<PAGE>
As filed with the Securities and Exchange Commission on March 25, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-4
Registration Statement
under
the Securities Act of 1933
----------------
MARRIOTT INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 7011 52-2055918
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)
10400 Fernwood Road
Bethesda, MD 20817
(301) 380-3000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Joseph Ryan, Executive Vice President and General Counsel
Marriott International, Inc.
10400 Fernwood Road, Dept. 52/923.30
Bethesda, MD 20817
(301) 380-3000
----------------
Copies to:
John F. Olson, Esq. Ward R. Cooper, Esq.
Gibson, Dunn & Crutcher LLP Marriott International, Inc.
1050 Connecticut Avenue, N.W. 10400 Fernwood Road, Dept. 52/923.23
Washington, DC 20036 Bethesda, MD 20817
(202) 955-8500 (301) 380-7824
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after the effectiveness of this Registration
Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
Proposed Proposed
Title of Each Class of Amount Maximum Maximum Amount of
Securities to be to be Offering Price Aggregate Registration
Registered Registered Per Unit Offering Price(1) Fee
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<S> <C> <C> <C> <C>
6 5/8% Series A Notes
due 2003.............. $200,000,000 100% $200,000,000 $55,600
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6 7/8% Series B Notes
due 2005.............. $200,000,000 100% $200,000,000 $55,600
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</TABLE>
(1) Estimated solely for purposes of calculating the registration fee.
----------------
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 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>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+Information contained herein is subject to completion or amendment. A +
+registration statement relating to these securities has been filed with the +
+Securities and Exchange Commission. These securities may not be sold nor may +
+offers to buy be accepted prior to the time the registration statement +
+becomes effective. This prospectus shall not constitute an offer to sell or +
+the solicitation of an offer to buy nor shall there be any sale of these +
+securities in any State in which such offer, solicitation or sale would be +
+unlawful prior to registration or qualification under the securities laws of +
+any such State. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MARCH 25, 1999
$400,000,000
Marriott International, Inc.
OFFER TO EXCHANGE
ALL OUTSTANDING
6 5/8% Series A Notes due 2003
($200,000,000 aggregate principal amount outstanding)
for
6 5/8% Series A Notes due 2003
Registered Under the Securities Act of 1933
and
6 7/8% Series B Notes due 2005
($200,000,000 aggregate principal amount outstanding)
for
6 7/8% Series B Notes due 2005
Registered Under the Securities Act of 1933
. The exchange offer expires at 5:00 p.m., New York City time, on ,
1999, unless extended.
. The exchange offer is not subject to any conditions other than that the
exchange offer will not violate any applicable law or interpretation of
the staff of the Securities and Exchange Commission and that there be no
pending or threatened proceeding that would reasonably be expected to
impair our ability to proceed with the exchange offer.
. All outstanding notes that are validly tendered and not validly withdrawn
will be exchanged.
. Tenders of outstanding notes may be withdrawn at any time before 5:00 p.m.
on the date of expiration of the exchange offer.
. The exchange of notes will not be a taxable exchange for U.S. federal
income tax purposes.
. We will not receive any proceeds from the exchange offer.
. The terms of the new notes to be issued are substantially identical to the
outstanding notes, except for transfer restrictions and registration
rights relating to the outstanding notes.
Consider carefully the "Risk Factors" beginning on page 10.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the new notes to be distributed in the
exchange offer, or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The date of this prospectus is , 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Forward-Looking Statements................................................. 2
Where You Can Find More Information........................................ 3
Incorporation of Information We File With the SEC.......................... 3
Summary.................................................................... 4
Risk Factors............................................................... 10
Use of Proceeds............................................................ 12
Ratio of Earnings to Fixed Charges......................................... 12
The Exchange Offer......................................................... 13
Certain Federal Income Tax Considerations.................................. 23
Selected Financial Data.................................................... 25
Business................................................................... 26
Description of the New Notes............................................... 27
Plan of Distribution....................................................... 39
Legal Matters.............................................................. 39
Independent Auditors....................................................... 39
</TABLE>
FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this document 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 concerning our possible or assumed future results of operations
and statements preceded by, followed by or that include the words "believes,"
"expects," "anticipates," "intends," "plans," "estimates" 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 put undue reliance on any
forward-looking statements. In addition, we do not have any intention or
obligation to update forward-looking statements after we distribute this
prospectus.
You should understand that the following important factors, in addition to
those discussed elsewhere in this prospectus, could cause our results to
differ materially from those expressed in forward-looking statements:
. competition within each of our business segments;
. business strategies and their intended results;
. 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 retirement community owners;
. the effect of international, national and regional economic conditions;
. the availability of capital to allow us and potential hotel and
retirement community owners to fund investments;
. our ability, and the ability of other parties upon which our businesses
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.
2
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file at the SEC's public reference rooms in Washington,
D.C. at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, New
York at 7 World Trade Center, 13th Floor, New York, NY 10048, and Chicago,
Illinois at Suite 1400, Northwestern Atrium Center, 14th Floor, 500 W. Madison
Street, Chicago, IL 60661. Please call the SEC at 1-800-SEC-0330 for further
information about the public reference rooms.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
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 be deemed to
automatically update and supersede this information. Specifically, we
incorporate by reference:
. Our Annual Report on Form 10-K for the fiscal 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 until the exchange offer
expires.
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
3
<PAGE>
SUMMARY
This summary highlights information contained elsewhere in this prospectus.
This summary is not complete and does not contain all of the information that
you should consider before investing in the new notes to be issued in the
exchange offer. You should read the entire prospectus carefully, especially the
risks of investing in the new notes discussed under "Risk Factors" starting on
page 10.
The Exchange Offer
On November 16, 1998, we completed the private offering of "initial" notes,
comprised of $200 million of 6 5/8% Series A Notes due 2003 and $200 million of
6 7/8% Series B Notes due 2005. We entered into a registration rights agreement
with the initial purchasers in the private offering in which we agreed, among
other things, to deliver to you this prospectus and to complete the exchange
offer within 45 days after the day on which the registration statement, which
includes this prospectus, is declared effective by the SEC.
In the exchange offer, you are entitled to exchange your initial notes for
"new" notes--registered notes with substantially identical terms as the initial
notes (except for transfer restrictions and registration rights relating to the
initial notes). If the exchange offer is not completed within 45 calendar days
after the day on which the related registration statement is declared effective
by the SEC, then the interest rate on the initial notes will be increased by
one-quarter of one percent per annum for each ninety-day period until the
exchange offer is consummated, up to a maximum of one-half percent per annum.
You should read the discussion under the heading "Summary--The New Notes" and
"Description of the New Notes" for further information regarding the new notes.
We believe that you may resell the new notes issued in the exchange offer
without compliance with the registration and prospectus delivery provisions of
the Securities Act, subject to the conditions discussed under the headings
"Summary--Terms of Exchange Offer" and "The Exchange Offer." You should read
these sections for further information regarding the exchange offer and resale
of the new notes.
Marriott International, Inc.
We are a worldwide operator and franchisor of hotels and senior living
communities and provider of distribution services. Our operations are grouped
in three business segments, Lodging, Senior Living Services and Distribution
Services, which represented 79, 6 and 15 percent, respectively, of total sales
in the fiscal year ended January 1, 1999.
In our Lodging segment, we operate, develop and franchise lodging facilities
and vacation timesharing resorts under 12 separate brand names.
In our Senior Living Services segment, we develop and presently operate 113
senior living communities offering independent living, assisted living and
skilled nursing care for seniors in the United States.
In our Distribution Services segment, we supply food and related products to
external customers and to internal operations throughout the United States.
Financial information by industry segment and geographic area as of January
1, 1999 and for the three fiscal years then ended, appears in the Business
Segments note to our Consolidated Financial Statements, which are contained in
our most recent Annual Report on Form 10-K and incorporated by reference into
this prospectus.
4
<PAGE>
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."
Our company--the "new" Marriott International--was formed to conduct the
lodging, senior living and distribution services businesses formerly conducted
by the "old" Marriott International. "Old" Marriott International, now called
Sodexho Marriott Services, Inc., is a provider of food service and facilities
management in North America.
Terms of the Exchange Offer
The exchange offer relates to the exchange of up to $200 million aggregate
principal amount of outstanding Series A notes for an equal aggregate principal
amount of Series A new notes and up to $200 million aggregate principal amount
of outstanding Series B notes for an equal aggregate principal amount of Series
B new notes. The new notes will be obligations of Marriott and will be governed
by the same indenture that governs the initial notes. The form and terms of the
new notes are identical in all material respects to the form and terms of the
initial notes, except that the new notes have been registered under the
Securities Act, and therefore are not entitled to the benefits of the
registration rights agreement that was executed as part of the offering of the
initial notes. The registration rights agreement provides for registration
rights with respect to the initial notes and for the payment of additional
interest on the initial notes if Marriott fails to meet its registration
obligations under the agreement.
