<PAGE>
As filed with the Securities and Exchange Commission on April 27, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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MARRIOTT INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
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Delaware 52-2055918
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
10400 Fernwood Road
Bethesda, Maryland 20817
301/380-3000
(Address, including zip code, and
telephone number, including area
code, of registrant's principal
executive offices)
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Agent: Copies to:
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Joseph Ryan, Esq. Ward R. Cooper, Esq. R. W. Smith, Jr.
Marriott International, Marriott International, Piper & Marbury, L.L.P.
Inc. Inc. 36 South Charles Street
Dept. 52/923.30 Dept. 52/923.23 Baltimore, Maryland 21201
10400 Fernwood Road 10400 Fernwood Road 410/539-2530
Bethesda, Maryland 20817 Bethesda, Maryland 20817
301/380-3000 301/380-7824
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(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Approximate date of commencement of proposed sale of securities to the
public: From time to time after the effective date of this registration
statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
CALCULATION OF REGISTRATION FEE(1)
<TABLE>
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<CAPTION>
Title of Each Class of Proposed Proposed Maximum Amount of
Securities to be Amount to be Maximum Offering Registration Fee Registration
Registered(2) Registered(3) Price Per Unit(4) Price Fee
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<S> <C> <C> <C> <C>
Debt Securities; Class A
Common Stock, par value
$.01(5); and Preferred
Stock, no par value... $500,000,000(6) $500,000,000(7)(8) $139,000
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</TABLE>
(1) Estimated in accordance with Rule 457 solely for the purpose of calculating
the registration fee.
(2) Any securities registered hereunder may be sold separately or as units with
other securities registered hereunder.
(3) Includes such indeterminate number of shares of Class A Common Stock and
shares of Preferred Stock as may be issued at indeterminable prices, but
with an aggregate initial offering price not to exceed $500,000,000, plus
such indeterminate number of shares of Class A Common Stock as may be
issued upon conversion of Preferred Stock registered hereunder.
(4) Omitted pursuant to General Instruction II.D of Form S-3.
(5) Associated with the Class A Common Stock are preferred share purchase
rights that will not be exercisable or evidenced separately from the Class
A Common Stock prior to the occurrence of certain events.
(6) Such amount represents the principal amount of any debt securities issued
at their principal amount, the issue price rather than the principal amount
of any debt securities issued at an original issue discount, the
liquidation preference of any preferred stock and the amount computed in
accordance with Rule 457(c) for any common stock.
(7) No separate consideration will be received for Class A Common Stock that is
issued upon conversion of Preferred Stock or Debt Securities.
(8) In U.S. dollars or the equivalent thereof in one or more foreign currencies
or composite currencies.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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<PAGE>
PROSPECTUS
MARRIOTT INTERNATIONAL, INC.
DEBT SECURITIES
COMMON STOCK
PREFERRED STOCK
We may from time to time sell up to $500,000,000 aggregate initial offering
price of our debt securities, common stock or preferred stock. The debt
securities may consist of debentures, notes or other types of debt. We will
provide specific terms of these securities in supplements to this prospectus.
You should read this prospectus and the applicable supplement carefully before
you invest.
Investing in these securities involves risks. See "Risk Factors" on page 6.
----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
----------------
April 27, 1999
<PAGE>
We have not authorized any dealer, salesman or other person to give any
information or to make any representation other than those contained or
incorporated by reference in this prospectus and any accompanying prospectus
supplement. You must not rely upon any information or representation not
contained or incorporated by reference in this prospectus or the accompanying
prospectus supplement. This prospectus and the accompanying supplement to this
prospectus do not constitute an offer to sell or the solicitation of an offer
to buy any securities other than the registered securities to which they
relate, nor do this prospectus and any accompanying prospectus supplement
constitute an offer to sell or the solicitation of an offer to buy securities
in any jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. The information contained in this prospectus
and the supplement to this prospectus is accurate as of the dates on their
covers. When we deliver this prospectus or a supplement or make a sale pursuant
to this prospectus, we are not implying that the information is current as of
the date of the delivery or sale.
----------------
Table of Contents
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
About this Prospectus...................................................... 3
Where You Can Find More Information........................................ 3
Forward-Looking Statements................................................. 5
Risk Factors............................................................... 6
The Company................................................................ 9
Use of Proceeds............................................................ 10
Ratio of Earnings to Fixed Charges......................................... 10
Description of Debt Securities We May Offer................................ 11
Our Common Stock........................................................... 21
Description of Preferred Stock We May Offer................................ 22
Plan of Distribution....................................................... 22
Legal Matters.............................................................. 24
Independent Public Accountants............................................. 24
</TABLE>
2
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission (the "SEC") utilizing a "shelf" registration
process. Under this shelf registration process, we may sell any combination of
the debt securities, common stock, or preferred stock described in this
prospectus in one or more offerings up to a total dollar amount of
$500,000,000. This prospectus provides you with a general description of the
securities we may offer. Each time we sell securities, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read both this prospectus
and the applicable prospectus supplement together with additional information
described under the next heading "Where You Can Find More Information."
To see more detail, you should read the exhibits filed with our registration
statement.
As used in this prospectus, unless the context requires otherwise, "we,"
"us," or "Marriott" means Marriott International, Inc. and its predecessors and
consolidated subsidiaries.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You can inspect and copy these reports, proxy
statements and other information at the public reference facilities of the SEC,
in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; 7 World Trade
Center, Suite 1300, New York, New York 10048; and Suite 1400, Citicorp Center,
500 W. Madison Street, Chicago, Illinois 60661-2511. You can also obtain copies
of these materials from the public reference section of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. The
SEC also maintains a web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the SEC (http://www.sec.gov). You can inspect reports and other
information we file at the office of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005.
We have filed a registration statement and related exhibits with the SEC
under the Securities Act of 1933, as amended. The registration statement
contains additional information about us and the securities we may issue. You
may inspect the registration statement and exhibits without charge at the
office of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and you
may obtain copies from the SEC at prescribed rates.
The SEC allows us to "incorporate by reference" the information we file with
it, which means that we can disclose important information to you by referring
to those documents. We hereby "incorporate by reference" the documents listed
below, which means that we are disclosing important information to you by
referring you to those documents. The information that we file later with the
SEC will automatically update and in some cases supersede this information.
Specifically, we incorporate by reference:
. Our Annual Report on Form 10-K for the year ended January 1, 1999;
. Our Proxy Statement filed on March 18, 1999; and
. Any future filings we make with the SEC under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 after the date of this
prospectus and before we stop offering securities (other than those
portions of such documents described in paragraphs (i), (k), and (l) of
Item 402 of Regulation S-K promulgated by the SEC).
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<PAGE>
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Corporate Secretary
Marriott International, Inc.
Marriott Drive, Department 52/862
Washington, D.C. 20058
(301) 380-3000
You should rely only on the information incorporated by reference or
provided in this prospectus and any supplement. We have not authorized anyone
else to provide you with other information.
4
<PAGE>
FORWARD-LOOKING STATEMENTS
We make forward-looking statements in this prospectus that are based on the
beliefs and assumptions of our management, and on information currently
available to our management. Forward-looking statements include the information
about our possible or assumed future results of operations and statements
preceded by, followed by or that include the words "believe," "expect,"
"anticipate," "intend," "plan," "estimate," or similar expressions.
Forward-looking statements involve risks, uncertainties and assumptions.
Actual results may differ materially from those expressed in these forward-
looking statements. You are cautioned not to unduly rely on any forward-looking
statements.
You should understand that the following important factors, in addition to
those discussed elsewhere in this prospectus and the documents incorporated in
this prospectus by reference, could cause results to differ materially from
those expressed in such forward-looking statements:
. competition within each of our business segments;
. the balance between supply of and demand for hotel rooms, timeshare
units and senior living accommodations;
. our continued ability to obtain new operating contracts and franchise
agreements;
. our ability to develop and maintain positive relations with current and
potential hotel and senior living community owners;
. the effect of international, national and regional economic conditions;
. the availability of capital to allow us and potential hotel and senior
living community owners to fund investments;
. our ability, and the ability of other parties upon which our businesses
also rely, to modify or replace on a timely basis, computer software and
other systems in order to function properly prior to, in and beyond, the
Year 2000; and
. other risks described from time to time in our filings with the SEC.
5
<PAGE>
RISK FACTORS
Before you invest in our securities, you should be aware of various risks,
including those described below. You should carefully consider these risk
factors together with all other information included in this prospectus before
you decide to invest in our securities.
Risks concerning the lodging business may impact our revenue and growth
The lodging business involves unique operating risks. Our largest business
is lodging. Our lodging properties are subject to operating risks that may
adversely impact our revenue. These risks include, among others:
. changes in general economic conditions, which can adversely affect the
level of business and pleasure travel, and therefore the demand for
lodging and related services;
. cyclical over-building in one or more sectors of the hotel industry
and/or in one or more geographic regions, which could lead to excess
supply compared to demand, and a decrease in hotel occupancy and/or room
rates;
. restrictive changes in zoning, land use, health, safety and
environmental laws, rules and regulations;
. our inability to obtain adequate property and liability insurance to
protect against losses or to obtain such insurance at reasonable rates;
and
. changes in travel patterns.
