more detailed information about
Cendant's right to defer interest payments on the debt securities and the
impact of deferral upon the holders of trust preferred securities.
STOCK PURCHASE UNITS
Cendant may offer stock purchase units, each of which will consist of
o a stock purchase contract and
o a trust preferred security, debt security or U.S. treasury
security. The trust preferred security, debt security or U.S.
treasury security will be pledged as collateral to secure the
holder's obligation to purchase common shares under the stock
purchase contract. If Cendant offers stock purchase units, a
prospectus supplement will provide information about the terms
of the offering, including the specific terms of the stock
purchase contracts and information about the security or
obligation that will secure the holder's obligation to purchase
common shares.
DEBT SECURITIES
Cendant may offer and sell to each Cendant trust a series of debt
securities, which each Cendant trust would purchase with the proceeds from
the sale of its trust preferred securities to the public and the sale of
its common securities to Cendant. The debt securities would be the sole
assets of each Cendant trust. If Cendant sells debt securities to any
Cendant trust, a prospectus supplement will provide specific information
about the debt securities, including their specific designation, aggregate
principal amount, denominations, date of maturity, interest rate which may
be fixed or variable, the dates upon which interest will be paid and
whether payments of interest may be deferred. The prospectus supplement
also will indicate whether the debt securities are redeemable or
convertible or exchangeable into other securities, and whether the debt
securities contain any sinking fund provisions or any other special terms.
As described above under "-trust preferred securities," the debt
securities may give Cendant the right to defer payments of interest on the
debt securities. If so, the prospectus supplement will provide more
detailed information about this right.
FORWARD-LOOKING INFORMATION
Some of the matters discussed in this prospectus, in any accompanying
prospectus supplement and in the documents incorporated by reference in
this prospectus or accompanying prospectus supplement contain
forward-looking statements within the meaning of the securities laws.
Forward- looking statements include terms such as "may," "will," "expect,"
"believe," "plan" and other similar terms. Cendant and the Cendant trusts
each cautions that, while each of them believes those statements to be
based on reasonable assumptions and makes those statements in good faith,
there can be no assurance that the actual results will not differ
materially from these assumptions or that the expectations provided in the
forward-looking statements derived from these assumptions will be realized.
Cendant should be aware of important factors that could have a
material impact on future results. These factors include, but are not
limited to:
o the resolution or outcome of the pending litigation and
government investigations relating to the previously announced
accounting irregularities;
o uncertainty as to Cendant's future profitability and Cendant's
ability to integrate and operate successfully acquired
businesses and the risks associated with those businesses,
including the merger that created Cendant and the NPC
acquisition;
o Cendant's ability to successfully divest non-strategic assets
and implement its new Internet strategy;
o Cendant's ability to develop and implement operational and
financial systems to manage rapidly growing operations;
o competition in Cendant's existing and potential future lines of
business;
o Cendant's ability to obtain financing on acceptable terms to
finance its growth strategy and to operate within the
limitations imposed by financing arrangements; and
o Cendant's ability and its vendors', franchisees' and customers'
ability to complete the necessary actions to achieve a Year
2000 conversion for computer systems and applications.
THE COMPANY
OVERVIEW
Cendant is one of the foremost consumer and business services
companies in the world. Cendant was created through the merger of HFS into
CUC in December 1997 with the resultant corporation being renamed Cendant
Corporation. Cendant provides the fee-based services formerly provided by
each of CUC and HFS, including travel services, real estate services and
membership-based consumer services, to its customers throughout the world.
Cendant operates in four principal divisions: travel related
services, real estate related services, direct marketing related services
and other consumer and business services. Cendant's businesses provide a
wide range of complementary consumer and business services, which together
represent eight business segments.
o The travel related service businesses facilitate vacation
timeshare exchanges, and franchise car rental and hotel
businesses.
o The real estate related service businesses franchise real
estate brokerage businesses, provide home buyers with mortgages
and assist in employee relocation.
o The direct marketing related service businesses provide an
array of value driven products and services.
o Cendant's other consumer and business services include its tax
preparation services franchise, information technology
services, car parks and vehicle emergency support and rescue
services in the United Kingdom, financial products and other
consumer-related services.
As a franchisor of hotels, residential real estate brokerage offices,
car rental operations and tax preparation services, Cendant licenses the
owners and operators of independent businesses to use its brand names.
Cendant does not own or operate hotels, real estate brokerage offices, car
rental operations or tax preparation offices. Instead, Cendant provides its
franchisee customers with services designed to increase their revenue and
profitability.
MATTERS RELATING TO THE ACCOUNTING IRREGULARITIES
AND ACCOUNTING POLICY CHANGE
ACCOUNTING IRREGULARITIES
On April 15, 1998, Cendant announced that in the course of
transferring responsibility for its accounting functions from Cendant
personnel associated with CUC prior to the merger to Cendant personnel
associated with HFS before the merger and preparing for the reporting of
first quarter 1998 financial results, it discovered accounting
irregularities in some of the CUC business units. As a result, Cendant,
together with its counsel and assisted by auditors, immediately began an
intensive investigation. In addition, Cendant's audit committee engaged
Willkie Farr & Gallagher as special legal counsel and Wilkie Farr engaged
Arthur Andersen LLP to perform an independent investigation into these
accounting irregularities.
On July 14, 1998, Cendant announced that the accounting
irregularities were greater than those initially discovered in April and
that the irregularities affected the accounting records of the majority of
the CUC business units. On August 13, 1998, Cendant announced that its
investigation was complete. On August 27, 1998, Cendant announced that its
audit committee had submitted its report to the board of directors on the
audit committee investigation into the accounting irregularities and its
conclusions regarding responsibility for those actions. A copy of the
report has been filed as an exhibit to Cendant's current report on Form 8-K
dated August 28, 1998.
As a result of the findings of the investigations, Cendant restated
its previously reported financial results for 1997, 1996 and 1995 and the
six months ended June 30, 1998 and 1997. The 1997 restated amounts also
included adjustments related to the former HFS businesses which are
substantially comprised of $47.8 million in reductions to merger-related
costs and other unusual charges ("Unusual Charges") and a $14.5 million
decrease in pre-tax income excluding Unusual Charges, which on a net basis
increased 1997 net income from continuing operations. The 1997 annual and
six months results have also been restated for a change in accounting,
effective January 1, 1997, related to revenue and expense recognition for
memberships with a full refund offer.
CLASS ACTION LITIGATION AND GOVERNMENT INVESTIGATION
Since the April 15, 1998 announcement of the discovery of accounting
irregularities in the former CUC business units, and prior to October 13,
1999, 70 lawsuits claiming to be class actions, two lawsuits claiming to be
brought derivatively on behalf of Cendant and several individual lawsuits
and arbitration proceedings have been filed against Cendant and, among
others, its predecessor, HFS, and several current and former officers and
directors of Cendant and HFS. These lawsuits assert, among other things,
various claims under the federal securities laws including claims under
sections 11, 12 and 15 of the Securities Act of 1933 and sections 10(b),
14(a) and 20(a) of and Rules 10b-5 and 14a-9 under the Securities Exchange
Act of 1934 and state statutory and common laws, including claims that
financial statements previously issued by Cendant were false and misleading
and that these statements allegedly caused the price of Cendant's
securities to be artificially inflated.
In addition, the staff of the Securities and Exchange Commission, the
SEC, and the United States Attorney for the District of New Jersey are
conducting investigations relating to the accounting irregularities. The
SEC staff has advised Cendant that its inquiry should not be construed as
an indication by the SEC or its staff that any violations of law have
occurred. As a result of the findings from the investigations, Cendant made
all adjustments considered necessary which are reflected in its restated
financial statements. Although Cendant can provide no assurances that
additional adjustments will not be necessary as a result of these
government investigations, Cendant does not expect that additional
adjustments will be necessary.
Other than with respect to the portion of the PRIDES litigation which
is discussed below, Cendant does not believe that it is feasible to predict
the final outcome or resolution of these proceedings and investigations or
to estimate the amount or potential range of loss with respect to the
resolution of these proceedings and investigations. In addition, the timing
of the final resolution of these proceedings and investigations is
uncertain. The possible outcomes or resolutions of these proceedings and
investigations could include judgments against Cendant or settlements and
could require substantial payments by Cendant. Cendant's management
believes that adverse outcomes in the proceedings and investigations or any
other resolutions, including settlements could have a material impact on
its financial condition, results of operations or cash flows.
SETTLEMENT OF PRIDES CLASS ACTION LITIGATION
On March 17, 1999, Cendant entered into a stipulation of settlement
in the PRIDES action and the court subsequently granted the settlement its
approval. Under the settlement stipulation, in return for the release of
all claims arising from any purchase of current FELINE PRIDES on or before
April 15, 1998, Cendant is obligated to issue up to 29,161,474 rights with
a stated theoretical value of $11.71 each. Each class member who does not
opt out and who submits a timely and valid proof of claim will be entitled
to one right for each current FELINE PRIDES held at the close of business
on April 15, 1998. Under the settlement stipulation, until February 14,
2001, Cendant will issue two new FELINE PRIDES to every person who delivers
to Cendant three rights and two current FELINE PRIDES. The terms of the new
FELINE PRIDES will be the same as the currently outstanding PRIDES, except
that the conversion rate will be revised so that, at the time the rights
are distributed, each of the new PRIDES will have a value equal to $17.57
more than each original PRIDES, based upon a generally accepted valuation
model. The settlement does not resolve claims based upon purchases of
current FELINE PRIDES after April 16, 1998.