Initial Notes............. 6 5/8% Series A Notes due 2003, which were issued
in November 1998 and 6 7/8% Series B Notes due
2005, which also were issued in November 1998.
New Notes................. 6 5/8% Series A Notes due 2003 and 6 7/8% Series B
Notes due 2005 that we are offering hereby. The
initial notes and the new notes are referred to
collectively as the notes.
The Exchange Offer........ We are offering to exchange:
. $1,000 principal amount of Series A new notes for
each
$1,000 principal amount of Series A initial
notes; and
. $1,000 principal amount of Series B new notes for
each
$1,000 principal amount of Series B initial
notes.
Initial notes may only be exchanged in $1,000
principal amount increments. As of the date of this
prospectus, there are outstanding $200,000,000
aggregate principal amount of Series A initial
notes and $200,000,000 aggregate principal amount
of Series B initial notes.
Resales................... Based on an interpretation by the SEC set forth in
no-action letters issued to third parties, we
believe that you may resell or otherwise transfer
new notes issued in the exchange offer without
complying with the registration and prospectus
delivery requirements of the Securities Act,
provided that:
. you are not our "affiliate" within the meaning of
Rule 405 under the Securities Act;
. you are not a broker-dealer who acquired the
initial notes directly from us without compliance
with the registration and prospectus delivery
provisions of the Securities Act;
5
<PAGE>
. you acquire the new notes in the ordinary course
of your business; and
. you are not participating in, do not intend to
participate in, and have no arrangement or
understanding with any person to participate in a
distribution of the new notes.
Any holder subject to any of these exceptions, and
each broker-dealer that receives new notes for its
own account pursuant to the exchange offer in
exchange for initial notes that were acquired as a
result of market-making, must comply with the
registration and prospectus delivery requirements
of the Securities Act in connection with the resale
of new notes (unless the resale is made pursuant to
an exemption from these requirements).
Expiration Date........... 5:00 p.m., New York City time, , 1999, unless
we extend the exchange offer, in which case the
term "expiration date" means the latest date and
time to which the exchange offer is extended.
Interest on the New Notes
and the Initial Notes.... Each new note will bear interest from November 16,
1998. If your initial notes are accepted for
exchange, you will not receive accrued interest on
the initial notes, and will be deemed to have
waived the right to receive any interest on the
initial notes from and after November 16, 1998.
Conditions to the The exchange offer is subject to the conditions
Exchange Offer........... that the exchange offer not violate any applicable
law or interpretation of the staff of the SEC and
that there be no pending or threatened proceeding
that would reasonably be expected to impair our
ability to proceed with the exchange offer, among
others. See "The Exchange Offer--Conditions."
Procedures for Tendering
Initial Notes............ If you wish to accept the exchange offer, you must
complete, sign and date the accompanying letter of
transmittal in accordance with its instructions and
deliver the letter of transmittal, together with
the initial notes and any other required
documentation, to the exchange agent at the address
set forth in the letter of transmittal. If you hold
initial notes through DTC and wish to accept the
exchange offer, you must do so under DTC's
Automated Tender Offer Program, by which you will
agree to be bound by the letter of transmittal.
Special Procedures for
Beneficial Owners........ If you are a beneficial owner whose initial notes
are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and
wish to tender in the exchange offer, you should
contact the person in whose name your initial notes
are registered promptly and instruct the person to
tender on your behalf. If you wish to tender in the
exchange offer on your own behalf, you must, prior
to completing and executing the letter of
transmittal and delivering your initial notes,
either make appropriate arrangements to register
ownership of the
6
<PAGE>
initial notes in your name or obtain a properly
completed bond power from the person in whose name
your initial notes are registered. The transfer of
registered ownership may take considerable time.
Guaranteed Delivery
Procedures............... If you wish to tender your initial notes in the
exchange offer and your initial notes are not
immediately available or you cannot deliver your
initial notes, the letter of transmittal and any
other required documents or you cannot comply with
the procedures for book-entry transfer prior to the
expiration date, you may tender your initial notes
according to the guaranteed delivery procedures set
forth in "The Exchange Offer--Guaranteed Delivery
Procedures."
Withdrawal Rights......... Tenders may be withdrawn at any time prior to 5:00
p.m., New York City time, on the expiration date
pursuant to the procedures described under "The
Exchange Offer--Withdrawals of Tenders."
Acceptance of Initial
Notes and Delivery of
New Notes................ Subject to conditions (summarized above in "--
Conditions to the Exchange Offer,") we will accept
for exchange any and all initial notes that are
properly tendered in the exchange offer prior to
the expiration date. The new notes issued pursuant
to the exchange offer will be delivered promptly
after the expiration date. See "The Exchange
Offer--Terms of the Exchange Offer."
Certain Federal Income
Tax Consequences......... With respect to the exchange of initial notes for
new notes:
. the exchange should not constitute a taxable
exchange for federal income tax purposes; and
. you should not recognize gain or loss upon
receipt of the new notes.
You must include interest on the new notes in gross
income to the same extent as the initial notes.
Registration Rights
Agreement................ In connection with the sale of the initial notes,
we entered into a registration rights agreement
with the initial purchasers of the initial notes
that grants the holders of the initial notes
registration rights. As a result of making this
exchange offer, we will have fulfilled most of our
obligations under the registration rights
agreement. If you do not tender your initial notes
in the exchange offer, you will not have any
further registration rights under the registration
rights agreement or otherwise unless you were not
eligible to participate in the exchange offer. See
"The Exchange Offer--Registration Rights." If you
are eligible to participate in the exchange offer
and do not tender your initial notes, you will
continue to hold the untendered initial notes,
which will continue to be subject to restrictions
on transfer under the Securities Act.
Exchange Agent............ The Chase Manhattan Bank is serving as our exchange
agent in connection with the exchange offer.
7
<PAGE>
Terms of the New Notes
The form and terms of the new notes will be substantially the same as the
form and terms of the initial notes except that:
. the new notes have been registered under the Securities Act and,
therefore, will not bear legends restricting their transfer;
. the holders of the new notes, except in limited circumstances, will not
be entitled to further registration rights under the registration rights
agreement or to receive additional interest on the notes in the event
that registration obligations are not complied with; and
. the minimum denomination of new notes will be reduced from $100,000 to
$1,000.
The new notes will evidence the same debt as the initial notes and will be
governed by the same indenture under which the initial notes were issued.
The New Notes
Issuer:................... Marriott International, Inc.
New Notes:................ $200,000,000 aggregate principal amount of 6 5/8%
Series A notes, and $200,000,000 aggregate
principal amount of 6 7/8% Series B notes.
Maturity Date:............ Series A new notes: November 15, 2003.
Series B new notes: November 15, 2005.
Interest Payment Dates:... May 15 and November 15 of each year, commencing May
15, 1999.
Ranking:.................. The new notes will be senior unsecured obligations,
ranking equally with all of our existing and future
senior unsecured indebtedness. The new notes
effectively will rank junior to all liabilities of
our subsidiaries. See "Description of the New
Notes."
Minimum Denomination:..... $1,000 and even multiples of $1,000.
Sinking Fund:............. None.
Optional Redemption:...... None.
Certain Covenants:........ We have agreed to restrictions on liens, sale and
leaseback transactions, mergers, consolidations and
transfers of substantially all of our assets. These
covenants are subject to important exceptions and
qualifications, which are described under the
heading "Description of the New Notes."
Ratings:.................. The initial notes have been rated BBB+ by Standard
& Poor's Ratings Group and Baa1 by Moody's
Investors Service, Inc., and we expect the new
notes to receive the same ratings.
Trustee:.................. The Chase Manhattan Bank.
8
<PAGE>
SUMMARY FINANCIAL DATA
(in millions, except ratios and per share data)
The following table presents summary financial data for the five most recent
fiscal years, which is from our consolidated financial statements. Since the
information in this table is only a summary and does not provide all of the
information contained in our financial statements, including the related notes,
you should read "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our Consolidated Financial Statements in our
Annual Report on Form 10-K for the year ended January 1, 1999, filed with the
SEC and incorporated into this prospectus by reference. Per share data and
shareholders' equity have not been presented for periods prior to 1998 because
we were not a publicly held company during that time. For information regarding
the calculation of the ratio of earnings to fixed charges, see "Ratio of
Earnings to Fixed Charges."
<TABLE>
<CAPTION>
Fiscal Year
---------------------------------------
1998 1997 1996(a) 1995 1994
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<S> <C> <C> <C> <C> <C>
Income Statement Data:
Sales................................ $7,968 $7,236 $5,738 $4,880 $4,461
Operating Profit Before Corporate
Expenses and Interest............... 736 609 508 390 316
Net Income........................... 390 324 270 219 162
Per Share Data:
Diluted Earnings per Share......... 1.46
Cash Dividends Declared............ .195
Other Operating Data:
Ratio of Earnings to Fixed Charges... 7.1x 7.2x 5.8x 6.9x 6.2x
Balance Sheet Data (at end of
period):
Total Assets......................... $6,233 $5,161 $3,756 $2,772 $2,061
Long-Term and Convertible
Subordinated Debt................... 1,267 422 681 180 102
Shareholders' Equity................. 2,570
</TABLE>
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(a) 1996 fiscal year was 53 weeks; all other fiscal years were 52 weeks.