Competition in the lodging business may affect our ability to grow. We
compete for hotel management, franchise and acquisition opportunities with
other managers, franchisors and owners of hotel properties, some of which may
have greater financial resources than we do. These competitors may be able to
accept more risk than we can prudently manage. Competition may generally reduce
the number of suitable management, franchise and investment opportunities
offered to us, and increase the bargaining power of property owners seeking to
engage a manager, become a franchisee or sell a hotel property. Our operational
and growth prospects are also dependent on the strength and desirability of our
lodging brands, the ability of our franchisees to generate revenues and profits
at properties they franchise from us and our ability to maintain positive
relations with our employees.
We may have conflicts of interest with Host Marriott Corporation and Crestline
Capital Corporation
We manage or franchise a large number of full service, luxury, limited
service and extended stay hotels and senior living communities that are owned,
controlled or leased by Host Marriott Corporation and its former subsidiary,
Crestline Capital Corporation, and we guarantee certain Host Marriott
obligations.
We may have conflicts of interest with Host Marriott or Crestline because
our Chairman and Chief Executive Officer, J.W. Marriott Jr., and his brother,
Richard E. Marriott, who is Chairman of Host Marriott, have significant
stockholdings in, and are directors of, both Marriott International and Host
Marriott. In addition, J.W. Marriott, Jr. and Richard E. Marriott have
significant holdings in Crestline and John W. Marriott III, the son of J.W.
Marriott, Jr. and a Marriott employee, is a director of Crestline.
Circumstances may occur on which Host Marriott's or Crestline's interests could
be in conflict with your interests as a holder of our securities, and Host
Marriott or Crestline may pursue transactions that present risks to you as a
holder of our securities. We cannot assure you that any such conflicts will be
resolved in your favor. Our transactions with Host Marriott and Crestline are
described in more detail in the notes to our Consolidated Financial Statements,
which we filed with the SEC as part of our Annual Report on Form 10-K for the
year ended January 1, 1999. See "Where You Can Find More Information" on page
3.
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The availability and price of capital may affect our ability to grow
Our ability to sell properties that we develop, and the ability of hotel
developers to build or acquire new Marriott branded properties, both of which
are important components of our growth plans, are to some extent dependent on
the availability and price of capital. We are monitoring the status of the
capital markets, which have shown unusual volatility during the past year, and
continually evaluate the effect, if any, that capital market conditions may
have on our ability to execute our announced growth plans. If this analysis
demonstrates that our growth plans should be modified, new plans which provide
for reduced or more limited growth may be necessary.
We depend on arrangements with others to grow
Our present growth strategy for development of additional lodging and senior
living facilities entails entering into and maintaining various arrangements
with present and future property owners, including Host Marriott, Crestline and
New World Development Company Limited. We cannot assure you that any of our
current strategic arrangements will continue, or that we will be able to enter
into future collaborations, in which case our ability to continue to grow could
be constrained.
Contract terms for new units may be less favorable
The terms of the operating contracts, distribution agreements, franchise
agreements and leases for each of our lodging facilities and retirement
communities are influenced by contract terms offered by our competitors at the
time these agreements are entered into. Accordingly, we cannot assure you that
contracts entered into or renewed in the future will be on terms that are as
favorable to us as those under our existing agreements.
We may fail to compete effectively and lose business
We generally operate in markets that contain numerous competitors and our
continued success depends, in large part, upon our ability to compete in such
areas as access, location, quality of accommodations, amenities, specialized
services, cost containment and, to a lesser extent, the quality and scope of
food and beverage services and facilities. If we fail to compete effectively,
our revenues and profitability will suffer.
Changes in supply and demand in our industries may adversely affect us
The lodging industry may be adversely affected by (1) supply additions, (2)
international, national and regional economic conditions, (3) changes in travel
patterns, (4) taxes and government regulations which influence or determine
wages, prices, interest rates, construction procedures and costs, and (5) the
availability of capital to allow us and potential hotel and retirement
community owners to fund investments. Our timeshare and senior living service
businesses are also subject to the same or similar uncertainties and,
accordingly, we cannot assure you that the present level of demand for
timeshare intervals and senior living communities will continue, or that there
will not be an increase in the supply of competitive units, which could reduce
the prices at which we are able to sell or rent units.
Computer systems that we depend on may fail to recognize the Year 2000
We depend on our computer software programs and operating systems in
operating our business. We also depend on the proper functioning of computer
systems of third parties, such as vendors and suppliers. The failure of any of
these systems to appropriately interpret the upcoming calendar year 2000 could
have a material adverse effect on us, our business and financial condition. We
are currently identifying our own systems that are not Year 2000 compliant and
taking steps to determine whether third parties are doing the same. In
addition, we are implementing a plan to prepare our most critical computer
systems to be Year 2000 compliant in 1999. We estimate that the total cost of
implementing our Year 2000 compliance program to be borne by us will be
approximately $40 to $50 million (on a pre-tax basis), of which $12 million had
been incurred through January 1, 1999.
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<PAGE>
Our inability to remedy our own Year 2000 problems or the failure of third
parties to do so may cause business interruptions or shutdowns, financial loss,
reputational harm and/or legal liability. We cannot assure you that our Year
2000 compliance program will be effective or that our estimates about the
timing and cost of completing our program will be accurate. You can find a more
detailed discussion of our Year 2000 compliance program in our Annual Report on
Form 10-K for the year ended January 1, 1999, which we have filed with the SEC
and incorporated by reference into this prospectus.
We are subject to restrictive debt covenants
Our existing debt agreements contain covenants that limit our ability to,
among other things, borrow additional money, pay dividends, sell assets or
engage in mergers. If we do not comply with these covenants, or do not repay
our debt on time, we would be in default under our debt agreements. Unless any
such default is waived by our lenders, the debt could become immediately
payable and this could have a material adverse impact on us.
We depend on cash flow of our subsidiaries to make payments on our securities
We are in part a holding company. Our subsidiaries conduct a significant
percentage of our consolidated operations and own a significant percentage of
our consolidated assets. Consequently, our cash flow and our ability to meet
our debt service obligations depends in large part upon the cash flow of our
subsidiaries and the payment of funds by the subsidiaries to us in the form of
loans, dividends or otherwise. Our subsidiaries are not obligated to make funds
available to us for payment of our debt securities or preferred stock dividends
or otherwise. In addition, their ability to make any payments will depend on
their earnings, the terms of their indebtedness, business and tax
considerations and legal restrictions. Our debt securities and any preferred
stock we may issue effectively will rank junior to all liabilities of our
subsidiaries. In the event of a bankruptcy, liquidation or dissolution of a
subsidiary and following payment of its liabilities, the subsidiary may not
have sufficient assets remaining to make payments to us as a shareholder or
otherwise. The indenture that governs our debt securities permits us and our
subsidiaries to incur additional indebtedness, including secured indebtedness,
subject to certain limitations. See "Description of the Debt Securities We May
Offer--Certain Covenants" on page 16.
A liquid trading market for our debt securities and preferred stock may not
develop
There has not been an established trading market for our debt securities or
preferred stock. The liquidity of any market for debt securities or preferred
stock will depend upon the number of holders of those securities, our
performance, the market for similar securities, the interest of securities
dealers in making a market in those securities and other factors. A liquid
trading market may not develop for any debt securities or preferred stock we
may issue.
Anti-takeover provisions may prevent a change in control
Our restated certificate of incorporation, our shareholder's rights plan,
and the Delaware General Corporation Law each contain provisions that could
have the effect of making it more difficult for a party to acquire, and may
discourage a party from attempting to acquire, control of our company without
approval of our board of directors. These provisions could discourage tender
offers or other bids for our common stock at a premium over market price.
Forward-Looking Statements May Prove Inaccurate
We have made forward-looking statements in this offering memorandum that are
subject to risks and uncertainties. You should note that many factors, some of
which are discussed elsewhere in this document, could affect future financial
results and could cause those results to differ materially from those expressed
in our forward-looking statements contained in this offering memorandum. See
"Forward-Looking Statements" on page 5.
8
<PAGE>
THE COMPANY
We are one of the world's leading hospitality companies. We are a worldwide
operator and franchisor of hotels and senior living communities. Our portfolio
of twelve lodging brands--from luxury to economy to extended stay to vacation
timesharing--is the broadest of any company in the world. Consistent with our
focus on management and franchising, we own very few of our lodging properties.
Our Senior Living Services unit develops and operates senior living communities
offering independent living, assisted living and skilled nursing care for
seniors. Operating under the name Marriott Distribution Services, we supply
food and related products to our domestic hotels and senior living communities
and to external domestic customers through our high-volume distribution
centers. Marriott Distribution Services is one of the largest limited line food
service distributors in the United States.
Formation of "New" Marriott International--Spin-off in March 1998. We became
a public company in March 1998, when we were "spun off" as a separate entity by
the company formerly named "Marriott International, Inc." We refer to the
"former" Marriott International as "Old Marriott". Our company--the "new"
Marriott International--was formed to conduct the lodging, senior living and
distribution services businesses formerly conducted by Old Marriott. Old
Marriott, now called Sodexho Marriott Services, Inc., is a provider of food
service and facilities management in North America.