Based on the settlement agreement, Cendant recorded an after tax
charge of approximately $228 million, or $0.26 per diluted share, which is
$351 million pre-tax, in the fourth quarter of 1998. Cendant recorded an
increase in additional paid-in capital of $350 million offset by a decrease
in retained earnings of $228 million, resulting in a net increase in
stockholders' equity of $122 million as a result of the prospective
issuance of the common stock. As a result, the settlement should not reduce
net book value. In addition, the settlement is not expected to reduce 1999
earnings per share unless Cendant's common stock price materially
appreciates.
THE CENDANT TRUSTS
Each of the Cendant trusts is a statutory business trust formed under
Delaware law pursuant to
o a declaration of trust executed by Cendant as sponsor for each
trust and the Cendant trustees of each trust and
o the filing of a certificate of trust with the Secretary of
State of the State of Delaware.
Each Cendant trust exists for the exclusive purposes of
o issuing and selling the trust preferred securities and common
securities representing common undivided beneficial ownership
interests in its assets,
o using the gross proceeds from the sale of its trust securities
to acquire the debt securities and
o engaging in only those other activities necessary, appropriate,
convenient or incidental to these purposes.
All of the common securities will be directly or indirectly owned by
Cendant. The common securities will rank equably, and payments on them will
be made proportionately, with the trust preferred securities. However, if
an event of default under the declaration has occurred and is continuing,
the rights of the holders of the common securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise will
be subordinated to the rights of the holders of the trust preferred
securities. Cendant will directly or indirectly acquire common securities
in an aggregate liquidation amount equal to at least 3% of the total
capital of each Cendant trust.
Unless otherwise specified in the applicable prospectus supplement,
each Cendant trust has a term of up to 55 years but may terminate earlier,
as provided in the Declaration. Each Cendant trust's business and affairs
will be conducted by the trustees (the "Cendant trustees") appointed by
Cendant as the direct or indirect holder of all of the common securities.
The holder of the common securities will be entitled to appoint, remove or
replace any of, or increase or reduce the number of, the Cendant trustees
of each Cendant trust. The duties and obligations of the Cendant trustees
shall be governed by the declaration of that Cendant trust. A majority of
the Cendant trustees (the "regular trustees") of each Cendant trust will be
persons who are employees or officers of or who are affiliated with
Cendant. One Cendant trustee of each Cendant trust will be a financial
institution (the "institutional trustee") that is not affiliated with
Cendant and has a minimum amount of combined capital and surplus of not
less than $50,000,000, which shall act as property trustee and as indenture
trustee for the purposes of compliance with the provisions of Trust
Indenture Act of 1939, under the terms provided in the applicable
prospectus supplement. In addition, unless the institutional trustee
maintains a principal place of business in the State of Delaware and
otherwise meets the requirements of applicable law, one Cendant trustee of
each Cendant trust will be an entity having a principal place of business
in, or a natural person resident of, the State of Delaware (the "Delaware
Trustee"). Cendant will pay all fees and expenses related to the Cendant
trust and the offering of the trust securities.
Unless otherwise specified in the applicable prospectus supplement,
the institutional trustee and Delaware trustee for each Cendant trust shall
be Wilmington Trust Company, and its address in the State of Delaware is
Rodney Square, North, 1100 North Market Street, Wilmington, Delaware 19890.
The principal place of business of each Cendant trust shall be c/o Cendant
Corporation, 6 Sylvan Way, Parsippany, New Jersey 07054, telephone (973)
428-9700.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges
of Cendant for the fiscal years ended December 31, 1995, 1996, 1997 and
1998 and for the six months ended June 30, 1999. For the purpose of
calculating this ratio, "earnings" consist of income from continuing
operations before income taxes plus fixed charges, and "fixed charges"
consist of interest on all indebtedness, amortization of debt expense, the
portion of rental expenses on operating leases deemed to be representative
of the interest factor, and preferred stock dividend requirements of
consolidated subsidiaries.
HISTORICAL
-------------------------------------------
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED ----------------------------
JUNE 30, 1999 1998 1997 1996 1995
------------- ------- ------ ------- ------
Ratio of Earnings to 4.56x 1.29x 1.44x 2.60x 2.08x
Fixed Charges(1)......
- ---------
(1) For the six months ended June 30, 1999, income from the continuing
operations before income taxes and minority interest includes
non-recurring charges of ($36,900,000) and a net gain on disposition
of businesses of $749,500,000. Excluding such items, the ratio of
earnings to fixed charges for the six months ended June 30, 1999 is
2.59x.
USE OF PROCEEDS
Unless otherwise provided in a prospectus supplement, the net
proceeds from the offering of the securities will be used for general
corporate purposes, which may include acquisitions, repayment of other
debt, acquisition of Cendant's common stock, working capital and capital
expenditures. When a particular series of securities is offered, the
applicable prospectus supplement will describe Cendant's intended use for
the net proceeds received for the sale of securities. Pending application
for specific purposes, the net proceeds may be invested in short-term
marketable securities.
DESCRIPTION OF THE DEBT SECURITIES
The debt securities may be offered from time to time by Cendant as
senior debt securities and/or as subordinated debt securities. The senior
debt securities will be issued under the senior indenture, as it may be
supplemented from time to time, between Cendant and The Bank of Nova Scotia
Trust Company of New York, as senior trustee. The subordinated debt
securities will be issued under the subordinated indenture, as it may be
supplemented from time to time, between Cendant and The Bank of Nova Scotia
Trust Company of New York, as the subordinated trustee. The term "trustee",
as used here, refers to either the senior trustee or the subordinated
trustee, as appropriate. The forms of the senior indenture and the
subordinated indenture, which are sometimes referred to here collectively
as the "indentures" and individually as an "indenture", have been filed as
exhibits to the registration statement. The terms of the indentures are
also governed by the applicable provisions of the Trust indenture Act of
1939. The following summary of material provisions of the debt securities
does not purport to be complete and is qualified in its entirety by
reference to the indentures.
GENERAL
The indentures will provide for the issuance of debt securities in
series up to the aggregate amount from time to time authorized by Cendant
for each series. A prospectus supplement will provide the following terms,
to the extent these terms are applicable to the debt securities, and
information relating to the debt securities in respect of which this
prospectus is delivered:
o the designation of the debt securities;
o classification as senior or subordinated debt securities;
o the aggregate principal amount of the debt securities;
o the percentage of the principal amount at which the debt
securities will be issued;
o the date or dates on which the debt securities will mature;
o the rate or rates, if any, per year, at which the debt
securities will bear interest, or the method of determination
of that rate or rates;
o the times and places at which the interest, if any, will be
payable;
o provisions for sinking, purchase or other analogous fund, if
any;
o the date or dates, if any, after which the debt securities may
be redeemed at the option of Cendant or of the holder and the
redemption price or prices;
o the date or the dates, if any, after which the debt securities
may be converted or exchanged at the option of the holder into
or for shares of common stock or preferred stock of Cendant and
the terms for any conversion or exchange; and
o any other specific terms of the debt securities.
Principal, premium, if any, and interest, if any, will be payable and
the debt securities offered here will be transferable, at the corporate
trust office of the trustee's agent in the borough of Manhattan, City of
New York, provided that payment of interest, if any, may be made at the
option of Cendant by check mailed to the address of the person entitled to
it as it appears in the security register. (Section 301 of each indenture)
If a prospectus supplement specifies that a series of debt securities
is denominated in a currency or currency unit other than United States
dollars, that prospectus supplement shall also specify the denomination in
which the debt securities will be issued and the coin or currency in which
the principal, premium, if any, and interest, if any, on the debt
securities will be payable, which may be United States dollars based upon
the exchange rate for the other currency or currency unit existing on or
about the time a payment is due. Special United States federal income tax
considerations applicable to any debt securities so denominated shall also
be described in the applicable prospectus supplement.
The debt securities may be issued in registered or bearer form and,
unless otherwise specified in a prospectus supplement, in denominations of
$1,000 and integral multiples. Debt securities may be issued in book-entry
form, without certificates. Any issue will be described in the prospectus
supplement relating to the debt securities. No service charge will be made
for any transfer or exchange of the debt securities, but Cendant or the
trustee may require payment of a sum sufficient to cover any tax or other
government charge payable in connection with it.
Debt securities may be issued under the indentures as original issue
discount securities to be sold at a substantial discount from their stated
principal amount. United States federal income tax consequences and other
applicable considerations applicable will be described in the applicable
prospectus supplement.