9
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RISK FACTORS
Before you invest in the new notes, 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 the new notes.
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;
. the inability to obtain property and liability insurance to fully protect
against all 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 also 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 recognized sales of $2,317 million during 1998 from lodging properties
and senior living communities owned or leased by Host Marriott Corporation.
Additionally, we recognized sales of $712 million in 1998 from properties
owned by several limited partnerships in which Host Marriott was the general
partner. In December 1998, Host Marriott reorganized its business operations
to qualify as a real estate investment trust, and spun off a new company,
Crestline Capital Corporation. Host Marriott transferred to Crestline all of
the senior living communities previously owned by Host Marriott, and entered
into lease or sublease agreements with Crestline for substantially all of Host
Marriott's lodging properties.
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 in which Host Marriott's or Crestline's interests
could be in conflict with your interests as a holder of new notes, and Host
Marriott may pursue transactions that present risks to you as a holder of new
notes. 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 and are incorporated by reference into this prospectus.
10
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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 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 are in
the process of evaluating 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 growth
plans may be necessary.
Computer Systems That We Depend On May Fail to Recognize 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 applications that will not be 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, of which $12 million (on a pre-tax basis)
had been incurred through January 1, 1999.
Our inability to remedy our own Year 2000 problems or the failure of third
parties to do so may cause business interruptions or shutdown, financial loss,
reputational harm and/or legal liability. We can not 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 is on file 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 will 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 Will Depend Upon Cash Flow of Our Subsidiaries to Make Payments on the New
Notes
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 depend 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 on the new notes or otherwise. In addition,
our subsidiaries' ability to make any payments will depend on their earnings,
the terms of their indebtedness, business and tax considerations and legal
restrictions. The new notes 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 governing the new notes will permit us and our
subsidiaries to incur additional indebtedness, including secured indebtedness.
See "Description of the New Notes--Certain Covenants" on page 33.
A Liquid Trading Market for the New Notes May Not Develop
The liquidity of any market for the new notes will depend upon the number of
holders of the new notes, our performance, the market for similar securities,
the interest of securities dealers in making a market in the new
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<PAGE>
notes and other factors. A liquid trading market may not develop. If an active
market for the new notes does not develop, the market price and liquidity of
the new notes may be adversely affected. There may not be a market where you
can sell your new notes and, if a market for the new notes starts, it may end
at any time. While the initial notes are eligible for trading in the PORTAL
Market, we currently do not intend to list the new notes on any securities
exchange or to seek approval for their quotation on the National Association
of Securities Dealers Automated Quotation or any other automated quotation
system.
Forward-Looking Statements May Prove Inaccurate
We have made forward-looking statements in this prospectus that are subject
to risks and uncertainties. Forward-looking statements include the information
concerning our possible or assumed future results.When we use words such as
"believes," "expects," "anticipates" or similar expressions, we are making
forward-looking statements. You should note that many factors, some of which
are discussed elsewhere in this document, could affect our future financial
results and could cause those results to differ materially from those
expressed in our forward-looking statements contained in this prospectus. See
"Forward-Looking Statements" on page 2.
USE OF PROCEEDS
We will not receive any proceeds from the exchange offer.
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>
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.
12
<PAGE>
THE EXCHANGE OFFER
The following discussion summarizes the material terms of the exchange
offer, including those set forth in the letter of transmittal distributed with
this prospectus. This summary is qualified in its entirety by reference to the
full text of the documents underlying the exchange offer, including the
indenture governing the new notes, which is filed as Exhibit 4.1 to our most
recent Annual Report on Form 10-K.
Registration Rights
We sold the initial notes to Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Chase Securities Inc., Goldman, Sachs & Co. and Salomon Smith
Barney Inc., as initial purchasers, on November 16, 1998 under an Offering
Memorandum dated November 10, 1998 covering $400 million principal amount of
the initial notes. The initial purchasers then subsequently resold the initial
notes to qualified institutional buyers under Rule 144A under the Securities
Act. As part of the offering of the initial notes, we entered into an Exchange
and Registration Rights Agreement dated as of November 16, 1998.
The registration rights agreement requires, among other things, that we:
. file with the SEC not later than March 31, 1999 a registration statement
under the Securities Act covering an offering of new notes of Marriott
identical in all material respects to the initial notes, other than
transfer restrictions under the Securities Act, registration rights and
the requirement, under certain circumstances, to pay additional interest
with respect to the initial notes;
. use our reasonable efforts to cause the registration statement to become
effective under the Securities Act before May 15, 1999 and to keep the
registration statement effective until the closing of the exchange offer;
. upon the effectiveness of the registration statement, commence the
exchange offer and keep the exchange offer open for a period of not less
than 30 calendar days; and
. use our reasonable efforts to cause the exchange offer to be consummated
within 45 calendar days after the effective date of the registration
statement.
The registration statement will be deemed not to be effective for any period
during which the offering of new notes is interfered with by any stop order,
injunction or other order or requirement of the SEC or any other governmental
agency or court.
The exchange offer gives you the opportunity, with limited exceptions, to
exchange your initial notes for a like principal amount of new notes, which
will be issued without a restrictive legend and which you may generally
reoffer and resell without restrictions or limitations under the Securities
Act. The Exchange Offer is subject to the general terms and conditions
developed by the staff of the SEC in the Morgan Stanley No-Action Letter
(Morgan Stanley and Co., Inc. (available June 5, 1991)) and the Exxon Capital
No-Action Letter (Exxon Capital Holdings Corporation (available May 13,
1988)), as interpreted in the SEC's letter to Shearman & Sterling dated July
2, 1993, and similar no-action letters. However, you are not entitled to rely
on the position of the staff in the no-action letters referred to above and,
in the absence of an exemption, must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with the
resale of the new notes, if you:
. are our "affiliate" within the meaning of Rule 405 under the Securities
Act;
. do not acquire the new notes in the ordinary course of your business;
. tender in the exchange offer with the intention to participate, or for
the purpose of participating, in a distribution of the new notes; or
. are a broker-dealer that acquired such initial notes directly from us.
If you are a broker-dealer receiving new notes for your own account in
exchange for initial notes, where you acquired the initial notes as a result
of market-making activities or other trading activities, you must
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<PAGE>
acknowledge that you will deliver a prospectus in connection with any resale
of these new notes. See "Plan of Distribution." We have agreed to include in
this prospectus information necessary to allow such broker-dealers to exchange
such initial notes in the exchange offer and to satisfy the prospectus
delivery requirements for resales of new notes received by such broker-dealer
in the exchange offer.
In addition, in the registration rights agreement, we agreed to file a shelf
registration statement pursuant to Rule 415 under the Securities Act, if:
. we are not permitted to effect the exchange offer because of any changes
in law, SEC rules or regulations or applicable interpretations of the
staff of the SEC after the issuance of the initial notes;
. for any other reason the registration statement relating to the exchange
offer is not declared effective before May 15, 1999 or the exchange offer
is not consummated within 45 calendar days after the effective date;
. any of the initial purchasers of the initial notes requests, within
ninety calendar days after the consummation of the exchange offer, the
filing of a shelf registration statement with respect to initial notes
held by it that are not eligible to be exchanged for new notes in the
exchange offer; or
. a holder is not permitted to participate in the exchange offer or does
not receive fully transferable new notes in the exchange offer because of
any changes in law, SEC rules or regulations or applicable
interpretations of the staff of the SEC after the issuance of the initial
notes.
We have agreed to file such a shelf registration statement with the SEC no
later than the later of May 15, 1999 and 60 calendar days after we have been
so requested. We also have agreed to use our reasonable efforts to cause such
a shelf registration statement to become effective under the Securities Act no
later than 60 days after the filing of the shelf registration statement. In
addition, we agreed to use our reasonable efforts to keep such a shelf
registration statement continuously effective for a period of at least two
years following November 16, 1998, the date on which the initial notes were
issued, or a shorter period that will terminate when all initial notes covered
by the shelf registration statement have been sold under the shelf
registration statement or have ceased to be outstanding or subject to
registration rights.
REGISTRATION DEFAULTS; ADDITIONAL INTEREST
If the applicable registration statement or amendment is not timely filed or
declared effective or thereafter ceases to be effective, or if the exchange
offer has not been consummated on or prior to the 45th calendar day after the
effective date of the applicable registration statement, the interest rate of
the initial notes will be increased by one-quarter percent per annum for the
first 90-day period immediately following the default. The interest rate will
increase by an additional one-quarter of one percent at the beginning of each
subsequent 90-day period until all such defaults have been cured, up to
maximum additional interest of one-half percent per annum. Following the cure
of all such defaults, the accrual of additional interest in respect of the
notes will cease.