Other Companies with the "Marriott" Name. In addition to us and Sodexho
Marriott Services, Inc. there are two other public companies with "Marriott" in
their names: Host Marriott Corporation (a lodging real estate company, most of
whose properties we manage) and Host Marriott Services Corporation (a food,
beverage and retail concessionaire at travel and entertainment venues). Each of
these companies has its own separate management, businesses and employees. Each
company's board of directors is comprised of different persons, except that
J.W. Marriott, Jr., our Chairman and Chief Executive Officer, his brother,
Richard E. Marriott, Chairman of Host Marriott, and William J. Shaw, our
President and Chief Operating Officer and one of our directors, are each
directors of more than one Marriott company. Members of the Marriott family
continue to own stock in each of these companies. Old Marriott was formed in
1993 when it was spun off from Marriott Corporation--now named Host Marriott
Corporation. Host Marriott Services Corporation was formed in 1995 when it was
spun off from Host Marriott Corporation.
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USE OF PROCEEDS
Unless we indicate otherwise in the applicable prospectus supplement, we
anticipate that we will use any net proceeds for general corporate purposes,
which may include repayment of existing debt, working capital, capital
expenditures, acquisitions and stock repurchases. We will set forth in the
prospectus supplement our intended use for the net proceeds received from any
sale of securities. Pending the use of the net proceeds, we expect to invest
these proceeds in short-term interest-bearing instruments or other debt
securities or to reduce indebtedness under our commercial paper program or bank
credit lines.
RATIO OF EARNINGS TO FIXED CHARGES
Our ratio of earnings to fixed charges for the periods indicated is as
follows:
<TABLE>
<CAPTION>
Fiscal Year
-------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
7.1x 7.2x 5.8x 6.9x 6.2x
</TABLE>
In calculating the ratio of earnings to fixed charges, earnings represent
income before income taxes and loss (income) related to equity method investees
plus (a) fixed charges and (b) distributed income of equity method investees;
minus (x) interest capitalized. Fixed charges represent interest expensed and
capitalized, amortization of deferred financing costs, an estimate of the
interest within rent expense and our share of the interest expense of certain
equity method investees.
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DESCRIPTION OF DEBT SECURITIES WE MAY OFFER
As required by Federal law for all publicly offered bonds and notes, the
debt securities described in this prospectus are governed by a document called
the "Indenture". The Indenture is a contract between us and The Chase Manhattan
Bank, which acts as Trustee. We may issue as many distinct series of debt
securities under the Indenture as we wish. This section summarizes terms of the
debt securities that are common to all series. Most of the financial terms and
other specific terms of your series of debt securities will be described in the
prospectus supplement that will be attached to the front of this prospectus.
Those terms may vary from the terms described here. The prospectus supplement
may also describe special Federal income tax consequences of the debt
securities.
The Indenture and its associated documents contain the full legal text of
the matters described in this section. The Indenture and the debt securities
are governed by New York law. A copy of the Indenture has been filed with the
SEC as part of our registration statement. See "Where You Can Find More
Information" on page 3 for information on how to obtain a copy.
Because this section is a summary, it does not describe every aspect of the
debt securities. This summary is subject to and qualified in its entirety by
reference to all the provisions of the Indenture, including definitions of
certain terms used in the Indenture. For example, in this section we use
capitalized words to signify defined terms that have been given special meaning
in the Indenture. We describe the meaning for only the more important terms. We
also include references in parentheses to certain sections of the Indenture.
Whenever we refer to particular sections or defined terms of the Indenture in
this prospectus or in the prospectus supplement, such sections or defined terms
are incorporated by reference here or in the prospectus supplement. This
summary also is subject to and qualified by reference to the description of the
particular terms of your series described in the prospectus supplement.
Conversion Rights
The terms and conditions, if any, upon which the debt securities are
convertible into common or preferred stock will be set forth in the prospectus
supplement. The terms will include whether the debt securities are convertible
into common or preferred stock, the conversion price (or its manner of
calculation), the conversion period, provisions as to whether conversion will
be at our option or the option of the holders, the events requiring an
adjustment of the conversion price and provisions affecting conversion in the
event of the redemption of the debt securities.
The Trustee
The Trustee under the Indenture has two main roles. First, the Trustee can
enforce your rights against us if we default on our obligations under our debt
securities. There are some limitations on the extent to which the Trustee acts
on your behalf, described later on pages 20 and 21 under "--Remedies If an
Event of Default Occurs".
Second, the Trustee performs administrative duties for us, such as sending
you interest payments, sending you notices and transferring your debt
securities to a new buyer if you sell.
Legal Ownership
"Street Name" and Other Indirect Holders
Investors who hold debt securities in accounts at banks or brokers will
generally not be recognized by us as legal Holders of debt securities. This is
called holding in "Street Name." Instead, we would recognize only the bank or
broker, or the financial institution the bank or broker uses to hold its debt
securities. These intermediary banks, brokers and other financial institutions
pass along principal, interest and other payments, on the debt securities,
either because they agree to do so in their customer agreements or because they
are legally
11
<PAGE>
required to. If you hold debt securities in "Street Name," you should check
with your own institution to find out:
. How it handles securities payments and notices.
. Whether it imposes fees or charges.
. How it would handle voting if ever required.
. Whether and how you can instruct it to send you debt securities
registered in your own name so you can be a direct Holder as described
below.
. How it would pursue rights under the debt securities if there were a
default or other event triggering the need for Holders to act to protect
their interests.
Direct Holders
Our obligations, as well as the obligations of the Trustee and those of any
third parties employed by us or the Trustee, run only to Persons who are
registered as Holders of debt securities. We do not have obligations to you if
you hold in "Street Name" or other indirect means, either because you choose to
hold debt securities in that manner or because the debt securities are issued
in the form of Global Securities as described below. For example, once we make
payment to the registered Holder, we have no further responsibility for the
payment if that Holder is legally required to pass the payment along to you as
a "Street Name" customer but does not do so.
Global Securities
What is a Global Security? A Global Security is a special type of indirectly
held Security, as described above under "Street Name" and Other Indirect
Holders'. If we choose to issue debt securities in the form of Global
Securities, the ultimate beneficial owners can only be indirect holders. We do
this by requiring that the Global Security be registered in the name of a
financial institution we select and by requiring that the debt securities
included in the Global Security not be transferred to the name of any other
direct Holder unless the special circumstances described below occur. The
financial institution that acts as the sole direct Holder of the Global
Security is called the "Depositary". Any person wishing to own a Security must
do so indirectly by virtue of an account with a broker, bank or other financial
institution that in turn has an account with the Depositary. The Prospectus
Supplement indicates whether your series of debt securities will be issued only
in the form of Global Securities.
Special Investor Considerations for Global Securities. As an indirect
holder, an investor's rights relating to a Global Security will be governed by
the account rules of the investor's financial institution and of the
Depositary, as well as general laws relating to securities transfers. We do not
recognize this type of investor as a Holder of debt securities and instead deal
only with the Depositary that holds the Global Security.
An investor should be aware that if debt securities are issued only in the
form of Global Securities:
. The investor cannot get debt securities registered in his or her own
name.
. The investor cannot receive physical certificates for his or her
interest in the debt securities.
. The investor will be a "Street Name" Holder and must look to his or her
own bank or broker for payments on the debt securities and protection of
his or her legal rights relating to the debt securities. See "Street
Name" and Other Indirect Holders' on page .
. The investor may not be able to sell interests in the debt securities to
some insurance companies and other institutions that are required by law
to own their securities in the form of physical certificates.
. The Depositary's policies will govern payments, transfers, exchange and
other matters relating to the investor's interest in the Global
Security. We and the Trustee have no responsibility for any aspect of
the Depositary's actions or for its records of ownership interests in
the Global Security. We and the Trustee also do not supervise the
Depositary in any way.
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. Payment for purchases and sales in the market for corporate bonds and
notes is generally made in next-day funds. In contrast, the Depositary
will usually require that interests in a Global Security be purchased or
sold within its system using same-day funds. This difference could have
some effect on how Global Security interests trade, but we do not know
what that effect will be.
Special Situations When Global Security Will Be Terminated. In a few special
situations described below, the Global Security will terminate and interests in
it will be exchanged for physical certificates representing debt securities.
After that exchange, the choice of whether to hold debt securities directly or
in "Street Name" will be up to the investor. Investors must consult their own
bank or brokers to find out how to have their interests in debt securities
transferred to their own name, so that they will be direct Holders. The rights
of "Street Name" investors and direct Holders in the debt securities have been
previously described in the subsections entitled "Street Name" and Other
Indirect Holders' on page 11 and "Direct Holders" on page 12 .
The special situations for termination of a Global Security are:
. When the Depositary notifies us that it is unwilling, unable or no
longer qualified to continue as Depositary.
. When an Event of Default on the debt securities has occurred and has not
been cured. We discuss defaults below under "Events of Default" on page
.