MERGER, CONSOLIDATION AND SALE OF ASSETS
The indentures will provide that Cendant shall not consolidate with
or merge into any other corporation or convey, transfer or lease its
properties and assets substantially as an entirety to any person, unless:
(1) the corporation formed by the consolidation or into which
Cendant is merged or the person which acquires by conveyance or
transfer, or which leases the properties and assets of Cendant
substantially as an entirety
(A) shall be a corporation, partnership, limited liability
company or trust organized and validly existing under the
laws of the United States of America, any of its states
or the District of Columbia, and
(B) shall expressly assume, by an indenture supplemental to
it, executed and delivered to the trustee, in form
satisfactory to the trustee, Cendant's obligation for the
due and punctual payment of the principal, premium, if
any, and interest on all the debt securities and the
performance and observance of every covenant of the
indentures on the part of Cendant to be performed or
observed;
(2) immediately after giving effect to the transaction, no default
or event of default shall have occurred and be continuing; and
(3) Cendant or that person shall have delivered to the trustee an
officers' certificate and an opinion of counsel, each stating
that the consolidation, merger, conveyance, transfer or lease
and supplemental indenture comply with this "Merger,
Consolidation and Sale of Assets" section and that all
conditions precedent here provided for relating to the
transaction have been complied with. This paragraph shall apply
only to a merger or consolidation in which Cendant is not the
surviving corporation and to conveyances, leases and transfers
by Cendant as transferor or lessor. (Section 801 of each
indenture)
The indentures will further provide that upon any consolidation by
Cendant with or merger by Cendant into any other corporation or any
conveyance, transfer or lease of the properties and assets of Cendant
substantially as an entirety to any person in accordance with the preceding
paragraph, the successor person formed by the consolidation or into which
Cendant is merged or to which the conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, Cendant under the indentures with the same effect as if the
successor person had been named as Cendant, and in the event of a
conveyance or transfer, Cendant, which term shall for this purpose mean
Cendant Corporation or any successor person which shall become such in the
manner described in the preceding paragraph, except in the case of a lease,
shall be discharged of all obligations and covenants under the indentures
and the debt securities and the coupons and may be dissolved and
liquidated. (Section 802 of each indenture)
EVENTS OF DEFAULT
The following will be "events of default" under the indentures with
respect to debt securities of any series:
(1) default in the payment of any interest on any debt securities
of that series or any related coupon, when the interest or
coupon becomes due and payable, and continuance of the default
for a period of 30 days;
(2) default in the payment of the principal or premium, if any, on
any debt securities of that series at its maturity;
(3) default in the deposit of any sinking fund payment when and as
due under the terms of the debt securities of that series and
the indentures;
(4) default in the performance, or breach, of any covenant or
warranty of Cendant in the indentures, other than a default in
the performance, or breach, of a covenant or warranty which is
specifically dealt with elsewhere under this "Events of
Default" section, and continuance of the default or breach for
a period of 90 days after there has been given, by registered
or certified mail, to Cendant by the trustee or to Cendant and
the trustee by the holders of at least 25% in principal amount
of all outstanding debt securities, a written notice specifying
such default or breach and requiring it to be remedied and
stating that the notice is a "notice of default thereunder;"
(5) the entry of a decree or order by a court having jurisdiction
in the premises adjudging Cendant bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of
Cendant under the Federal Bankruptcy Code or any other
applicable federal or state law, or appointing a receiver,
liquidator, assignee, trustee, sequestrator or other similar
official of Cendant or of any substantial part of its property,
or ordering the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in
effect for a period of 90 consecutive days;
(6) the institution by Cendant of proceedings to be adjudicated
bankrupt or insolvent, the consent by it to the institution of
bankruptcy or insolvency proceedings against it, the filing by
it of a petition or answer or consent seeking reorganization or
relief under the Federal Bankruptcy Code or any other
applicable federal or state law, the consent by it to the
filing of any petition or to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator or other similar
official of Cendant or of any substantial part of its property,
the making by it of an assignment for the benefit of creditors,
or the admission by it in writing of its inability to pay its
debts generally as they become due;
(7) (A) there shall have occurred one or more defaults by
Cendant in the payment of the principal or premium, if
any, on debt aggregating $50 million or more, when the
same becomes due and payable at its stated maturity, and
the default or defaults shall have continued after any
applicable grace period and shall not have been cured or
waived,
(B) debt of Cendant aggregating $50 million or more shall
have been accelerated or otherwise declared due and
payable, or required to be prepaid or repurchased, other
than by regularly scheduled required prepayment, prior to
its stated maturity; or
(8) any other event of default provided with respect to debt
securities of that series.
If an event of default described in clause (1), (2), (3), (4), (7) or
(8) above with respect to debt securities of any series at the time
outstanding occurs and is continuing, then in every such case the trustee
or the holders of not less than 25% in principal amount of the outstanding
debt securities of that series may declare the principal amount or, if the
debt securities of that series are original issue discount securities or
indexed securities, the portion of the principal amount as may be specified
in the terms of that series of all of the debt securities of that series to
be due and payable immediately. The declaration shall be made by a notice
in writing to Cendant and to the trustee if given by holders, and upon that
declaration the principal amount or specified portion of it, shall become
immediately due and payable. If an event of default described in clause (5)
or (6) above occurs and is continuing, then the principal amount of all the
debt securities shall become and be immediately due and payable without any
declaration or other act on the part of the trustee or any holder, subject,
however, to all rights, powers and limitations provided for by the Federal
Bankruptcy Code or any other applicable federal or state law.
At any time after a declaration of acceleration with respect to debt
securities of any series or of all series, has been made and before a
judgment or decree for payment of the money due has been obtained by the
trustee as provided in article five of the indentures, the holders of a
majority in principal amount of the outstanding debt securities of that
series or of all series, by written notice to Cendant and the trustee, may
rescind and annul the declaration and its consequences if:
(1) Cendant has paid or deposited with the trustee a sum sufficient
to pay in the currency in which the debt securities of the
series are payable, except as otherwise specified under section
301 of the indentures for the debt securities of that series
and except, if applicable, as provided in various provisions of
section 312 of the indentures:
(A) All overdue interest on all outstanding debt securities
of that series or of all series and any related coupons;
(B) all unpaid principal of and premium, if any, on any
outstanding debt securities of that series or of all
series which has become due otherwise than by the
declaration of acceleration, and interest on the unpaid
principal at the rate or rates prescribed in the debt
securities;
(C) to the extent that payment of the interest is lawful,
interest on overdue interest at the rate or rates
prescribed in the debt securities; and
(D) all sums paid or advanced by the trustee and the
reasonable compensation, expenses, disbursements and
advances of the trustee, its agents and counsel; and
(2) all events of default with respect to debt securities of that
series or of all series other than the non-payment of amounts
of principal of or premium if any, or interest on debt
securities of that series or of all series, which have become
due solely by the declaration of acceleration, have been cured
or waived as provided in Section 513 of the indentures.
No rescission shall affect any subsequent default or impair any
consequent right consequent.
Notwithstanding the preceding paragraph, in the event of a
declaration of acceleration in respect of the debt securities because of an
event of default specified in clause (7) of the first paragraph of this
section shall have occurred and be continuing, the declaration of
acceleration shall be automatically annulled if the debt that is the
subject of the event of default has been discharged or the debt holders
have rescinded their declaration of acceleration in respect of that debt,
and written notice of the discharge or rescission shall have been given to
the trustee by Cendant and countersigned by the holders of the debt or a
trustee, fiduciary or agent for the holders, within 30 days after the
declaration of acceleration in respect of the debt securities, and no other
event of default has occurred during the 30- day period which has not been
cured or waived during that period. (Section 502 of each indenture)
Subject to section 502 of each indenture, the holders of not less
than a majority in principal amount of the outstanding debt securities of
any series may on behalf of the holders of all the debt securities of that
series waive any past default described in clause (1), (2), (3), (4), (7),
or (8) of the first paragraph of this section or, in the case of a default
described in clause (5) or (6) of the first paragraph of this section, the
holders of not less than a majority in principal amount of all outstanding
debt securities may waive that past default, and its consequences, except a
default
o in respect of the payment of the principal, premium, if any or
interest on any debt security or any related coupon, or
o in respect of a covenant or provision which under the
indentures cannot be modified or amended without the consent of
the holder of each outstanding debt security of such series
affected. (Section 513 of each indenture)
Upon any such waiver, the default shall cease to exist, and any event
of default arising from it shall be deemed to have been cured, for every
purpose of the indentures. However, no waiver shall extend to any
subsequent or other default or event of default or impair any consequent
right. (Section 513 of each indenture)
No holder of any debt security of any series or any related coupons
shall have any right to institute any proceeding, judicial or otherwise,
with respect to the indentures, or for the appointment of a receiver or
trustee, or for any other remedy, unless
(1) the holder has previously given written notice to the trustee
of a continuing event of default with respect to the debt
securities of that series;
(2) the holders of not less than 25% in principal amount of the
outstanding debt securities of that series in the case of any
event of default under clause (1), (2), (3), (4), (7) or (8) of
the first paragraph of this section, or, in the case of any
event of default described in clause (5) or (6) of the first
paragraph of this section, the holders of not less than 25% in
principal amount of all outstanding debt securities, shall have
made written request to the trustee to institute proceedings in
respect of that event of default in its own name as trustee
under each of the indentures;
(3) the holder or holders have offered to the trustee reasonable
indemnity against the costs, expenses and liabilities to be
incurred in compliance with that request;
(4) the trustee for 60 days after its receipt of the notice,
request and offer of indemnity has failed to institute any
proceeding; and
(5) no direction inconsistent with the written request has been
given to the trustee during the 60-day period by the holders of
a majority or more in principal amount of the outstanding debt
securities of that series in the case of any event of default
described in clause (1), (2), (3), (4), (7) or (8) of the first
paragraph of this section, or, in the case of any event of
default described in clause (5) or (6) of the first paragraph
of this section, by the holders of a majority or more in
principal amount of all outstanding debt securities. (Section
507 of each indenture)
During the existence of an event of default, the trustee is required
to exercise the rights and powers vested in it under either indenture in
good faith. Subject to the provisions of the indentures relating to the
duties of the trustee, in case an event of default shall occur and be
continuing, the trustee under the indentures is not under any obligation to
exercise any of its rights or powers under the indentures at the request or
direction of any of the holders unless the holders shall have offered to
the trustee reasonable security or indemnity. Subject to the provisions
concerning the rights of the trustee, with respect to the debt securities
of any series, the holders of not less than a majority in principal amount
of the outstanding debt securities of that series shall 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 under the indentures.