Except as set forth above, this prospectus may not be used for any offer to
resell, resale or other transfer of new notes.
Except as set forth above, after consummation of the exchange offer, holders
of notes have no registration or exchange rights under the registration rights
agreement. See "--Consequences of Failure to Exchange."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "expiration date" means 5:00 p.m., New York City time, on ,
1999, unless we, in our sole discretion, extend the exchange offer, in which
case the term "expiration date" means the latest date and time to which the
exchange offer is extended. To extend the exchange offer, we will notify the
exchange agent of any extension by oral or written notice, followed by a
public announcement no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date.
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<PAGE>
We reserve the right, in our reasonable judgment, to:
. delay accepting any initial notes, to extend the exchange offer or to
terminate the exchange offer if any of the conditions set forth below
under the heading "--Conditions" have not been satisfied, by giving
oral or written notice of such delay, extension or termination to the
exchange agent or
. amend the terms of the exchange offer in any manner.
Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by a public announcement thereof.
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept any and all initial notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time on
the expiration date. We will issue $1,000 principal amount of new notes in
exchange for each $1,000 principal amount of outstanding initial notes
accepted in the exchange offer. Holders of the initial notes may tender some
or all of their initial notes pursuant to the exchange offer; however, initial
notes may be tendered only in integral multiples of $1,000. The new notes will
evidence the same debt as the initial notes and will be entitled to the
benefits of the same indenture. The form and terms of the new notes are
substantially the same as the form and terms of the initial notes, except
that:
. the new notes have been registered under the Securities Act and thus will
not bear legends restricting their transfer;
. holders of the new notes generally will not be entitled to rights under
the registration rights agreement or additional interest, which rights
generally will terminate upon consummation of the exchange offer; and
. the minimum denomination of new notes will be reduced from $100,000 to
$1,000.
Holders of initial notes do not have any appraisal or dissenters' rights
under applicable law or the indenture as a result of the exchange offer. We
intend to conduct the exchange offer in accordance with the applicable
requirements of the Securities Exchange Act of 1934 and the rules and
regulations of the SEC thereunder, including Rule 14e-l.
We will be deemed to have accepted validly tendered initial notes when, as
and if we have given oral or written notice thereof to the exchange agent. The
exchange agent will act as agent for the tendering holders pursuant to the
exchange agent agreement for the purpose of receiving the new notes from us.
If any tendered initial notes are not accepted for exchange because of an
invalid tender, the occurrence of other events set forth in this prospectus or
otherwise, the certificates for any such unaccepted initial notes will be
returned, without expense, to the tendering holders as promptly as practicable
after the expiration date.
Holders who tender their initial notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the letter of transmittal, transfer taxes with respect to the exchange of
initial notes pursuant to the exchange offer. We will pay all charges and
expenses, other than transfer taxes in certain circumstances, in connection
with the exchange offer. See "--Fees and Expenses."
Interest on New Notes
Each new note will bear interest from the most recent date to which interest
has been paid or duly provided for on the initial note surrendered in exchange
for such new note or, if no such interest has been paid or duly provided for
on such initial note, from November 16, 1998. Holders of the initial notes
whose initial notes are accepted for exchange will not receive accrued
interest on such initial notes for any period from and after the last interest
payment date to which interest has been paid or duly provided for on such
initial notes prior to the original issue date of the new notes or, if no such
interest has been paid or duly provided for, will not receive any accrued
interest on such initial notes, and will be deemed to have waived the right to
receive any interest on such initial notes accrued from and after such
interest payment date or, if no such interest has been paid or duly
15
<PAGE>
provided for, from and after November 16, 1998. Interest on the new notes will
be payable semi-annually on May 15 and November 15 of each year, commencing
May 15, 1999.
Procedures for Tendering Initial Notes
Only holders of initial notes may tender such initial notes in the exchange
offer. To tender in the exchange offer, you must complete, sign and date the
letter of transmittal, or a facsimile of the letter of transmittal, have the
signatures guaranteed if required by the letter of transmittal, and mail or
otherwise deliver such letter of transmittal or such facsimile, together with
the initial notes and any other required documents, to the exchange agent so
as to be received by the exchange agent at the address set forth on the cover
page of the letter of transmittal prior to 5:00 p.m., New York City time, on
the expiration date. Delivery of the initial notes may be made by book-entry
transfer of such initial notes into the exchange agent's account at DTC in
accordance with the procedures described below. Confirmation of such book-
entry transfer must be received by the exchange agent prior to the expiration
date.
By executing the letter of transmittal, you will make to us the
representations set forth below in the third paragraph under the heading "--
Resale of New Notes" on page 20.
Your tender and our acceptance will constitute an agreement with the terms
and subject to the conditions set forth in this prospectus and in the letter
of transmittal.
The method of delivery of initial notes and the letter of transmittal and
all other required documents to the exchange agent is at your election and
risk. Instead of delivery by mail, we recommend that you use an overnight or
hand delivery service. In all cases, you should allow sufficient time to
assure delivery to the exchange agent before the expiration date. No letter of
transmittal or notes should be sent to us. You may request that your broker,
dealer, commercial bank, trust company or nominee effect the above
transactions for you.
If you are a beneficial owner whose initial notes are registered in the name
of a broker, dealer, commercial bank, trust company or other nominee and you
wish to tender, you should contact the registered holder promptly and instruct
such registered holder to tender on your behalf.
Signatures on the letter of transmittal or on a notice of withdrawal, as the
case may be, must be guaranteed by an "eligible institution" (as defined
below) unless the initial notes tendered are:
. signed by the registered holder, unless such holder has completed the
box entitled "Special Exchange Instructions" or "Special Delivery
Instructions" on the letter of transmittal, or
. tendered for the account of an eligible institution.
If signatures on a letter of transmittal or a notice of withdrawal are
required to be guaranteed, the guarantee must be by a member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office
or correspondent in the United States, or an "eligible guarantor institution"
within the meaning of Rule l7A(d)-15 under the Securities Exchange Act of 1934
(an "eligible institution").
If the letter of transmittal is signed by a person other than the registered
holder of any initial notes listed therein, those initial notes must be
endorsed or accompanied by a properly completed bond power, signed by the
registered holder as the registered holder's name appears on the initial
notes, with the signature guaranteed by an eligible institution.
If the letter of transmittal or any initial notes or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
those persons should so indicate when signing, and unless waived by us, must
submit proper evidence satisfactory to us of their authority to so act with
the letter of transmittal.
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<PAGE>
We will determine in our sole discretion all questions as to the validity,
form, eligibility, including time of receipt, acceptance of tendered initial
notes and withdrawal of tendered initial notes, and our determination will be
final and binding. We reserve the absolute right to reject any and all initial
notes not properly tendered or any initial notes our acceptance of which
would, in the opinion of our counsel, be unlawful. We also reserve the right
to waive any defects, irregularities or conditions of tender as to particular
initial notes. Our interpretation of the terms and conditions of the exchange
offer, including the instructions in the letter of transmittal, will be final
and binding on all parties. Unless waived, any defects or irregularities in
tenders of initial notes must be cured within the amount of time we determine.
Although we intend to notify you of defects or irregularities in your tender
of initial notes, none of Marriott, the exchange agent or any other person
will incur any liability for failure to give such notification. Tenders of
initial notes will not be deemed to have been made until those defects or
irregularities have been cured or waived. Any initial notes received by the
exchange agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the exchange
agent to the tendering holders, unless otherwise provided in the letter of
transmittal, as soon as practicable following the expiration date.
Book-Entry Delivery Procedures
Promptly after the date of this prospectus, the exchange agent will
establish accounts with respect to the initial notes at DTC for purposes of
the exchange offer. Any financial institution that is a participant in DTC's
systems may make book-entry delivery of the initial notes by causing DTC to
transfer those initial notes into the exchange agent's account at DTC in
accordance with DTC's procedures for such transfer. To be timely, book-entry
delivery of initial notes requires receipt of a confirmation of a book-entry
transfer (a "Book-Entry Confirmation") prior to the expiration date. In
addition, although delivery of initial notes may be effected through book-
entry transfer into the exchange agent's account at DTC, the letter of
transmittal or a manually signed facsimile of the letter of transmittal,
together with any required signature guarantees and any other required
documents, or an "agent's message" (as defined below) in connection with a
book-entry transfer, must, in any case, be delivered or transmitted to and
received by the exchange agent at its address set forth on the cover page of
the letter of transmittal prior to the expiration date to receive new notes
for tendered initial notes, or the guaranteed delivery procedure described
below must be complied with. Tender will not be deemed made until such
documents are received by the exchange agent. Delivery of documents to DTC
does not constitute delivery to the exchange agent.
Tender of Initial Notes Held Through The Depository Trust Company
The exchange agent and DTC have confirmed that the exchange offer is
eligible for DTC's Automated Tender Offer Program. Accordingly, participants
in DTC's Automated Tender Offer Program may, instead of physically completing
and signing the applicable letter of transmittal and delivering it to the
exchange agent, electronically transmit their acceptance of the exchange offer
by causing DTC to transfer initial notes to the exchange agent in accordance
with DTC's Automated Tender Offer Program procedures for transfer. DTC will
then send an agent's message to the exchange agent.