. The prospectus supplement may also list additional situations for
terminating a Global Security that would apply only to the particular
series of debt securities covered by the Prospectus Supplement. When a
Global Security terminates, the Depositary (and not we or the Trustee)
is responsible for deciding the names of the institutions that will be
the initial direct Holders. (Sections 204 and 305)
In the remainder of this description "you" means direct Holders and not
"Street Name" or other indirect holders of debt securities. Indirect holders
should read the previous subsection on page 11 entitled " "Street Name' and
Other Indirect Holders".
Overview of Remainder of This Description
The remainder of this description summarizes:
. Additional mechanics relevant to the debt securities under normal
circumstances, such as how you transfer ownership and where we make
payments;
. Your rights under several special situations, such as if we merge with
another company or, if we want to change a term of the debt securities;
. Promises we make to you about how we will run our business, or business
actions we promise not to take (known as "restrictive covenants"); and
. Your rights if we default or experience other financial difficulties.
Additional Mechanics
Form, Exchange and Transfer
The debt securities will be issued:
. only in fully registered form
. without interest coupons
. in denominations that are even multiples of $1,000. (Section 302)
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You may have your debt securities broken into more debt securities of
smaller denominations or combined into fewer debt securities of larger
denominations, as long as the total principal amount is not changed.
(Section 305) This is called an "exchange."
You may exchange or transfer debt securities at the office of the Trustee.
The Trustee acts as our agent for registering debt securities in the names of
Holders and transferring debt securities. We may change this appointment to
another entity or perform it ourselves. The entity performing the role of
maintaining the list of registered Holders is called the "Security Registrar."
It will also perform transfers. (Section 305)
You will not be required to pay a service charge to transfer or exchange
debt securities, but you may be required to pay for any tax or other
governmental charge associated with the exchange or transfer. The transfer or
exchange will only be made if the Security Registrar is satisfied with your
proof of ownership.
If we have designated additional transfer agents, they are named in the
Prospectus Supplement. We may cancel the designation of any particular transfer
agent. We may also approve a change in the office through which any transfer
agent acts. (Section 1002)
If the debt securities are redeemable and we redeem less than all of the
debt securities of a particular series, we may block the transfer or exchange
of debt securities during the period beginning 15 days before the day we mail
the notice of redemption and ending on the day of that mailing, in order to
freeze the list of Holders to prepare the mailing. We may also refuse to
register transfers or exchanges of debt securities selected for redemption,
except that we will continue to permit transfers and exchanges of the
unredeemed portion of any Security being partially redeemed. (Section 305)
Payment and Paying Agents
We will pay interest to you if you are a direct Holder listed in the
Trustee's records at the close of business on a particular day in advance of
each due date for interest, even if you no longer own the Security on the
interest due date. That particular day, usually about two weeks in advance of
the interest due date, is called the "Regular Record Date" and is stated in the
Prospectus Supplement. (Section 307) Holders buying and selling debt securities
must work out between them how to compensate for the fact that we will pay all
the interest for an interest period to the one who is the registered Holder on
the Regular Record Date. The most common manner is to adjust the sales price of
the debt securities to pro rate interest fairly between buyer and seller. This
pro rated interest amount is called "accrued interest".
We will pay interest, principal and any other money due on the debt
securities at the corporate trust office of the Trustee in Dallas, Texas. That
office is currently located at 1201 Main Street, 18th Floor, Dallas, Texas
75202. You may elect to have your payments picked up at or wired from that
office. We may also choose to pay interest by mailing checks.
"Street Name" and other indirect holders should consult their banks or
brokers for information on how they will receive payments.
We may also arrange for additional payment offices, and may cancel or change
these offices, including our use of the Trustee's corporate trust office. These
offices are called "Paying Agents". We may also choose to act as our own Paying
Agent. We must notify you of changes in the Paying Agents for any particular
series of debt securities. (Section 1002)
Notices
We and the Trustee will send notices regarding the debt securities only to
direct Holders, using their addresses as listed in the Trustee's records.
(Sections 101 and 106)
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Regardless of who acts as Paying Agent, all money paid by us to a Paying
Agent that remains unclaimed at the end of two years after the amount is due to
direct Holders will be repaid to us. After that two-year period, you may look
only to us for payment and not to the Trustee, any other Paying Agent or anyone
else. (Section 1003)
Special Situations
Mergers and Similar Events
We are generally permitted to consolidate or merge with another company or
entity. We are also permitted to sell substantially all of our assets to
another entity. However, we may not take any of these actions unless all the
following conditions are met:
. Where we merge out of existence or sell substantially all of our assets,
the other entity may not be organized under a foreign country's laws
(that is, it must be a corporation, partnership or trust organized under
the laws of a State or the District of Columbia or under federal law)
and it must agree to be legally responsible for the debt securities.
. The merger, sale of assets or other transaction must not cause a default
on the debt securities, and we must not already be in default (unless
the merger or other transaction would cure the default). For purposes of
this no-default test, a default would include an Event of Default that
has occurred and not been cured, as described later on page 20 under "--
What is An Event of Default" A default for this purpose would also
include any event that would be an Event of Default if the requirements
for giving us default notice or our default having to exist for a
specific period of time were disregarded.
. It is possible that the merger, sale of assets or other transaction
would cause some of our property to become subject to a mortgage or
other legal mechanism giving lenders preferential rights in that
property over other lenders or over our general creditors if we fail to
pay them back. We have promised to limit these preferential rights on
our property, called "Liens", as discussed later on page 16 under "--
Certain Covenants-Restrictions on Liens". If a merger or other
transaction would create any Liens on our property, we must comply with
that covenant. We would do this either by deciding that the Liens were
permitted, or by following the requirements of the covenant to grant an
equivalent or higher-ranking Lien on the same property to you and the
other direct Holders of the debt securities entitled to that protection.
(Section 801)
Modification and Waiver
There are three types of changes we can make to the Indenture and the debt
securities.
Changes Requiring Your Approval. First, there are changes that we cannot
make to the Indenture or your debt securities without your specific approval.
We cannot do the following without your specific approval:
. change the Stated Maturity of the principal or interest on a Security;
. reduce any amounts due on a Security;
. reduce the amount of principal payable upon acceleration of the Maturity
of a Security following a default;
. change the place or currency of payment on a Security;
. impair your right to sue for payment;
. reduce the percentage of Holders of debt securities whose consent is
needed to modify or amend the Indenture;
. reduce the percentage of Holders of debt securities whose consent is
needed to waive compliance with certain provisions of the Indenture or
to waive certain defaults; and
. modify any other aspect of the provisions dealing with modification and
waiver of the Indenture (Section 902)
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Changes Requiring a Majority or 50% Vote. Second, there are changes that we
cannot make to the Indenture or the debt securities without a vote in favor by
Holders of debt securities owning not less than 50% of the principal amount of
the particular series affected. Most changes fall into this category, except
for clarifying changes and certain other changes that would not adversely
affect Holders of the debt securities. A majority vote would be required for us
to obtain a waiver of all or part of the covenants described below, or a waiver
of a past default. However, we cannot obtain a waiver of a payment default or
any other aspect of the Indenture or the debt securities listed in the first
category described above on page 15 under "--Changes Requiring Your Approval"
unless we obtain your individual consent to the waiver. (Section 513)
Changes Not Requiring Approval. The third type of change does not require
any vote by Holders of debt securities. This type is limited to clarifications
and certain other changes that would not adversely affect Holders of the debt
securities. (Section 901)
Further Details Concerning Voting. When taking a vote, we will use the
following rules to decide how much principal amount to attribute to a Security:
. For Original Issue Discount Securities, we will use the principal amount
that would be due and payable on the voting date if the Maturity of the
debt securities were accelerated to that date because of a default.
. For debt securities whose principal amount is not known (for example,
because it is based on an index), we will use a special rule for that
Security described in the prospectus supplement.
. For debt securities denominated in one or more foreign currencies or
currency units, we will use the U.S. dollar equivalent.
Debt securities will not be considered Outstanding, and therefore not
eligible to vote, if we have deposited or set aside in trust for you money for
their payment or redemption. Debt securities will also not be eligible to vote
if they have been fully defeased as described below on pages 18 and 19 under
"--Full Defeasance". (Section 101)
We will generally be entitled to set any day as a record date for the
purpose of determining the Holders of Outstanding debt securities that are
entitled to vote or take other action under the Indenture. In certain limited
circumstances, the Trustee will be entitled to set a record date for action by
Holders. If we or the Trustee set a record date for a vote or other action to
be taken by Holders that vote or action may be taken only by persons who are
Holders of Outstanding debt securities on the record date and must be taken
within 180 days following the record date or another shorter period that we may
specify (or as the Trustee may specify, if it set the record date). We may
shorten or lengthen (but not beyond 180 days) this period from time to time.
(Section 104)
"Street Name" and other indirect holders should consult their banks or
brokers for information on how approval may be granted or denied if we seek to
change the Indenture or the debt securities or request a waiver.
No Protection in the Event of a Change of Control
Unless we state otherwise in the applicable prospectus supplement, the debt
securities will not contain any provisions which may afford holders of the debt
securities protection in the event of a change in control of our company or in
the event of a highly leveraged transaction (whether or not such transaction
results in a change in control) which could adversely affect Holders of debt
securities.