Within 90 days after the occurrence of any default with respect to
debt securities of any series, the trustee shall transmit in the manner and
to the extent provided in the Trust Indenture Act section 313(c), notice of
the default known to the trustee, unless the default shall have been cured
or waived. However, in the case of a default in the payment of the
principal, premium, if any, or interest on any debt securities of that
series, or in the payment of any sinking fund installment with respect to
debt securities of that series, the trustee shall be protected in
withholding the notice if and so long as the board of directors, the
executive committee or a trust committee of directors and/or responsible
officers of the trustee in good faith determines that the withholding of
the notice is in the interest of the holders of debt securities of that
series and any related coupons. Furthermore, in the case of any default of
the character specified in clause (7) of the first paragraph of this
section with respect to debt securities of that series, no notice to
holders shall be given until at least 30 days after its occurrence.
Cendant is required to deliver to the trustee, within 120 days after
the end of each fiscal year, a brief certificate of Cendant's compliance
with all of the conditions and covenants under the indentures.
DEFEASANCE OR COVENANT DEFEASANCE OF THE INDENTURES
The indentures will provide that Cendant may, at its option and at
any time, terminate its obligations with respect to the outstanding debt
securities of any series ("defeasance"). Defeasance means that Cendant
shall be deemed to have paid and discharged the entire indebtedness
represented by the outstanding debt securities and any related coupons,
except for the following which shall survive until otherwise terminated or
discharged under the indentures:
(A) the rights of holders of outstanding debt securities and any
related coupons
(1) to receive, solely from the Cendant trust fund described
in the indentures, payments in respect of the principal,
premium if any and interest on the debt securities and
any related coupons when these payments are due, and
(2) to receive shares of common stock or other securities
from Cendant upon conversion of any convertible debt
securities issued under it,
(B) Cendant's obligations to issue temporary debt securities,
register the transfer or exchange of any debt securities,
replace mutilated, destroyed, lost or stolen debt securities,
maintain an office or agency for payments in respect of the
debt securities and, if Cendant acts as its own paying agent,
hold in trust, money to be paid to the persons entitled to
payment, and with respect to additional amounts, if any, on
such debt securities as contemplated in the indentures,
(C) the rights, powers, trusts, duties and immunities of the
trustee under the indentures and
(D) the defeasance provisions of the indentures.
With respect to subordinated debt securities, money and securities
held in trust under the defeasance and covenant defeasance provisions
described here, shall not be subject to the subordination provisions of the
subordinated indenture. In addition, Cendant may, at its option and at any
time, elect to terminate its obligations with respect to the covenants that
are provided in the indentures, some of which are described in the "Certain
Covenants" section above, and any omission to comply with these obligations
shall not constitute a default or an event of default with respect to the
debt securities ("covenant defeasance"). (Section 1403 of each indenture)
In order to exercise either defeasance or covenant defeasance:
(1) Cendant shall irrevocably have deposited or caused to be
deposited with the trustee, in trust, for the purpose of making
the following payments, specifically pledged as security for,
and dedicated solely to, the benefit of the holders of the debt
securities and any related coupons,
(A) money in an amount and in the currency in which the debt
securities and any related coupons are then specified as
payable at stated maturity,
(B) government obligations applicable to the debt securities,
determined on the basis of the currency in which the debt
securities are then specified as payable at stated
maturity, which through the scheduled payment of
principal and interest in accordance with their terms
will provide, not later than one day before the due date
of any payment of principal, including any premium and
interest if any, under the debt securities and any
related coupons, money in an amount or
(C) a combination of (A) and (B), sufficient, in the opinion
of a nationally recognized firm of independent public
accountants to pay and discharge
o the principal, premium if any and interest on the outstanding
debt securities and any related coupons on the stated maturity
or redemption date, if applicable, of the principal and
premium, if any, installment or interest, and
o any mandatory sinking fund payments or analogous payments
applicable to the outstanding debt securities and any related
coupons on the day on which the payments are due and payable in
accordance with the terms of the indentures and of the debt
securities and any related coupons.
However, the trustee shall have been irrevocably instructed to apply
the money or the proceeds of the government obligations to said payments
with respect to the debt securities and any related coupons. Before the
deposit, Cendant may give to the trustee, in accordance with the redemption
provisions in the indentures, a notice of its election to redeem all or any
portion of the outstanding debt securities at a future date in accordance
with the terms of the debt securities of that series and the redemption
provisions of the indentures. The notice shall be irrevocable and if given,
shall be given effect in applying the above; and
(2) no default or event of default with respect to the debt
securities and any related coupons shall have occurred and be
continuing on the date of this deposit. Insofar as the event of
default described in clauses (5) and (6) of the events of
default section above are concerned, at any time during the
period ending on the 91st day after the date of this deposit,
it being understood that this condition shall not be deemed
satisfied until the expiration of this period;
(3) a defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, the
indentures or any other material agreement or instrument to
which Cendant is a party or by which it is bound;
(4) in the case of a defeasance, Cendant shall have delivered to
the trustee an opinion of counsel stating that Cendant has
received from, or there has been published by, the Internal
Revenue Service a ruling or
since the issue date, there has been a change in the applicable
United States federal income tax law,
in either case to the effect that, and based on the above the
opinion shall confirm that, the holders of the outstanding debt
securities and any related coupons will not recognize income,
gain or loss for United States federal income tax purposes as a
result of the defeasance and will be subject to United States
federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if the defeasance
had not occurred;
(5) in the case of a covenant defeasance, Cendant shall have
delivered to the trustee an opinion of counsel to the effect
that the holders of the outstanding debt securities and any
related coupons will not recognize income, gain or loss for
United States federal income tax purposes as a result of the
covenant defeasance and will be subject to United States
federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if the covenant
defeasance had not occurred;
(6) notwithstanding any other provisions of the defeasance and
covenant defeasance provisions of the indentures, the
defeasance or covenant defeasance shall be effected in
compliance with any additional or substitute terms, conditions
or limitations under Section 301 of the indentures; and
(7) Cendant shall have delivered to the trustee an officers'
certificate and an opinion of counsel, each stating that all
conditions precedent under the indentures to either defeasance
or covenant defeasance, as the case may be, have been complied
with. (Section 1404 of each indenture)
SATISFACTION AND DISCHARGE
The indentures shall upon Cendant's request cease to be of further
effect with respect to any series of debt securities, except as to any
surviving rights of registration of transfer or exchange of debt securities
of that series expressly provided for in this prospectus and Cendant's
obligation to pay any additional amounts as contemplated by Section 1005 of
each indenture. The trustee, at Cendant's expense, shall execute proper
instruments acknowledging satisfaction and discharge of the indenture as to
that series when
(1) either
(A) all theretofore authenticated and delivered debt
securities of that series and delivered and all
appertaining coupons, if any, other than
(1) coupons appertaining to bearer securities
surrendered for exchange for registered securities
and maturing after the exchange, whose surrender is
not required or has been waived as provided in
Section 305 of the indentures,
(2) debt securities and coupons of the series which
have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 306 of
the indentures,
(3) coupons appertaining to debt securities called for
redemption and maturing after the relevant
redemption date, whose surrender has been waived as
provided in Section 1106 of the indentures, and
(4) debt securities and coupons of the series for whose
payment money has theretofore been deposited in
trust with the trustee or any paying agent or
segregated and held in trust by Cendant and
thereafter repaid to Cendant, as provided in
Section 1003 of the indentures, have been delivered
to the trustee for cancellation; or
(B) all debt securities of that series and, in the case of
(1) or (2) below, any appertaining coupons appertaining
not theretofore delivered to the trustee for cancellation
(1) have become due and payable,
(2) will become due and payable at their stated
maturity within one year, or
(3) if redeemable at Cendant's option, are to be called
for redemption within one year under arrangements
satisfactory to the trustee for the giving of
notice of redemption by the trustee in Cendant's
name at its expense, and Cendant, in the case of
(1), (2) or (3) above, has irrevocably deposited or
caused to be deposited with the trustee as trust
funds in trust for the purpose an amount, in the
currency in which the debt securities of that
series are payable. The amount shall be sufficient
to pay and discharge the entire indebtedness on the
debt securities not theretofore delivered to the
trustee for cancellation, for principal, premium if
any and interest to the date of the deposit, in the
case of debt securities which have become due and
payable, or to the stated maturity or redemption
date;
(2) Cendant has paid or caused to be paid all other sums payable by
it under this prospectus; and
(3) Cendant has delivered to the trustee an officers' certificate
and an opinion of counsel, each stating that all conditions
precedent provided here for relating to the satisfaction and
discharge of the indentures as to that series have been
complied with. (Section 401 of each indenture)
AMENDMENTS AND WAIVERS
The indentures will provide that at any time and from time to time,
Cendant and the trustee may, without the consent of any holder of debt
securities, enter into one or more supplemental indentures for specified
purposes, including, among other things,
o to cure ambiguities, defects or inconsistencies, or to make any
other provisions with respect to questions or matters arising
under the indentures, provided that this action shall not
adversely affect the interests of the holders in any material
respect,
o to effect or maintain the qualification of the indentures under
the Trust indenture Act, or
o to evidence the succession of another person to Cendant and the
assumption by any successor of Cendant's obligations in
accordance with the indentures and the debt securities.