The term "agent's message" means a message transmitted by DTC, received by
the exchange agent and forming part of the Book-Entry Confirmation, which
states that DTC has received an express acknowledgment from a participant in
DTC's Automated Tender Offer Program that is tendering initial notes that are
the subject of such Book-Entry Confirmation, that the participant has received
and agrees to be bound by the terms of the applicable letter of transmittal
or, in the case of an agent's message relating to guaranteed delivery, that
the participant has received and agrees to be bound by the applicable notice
of guaranteed delivery, and that we may enforce such agreement against that
participant.
Guaranteed Delivery Procedures
If you wish to tender your initial notes and:
. your initial notes are not immediately available,
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<PAGE>
. you cannot deliver your initial notes, the letter of transmittal or any
other required documents to the exchange agent, or
. you cannot complete the procedures for book-entry transfer, prior to the
expiration date,
you may still effect a tender if:
(1) the tender is made through an eligible institution;
(2) prior to the expiration date, the exchange agent receives from such
eligible institution a properly completed and duly executed notice of
guaranteed delivery by facsimile transmission, mail or hand delivery
setting forth the name and address of the holder, the certificate
number(s) of the initial notes (if the initial notes are not held
through DTC) and the principal amount of initial notes tendered,
stating that the tender is being made thereby and guaranteeing that,
within three New York Stock Exchange trading days after the expiration
date, the letter of transmittal or facsimile thereof, together with the
certificate(s) representing the initial notes or a Book-Entry
Confirmation transfer of the initial notes into the exchange agent's
account at DTC and all other documents required by the letter of
transmittal, will be deposited by the eligible institution with the
exchange agent; and
(3) the properly completed and executed letter of transmittal or facsimile
thereof, as well as the certificate(s) representing all tendered
initial notes in proper form for transfer or Book-Entry Confirmation
transfer of such initial notes into the exchange agent's account at DTC
and all other documents required by the letter of transmittal, are
received by the exchange agent within three New York Stock Exchange
trading days after the expiration date.
Upon request to the exchange agent, a notice of guaranteed delivery will be
sent to you so that you may tender your initial notes according to the
guaranteed delivery procedures set forth above.
Withdrawals of Tenders
Except as otherwise provided in this prospectus, you may withdraw your
tender of initial notes at any time prior to 5:00 p.m., New York City time, on
the expiration date.
To withdraw a tender of initial notes in the exchange offer, a written or
facsimile transmission notice of withdrawal must be received by the exchange
agent at the address set forth in this prospectus prior to 5:00 p.m., New York
City time, on the expiration date. Any such notice of withdrawal must:
. specify the name of the person who deposited the initial notes to be
withdrawn,
. identify the initial notes to be withdrawn including the certificate
number(s) and the principal amount of the initial notes, or, in the case
of initial notes transferred by book-entry transfer, the name and number
of the account at DTC to be credited,
. be signed by the holder in the same manner as the original signature on
the letter of transmittal by which the initial notes were tendered,
including any required signature guarantees, or be accompanied by
documents of transfer sufficient to have the trustee under the indenture
register the transfer of the initial notes into the name of the person
withdrawing the tender, and
. specify the name in which any such initial notes are to be registered, if
different from that of the person who deposited the initial notes.
We will determine all questions as to the validity, form and eligibility,
including time of receipt, of such notices, and our determination will be
final and binding on all parties. Any initial notes so withdrawn will be
deemed not to have been validly tendered for purposes of the exchange offer
and no new notes will be issued with respect thereto unless the initial notes
so withdrawn are validly retendered. Any initial notes that have been tendered
but are not accepted for exchange will be returned to their holder without
cost to such holder as soon as practicable after withdrawal, rejection of
tender or termination of the exchange offer. Properly withdrawn initial notes
may be retendered by following one of the procedures described above under "--
Procedures for Tendering Initial Notes" at any time prior to the expiration
date.
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<PAGE>
Conditions
Notwithstanding any other term of the exchange offer, we will not be
required to accept for exchange any initial notes, and may terminate or amend
the exchange offer as provided in this prospectus before the acceptance of
such initial notes, if:
. the exchange offer or the making of any exchange by a holder, violates
any applicable law or interpretation of the staff of the SEC; or
. any action or proceeding shall have been instituted or threatened in any
court or by any governmental agency which in our judgment would
reasonably be expected to impair our ability to proceed with the
exchange offer.
If we determine in our reasonable judgment that either of these conditions
are not satisfied, we may:
. refuse to accept any initial notes and return all tendered initial notes
to the tendering holders,
. extend the exchange offer and retain all initial notes tendered prior to
the expiration of the exchange offer, subject, however, to the rights
of holders to withdraw such initial notes (see "--Withdrawals of
Tenders"), or
. waive such unsatisfied conditions with respect to the exchange offer and
accept all properly tendered initial notes that have not been
withdrawn.
Exchange Agent
The Chase Manhattan Bank will act as exchange agent for the exchange offer
with respect to the initial notes.
Questions and requests for assistance, requests for additional copies of
this prospectus or of the letter of transmittal for the initial notes and
requests for copies of the notice of guaranteed delivery should be directed to
the exchange agent, addressed as follows:
By registered or certified mail or overnight courier:
The Chase Manhattan Bank
Attn: Joseph Progar
One Liberty Place
Suite 5210
Philadelphia, PA 19103
By facsimile (for eligible institutions only): (215) 972-8372
Confirm by telephone: (215) 988-1317
Fees and Expenses
We will bear the expenses of soliciting initial notes for exchange. The
principal solicitation is being made by mail by the exchange agent. Additional
solicitation may be made by telephone, facsimile or in person by officers and
regular employees of Marriott and our affiliates and by persons so engaged by
the exchange agent.
We will pay the exchange agent reasonable and customary fees for its
services and will reimburse it for its reasonable out-of-pocket expenses in
connection therewith and pay other registration expenses, including fees and
expenses of the trustee under the indenture, filing fees, blue sky fees and
printing and distribution expenses.
We will pay all transfer taxes, if any, applicable to the exchange of the
initial notes pursuant to the exchange offer. If, however, certificates
representing the new notes or the initial notes for principal amounts not
tendered
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<PAGE>
or accepted for exchange are to be delivered to, or are to be issued in the
name of, any person other than the registered holder of the initial notes
tendered, or if tendered initial notes are registered in the name of any
person other than the person signing the letter of transmittal, or if a
transfer tax is imposed for any reason other than the exchange of the initial
notes pursuant to the exchange offer, then the amount of any such transfer
taxes, whether imposed on the registered holder or any other person, will be
payable by the tendering holder.
Accounting Treatment
The new notes will be recorded at the same carrying value as the initial
notes, which is the aggregate principal amount of the initial notes, as
reflected in our accounting records on the date of exchange. Accordingly, no
gain or loss for accounting purposes will be recognized in connection with the
exchange offer. The expenses of the initial notes offering and the exchange
offer will be amortized over the term of the new notes.
Resale of New Notes
We are making the exchange offer in reliance on the position of the staff's
Exxon Capital no-action letter, Morgan Stanley no-action letter, Shearman &
Sterling no-action letter and other interpretive letters addressed to third
parties in other transactions; however, we have not sought our own
interpretive letter addressing these matters and we cannot assure you that the
staff of the SEC would make a similar determination with respect to the
exchange offer as it has in such interpretive letters to third parties. Based
on these interpretations by the staff, and subject to the two immediately
following sentences, we believe that unless you are a broker-dealer, you may
offer for resale, resell or otherwise transfer new notes issued to you
pursuant to this exchange offer in exchange for initial notes without further
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that you acquire such new notes in the ordinary
course of your business and you are not participating, and have no arrangement
or understanding with any person to participate, in a distribution within the
meaning of the Securities Act of such new notes. Notwithstanding the above,
you may be subject to separate restrictions if you:
. are our "affiliate" within the meaning of Rule 405 under the Securities
Act,
. do not acquire such new notes in the ordinary course of your business,
. intend to participate in the exchange offer for the purpose of
distributing new notes, or
. are a broker-dealer who purchased such initial notes directly from us.
If you fall into any of the categories above, you:
. will not be able to rely on the interpretations of the SEC staff set
forth in the above-mentioned interpretive letters,
. will not be permitted or entitled to tender your initial notes in the
exchange offer, and
. must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any sale or other transfer of your
initial notes unless the sale is made pursuant to an exemption from these
requirements.
In addition, as described below, if you are a broker-dealer holding initial
notes acquired for your own account (a "Participating Broker-Dealer"), then
you may be deemed a statutory "underwriter" within the meaning of the
Securities Act and must deliver a prospectus meeting the requirements of the
Securities Act in connection with any resales of your new notes.