Certain Covenants
Restrictions on Liens. Some of our property may be subject to a mortgage or
other legal mechanism that gives our lenders preferential rights in that
property over other lenders (including you and any other Holders of the debt
securities) or over our general creditors if we fail to pay them back. These
preferential rights are called
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"Liens." We promise that we will not place a Lien on any of our Principal
Properties, or on any shares of stock or debt of any of our Restricted
Subsidiaries, to secure new debt unless we grant an equivalent or higher-
ranking Lien on the same property to you and any other Holders of the debt
securities. (Section 1008)
However, we do not need to comply with this restriction if the amount of all
debt that would be secured by Liens on Principal Properties (including the new
debt and all "Attributable Debt", as described under "Restriction on Sales and
Leasebacks" below, that results from a sale and leaseback transaction involving
Principal Properties) is less than the greater of $400 million or 10% of our
Consolidated Net Assets.
This Restriction on Liens also does not apply to certain types of Liens, and
we can disregard these Liens when we calculate the limits imposed by this
restriction. We may disregard a Lien on any Principal Property or on any shares
of stock or debt of any Restricted Subsidiary if:
. the Lien existed on the date of the Indenture, or
. the Lien existed at the time the property was acquired or at the time an
entity became a Restricted Subsidiary, or
. the Lien secures Debt that is no greater than the Acquisition Cost or
the Cost of Construction on a Principal Property or Restricted
Subsidiary (if the Lien is created no later than 24 months after such
acquisition or completion of construction), or
the Lien is in favor of us or any Subsidiary, or
. the Lien is granted in order to assure our performance of any tender or
bid on any project (and other similar Liens).
Subject to certain limitations, we may also disregard any Lien that extends,
renews or replaces any of these types of Liens.
We and our subsidiaries are permitted to have as much unsecured debt as we
may choose and except as provided in this restriction on Liens, the Indenture
does not contain provisions that would afford protection to you in the event of
a highly leveraged transaction involving our company.
Restrictions on Sales and Leasebacks. We promise that neither we nor any of
our Restricted Subsidiaries will enter into any sale and leaseback transaction
involving a Principal Property, unless we comply with this covenant. A "sale
and leaseback transaction" generally is an arrangement between us or a
Restricted Subsidiary and any lessor (other than the Company or a Subsidiary)
where we or the Restricted Subsidiary lease a property for a period in excess
of three years, if such property was or will be sold by us or such Restricted
Subsidiary to that lender or investor.
We can comply with this promise in either of two different ways. First, we
will be in compliance if we or a Restricted Subsidiary could grant a Lien on
the Principal Property in an amount equal to the Attributable Debt for the sale
and leaseback transaction without being required to grant an equivalent or
higher-ranking Lien to you and the other Holders of the debt securities under
the Restriction on Liens described above. Second, we can comply if we retire an
amount of Debt, within 240 days of the transaction, equal to at least the net
proceeds of the sale of the Principal Property that we lease in the transaction
or the fair value of that property, whichever is greater. (Section 1009)
Certain Definitions Relating to our Covenants. Following are the meanings of
the terms that are important in understanding the covenants previously
described. (Section 101)
"Attributable Debt" means the total present value of the minimum rental
payments called for during the term of the lease (discounted at the rate that
the lessee could borrow over a similar term at the time of the transaction).
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"Consolidated Net Assets" is the consolidated assets (less reserves and
certain other permitted deductible items), after subtracting all current
liabilities (other than the current portion of long-term debt and Capitalized
Lease Obligations) as such amounts appear on our most recent consolidated
balance sheet and computed in accordance with generally accepted accounting
principles.
"Debt" means notes, bonds, debentures or other similar evidences of
indebtedness for borrowed money or any guarantee thereof.
"Restricted Subsidiary" means any Subsidiary:
. organized and existing under the laws of the United States, and
. the principal business of which is carried on within the United States
of America, and
. which either (1) owns or is a lessee pursuant to a capital lease of any
real estate or depreciable asset which has a net book value in excess of
2% of Consolidated Net Assets, or (2) in which the investment of the
Company and all its Subsidiaries exceeds 5% of Consolidated Net Assets.
The definition of a Restricted Subsidiary does not include any Subsidiaries
principally engaged in our company's timeshare or senior living services
businesses, or the major part of whose business consists of finance, banking,
credit, leasing, insurance, financial services or other similar operations, or
any combination thereof. The definition also does not include any Subsidiary
formed or acquired after the date of the Indenture for the purpose of
developing new assets or acquiring the business or assets of another person and
which does not acquire all or any substantial part of our business or assets or
those of any Restricted Subsidiary.
A "Subsidiary" is a corporation in which we and/or one or more of our other
subsidiaries owns at least 50% of the voting stock, which is a kind of stock
that ordinarily permits its owners to vote for the election of directors.
A "Principal Property" is any parcel or groups of parcels of real estate or
one or more physical facilities or depreciable assets, the net book value of
which exceeds 2% of the Consolidated Net Assets.
Defeasance
The following discussion of full defeasance and covenant defeasance will be
applicable to your series of debt securities only if we choose to have them
apply to that series. If we do so choose, we will state that in the Prospectus
Supplement. (Section 1301)
Full Defeasance. If there is a change in federal tax law, as described
below, we can legally release ourselves from any payment or other obligations
on the debt securities (called "full defeasance") if we put in place the
following other arrangements for you to be repaid:
. We must deposit in trust for your benefit and the benefit of all other
direct Holders of the debt securities a combination of money and U.S.
government or U.S. government agency notes or bonds that will generate
enough cash to make interest, principal and any other payments on the
debt securities on their various due dates.
. There must be a change in current federal tax law or an IRS ruling that
lets us make the above deposit without causing you to be taxed on the
debt securities any differently than if we did not make the deposit and
just repaid the debt securities ourselves. (Under current federal tax
law, the deposit and our legal release from the debt securities would be
treated as though we took back your debt securities and gave you your
share of the cash and notes or bonds deposited in trust. In that event,
you could be required to recognize gain or loss on the debt securities
you give back to us.)
. We must deliver to the Trustee a legal opinion of our counsel confirming
the tax law change or ruling described above. (Sections 1302 and 1304)
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If we ever did accomplish full defeasance, as described above, you would
have to rely solely on the trust deposit for repayment on the debt securities.
You could not look to us for repayment in the unlikely event of any shortfall.
Conversely, the trust deposit would most likely be protected from claims of our
lenders and other creditors if we ever become bankrupt or insolvent.
Covenant Defeasance. Under current federal tax law, we can make the same
type of deposit described above and be released from some of the covenants in
the series of debt securities for which such deposit is made. This is called
"covenant defeasance". In that event, you would lose the protection of those
covenants but would gain the protection of having money and securities set
aside in trust to repay the affected series of debt securities. In order to
achieve covenant defeasance, we must, among other things, do the following:
. We must deposit in trust for your benefit and the benefit of all other
direct Holders of the affected series of debt securities a combination
of money and U.S. government or U.S. government agency notes or bonds
that will generate enough cash to make interest, principal and any other
payments on such series of debt securities on their various due dates.
. We must deliver to the Trustee a legal opinion of our counsel confirming
that under current federal income tax law we may make the above deposit
without causing you to be taxed on such series of debt securities any
differently than if we did not make the deposit and just repaid such
debt securities ourselves.
If we accomplish covenant defeasance, the following provisions of the
Indenture with respect to the affected series of debt securities would no
longer apply:
. Our promises regarding conduct of our business previously described on
pages 16 and 17 under "-- Certain Covenants."
. The condition regarding the treatment of Liens when we merge or engage
in similar transactions, as previously described on page 15 under "--
Mergers and Similar Events".
. The Events of Default relating to breach of covenants and acceleration
of the maturity of other debt, described later on page 20 under "--What
Is an Event of Default?".
If we accomplish covenant defeasance, you can still look to us for repayment
of the affected series of debt securities if there were a shortfall in the
trust deposit. In fact, if one of the remaining Events of Default occurred
(such as our bankruptcy) and the affected series of debt securities become
immediately due and payable, there may be such a shortfall. Depending on the
event causing the default, you may not be able to obtain payment of the
shortfall. (Sections 1303 and 1304)
Default and Related Matters
Original Issue Discount
The debt securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity. If
material or applicable, special U.S. federal income tax, accounting and other
considerations applicable to these debt securities will be described in the
applicable prospectus supplement.
Subordination
The debt securities are not secured by any of our property or assets.
Accordingly, your ownership of the debt securities means you are one of our
unsecured creditors. The debt securities will effectively rank junior to all
liabilities of our subsidiaries. The terms and conditions, if any, upon which
subordinated securities of a series are subordinated to debt securities of
other series or to our other indebtedness will described in the applicable
prospectus supplement. These terms will include a description of the
indebtedness ranking senior to the subordinated securities, the restrictions on
payments to the holders of the subordinated securities while a
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default with respect to senior indebtedness is continuing, the restrictions, if
any, on payments to the holders of the subordinated securities following an
Event of Default, and provisions requiring holders of the subordinated
securities to remit certain payments to holders of senior indebtedness. Debt
securities which are not subordinated will rank equally with all our other
unsecured and unsubordinated indebtedness,
Events of Default
You will have special rights if an Event of Default occurs and is not cured,
as described later in this subsection.