(Section 901 of each indenture)
Other amendments and modifications of the indentures or the debt
securities may be made by Cendant and the trustee with the consent of the
holders of not less than a majority of the aggregate principal amount of
all of the then outstanding debt securities of any series. However,
(1) no modification or amendment may, without the consent of the
holder of each affected outstanding debt security do the
following:
o change the stated maturity of the principal or any
installment of interest on any debt security,
o reduce the principal amount, the rate of interest or any
premium payable upon redemption,
o change any of Cendant's obligations to pay additional
amounts contemplated by Section 1005 of each indenture
except as contemplated and permitted by the provisions of
the indentures,
o reduce the amount of the principal of an original issue
discount security that would be due and payable upon a
declaration of acceleration of its maturity under section
502 of the indentures of the amount provable in
bankruptcy under section 504 of the indentures,
o adversely affect any right of repayment at the option of
any holder of any debt security,
o change any place of payment where any debt security,
premium or the interest is payable,
o change the currency in which any debt security, premium
or the interest is payable,
o impair the right to institute suit for the enforcement of
any payment on the debt security on or after the stated
maturity or, in the case of redemption or repayment at
the option of the holder, on or after the redemption date
or repayment date, or
o adversely affect any right to convert or manage any debt
securities as may be provided under section 301 of the
indentures, or
(2) no modification or amendment may, without the consent of the
holder of each affected outstanding debt security
o reduce the percent in principal amount of the outstanding
debt securities of any series, the consent of whose
holders is required for any supplemental indenture, for
any waiver of compliance with the provisions of the
indentures or defaults under the indentures and their
consequences provided for in the indentures, or
o reduce the requirements for quorum or voting.
GOVERNING LAW
The indentures and the debt securities will be governed by and
construed in accordance with the laws of the State of New York. The
indentures are subject to the provisions of the Trust indenture Act that
are required to be a part of the indentures and shall, to the extent
applicable, be governed by these provisions.
CERTAIN DEFINITIONS
Provided below is a summary of some of the defined terms used in the
indentures.
"Affiliate" of any specified person means any other person directly
or indirectly controlling or controlled by or under direct or indirect
common control with the specified person. For the purposes of this
definition, "control" when used with respect to any specified person means
the power to direct the management and policies of that person, directly or
indirectly, whether through the ownership of voting securities, by contract
or otherwise. The terms "controlling" and "controlled" have meanings
correlative to the above.
"Capital Stock" means any and all shares, interests, participations,
rights or equivalents, however designated, of Cendant's corporate stock or
any principal subsidiary.
"Company Request" or "Company Order" means a written request or order
signed in the name of Cendant by its chairman, its president, any vice
president, its treasurer or an assistant treasurer, and delivered to the
trustee.
"Debt" means notes, bonds, debt securities or other similar evidences
of indebtedness for money borrowed.
"Default" means any event which is, or after notice or passage of
time or both would be, an event of default.
"Fair Market Value" means the fair market value of the item in
question as determined by the board of directors acting in good faith and
in exercise of its fiduciary duties.
"Holder" means a person in whose name a debt security is registered
in the security register.
"Interest Payment Date" means the stated maturity of an installment
of interest on the debt securities.
"Issue Date" means the date of first issuance of the debt securities
under either indenture.
"Maturity", when used with respect to any debt securities, means the
date on which the principal of that debt security or an installment of
principal becomes due and payable, whether at the stated maturity or by
declaration of acceleration, notice of redemption, notice of option to
elect repayment or otherwise.
"Officers' Certificate" means a certificate signed by the chairman,
the president or a vice president, and by the treasurer, an assistant
treasurer, the secretary or an assistant secretary of Cendant, and
delivered to the trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for Cendant, including an employee of Cendant, and who shall be
acceptable to the trustee.
"Original Issue Discount security" means any debt security which
provides for an amount less than the principal amount to be due and payable
upon a declaration of acceleration of the maturity under Section 502 of the
indentures.
"Outstanding", when used with respect to debt securities, means, as
of the date of determination, all debt securities theretofore authenticated
and delivered under the indentures, except:
o debt securities theretofore cancelled by the trustee or
delivered to the trustee for cancellation;
o debt securities, or portions of the debt securities, for whose
payment, money in the necessary amount has been theretofore
deposited with the trustee or any paying agent other than
Cendant, in trust or set aside and segregated in trust by
Cendant if Cendant shall act as its own paying agent, for the
holders of these debt securities;
o debt securities, except to the extent provided in the
"Defeasance or Covenant Defeasance of the Indentures" section,
with respect to which Cendant has effected defeasance and/or
covenant defeasance as provided in the indenture; and
o mutilated, destroyed, lost or stolen debt securities which have
become or are about to become due and payable which have been
paid under section 306 of the indentures or in exchange for or
in lieu of which other debt securities have been authenticated
and delivered under the indenture, other than any debt
securities in respect of which there shall have been presented
to the trustee proof satisfactory to it that these debt
securities are held by a bona fide purchaser in whose hands the
debt securities are valid obligations of Cendant.
However, in determining whether the holders of the requisite
principal amount of outstanding debt securities have given any request,
demand, authorization, direction, notice, consent or waiver under the
indentures, and for the purpose of making the calculations required by the
Trust Indenture Act Section 313, debt securities owned by Cendant, any
other obligor upon the debt securities, any affiliate of Cendant or such
other obligor shall be disregarded and deemed not to be outstanding. Except
that, in determining whether the trustee shall be protected in making this
calculation or in relying upon any request, demand, authorization,
direction, notice, consent or waiver, only debt securities which the
trustee knows to be so owned shall be so disregarded. Debt securities so
owned which have been pledged in good faith may be regarded as outstanding
if the pledgee establishes to the satisfaction of the trustee the pledgee's
right so to act with respect to these debt securities and that the pledgee
is not Cendant, any other obligor upon the debt securities, any affiliate
of Cendant or such other obligor.
"Paying Agent" means any person, including Cendant acting as paying
agent, authorized by Cendant to pay the principal, premium if any, or
interest on any debt securities on behalf of Cendant.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Responsible Officer", when used with respect to the trustee, means:
o the chairman or any vice-chairman of the board of directors,
the chairman or any vice- chairman of the executive committee
of the board of directors, the chairman of the trust committee,
the president, any vice president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, the cashier,
any assistant cashier, any trust officer or assistant trust
officer, the controller or any assistant controller,
o any other officer of the trustee customarily performing
functions similar to those performed by any of the
above-designated officers, and
o with respect to a particular corporate trust matter, any other
officer to whom that matter is referred because of his
knowledge of and familiarity with the particular subject.
"Rolling Period" shall mean with respect to any fiscal quarter, such
fiscal quarter and the three immediately preceding fiscal quarters
considered as a single accounting period.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305 of the indenture.
"Stated Maturity", when used with respect to any debt security, any
installment of principal or interest, means the date specified in this debt
security as the fixed date on which the principal of this debt security or
the installment of principal or interest is due and payable.
"Subsidiary" means any corporation of which at the time of
determination Cendant, directly and/or indirectly through one or more
subsidiaries, owns more than 50% of the voting stock.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939
as in force at the date as of which the indentures were executed, except
that any supplemental indenture executed under the indentures shall conform
to the requirements of the Trust Indenture Act as in effect on the date of
its execution.
"Trustee" means The Bank of Nova Scotia Trust Company of New York
until a successor trustee shall have become trustee under the applicable
provisions of the indentures. After that "trustee" shall mean that
successor trustee.
"Vice President", when used with respect to Cendant or the trustee,
means any vice president, whether or not designated by a number or a word
or words added before or after the title "vice president".
"Voting Stock" means stock of the class or classes having general
voting power under ordinary circumstances to elect at least a majority of
the board of directors, managers or trustees of a corporation. This is
irrespective of whether or not at the time stock of any other class or
classes shall have or might have voting power by reason of the happening of
any contingency.
DESCRIPTION OF COMMON STOCK
The following description of Cendant 's common stock does not purport
to be complete and is subject to, and qualified in its entirety by
reference to, the more complete descriptions provided in Cendant's amended
and restated certificate of incorporation, and amended and restated
by-laws. The certificate of incorporation and by-laws are exhibits to this
registration statement.
The Company is authorized to issue up to 2,000,000,000 shares of
common stock, par value $.01 per share. As of August 6, 1999, there were
approximately 720,331,470 shares of common stock outstanding.