As a condition to your participation in the exchange offer, each holder of
initial notes, including, without limitation, any holder who is a
Participating Broker-Dealer, must furnish, upon our request, prior to the
consummation of the exchange offer, a written representation to us contained
in the letter of transmittal to the effect that:
. you are not our affiliate,
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<PAGE>
. any new notes to be received by you are being acquired in the ordinary
course of your business, and
. you are not engaged in, do not intend to engage in, and have no
arrangement or understanding with any person to participate in, a
distribution within the meaning of the Securities Act of such new notes.
If you are a broker-dealer receiving new notes for your own account in the
exchange offer, you must acknowledge that you acquired the initial notes for
your own account as a result of market-making activities or other trading
activities, and not directly from us, and must agree that you will deliver a
prospectus meeting the requirements of the Securities Act in connection with
any resale of such new notes. The letter of transmittal states that by so
acknowledging and by delivering a prospectus, a Participating Broker-Dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. Based on the position taken by the SEC staff in the
interpretive letters referred to above, we believe that if you are a
Participating Broker-Dealer, you may fulfill your prospectus delivery
requirements with respect to the new notes received upon exchange of your
initial notes with a prospectus meeting the requirements of the Securities
Act, which may be this prospectus (which was prepared for the exchange offer)
so long as it contains a description of the plan of distribution with respect
to the resale of such new notes. Accordingly, this prospectus, as it may be
amended or supplemented from time to time, may be used by a Participating
Broker-Dealer during the period referred to below in connection with resales
of new notes received in exchange for initial notes where the initial notes
were acquired by the Participating Broker-Dealer for its own account as a
result of market-making or other trading activities.
Consequences of Failure to Exchange
Any initial notes tendered and exchanged in the exchange offer will reduce
the aggregate principal amount of initial notes outstanding. Following the
consummation of the exchange offer, holders who did not tender their initial
notes generally will not have any further registration rights under the
registration rights agreement, and such initial notes will continue to be
subject to restrictions on transfer. Accordingly, the liquidity of the market
for such initial notes could be adversely affected. The initial notes are
currently eligible for sale pursuant to Rule 144A through PORTAL. Because we
anticipate that most holders will elect to exchange initial notes for new
notes pursuant to the exchange offer due to the absence of restrictions on the
resale of new notes (except for applicable restrictions on any holder of new
notes who is our affiliate or is a broker-dealer that acquired the initial
notes directly from us) under the Securities Act, we anticipate that the
liquidity of the market for any initial notes remaining after the consummation
of the exchange offer may be substantially limited.
As a result of the making of this exchange offer, we will have fulfilled
most of our obligations under the registration rights agreement, and holders
who do not tender their initial notes, except for certain instances involving
the initial purchasers or holders of initial notes who are not eligible to
participate in the exchange offer, will not have any further registration
rights under the registration rights agreement or otherwise or rights to
receive additional interest for failure to register. Accordingly, any holder
that does not exchange its initial notes for new notes will continue to hold
the untendered initial notes and will be entitled to all the rights and
subject to all the limitations applicable under the indenture, except to the
extent that such rights or limitations, by their terms, terminate or cease to
have further effectiveness as a result of the exchange offer.
The initial notes that are not exchanged for new notes pursuant to the
exchange offer will remain restricted securities within the meaning of the
Securities Act. Accordingly, such initial notes may be resold only:
. to us or any of our subsidiaries,
. inside the United States to a "qualified institutional buyer" in
compliance with Rule 144A under the Securities Act,
. inside the United States to an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3), or (7) under the Securities Act), or
an "accredited investor" that, prior to such transfer, furnishes or has
furnished on its behalf by a U.S. broker-dealer to the trustee under the
indenture a signed letter containing certain representations and
agreements relating to the restrictions on transfer of the new notes, the
form of which letter can be obtained from the trustee,
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. outside the United States in compliance with Rule 904 under the
Securities Act,
. pursuant to the exemption from registration provided by Rule 144 under
the Securities Act, if available, or
. pursuant to an effective registration statement under the Securities Act.
Each accredited investor that is not a qualified institutional buyer and
that is an original purchaser of any of the initial notes from the initial
purchasers will be required to sign a letter confirming that such person is an
accredited investor under the Securities Act and that such person acknowledges
the transfer restrictions summarized above.
Other
Participation in the exchange offer is voluntary and you should carefully
consider whether to accept the offer to exchange your initial notes. We urge
you to consult your financial and tax advisors in making your decision on what
action to take with respect to the exchange offer. We may in the future seek
to acquire untendered initial notes in open market or privately negotiated
transactions, through subsequent exchange offers or otherwise. We have no
present plans to acquire any initial notes that are not tendered in the
exchange offer or to file a registration statement to permit resales of any
untendered initial notes.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
General
The following is a summary of material United States federal income tax
consequences relevant to the exchange of initial notes for new notes pursuant
to the exchange offer and the purchase, ownership and disposition of the new
notes, but does not purport to be a complete analysis of all potential tax
effects. This summary reflects the opinion of our outside counsel, Gibson,
Dunn & Crutcher LLP, as to material federal income tax consequences expected
to result from the exchange offer. This summary is based upon the Internal
Revenue Code of 1986, as amended (the "Code"), existing and proposed
regulations thereunder, published rulings and court decisions, all as in
effect and existing on the date hereof and all of which are subject to change
at any time, which change may be retroactive. Gibson, Dunn & Crutcher LLP has
relied upon certain factual representations by us and our officers for
purposes of this summary. This summary is not binding on the Internal Revenue
Service or on the courts, and no ruling will be requested from the Internal
Revenue Service on any issues described below. We cannot assure you that the
Internal Revenue Service will not take a different position concerning the
matters discussed below or that such positions of the Internal Revenue Service
would not be sustained.
This summary applies only to those persons who acquired the initial notes
for cash and who hold notes as capital assets. It does not address the tax
consequences to taxpayers who are subject to special rules (such as financial
institutions, tax-exempt organizations, insurance companies and persons who
are not "U.S. Holders"). A "U.S. Holder" means a beneficial owner of a note
that is for U.S. federal income tax purposes:
. a citizen or resident of the United States;
. a corporation, partnership or other entity created or organized in or
under the laws of the United States or any political subdivision thereof;
. an estate the income of which is subject to U.S. federal income
taxation regardless of its source; or
. a trust if (A) a court within the United States is able to exercise
primary supervision over the administration of the trust and (B) one or
more U.S. fiduciaries have the authority to control all substantial
decisions of the trust.
The following discussion is for general information only. You are strongly
urged to consult with your own tax advisors to determine the impact of your
personal tax situation on the anticipated tax consequences, including the tax
consequences under state, local, foreign or other tax laws, of the
acquisition, ownership and disposition of the new notes.
Exchange of Initial Notes for New Notes
Pursuant to this prospectus, we are offering to effect the exchange offer
for the initial notes, through which holders will be entitled to exchange the
initial notes for new notes that would be identical in all material respects
to the initial notes, except that the new notes would be registered and
therefore would not be subject to transfer restrictions. In addition, under
certain circumstances we may be required to file a shelf registration
statement with respect to the initial notes, either in lieu of or in
conjunction with the exchange offer, which, if effective, would ease transfer
restrictions on such notes and thereby permit their resale.
In the opinion of our outside counsel, Gibson, Dunn & Crutcher LLP, neither
participation in the exchange offer nor the filing of a shelf registration
statement as described above should result in a taxable exchange to any holder
of a note.
In the event that we complete the exchange offer, no taxable exchange should
occur or should be deemed to occur because the exchange would be conducted
pursuant to the terms of the initial notes and such exchange would not result
in a material alteration of the terms of the notes. Accordingly, the new notes
would be treated as continuations of the corresponding initial notes, and
there should be no U.S. federal income tax consequences
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to holders electing to exchange initial notes for new notes. In particular, an
exchanging holder would not recognize any gain or loss on the exchange, would
retain the same basis in the new note as held in the initial note and would
have a holding period for the new note that includes such holder's holding
period for the initial note. The exchange offer would not result in any
federal income tax consequences to holders of initial notes who do not
exchange their notes for new notes.
Moreover, if we file a shelf registration statement in connection with the
initial notes, no taxable exchange should occur or be deemed to occur, because
the shelf registration statement would be filed pursuant to the terms of the
initial notes and such filing would not result in a material alteration of the
terms of the notes. Accordingly, there should be no U.S. federal income tax
consequences to any holders of the notes from the filing of a shelf
registration statement as described above.
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SELECTED FINANCIAL DATA
(in millions, except per share data)
The following table presents certain selected financial data for the five
most recent fiscal years, which is from our consolidated financial statements.
Since the information in this table is only a summary and does not provide all
of the information contained in our financial statements, including the
related notes, you should read "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and our Consolidated Financial
Statements in our Annual Report on Form 10-K for the year ended January 1,
1999, which has been filed with the SEC and incorporated into this prospectus
by reference. Per share data has not been presented for periods prior to 1998
because we were not a publicly held company during that time.