What Is An Event of Default? The term "Event of Default" means any of the
following:
. We do not pay the principal or any premium on a Security on its due
date.
. We do not pay interest on a Security within 30 days of its due date.
. We remain in breach of a covenant described on page 16 or 17 or any
other term of the Indenture for 60 days after we receive a notice of
default stating we are in breach. The notice must be sent by either the
Trustee or Holders of 25% of the principal amount of debt securities of
the affected series.
. We or any Restricted Subsidiary default on other debt (excluding any
non-recourse debt) which totals over $100 million (or 4% of our
Consolidated Net Assets, whichever amount is greater) and the lenders of
such debt shall have taken affirmative action to enforce the payment of
such debt, and this repayment obligation remains accelerated for 10 days
after we receive a notice of default as described in the previous
paragraph.
. We file for bankruptcy or certain other events in bankruptcy, insolvency
or reorganization occur. (Section 501)
A payment default or other default under one series of notes may, but will
not necessarily, cause a default to occur under any other series of notes
issued under the Indenture.
Remedies If an Event of Default Occurs. If an Event of Default has occurred
and has not been cured, the Trustee or the Holders of 25% in principal amount
of the debt securities of the affected series may declare the entire principal
amount of all the debt securities of that series to be due and immediately
payable. This is called a declaration of acceleration of maturity. If an Event
of Default occurs because of certain events in bankruptcy, insolvency or
reorganization, the principal amount of all the debt securities will be
automatically accelerated, without any action by the Trustee or any Holder. A
declaration of acceleration of maturity may be cancelled by the Holders of at
least a majority in principal amount of the debt securities of the affected
series. (Section 502)
Except in cases of default, where the Trustee has some special duties, the
Trustee is not required to take any action under the Indenture at the request
of any Holders unless the Holders offer the Trustee reasonable protection from
expenses and liability (called an "indemnity"). (Section 603) If reasonable
indemnity is provided, the Holders of a majority in principal amount of the
Outstanding debt securities of the affected series may direct the time, method
and place of conducting any lawsuit or other formal legal action seeking any
remedy available to the Trustee. These majority Holders may also direct the
Trustee in performing any other action under the Indenture. (Section 512)
Before you bypass the Trustee and bring your own lawsuit or other formal
legal action or take other steps to enforce your rights or protect your
interests relating to the debt securities, the following must occur:
. You must give the Trustee written notice that an Event of Default has
occurred and remains uncured.
. The Holders of 25% in principal amount of all Outstanding debt
securities of the affected series must make a written request that the
Trustee take action because of the default, and must offer reasonable
indemnity to the Trustee against the cost and other liabilities of
taking that action.
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. The Trustee must have not taken action for 60 days after receipt of the
above notice and offer of indemnity. (Section 507)
However, you are entitled at any time to bring a lawsuit for the payment of
money due on your debt securities on or after its due date. (Section 508)
"Street Name" and other indirect holders should consult their banks or
brokers for information on how to give notice or direction to or make a request
of the Trustee and to make or cancel a declaration of acceleration.
We will furnish to the Trustee every year a written statement of certain of
our officers certifying that to their knowledge we are in compliance with the
Indenture and the debt securities, or else specifying any default. (Section
1004)
Regarding the Trustee
The Chase Manhattan Bank is the Trustee, Security Registrar and Paying Agent
under the Indenture. We have certain existing banking relationships with The
Chase Manhattan Bank, including that one of its affiliates is a lender under
our revolving credit facilities. In addition, Chase Securities Inc., an
affiliate of The Chase Manhattan Bank, may be a purchaser of our securities.
If an Event of Default (or an event that would be an Event of Default if the
requirements for giving us default notice or our default having to exist for a
specific period of time were disregarded) occurs, the Trustee may be considered
to have a conflicting interest with respect to the debt securities for purposes
of the Trust Indenture Act of 1939. In that case, the Trustee may be required
to resign as Trustee under the Indenture and we would be required to appoint a
successor Trustee.
OUR COMMON STOCK
Our common stock (Class A Common Stock, $0.01 par value per share) is traded
on the New York Stock Exchange, Chicago Stock Exchange, Pacific Stock Exchange
and Philadelphia Stock Exchange under the symbol "MAR". Each holder of our
common stock is entitled to ten votes for each share registered in his or her
name on our books on all matters submitted to a vote of stockholders. Our
common stock does not have cumulative voting rights. As a result, subject to
the voting rights of holders of any outstanding preferred stock, if any, in an
election of directors the holders of a majority of shares of our common stock
will be able to elect 100 percent of the directors to be elected.
Rights Agreement and Series A Junior Preferred Stock
Each share of our common stock, including those that may be issued in an
offering under this prospectus or upon the conversion or exercise of other
securities offered under this prospectus, carries with it one preferred share
purchase right. This type of arrangement is sometimes referred to as a "poison
pill." If the rights become exercisable, each right entitles the registered
holder to purchase one one-thousandth of a share of our Series A Junior
Preferred Stock (subject to adjustment as a result of certain events) at a
fixed price. Until a right is exercised, the holder of the right has no right
to vote or receive dividends or any other rights as a shareholder as a result
of holding the right.
The rights trade automatically with shares of our common stock, and may only
be exercised in connection with certain attempts to take over our company. The
rights are designed to protect the interests of our company and our
shareholders against coercive takeover tactics. The rights are also designed to
encourage potential acquirors to negotiate with our board of directors before
attempting a takeover and to increase the ability of our board to negotiate
terms of any proposed takeover that benefit our shareholders. The rights may,
but are not intended to, deter takeover proposals that may be in the interests
of our shareholders.
21
<PAGE>
If issued, our Series A Junior Preferred Stock would generally not be
available to the person or persons who acquired our common stock in certain
takeover attempts. Our Series A Junior Preferred Stock would have significant
preferential dividend, voting and liquidation rights over our common stock.
However, unless the applicable prospectus supplement specifies otherwise, each
series of preferred stock offered under this prospectus will rank senior to our
Series A Junior Participating Preferred Stock as to the payment of dividends
and any distribution of our assets.
For more information on our common stock, the rights and our Series A Junior
Preferred Stock, see our Form 10 Registration Statement dated February 13, 1998
and the Rights Agreement, dated as of March 27, 1998, between us and The Bank
of New York, as Rights Agent, both of which we have filed with the SEC. See
"Where You Can Find More Information" on page 3.
DESCRIPTION OF PREFERRED STOCK WE MAY OFFER
Pursuant to our restated certificate of incorporation, our board of
directors has the authority, without further shareholder action, to issue a
maximum of 10,000,000 shares of preferred stock, without par value. As of
January 1, 1999, 800,000 shares of our Series A Junior Participating Preferred
Stock were reserved for issuance in connection with our stockholder rights plan
and no shares of preferred stock were outstanding. Our stockholder rights plan
provides certain protections to existing common stockholders in the event of a
hostile takeover. Unless the applicable prospectus supplement specifies
otherwise, each series of preferred stock offered under this prospectus will
rank senior to our Series A Junior Participating Preferred Stock as to the
payment of dividends and any distribution of our assets.
Our board of directors has broad authority to adopt one or more resolutions
setting forth the terms and conditions of any series of preferred stock. If we
offer a series of preferred stock under this prospectus, we will issue an
appropriate prospectus supplement. You should read that prospectus supplement
for a description of the terms of the applicable series, including:
. the number of shares and designation or title;
. the initial public offering price;
. dividend rights, including the dividend rate or rates, or method of
calculation, the dividend periods, the dates on which dividends will be
payable and whether the dividends will be cumulative or noncumulative
and, if cumulative, the dates from which the dividends will start to
cumulate;
. the voting rights, if any, which will apply;
. the rights of the holders upon our dissolution or upon the distribution
of our assets;
. whether and upon what terms the shares will have a purchase, retirement
or sinking fund;
. whether and upon what terms the shares will be convertible; and
. any other preferences, rights, limitations or restrictions of the
series.
PLAN OF DISTRIBUTION
We may sell the securities offered under this prospectus through agents,
through underwriters or dealers or directly to one or more purchasers.
Underwriters, dealers and agents that participate in the distribution of
securities offered under this prospectus may be underwriters as defined in the
Securities Act of 1933 and any discounts or commissions received by them from
us and any profit on the resale of the securities offered by them may be
treated as underwriting discounts and commissions under the Securities Act. Any
underwriters or agents will be identified and their compensation (including
underwriting discount) will be described in the applicable prospectus
supplement. The prospectus supplement will also describe other terms of the
offering, including any discounts or concessions allowed or reallowed or paid
to dealers and any securities exchanges on which the offered securities may be
listed.
22
<PAGE>
We may distribute the securities from time to time in one or more
transactions:
. at a fixed price or prices, which may be changed;
. at market prices prevailing at the time of sale;
. at prices related to such prevailing market prices; or
. at negotiated prices.