GENERAL
Subject to the rights of the holders of any shares of Cendant's
preferred stock which may at the time be outstanding, holders of common
stock are entitled to the dividends the board of directors may declare out
of its legally available funds. The holders of common stock will possess
exclusive voting rights in Cendant, except to the extent the board of
directors specifies voting power with respect to any preferred stock
issued. Except as hereinafter described, holders of common stock are
entitled to one vote for each share of common stock, but will not have any
right to cumulate votes in the election of directors. In the event of
liquidation, dissolution or winding up of Cendant, the holders of common
stock are entitled to receive, after payment of all of Cendant 's debts and
liabilities and of all sums to which holders of any preferred stock may be
entitled, the distribution of any remaining assets of Cendant . Holders of
the common stock will not be entitled to preemptive rights with respect to
any shares which may be issued. Any shares of common stock sold under this
prospectus will be fully paid and non-assessable upon issuance against full
payment of their purchase price. The common stock is listed on the New York
Stock Exchange under the symbol "CD."
CERTAIN PROVISIONS
The provisions of Cendant's certificate and by-laws which are
summarized below may be deemed to have an anti-takeover effect and may
delay, defer or prevent a tender offer or takeover attempt that a
stockholder might consider in its stockholder's best interest, including
those attempts that might result in a premium over the market price for the
shares held by stockholders.
CLASSIFIED BOARD
The board of directors is divided into three classes that are elected
for staggered three-year terms. A director may be removed by the
stockholders without cause only by the affirmative vote of the holders,
voting as a single class of 80% or more of the total number of votes
entitled to be cast by all holders of the voting stock, which shall include
all capital stock of Cendant which by its terms may vote on all matters
submitted to stockholders of Cendant generally. In addition, under the
by-laws
o an affirmative vote of 80% of the entire board of directors
will be required to change the number of directors, and
o a quorum, at any meeting of the board of directors, shall
consist of a majority of the entire board of directors.
SPECIAL MEETINGS OF STOCKHOLDERS
A special meeting of stockholders may be called only by the chairman
of the board of directors, the president or the board of directors under a
resolution approved by a majority of the entire board of directors.
QUORUM AT STOCKHOLDER MEETINGS
The holders of one-third of the shares entitled to vote at any
meeting of the stockholders, present in person or by proxy, shall
constitute a quorum at all stockholder meetings.
STOCKHOLDER ACTION BY WRITTEN CONSENT
Stockholder action by written consent instead of a meeting is
prohibited under the certificate. 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 Cendant from
using the written consent procedure to take stockholder action without
giving all the stockholders of Cendant entitled to vote on a proposed
action the opportunity to participate in determining the proposed action.
ADVANCE NOTICE OF STOCKHOLDER -- PROPOSED BUSINESS AT ANNUAL MEETINGS
The by-laws provide that for business to be properly brought before
an annual meeting by a stockholder, the stockholder must have given timely
notice in writing to Cendant's secretary. To be timely, a stockholder's
notice must be delivered to or mailed and received at the principal
executive offices of Cendant not less than 60 days nor more than 90 days
prior to the meeting. However, if there is a less than 70 days' notice or
prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received
not later than the close of business on the tenth day following the date on
which the notice of the date of the annual meeting was mailed or such
public disclosure was made. A stockholder's notice to the secretary must
provide as to each matter the stockholder proposes to bring before the
annual meeting:
o a brief description of the business desired to be brought
before the annual meeting,
o the name and address, as they appear on Cendant's books, of the
stockholder proposing that business,
o the class and number of shares of Cendant which are
beneficially owned by the stockholder, and
o any material interest of the stockholder in that business.
In addition, the by-laws provide that for a stockholder to properly
nominate a director at a meeting of stockholders, the stockholder must have
given timely notice in writing to the secretary of Cendant. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of Cendant:
o in the case of an annual meeting, at least 90 days prior to the
date of the last annual meeting of Cendant stockholders, and
o with respect to a special meeting of stockholders, the close of
business on the 10th day following the date on which notice of
that meeting is first given to stockholders.
The stockholder's notice to the secretary must contain:
o the name and address of the stockholder who intends to make the
nomination and of the person or persons to be nominated,
o a representation that the stockholder is holder of record of
common stock and intends to appear in person or by proxy at the
meeting to nominate each nominee,
o a description of all arrangements between the stockholder and
each nominee,
o any other information with respect to each nominee as would be
required to be included in a proxy statement filed under the
proxy rules of the Commission, and
o the consent of each nominee to serve as director of Cendant if
so elected.
AMENDMENT OF GOVERNING DOCUMENTS
The certificate requires a super-majority of stockholders to approve
amendments to the certificate and the by-laws.
FAIR PRICE PROVISIONS
Under the Delaware General Corporation Law and the certificate, an
agreement of merger, sale, lease or exchange of all or substantially all of
Cendant's assets must be approved by the board of directors and adopted by
the holders of a majority of the outstanding shares of stock entitled to
vote. However, the certificate 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 Cendant's directors, voting together as a
single class, to approve various business combination transactions,
including mergers, recapitalization and the issuance or transfer of
securities. This applies to business combination transactions of Cendant or
a subsidiary having an aggregate fair market value of $10 million or more,
involving Cendant 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
o the business combination is approved by a majority of
disinterested directors, or
o the shareholders receive a "fair price" for their securities
and various other procedural requirements are met. The
certificate 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
directors.
DESCRIPTION OF TRUST PREFERRED SECURITIES OF THE CENDANT TRUSTS
GENERAL
Each Cendant trust may issue, from time to time, only one series of
trust preferred securities having terms described in the prospectus
supplement relating to it. The declaration of each Cendant trust authorizes
the regular trustees of the Cendant trust to issue on behalf of that
Cendant trust one series of trust preferred securities. Each declaration
will be qualified as an indenture under the Trust Indenture Act. The
institutional trustee, an independent trustee, will act as indenture
trustee for the trust preferred securities for purposes of compliance with
the provisions of the Trust Indenture Act. The trust preferred securities
will have terms, including distributions, redemption, voting, liquidation
rights and other preferred, deferred or other special rights or
restrictions as shall be established by the regular trustees in accordance
with the applicable declaration or as shall be provided in the declaration
or made part of the declaration by the Trust Indenture Act. Reference is
made to any prospectus supplement relating to the trust preferred
securities of a Cendant trust for specific terms of the trust preferred
securities, including, to the extent applicable:
o the distinctive designation of the trust preferred securities,
o the number of trust preferred securities issued by the Cendant
trust,
o the annual distribution rate or method of determining that rate
for trust preferred securities issued by the Cendant trust and
the date or dates upon which the distributions shall be
payable; provided, however, that distributions on the trust
preferred securities shall, subject to any deferral provisions,
and any provisions for payment of defaulted distributions, be
payable on a quarterly basis to holders of the trust preferred
securities as of a record date in each quarter during which the
trust preferred securities are outstanding,
o any right of the Cendant trust to defer quarterly distributions
on the trust preferred securities as a result of an interest
deferral right exercised by Cendant on the subordinated debt
securities held by the Cendant trust,
o whether distributions on trust preferred securities shall be
cumulative, and, in the case of trust preferred securities
having cumulative distribution rights, the date or dates or
method of determining the date or dates from which
distributions on trust preferred securities shall be
cumulative,
o the amount or amounts which shall be paid out of the assets of
the Cendant trust to the holders of trust preferred securities
upon voluntary or involuntary dissolution, winding-up or
termination of such Cendant trust,
o the obligation or option, if any, of the Cendant trust to
purchase or redeem trust preferred securities and the price or
prices at which, the period or periods within which and the
terms and conditions upon which trust preferred securities
shall be purchased or redeemed, in whole or in part, under the
obligation or option with the redemption price to be specified
in the applicable prospectus supplement,
o the voting rights, if any, of trust preferred securities in
addition to those required by law, including the number of
votes per preferred security and any requirement for the
approval by the holders of trust preferred securities as a
condition to specified action or amendments to the declaration,
o the terms and conditions, if any, upon which subordinated debt
securities held by the Cendant trust may be distributed to
holders of trust preferred securities, and
o any other relevant rights, preferences, privileges, limitations
or restrictions of trust preferred securities consistent with
the declaration or with applicable law.
All trust preferred securities offered here will be guaranteed by
Cendant to the extent provided below under "Description of Trust
Guarantees." The trust guarantee issued to each Cendant trust, when taken
together with Cendant's back-up undertakings, consisting of its obligations
under each declaration including the obligation to pay expenses of each
Cendant trust, the applicable indenture and any applicable supplemental
indentures and the debt securities issued to any Cendant trust will provide
a full and unconditional guarantee by Cendant of amounts due on the trust
preferred securities issued by each Cendant trust. The payment terms of the
trust preferred securities will be the same as the debt securities issued
to the applicable Cendant trust by Cendant.
Each declaration authorizes the regular trustees to issue on behalf
of the applicable trust one series of common securities having terms
including distributions, redemption, voting, liquidation rights or
restrictions as shall be established by the regular trustees in accordance
with the declaration or as shall otherwise be provided in it. The terms of
the common securities issued by each Cendant trust will be substantially
identical to the terms of the trust preferred securities issued by the
Cendant trust, and the common securities will rank equably, and payments
will be made on them proportionately, with the trust preferred securities.