<TABLE>
<CAPTION>
Fiscal Year
-----------------------------------
1998 1997 1996(a) 1995 1994
------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Sales..................................... $7,968 $7,236 $5,738 $4,880 $4,461
Operating Profit Before Corporate Expenses
and Interest............................. 736 609 508 390 316
Net Income................................ 390 324 270 219 162
Per Share Data:
Diluted Earnings per Share............... 1.46
Cash Dividends Declared.................. .195
Balance Sheet Data (at end of period):
Total Assets.............................. $6,233 $5,161 $3,756 $2,772 $2,061
Long-Term and Convertible Subordinated
Debt..................................... 1,267 422 681 180 102
Shareholders' Equity...................... 2,570
</TABLE>
- --------
(a) 1996 fiscal year was 53 weeks; all other fiscal years were 52 weeks.
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BUSINESS
Marriott International, Inc. is one of the world's leading hospitality
companies. We are a worldwide operator and franchisor of hotels and senior
living communities and provider of distribution services. Our operations are
grouped in three business segments, Lodging, Senior Living Services and
Distribution Services, which represented 79, 6, and 15 percent, respectively,
of total sales in the fiscal year ended January 1, 1999.
LODGING. We operate or franchise nearly 1,700 lodging properties worldwide,
with over 325,000 rooms. 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 lodging brands include:
EXTENDED-STAY LODGING
UPSCALE FULL-SERVICE LODGING
.Residence Inn
.Marriott Hotels, Resorts and Suites
.TownePlace Suites
.Renaissance Hotels and Resorts
.Marriott Executive Residences
.New World Hotels International (Asia)
LUXURY LODGING
MODERATE-PRICED AND ECONOMY LODGING
.Ritz-Carlton
.Courtyard
VACATION TIMESHARING
.Fairfield Inn
.Marriott Vacation Club
.SpringHill Suites International
.Ramada International Hotels & Resorts
(Europe, Middle East and Asia/Pacific)
SENIOR LIVING SERVICES. Through our Senior Living Services business, we
develop and operate both "independent full-service" and "assisted living"
senior living communities and provide related senior care services. We
operated 113 of these facilities as of January 1, 1999, most of which were
owned by third parties, and are the largest U.S. operator of senior living
communities in the quality tier. Our three principal senior living community
brands are:
. Brighton Gardens (quality-tier assisted living)
. Village Oaks (moderate-priced assisted living)
. Marriott MapleRidge (high levels of service for the more frail senior
population; formerly branded as Hearthside).
DISTRIBUTION SERVICES. Operating under the name Marriott Distribution
Services, we are a United States limited-line distributor of food and related
supplies, carrying an average of 3,000 product items per distribution center.
This segment originally focused on purchasing, warehousing and distributing
food and supplies to other Marriott businesses. However, Marriott Distribution
Services has increased its third-party business to about 88 percent of total
sales volume in the year ended January 1, 1999.
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 investment
trust, 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. In addition, 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 (now called Sodexho Marriott Services,
Inc.) was formed in 1993 when it was spun off from Marriott Corporation--now
named Host Marriott Corporation.
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Host Marriott Services Corporation was formed in 1995 when it was spun off
from Host Marriott Corporation. For more information on our transactions with
Host Marriott Corporation, see the "Relationships with Major Customers" Note
to our Consolidated Financial Statements, which we filed with the SEC as part
of our most recent Form 10-K.
Formation of "New" Marriott International--Spinoff 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." Our company--the
"new" Marriott International--was formed to conduct the lodging, senior living
and distribution services businesses formerly conducted by "old" Marriott.
The spinoff was effected through a dividend of one share of our common stock
and one share of our Class A common stock for each share of old Marriott
common stock outstanding on March 20, 1998. As the result of a shareholder
vote at our 1998 annual meeting of shareholders, on May 21, 1998 we converted
all of our outstanding shares of common stock into shares of Class A common
stock on a one-for-one basis.
The old Marriott shareholders approved the spinoff and related transactions
at a special meeting held in March 1998. Old Marriott received a ruling from
the Internal Revenue Service that the spinoff would be tax-free to old
Marriott, to us and to our shareholders.
At the same time as the spinoff, old Marriott merged its remaining
business--food service and facilities management--with the similar businesses
of Sodexho Alliance in the United States and Canada, to form Sodexho Marriott
Services. Sodexho Marriott Services also successfully completed a public cash
tender offer for substantially all of $720 million of old Marriott's public
debt. We are providing certain transitional administrative services to Sodexho
Marriott Services, such as employee benefit administration and employee
relocation, and Marriott Distribution Services provides food distribution
services to many of Sodexho Marriott Services' food service locations. For a
discussion of some of our contracts with Sodexho Marriott Services, see "Notes
to Consolidated Financial Statements--Summary of Significant Accounting
Policies," which are contained in our most recent Annual Report on Form 10-K
and incorporated by reference into this prospectus.
DESCRIPTION OF THE NEW NOTES
We are offering, in exchange for initial notes, a total of $400 million
aggregate principal amount of new notes, comprised of $200 million aggregate
principal amount of 6 5/8% Series A new notes and $200 million aggregate
principal amount of 6 7/8% Series B new notes.
The initial notes were issued under a document called the "indenture". The
indenture is a contract between us and The Chase Manhattan Bank, which acts as
trustee. The new notes will be governed by the same indenture that governs the
initial notes. The trustee has two main roles. First, the trustee can enforce
your rights against us if we default. There are some limitations on the extent
to which the trustee acts on your behalf, described later on page 36 under
"Remedies If an Event of Default Occurs". Second, the trustee performs
administrative duties for us, such as sending you interest payments,
transferring your new notes to a new buyer if you sell and sending you
notices.
The indenture and its associated documents contain the full legal text of
the matters described in this section. The indenture and the new notes are
governed by New York law. We filed a copy of the indenture with the SEC as
Exhibit 4.1 to our most recent Annual Report on Form 10-K. When the new notes
are issued, the indenture will be subject to and governed by the Trust
Indenture Act of 1939.
Because this section is a summary, it does not describe every aspect of the
new notes. This summary is subject to, and qualified in its entirety by
reference to, all the provisions of the indenture, including definitions of
terms used in the indenture and those terms made part of the indenture by
reference to the Trust Indenture Act. For example, in this section we use
capitalized words to signify defined terms that have been given special
meanings in the indenture. We describe the meaning for only the more important
terms. We also include
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<PAGE>
references in parentheses to certain sections of the indenture. Whenever we
refer to particular sections or defined terms of the indenture in this
prospectus, such sections or defined terms are automatically incorporated
here.
General
The new notes will be senior unsecured obligations of Marriott, ranking
equally with all of our existing and future senior unsecured indebtedness. The
new notes effectively will rank junior to all liabilities of our subsidiaries.
The Series A new notes will be issued solely in exchange for an equal
principal amount of Series A initial notes pursuant to the exchange offer; the
Series B new notes will be issued solely in exchange for an equal principal
amount of Series B initial notes pursuant to the exchange offer. The form and
terms of each series of new notes will be identical in all material respects
to the form and terms of the respective series of initial notes, except that:
. the new notes will have been registered under the Securities Act and will
not bear legends restricting their transfer; and
. the holders of the new notes, except for limited instances, will not be
entitled to further registration rights under the registration rights
agreement or to receive additional interest on the new notes in the event
that registration obligations are not complied with.
Payments by Us on the New Notes
The Series A Notes
We will pay interest on the Series A notes at the rate of 6 5/8% per annum.
We will pay this interest on May 15 and November 15 of each year, with the
first payment being made on May 15, 1999. Each new note will bear interest
from November 16, 1998. If your initial Series A notes are accepted for
exchange, you will not receive accrued interest on the initial Series A notes,
and will be deemed to have waived the right to receive any interest on the
initial Series A notes from and after November 16, 1998.
We will pay interest only to those holders who are registered holders on the
fifteenth calendar day before the interest payment date. In addition to the
interest, we will repay the principal on the Series A notes on November 15,
2003. Periodically, we may buy the Series A notes. However, we are not
obligated to repay, and may not repay at our option, any portion of the
principal of the Series A notes prior to their maturity.
The Series B Notes
We will pay interest on the Series B notes at the rate of 6 7/8% per annum.
We will pay this interest on May 15 and November 15 of each year, with the
first payment being made on May 15, 1999. If your initial Series B notes are
accepted for exchange, you will not receive accrued interest on the initial
Series B notes, and will be deemed to have waived the right to receive any
interest on the initial Series B notes from and after November 16, 1998.
We will pay interest only to those holders who are registered holders on the
fifteenth calendar day before the interest payment date. In addition to the
interest, we will repay the principal on the Series B notes on November 15,
2005. Periodically, we may buy the Series B notes. However, we are not
obligated to repay, and may not repay at our option, any portion of the
principal of the Series B notes prior to their maturity.