If the applicable prospectus supplement indicates, we will authorize dealers
or our agents to solicit offers by institutions approved by us to purchase
offered securities from us under contracts that provide for payment and
delivery on a future date. These institutions may include:
. commercial, investment and savings banks;
. insurance companies;
. pension funds;
. investment companies; and
. educational and charitable institutions.
The institution's obligations under these contracts are only subject to the
condition that the purchase of the offered securities at the time of delivery
is allowed by the laws that govern the institution. The dealers and our agents
will not be responsible for the validity or performance of these contracts.
We may have agreements with the underwriters, dealers and agents to
indemnify them against certain civil liabilities, including liabilities under
the Securities Act, or to contribute with respect to payments which the
underwriters, dealers or agents may be required to make as a result of those
civil liabilities.
When we issue the securities offered by this prospectus (except for shares
of common stock), they may be new securities without an established trading
market. If we sell a security offered by this prospectus to an underwriter for
public offering and sale, the underwriter may make a market for that security,
but the underwriter will not be obligated to do so and could discontinue any
market making without notice at any time. Therefore, we cannot give you any
assurances about the liquidity of any security offered by this prospectus.
Underwriters and agents and their affiliates may be customers of, engage in
transactions with, or perform services for us or our subsidiaries in the
ordinary course of their businesses.
To facilitate the offering of securities, persons participating in an
offering may engage in transactions that stabilize, maintain, or otherwise
affect the price of the securities offered. This may include over-allotments or
short sales of the securities, which involves the sale by persons participating
in the offering of more securities than we sold to them. In these
circumstances, these persons would cover such over-allotments or short
positions by making purchases in the open market or by exercising their over-
allotment option. In addition, these persons may stabilize or maintain the
price of the securities by bidding for or purchasing securities in the open
market or by imposing penalty bids, whereby selling concessions allowed to
dealers participating in the offering may be reclaimed if securities sold by
them are repurchased in connection with stabilization transactions. The effect
of these transactions may be to stabilize or maintain the market price of the
securities at a level above that which might otherwise prevail in the open
market. These transactions may be discontinued at any time.
23
<PAGE>
LEGAL MATTERS
Our Law Department will pass upon the validity of any debt securities,
preferred stock or common stock issued under this prospectus. Attorneys in our
Law Department own shares of our common stock, and hold stock options, deferred
stock and restricted stock awards under our 1998 Comprehensive Stock and Cash
Incentive Plan and may receive additional awards under such plan in the future.
Any underwriters will be represented by their own legal counsel.
INDEPENDENT PUBLIC ACCOUNTANTS
The financial statements incorporated by reference in this prospectus and
elsewhere in the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto, and are incorporated by reference in this prospectus and registration
statement in reliance upon the authority of said firm as experts in giving said
reports.
24
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following is a statement of the estimated expenses, other than
underwriting discounts and commissions, to be incurred in connection with the
distribution of the securities registered under this Registration Statement:
<TABLE>
<CAPTION>
Amount
To Be Paid
----------
<S> <C>
Securities and Exchange Commission registration fee................ $139,000
Rating Agency fees................................................. 250,000
Legal fees and expenses............................................ 25,000
Fees and expenses of qualification under state securities laws
(including legal fees)............................................ 1,000
Accounting fees and expenses....................................... 100,000
Trustees Fees...................................................... 20,000
Printing fees...................................................... 75,000
Miscellaneous...................................................... 5,000
--------
Total.......................................................... 615,000
========
</TABLE>
Item 15. Indemnification of Directors and Officers
Article Eleventh and Article Sixteenth of the Company's Amended and Restated
Certificate of Incorporation (the "Certificate") and Section 7.7 of the
Company's Restated Bylaws limit the personal liability of directors to the
Company or its shareholders for monetary damages for breach of fiduciary duty.
These provisions of the Company Certificate and Bylaws are collectively
referred to herein as the "Director Liability and Indemnification Provisions."
The Director Liability and Indemnification Provisions define and clarify the
rights of individuals, including Company directors and officers, to
indemnification by the Company in the event of personal liability or expenses
incurred by them as a result of litigation against them. These provisions are
consistent with Section 102(b)(7) of the Delaware General Corporation Law,
which is designed, among other things, to encourage qualified individuals to
serve as directors of Delaware corporations by permitting Delaware corporations
to include in their certificates of incorporation a provision limiting or
eliminating directors' liability for monetary damages and with other existing
Delaware General Corporation Law provisions permitting indemnification of
certain individuals, including directors and officers. The limitations of
liability in the Director Liability and Indemnification Provisions may not
affect claims arising under the federal securities laws.
In performing their duties, directors of a Delaware corporation are
obligated as fiduciaries to exercise their business judgment and act in what
they reasonably determine in good faith, after appropriate consideration, to be
the best interests of the corporation and its shareholders. Decisions made on
that basis are protected by the so-called "business judgment rule." The
business judgment rule is designed to protect directors from personal liability
to the corporation or its shareholders when business decisions are subsequently
challenged. However, the expense of defending lawsuits, the frequency with
which unwarranted litigation is brought against directors and the inevitable
uncertainties with respect to the outcome of applying the business judgment
rule to particular facts and circumstances mean that, as a practical matter,
directors and officers of a corporation rely on indemnity from, and insurance
procured by, the corporation they serve, as a financial backstop in the event
of such expenses or unforeseen liability. The Delaware legislature has
recognized that adequate insurance and indemnity provisions are often a
condition of an individual's willingness to serve as director of a Delaware
corporation. The Delaware General Corporation law has for some time
specifically permitted corporations to provide indemnity and procure insurance
for its directors and officers.
II-1
<PAGE>
This description of the Director Liability and Indemnification Provisions is
intended as a summary only and is qualified in its entirety by reference to the
Company Certificate and the Company Bylaws, each of which has been filed with
the SEC.
Item 16. Exhibits
<TABLE>
<CAPTION>
Incorporation by Reference
(where a report or registration
statement is indicated below, that
document has been previously filed
with the SEC and the applicable
exhibit is incorporated by reference
Description thereto)
----------- ------------------------------------
<C> <S> <C>
1 Form of Underwriting Agreement To be filed by amendment.
2.1 Distribution Agreement dated as Appendix A in our Form 10 filed
of September 30, 1997 between on February 13, 1998.
Sodexho Marriott Services, Inc.
and the Company.
2.2 Agreement and Plan of Merger Appendix B in our Form 10 filed
dated as of September 30, 1997 on February 13, 1998.
among Sodexho Marriott Services,
Inc., Marriott-ICC Merger Corp.,
the Company, Sodexho Alliance,
S.A. and International Catering
Corporation.
2.3 Omnibus Restructuring Agreement Appendix C in our Form 10 filed
dated as of September 30, 1997 on February 13, 1998.
among Sodexho Marriott Services,
Inc., Marriott-ICC Merger Corp.,
the Company, Sodexho Alliance,
S.A. and International Catering
Corporation.
2.4 Amendment Agreement dated as of Appendix D in our Form 10 filed
January 28, 1998 among Sodexho on February 13, 1998.
Marriott Services, Inc.,
Marriott-ICC Merger Corp., the
Company, Sodexho Alliance, S.A.
and International Catering
Corporation.
3.1 Amended and Restated Certificate Exhibit No. 2 to our Form 8-A/A
of Incorporation of the Company. filed on April 3, 1998.
3.4 Rights Agreement dated as of Exhibit No.1 to our Form 8-A/A
March 27, 1998 between the filed on April 3, 1998.
Company and The Bank of New
York, as Rights Agent
4.1(a) Indenture dated as of November Exhibit No. 4.1 to our Form 10-K
16, 1998 between the Company and for the fiscal year ended January
The Chase Manhattan Bank, as 1, 1999.
Trustee.
4.1(b) Form of 6.625% Series A Note due Exhibit No. 4.2 to our Form 10-K
2003. for the fiscal year ended January
1, 1999.
4.1(c) Form of 6.875% Series B Note due Exhibit No. 4.3 to our Form 10-K
2005. for the fiscal year ended January
1, 1999.
4.2(a) Indenture between the Company Exhibit No. 4.1 to Form 8-K of
and The Bank of New York, as Old Marriott dated March 25,
Trustee, relating to Liquid 1996; Exhibit No. 4.2 to Form 8-K
Yield Option Notes, as of Old Marriott dated March 25,
supplemented. 1996 (First Supplemental
Indenture); and Exhibit No. 4.2
to Form 10-Q of the Company for
the fiscal quarter ended March
27, 1998 (Second Supplemental
Indenture).
4.2(b) LYONs Allocation Agreement Exhibit No. 10.9 to the Company's
between the Company and Sodexho Form 10 filed on February 13,
Marriott Services, Inc. 1998.
4.3 $1.5 billion Credit Agreement Exhibit 10.10 to the Company's
among the Company, Citibank, Form 10-K for the fiscal year
N.A., as Administrative Agent, ended January 2, 1998.
and certain banks, as Banks,
dated February 19, 1998.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Incorporation by Reference
(where a report or registration
statement is indicated below, that
document has been previously filed
with the SEC and the applicable
exhibit is incorporated by reference
Description thereto)
----------- ------------------------------------
<C> <S> <C>
4.4 $500 million Credit Agreement Exhibit 10.8 to our Form 10-K for
among the Company, Citibank, N.A., the fiscal year ended January 1,
as Administrative Agent, and 1999.
certain banks, as Banks, dated
February 2, 1999.