However, if an event of default under the declaration has occurred and is
continuing, the rights of the holders of the common securities to payment
in respect of distributions and payments upon liquidation, redemption and
otherwise will be subordinated to the rights of the holders of the trust
preferred securities. The common securities will also carry the right to
vote and to appoint, remove or replace any of the Cendant trustees of the
Cendant trust. All of the common securities of each Cendant trust will be
directly or indirectly owned by Cendant.
The financial statements of any Cendant trust that issues trust
preferred securities will be reflected in Cendant's consolidated financial
statements with the trust preferred securities shown as company-obligated
mandatorily-redeemable trust preferred securities of a subsidiary trust
under minority interest in consolidated subsidiaries. In a footnote to
Cendant's audited financial statements there will be included statements
that the applicable Cendant trust is wholly-owned by Cendant and that the
sole asset of such Cendant trust is the debt securities, indicating the
principal amount, interest rate and the maturity date.
DESCRIPTION OF TRUST GUARANTEES
Provided below is a summary of information concerning the trust
guarantees that will be executed and delivered by Cendant for the benefit
of the holders, from time to time, of trust preferred securities. Each
trust guarantee will be qualified as an indenture under the Trust Indenture
Act. Unless otherwise specified in the applicable prospectus supplement,
Wilmington Trust Company will act as independent indenture trustee for
Trust Indenture Act purposes under each trust guarantee (the "trust
preferred securities guarantee trustee"). The terms of each trust guarantee
will be those provided in the trust guarantee and those made part of the
trust guarantee by the Trust Indenture Act. The following summary does not
purport to be complete and is subject to and qualified in its entirety by
reference to the provisions of the form of trust guarantee and the Trust
Indenture Act. A copy of the form of trust guarantee has been filed as an
exhibit to the registration statement of which this prospectus is a part.
Each trust guarantee will be held by the trust preferred securities
guarantee trustee for the benefit of the holders of the trust preferred
securities of the applicable Cendant trust.
GENERAL
Unless otherwise specified in the applicable prospectus supplement,
under each trust guarantee, Cendant will agree, to the extent provided, to
pay in full to the holders of the trust preferred securities, the guarantee
payments, except to the extent paid by the Cendant trust, as and when due,
regardless of any defense, right of set-off or counterclaim which the
Cendant trust may have or assert. The following payments or distributions
with respect to the trust preferred securities are the guarantee payments,
and to the extent not paid by the Cendant trust, will be subject to the
trust guarantee (without duplication):
(1) any accrued and unpaid distributions that are required to be
paid on the trust preferred securities, to the extent the
Cendant trust shall have the requisite funds available,
(2) the redemption price, including all accrued and unpaid
distributions to the date of redemption, to the extent the
Cendant trust has the requisite funds available, with respect
to any trust preferred securities called for redemption by the
Cendant trust, and
(3) upon a voluntary or involuntary dissolution, winding-up or
termination of the Cendant trust, other than in connection with
the distribution of debt securities to the holders of trust
preferred securities or the redemption of all of the trust
preferred securities upon maturity or redemption of the
subordinated debt securities, the lesser of
(a) the aggregate of the liquidation amount and all accrued
and unpaid distributions on the trust preferred
securities to the date of payment, to the extent the
Cendant trust has the requisite funds available, or
(b) the amount of assets of the Cendant trust remaining for
distribution to holders of the trust preferred securities
in liquidation of the Cendant trust.
Cendant's obligation to make a guarantee payment may be satisfied by
direct payment of the required amounts by Cendant to the holders of trust
preferred securities or by causing the applicable Cendant trust to pay
these amounts to the holders.
Each trust guarantee will not apply to any payment of distributions
except to the extent the applicable Cendant trust shall have the requisite
funds available. If Cendant does not make interest or principal payments on
the subordinated debt securities purchased by the Cendant trust, the
Cendant trust will not pay distributions on the trust preferred securities
issued by the Cendant trust and will not have the requisite funds
available.
Cendant has also agreed to guarantee the obligations of each Cendant
trust with respect to the common securities (the "common guarantee") issued
by these Cendant trusts to the same extent as the trust guarantee. However,
if an event of default under the subordinated indenture has occurred and is
continuing, holders of trust preferred securities under the trust guarantee
shall have priority over holders of the common securities under the common
guarantee with respect to distributions and payments on liquidation,
redemption or otherwise.
CERTAIN COVENANTS OF CENDANT
Unless otherwise specified in the applicable prospectus supplement,
in each trust guarantee, Cendant will covenant that, so long as any trust
preferred securities issued by the applicable Cendant trust remain
outstanding, if there shall have occurred any event of default under the
trust guarantee or under the declaration of the Cendant trust, then:
(A) Cendant will not declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase, acquire or
make a liquidation payment with respect to, any of its capital
stock, other than
(1) purchases or acquisitions of Cendant's capital stock in
connection with the satisfaction by Cendant of its
obligations under any employee or agent benefit plans or
the satisfaction by Cendant of its obligations under any
contract or security outstanding on the date of the event
requiring Cendant to purchase its capital stock,
(2) as a result of a reclassification of Cendant's capital
stock, other than into cash or other property, or the
exchange or conversion of one class or series of
Cendant's capital stock for another class or series of
Cendant's capital stock,
(3) the purchase of fractional interests in shares of
Cendant's capital stock under the conversion or exchange
provisions of that capital stock or the security being
converted or exchanged,
(4) dividends or distributions in Cendant's capital stock,
rights to acquire capital stock or repurchases or
redemptions of capital stock solely from the issuance or
exchange of capital stock, or
(5) redemptions or repurchases of any rights outstanding
under a shareholder rights plan;
(B) Cendant shall not make any payment of interest, principal or
premium if any, on or repay, repurchase or redeem any debt
securities issued by Cendant which rank junior to the debt
securities issued to the applicable Cendant trust; and
(C) Cendant shall not make any guarantee payments with respect to
the above, other than under a trust guarantee.
MODIFICATION OF THE TRUST GUARANTEES; ASSIGNMENT
Except with respect to any changes that do not adversely affect the
rights of holders of trust preferred securities, in which case no consent
of the holders will be required, each trust guarantee may be amended only
with the prior approval of the holders of not less than a majority in
liquidation amount of the outstanding trust preferred securities of the
Cendant trust. The manner of obtaining the approval of holders of the trust
preferred securities will be provided in accompanying prospectus
supplement. All guarantees and agreements contained in a trust guarantee
shall bind the successors, assigns, receivers, trustees and representatives
of Cendant and shall inure to the benefit of the holders of the trust
preferred securities of the applicable Cendant trust then outstanding.
EVENTS OF DEFAULT
An event of default under a trust guarantee will occur upon Cendant's
failure to perform any of its payment or other obligations under the trust
guarantee. The holders of a majority in liquidation amount of the trust
preferred securities to which the trust guarantee relates have the right to
direct the time, method and place of conducting any proceeding for any
remedy available to the trust preferred securities guarantee trustee in
respect of the trust guarantee or to direct the exercise of any trust or
power conferred upon the trust preferred securities guarantee trustee under
the trust guarantee.
If the trust preferred securities guarantee trustee fails to enforce
the trust guarantee, any record holder of trust preferred securities to
which the trust guarantee relates may institute a legal proceeding directly
against Cendant to enforce the trust preferred securities guarantee
trustee's rights under the trust guarantee without first instituting a
legal proceeding against the applicable Cendant trust, the trust preferred
securities guarantee trustee or any other person or entity. Notwithstanding
the above, if Cendant has failed to make a guarantee payment under a trust
guarantee, a record holder of trust preferred securities to which that
trust guarantee relates may directly institute a proceeding against Cendant
for enforcement of such trust guarantee for the payment to the record
holder of the trust preferred securities to which that trust guarantee
relates of the principal of or interest on the applicable debt securities
on or after the respective due dates specified in the debt securities, and
the amount of the payment will be based on the holder's proportional share
of the amount due and owing on all of the trust preferred securities to
which that trust guarantee relates. Cendant has waived any right or remedy
to require that any action be brought first against the applicable Cendant
trust or any other person or entity before proceeding directly against
Cendant. The record holder in the case of the issuance of one or more
global trust preferred securities certificates will be The Depository Trust
Company acting at the direction of the beneficial owners of the trust
preferred securities.
Cendant will be required to provide annually to the trust preferred
securities guarantee trustee a statement as to the performance by Cendant
of some of its obligations under each outstanding trust guarantee and as to
any default in that performance.
INFORMATION CONCERNING THE TRUST PREFERRED SECURITIES GUARANTEE TRUSTEE
The trust preferred securities guarantee trustee, prior to the
occurrence of a default to a trust guarantee, undertakes to perform only
those duties as are specifically provided in that trust guarantee and,
after default with respect to that trust guarantee, shall exercise the same
degree of care as a prudent individual would exercise in the conduct of his
or her own affairs. Subject to this provision, the trust preferred
securities guarantee trustee is under no obligation to exercise any of the
powers vested in it by a trust guarantee at the request of any holder of
trust preferred securities to which that trust guarantee relates unless it
is offered reasonable indemnity against the costs, expenses and liabilities
that it might incur.