5.1 Opinion of Joseph Ryan, Esq., on Filed herewith.
behalf of the Law Department of
the Company.
12 Statement of Computation of Ratio Exhibit 12 to our Form 10-K for
of Earnings to Fixed Charges the fiscal year ended January 1,
1999.
23.1 Consent of Arthur Andersen LLP Filed herewith.
23.2 Consent of Joseph Ryan, Esq. on Included in the opinion filed as
behalf of the Law Department of Exhibit 5.
the Company
27 Financial Data Schedule for the Exhibit 27 to our Form 10-K for
Company. the fiscal year ended January 1,
1999.
99 Forward-Looking Statements. Filed herewith.
</TABLE>
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales of its
securities are being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by a Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-3
<PAGE>
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of such
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
a registrant pursuant to the provisions described under Item 15 above, or
otherwise, the undersigned registrant has been advised that in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of such registrant in the successful defense of any
action, suit or proceeding), is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the County of Montgomery, State of
Maryland, on April 27, 1999.
Marriott International, Inc.
/s/ J.W. Marriott, Jr.
By: _________________________________
J.W. Marriott, Jr.
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Joseph
Ryan as his or her true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for such person and in his or her name,
place and stead, in any and all capacities, to sign any or all further
amendments (including post-effective amendments) to this Registration Statement
(and any additional Registration Statement related hereto permitted by Rule
462(b) promulgated under the Securities Act of 1933 (and all further
amendments, including post-effective amendments, thereto)), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney-in-
fact and agent, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, or his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ J. W. Marriott, Jr. Chairman of the Board, April 27, 1999
______________________________________ Chief Executive Officer
J.W. Marriott, Jr. and Director (Principal
Executive Officer)
/s/ Arne M. Sorenson Executive Vice President April 27, 1999
______________________________________ and Chief Financial
Arne M. Sorenson Officer (Principal
Financial Officer)
/s/ Stephen E. Riffee Vice President, Finance April 27, 1999
______________________________________ and Chief Accounting
Stephen E. Riffee Officer (Principal
Accounting Officer)
Director
______________________________________
Henry Cheng Kar-Shun
Director April 27, 1999
/s/ Gilbert M. Grosvenor
______________________________________
Gilbert M. Grosvenor
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Richard E. Marriott Director April 27, 1999
______________________________________
Richard E. Marriott
/s/ Floretta Dukes McKenzie Director April 27, 1999
______________________________________
Floretta Dukes McKenzie
/s/ Harry J. Pearce Director April 27, 1999
______________________________________
Harry J. Pearce
/s/ W. Mitt Romney Director April 27, 1999
______________________________________
W. Mitt Romney
/s/ Roger W. Sant Director April 27, 1999
______________________________________
Roger W. Sant
/s/ William J. Shaw President, Chief Operating April 27, 1999
______________________________________ Officer and Director
William J. Shaw
/s/ Lawrence M. Small Director April 27, 1999
______________________________________
Lawrence M. Small
</TABLE>
II-6
<PAGE>
Exhibit 5.1
[Marriott International Law Department Letterhead]
April 27, 1999
Marriott International, Inc.
10400 Fernwood Road
Bethesda, Maryland 20817
Ladies and Gentlemen:
We have acted as counsel for Marriott International, Inc., a Delaware
corporation (the "Company"), in connection with the Company's registration of up
to $500,000,000 aggregate initial offering price of debt securities, common
stock and/or preferred stock (collectively, the "Securities") on a Registration
Statement on Form S-3 (the "Registration Statement") to be filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Act"). The Securities may be offered in separate series, in amounts, at
prices, and on terms to be set forth in the prospectus and one or more
supplements to the prospectus (collectively, the "Prospectus") constituting a
part of the Registration Statement.
The debt securities will be issued pursuant to that certain Indenture between
the Company and The Chase Manhattan Bank, as trustee, dated as of November 16,
1998 (the "Indenture"). Each series of preferred stock is to be issued under the
Company's restated certificate of incorporation, as amended from time to time
and one or more resolutions of the board of directors setting forth the terms
and conditions of the preferred stock. The common stock is to be issued under
the Company's restated certificate of incorporation, as amended from time to
time.
As part of the corporate action taken and to be taken in connection with the
issuance of the Securities (the "corporate proceedings"), the Company's board of
directors will, before they are issued, authorize the issuance of any Securities
other than the debt securities, and certain terms of the Securities to be issued
by the Company from time to time will be approved by the board of directors or a
committee thereof or certain authorized officers of Company.
We have examined or are otherwise familiar with the Company's restated
certificate of incorporation and by-laws, the Registration Statement, such of
the corporate proceedings as have occurred as of the date hereof, and such other
documents, records and instruments as we have deemed necessary or appropriate
for the purposes of this opinion. Based on the foregoing and the assumptions
that follow, we are of the opinion that:
1. The Indenture is a valid and binding obligation of the Company and upon
(a) the completion of all required corporate proceedings relating to the
issuance of debt securities, (b) the due execution and delivery of the
debt securities, and (c) the due authentication of the debt securities by
a duly appointed trustee, such debt securities will be valid and binding
obligations of the Company.
2. Upon (a) the completion of all required corporate proceedings relating
to the issuance of preferred stock, and (b) the due execution, issuance
and delivery of certificates representing the preferred stock pursuant to
the applicable resolutions of the Company's board of directors, the
preferred stock will be validly authorized and issued, fully paid and
non-assessable.
<PAGE>
3. Upon (a) the completion of all required corporate proceedings relating to
the issuance of common stock, and (b) the execution, issuance and delivery
of certificates representing common stock, the common stock will be
validly authorized and issued, fully paid and non-assessable.
The foregoing opinions assume that (a) the consideration designated in the
applicable corporate proceedings for any Security has been received by the
Company in accordance with applicable law; and (b) the Registration Statement
has become effective under the Securities Act. To the extent they relate to
enforceability, each of the foregoing opinions is subject to the limitation that
the provisions of the referenced instruments and agreements may be limited by
bankruptcy or other laws of general application affecting the enforcement of
creditors' rights and by general principals of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to the Company's Law Department in
the prospectus that forms a part of the Registration Statement.
Very truly yours,
MARRIOTT INTERNATIONAL, INC.
LAW DEPARTMENT
By: /s/ Joseph Ryan
--------------------------------------
Joseph Ryan
Executive Vice President and General Counsel
<PAGE>
Exhibit 23.1
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 28, 1999
included in Marriott International Inc.'s Form 10-K for the year ended
January 1, 1999 and to all references to our Firm included in this
registration statement.
/s/ Arthur Andersen LLP
Vienna, VA
April 26, 1999
<PAGE>
EXHIBIT 99
FORWARD-LOOKING STATEMENTS
The following factors, among others, could cause actual results to differ
materially from those contained in forward-looking statements made in this
report or presented elsewhere by management.
Dependence on Others: Our present growth strategy for development of additional
lodging and senior living facilities entails entering into and maintaining
various arrangements with present and future property owners, including Host
Marriott Corporation and New World Development Company Limited. There can be no
assurance that any of our current strategic arrangements will continue, or that
we will be able to enter into future collaborations.
Contract Terms for New Units: The terms of the operating contracts, distribution
agreements, franchise agreements and leases for each of our lodging facilities
and senior living communities are influenced by contract terms offered by our
competitors at the time such agreements are entered into. Accordingly, we cannot
assure you that contracts entered into or renewed in the future will be on terms
that are as favorable to us as those under existing agreements.
Competition. The profitability of hotels, vacation timeshare resorts, senior
living communities, and distribution centers we operate is subject to general
economic conditions, competition, the desirability of particular locations, the
relationship between supply of and demand for hotel rooms, vacation timeshare
resorts, senior living facilities, and distribution services, and other factors.
We generally operate in markets that contain numerous competitors and our
continued success will depend, in large part, upon our ability to compete in
such areas as access, location, quality of accommodations, amenities,
specialized services, cost containment and, to a lesser extent, the quality and
scope of food and beverage services and facilities.
Supply and Demand: The lodging industry may be adversely affected by (1) supply
additions, (2) international, national and regional economic conditions, (3)
changes in travel patterns, (4) taxes and government regulations which influence
or determine wages, prices, interest rates, construction procedures and costs,
and (5) the availability of capital to allow us and potential hotel and senior
living community owners to fund investments. Our timeshare and senior living
service businesses are also subject to the same or similar uncertainties and,
accordingly, we cannot assure you that the present level of demand for
timeshare intervals and senior living communities will continue, or that there
will not be an increase in the supply of competitive units, which could reduce
the prices at which we are able to sell or rent units.
Year 2000 Compliance: Our failure or a failure by third parties with whom we do
business to successfully address the Year 2000 problem, as described on pages 7
and 8 of the prospectus which forms part of this registration statement ("Risk
Factors -- Computer systems that we depend on may fail to recognize the Year
2000"), could materially and adversely effect us, our business or financial
condition.