TERMINATION
Each trust guarantee will terminate as to the trust preferred
securities issued by the applicable Cendant trust upon full payment of the
redemption price of all trust preferred securities of that Cendant trust,
upon distribution of the debt securities held by that Cendant trust to the
holders of all of the trust preferred securities of the Cendant trust or
upon full payment of the amounts payable in accordance with the declaration
of the Cendant trust upon liquidation of that Cendant trust. Each trust
guarantee will continue to be effective or will be reinstated, if at any
time any holder of trust preferred securities issued by the applicable
Cendant trust must restore payment of any sums paid under the trust
preferred securities or the trust guarantee.
STATUS OF THE TRUST GUARANTEES
The trust guarantees will constitute senior unsecured obligations of
Cendant and will rank on a parity with all of Cendant's other senior
unsecured obligations.
Each trust guarantee will constitute a guarantee of payment and not
of collection. The guaranteed party may institute a legal proceeding
directly against Cendant to enforce its rights under that trust guarantee
without instituting a legal proceeding against any other person or entity.
GOVERNING LAW
The trust guarantees will be governed by and construed in accordance
with the law of the State of New York.
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
Cendant may issue stock purchase contracts, including contracts
obligating holders to purchase from Cendant, and Cendant to sell to the
holders, a specified number of shares of common stock at a future date or
dates. The consideration per share of common stock or preferred stock may
be fixed at the time the stock purchase contracts are issued or may be
determined by reference to a specific formula provided in the stock
purchase contracts. The stock purchase contracts may be issued separately
or as a part of units consisting of a stock purchase contract and debt
securities, trust preferred securities or debt obligations of third
parties, including U.S. treasury securities, securing the holders'
obligations to purchase the common stock under the stock purchase
contracts. The stock purchase contracts may require Cendant to make
periodic payments to the holders of the stock purchase units or vice versa,
and these payments may be unsecured or prefunded on some basis. The stock
purchase contracts may require holders to secure their obligations under
the contracts in a specified manner.
The applicable prospectus supplement will describe the terms of any
stock purchase contracts or stock purchase units. The description in the
prospectus supplement will not necessarily be complete, and reference will
be made to the stock purchase contracts, and, if applicable, collateral
arrangements and depositary arrangements, relating to these stock purchase
contracts or stock purchase units.
PLAN OF DISTRIBUTION
Cendant may sell the securities and the Cendant trusts may sell trust
preferred securities being offered here in any of, or any combination of,
the following ways:
o directly to purchasers;
o through agents;
o through underwriters; and/or
o through dealers.
Offers to purchase securities may be solicited directly by Cendant
and/or a Cendant trust or by agents designated by Cendant and/or a Cendant
trust from time to time. Any agent, who may be deemed to be an underwriter
as that term is defined in the Securities Act, involved in the offer or
sale of securities, will be named, and any commissions payable by Cendant
and/or a Cendant trust to that agent will be provided, in the prospectus
supplement. Unless otherwise indicated in a prospectus supplement, any
agent will be acting on a best efforts basis for the period of its
appointment, which is ordinarily five business days or less.
If an underwriter or underwriters are utilized in the offer or sale
of securities, Cendant and/or the applicable Cendant trust will execute an
underwriting agreement with the underwriters at the time of sale of the
securities to the underwriters and the names of the underwriters and the
principal terms of Cendant's and/or the applicable Cendant trust's
agreement with the underwriters will be provided in the appropriate
prospectus supplement.
If a dealer is utilized in the offer or sale of securities, Cendant
and/or the applicable Cendant trust will sell the securities to the dealer,
as principal. The dealer may then resell the securities to the public at
varying prices to be determined by the dealer at the time of resale. The
name of the dealer and the principal terms of Cendant's and/or the
applicable Cendant trust's agreement with the dealer will be provided in
the appropriate prospectus supplement.
Agents, underwriters, and dealers may be entitled under agreements
with Cendant and/or a Cendant trust to indemnification by Cendant and/or a
Cendant trust against specified liabilities, including liabilities under
the Securities Act. Agents, dealers and underwriters may also be customers
of, engage in transactions with, or perform services for Cendant in the
ordinary course of their business.
Underwriters, agents or their controlling persons may engage in
transactions with and perform services for Cendant in the ordinary course
of business.
The place and time of delivery for securities will be provided in the
accompanying prospectus supplement for these securities.
LEGAL OPINIONS
Certain matters of Delaware law relating to the validity of the trust
preferred securities will be passed upon on behalf of the Cendant trusts by
Skadden, Arps, Slate, Meagher & Flom LPP. The validity of the securities
offered here by Cendant will be passed on for Cendant by Eric J. Bock,
Esq., Vice President--Legal of Cendant. Mr. Bock holds shares of common
stock and options to acquire shares of common stock.
EXPERTS
The consolidated financial statements of Cendant and its consolidated
subsidiaries, except PHH Corporation ("PHH"), as of December 31, 1996 and
for the year ended December 31, 1996, incorporated in this prospectus by
reference from our annual report on Form 10-K/A for the year ended December
31, 1998 have been audited by Deloitte & Touche LLP, as stated in their
report, (which expresses an unqualified opinion and includes explanatory
paragraphs relating to the litigation as described in Note 18, and the
change in the method of recognizing revenue and membership solicitation
costs as described in Note 2) which is incorporated herein by reference.
The consolidated financial statements of PHH have been audited by KPMG LLP,
as stated in their report incorporated herein by reference. Such
consolidated financial statements of Cendant and its consolidated
subsidiaries are incorporated by reference herein in reliance upon the
respective reports of such firms given upon their authority as experts in
accounting and auditing. All of the foregoing firms are independent
auditors.
The financial statements of PHH Corporation for the year ended
December 31, 1996, are consolidated with those of Cendant. With respect to
the financial statements of PHH Corporation for the year ended December 31,
1996, the Cendant financial statements which are incorporated by reference
in this prospectus, have been incorporated by reference in reliance upon
the report of KPMG LLP, independent auditors, incorporated herein by
reference and upon the authority of such firm as experts in accounting and
auditing.
WHERE YOU CAN FIND MORE INFORMATION
Cendant files reports, proxy statements and other information with
the Securities and Exchange Commission. Cendant's filings with the
Commission are available to the public over the Internet at the
Commission's web site at http: www.sec.gov. You may also read and copy any
document Cendant files at the Commission at the public reference rooms of
the Commission in Washington, D.C., New York, New York and Chicago,
Illinois. Please call the Commission at 1-800-SEC-0330 for further
information on the public reference rooms.
Cendant has filed with the SEC a registration Statement on Form S-3
under the Securities Act with respect to the securities offered in this
prospectus. This prospectus does not contain all of the information that is
in the registration statement, parts of which we have omitted, as allowed
under the rules and regulations of the Commission. You should refer to the
registration statement for further information with respect to Cendant and
the securities offered in this prospectus. Any statements made in this
prospectus concerning the provisions of legal documents are not necessarily
complete and you should read the documents which are filed as exhibits to
the registration statement or otherwise filed with the SEC. Copies of the
registration statement, including exhibits, may be inspected without charge
at the Commission's principal office in Washington, D.C., and you may
obtain copies from this office upon payment of the fees prescribed by the
Commission.
The Commission allows Cendant to "incorporate by reference" the
information Cendant files with them, which means that Cendant can disclose
important information to you by referring you to those documents. The
information incorporated by reference is an important part of this
prospectus and information that Cendant files later with the Commission
will automatically update and supersede this information. Cendant
incorporates by reference the documents listed below and any future filings
made with the Commission under sections 13(a), 13(c), 14 or 15(d) of the
Exchange until we sell all of the securities.
o Annual Report on Form 10-K/A for the year ended December 31,
1998, filed on October 13, 1999 with the SEC
o Quarterly Report on Form 10-Q/A for the quarter ended March 31,
1999, filed on October 13, 1999 with the SEC
o Quarterly Report on Form 10-Q/A for the quarter ended June 30,
1999, filed on October 13, 1999 with the SEC
o Current Report on Form 8-K dated April 22, 1999
o Current Report on Form 8-K dated May 25, 1999
o Current Report on Form 8-K dated June 2, 1999
o Current Report on Form 8-K dated June 22, 1999
o Current Report on Form 8-K dated July 9, 1999
o Current Report on Form 8-K dated July 16, 1999
o Current Report on Form 8-K dated July 23, 1999
o Current Report on Form 8-K dated September 16, 1999
o Current Report on Form 8-K dated October 5, 1999
o The description of our common stock contained in the
registration statements on Form 8-A dated July 27, 1984 and
August 15, 1989
You may request a copy of these filings at no cost, by writing or
telephoning us at the following:
Investor Relations
Cendant Corporation
9 West 57th Street
New York, NY 10019
Telephone: (212) 413-1800
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You should rely only on the information contained or incorporated by
reference in this prospectus. Neither Cendant nor any underwriter has
authorized anyone to provide you with different information. Neither
Cendant nor any underwriter is making an offer to sell these securities in
any jurisdiction where the offer or sale is not permitted. Cendant should
not assume that the information contained or incorporated by reference in
this prospectus is accurate as of any date other than the date on the front
cover of this prospectus.
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CENDANT LOGO
15,000,000
SPECIAL FELINE PRIDESSM
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PROSPECTUS SUPPLEMENT
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February 7, 2001
SM Service Mark of Merrill Lynch & Co., Inc.
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