Legal Ownership
"Street Name" and Other Indirect Holders
As explained below, new notes will be issued only as "global securities"
but, under certain circumstances described below, may be exchanged for
"certificated securities." Investors in new, global notes, or who hold new
certificated notes through an account with a bank or broker, will generally
not be recognized by us or the trustee as legal holders of the new
certificated notes. This is called holding in "street name." Instead, we and
the trustee will
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<PAGE>
recognize only the depositary for the global notes, or the bank or broker, or
the financial institution the bank or broker uses to hold its new notes, as a
holder of new notes. These intermediary banks, brokers and other financial
institutions pass along principal, interest and other payments on the new
notes, either because they agree to do so in their customer agreements or
because they are legally required to. If you hold new notes in "street name,"
you should check with your own institution to find out:
. How it will handle payments made on the new notes and any notices that we
may provide.
. Whether it imposes fees or charges.
. How it would handle voting if ever required.
. Whether, and how, it will permit you to register the new notes in your
own name so you can be a direct holder as described below.
. How it would pursue rights under the new notes 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, are only to those persons who are
registered as holders of the new notes. As noted above, we do not, nor does
the trustee, have obligations to you if you hold in "street name" or other
indirect means. For example, once we make payment to the registered holder, we
have no further responsibility for that payment even if that holder is legally
required to pass the payment along to you as a "street name" customer but does
not do so.
Global Security
All new notes will initially be issued only as a registered new note in
global form without interest coupons (a "global security").
What is a Global Security? A global security is a special type of indirectly
held security, that is only registered in the name of a financial institution
selected by us. The financial institution that acts as the sole direct holder
of the global security is called the "Depositary". Our Depositary will be DTC.
Any holder wishing to own an interest in a global 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. See "Book-Entry
Procedures and Transfer--Certain Book-Entry Procedures for the Global
Security".
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 will
not recognize this type of investor as a holder of notes and instead will deal
only with the Depositary.
An investor should be aware that:
. The investor holding interests in global securities will be a "street
name" holder and must look to his or her own bank or broker for payments
on the new notes and protection of his or her legal rights relating to
the new notes. See " "Street Name' and Other Indirect Holders" on page
28.
. 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.
Payment for purchases and sales in the market for corporate bonds and notes
is generally made in next-day funds. In contrast, it is the policy of the
Depositary to 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.
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Special Situations When Global Security Will Be Terminated. In a few special
situations described later, the global security will terminate and interests
in it will be exchanged for physical certificates (each, a "certificated
security") representing new notes. After that exchange, the choice of whether
to hold notes directly or in "street name" will be up to the investor. In that
case, investors must consult their own bank or brokers to find out how to have
their interests in certificated securities transferred to their own name, so
that they will be direct holders. The rights of "street name" investors and
direct holders in the new notes have been previously described in the
subsections entitled " "Street Name' and Other Indirect Holders" on page 28
and "Direct Holders" on page 29.
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 new notes has occurred and has not been
cured. (Defaults are discussed later under "Events of Default" on page
36)
When a global security terminates, the Depositary (and not us 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 notes. Indirect holders should
read the previous subsection on page 28 entitled " "Street Name' and Other
Indirect Holders".
Overview of Remainder of this Description
You may have your new notes broken into more new notes of smaller
denominations (subject to minimum denomination requirements) or combined into
fewer new notes 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 new notes at the office of the trustee. The
trustee acts as our agent for registering new notes in the names of holders
and transferring new notes. 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)
The remainder of this description summarizes:
. Additional mechanics relevant to the new notes 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 new notes;
. Promises we make to you about how we will run our business, or business
actions we promise not to take (known as"covenants"); and
. Your rights if we default or experience other financial difficulties.
Additional Mechanics
Form, Exchange and Transfer
The new notes will be issued:
. only in fully registered form
. without interest coupons
. in a minimum denomination of $1,000 and even multiples of $1,000.
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You will not be required to pay a service charge to transfer or exchange new
notes, 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.
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)
Payment and Paying Agents
"Street name" and other indirect holders should consult their banks or
brokers for information on how they will receive payments.
We will pay interest to you if you are a direct holder listed in the
trustee's records at the close of business on the fifteenth calendar day
before each due date for interest, even if you no longer own the note on the
interest due date. That day is called the "regular record date." (Section 307)
Holders buying and selling new notes must work out between themselves 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 new notes 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 new notes 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.
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 the trustee of changes in the paying agents.
(Section 1002)
Notices
We and the trustee will send notices regarding the new notes only to direct
holders, using their addresses as listed in the trustee's records. (Sections
101 and 106)
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
Under the indenture, 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 new notes.
. The merger, sale of assets or other transaction must not cause a default
on the new notes, 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
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described later on page 36 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 33 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 new
notes. (Section 801)
Modification and Waiver
There are three types of changes we can make to the indenture and the new
notes.
Changes Requiring Your Approval. First, there are changes that cannot be
made to your new notes without your specific approval. Following is a list of
those types of changes:
. change the stated maturity of the principal or interest on a new note
. reduce any amounts due on a new note
. reduce the amount of principal payable upon acceleration of the Maturity
of a new note following a default
. change the place or currency of payment on a new note
. impair your right to sue for payment
. reduce the percentage of holders of new notes whose consent is needed to
modify or amend the indenture
. reduce the percentage of holders of new notes whose consent is needed to
waive compliance with certain provisions of the indenture or to waive
certain defaults
. modify any other aspect of the provisions dealing with modification and
waiver of the indenture. (Section 902)
Changes Requiring a Majority or 50% Vote. The second type of change to the
indenture and the new notes is the kind that requires a vote in favor by
holders of not less than 50% of the principal amount of the new notes. Most
changes fall into this category, except for clarifying changes and other
changes that would not adversely affect holders of the new notes. 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 new notes listed in the first category described previously under "Changes
Requiring Your Approval" unless we obtain your individual consent to the
waiver. (Sections 902 and 513)
Changes Not Requiring Approval. The third type of change does not require
any vote by holders of the new notes. This type is limited to clarifications
and other changes that would not adversely affect holders of the new notes.
(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 new
note:
Notes 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. New notes will also not be eligible to vote if they
have been fully defeased as described later on page 34 under "Full
Defeasance."(Section 101)
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We will generally be entitled to set any day as a record date for the
purpose of determining the holders of outstanding new notes 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 new notes 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 new notes or request a waiver.
Certain Covenants
The indenture does not contain provisions that would afford protection to
you in the event of a highly leveraged transaction involving us.
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 the other direct holders of the
new notes) or over our general creditors if we fail to pay them back. These
preferential rights are called "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 the other
holders of the new notes. (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 $400 million, or 10% of our
Consolidated Net Assets, whichever amount is greater.
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. These types of Liens are Liens on any Principal Property or on
any shares of stock or debt of any Restricted Subsidiary if:
. such Liens existed on the date of the indenture, or
. such Liens existed at the time the property was acquired or at the time
an entity became a Restricted Subsidiary, or
. such Liens secure Debt that is no greater than the Acquisition Cost or
the Cost of Construction on a Principal Property or Restricted Subsidiary
(if such Liens are created no later than 24 months after such acquisition
or completion of construction), or
. such Liens are in favor of us or any Subsidiary, or
. such Liens are granted in order to assure our performance of any tender
or bid on any project (and other similar Liens).
Subject to certain limitations, we can also disregard Liens that extend,
renew or replace any of these types of Liens.
Under the indenture, we and our subsidiaries are permitted to have as much
unsecured debt as we may choose.
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
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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 covenant 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 direct holders of the new notes
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).
"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.
A "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 (i) 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 (ii) 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 the 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 the business or
assets of the Company or 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 group of parcels of real estate or
one or more physical facilities or depreciable assets, the net book value of
which exceeds 2% of Consolidated Net Assets.
Defeasance
Full Defeasance. We can legally release ourselves from any payment or other
obligations on any series of the new notes (called "full defeasance") if,
among other things, we put in place the following other arrangements for you
to be repaid and the following conditions are met:
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. We must deposit in trust for your benefit and the benefit of all other
direct holders of the new notes of the affected series 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 new notes 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 such
series of new notes any differently than if we did not make the deposit
and just repaid such new notes ourselves. (Under current federal tax law,
the deposit and our legal release from such new notes would be treated as
though we took back your new notes of such series 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 new notes of such
series you were treated as giving back to us.)
. We must deliver to the trustee a legal opinion of our counsel confirming
the tax law change or ruling described above.
If we ever did accomplish full defeasance, as described above, you would
have to rely solely on the trust deposit for repayment of the affected series
of new notes. 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. (Sections 1302 and 1304)
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 new notes 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 new notes. 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 new notes 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 new notes 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 new notes any
differently than if we did not make the deposit and just repaid such new
notes ourselves.
If we accomplish covenant defeasance, the following provisions of the
indenture with respect to the affected series of new notes would no longer
apply:
. Our promises regarding conduct of our business previously described on
page 33 under "Certain Covenants."
. The condition regarding the treatment of Liens when we merge or engage in
similar transactions, as previously described on page 31 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 36 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 new notes 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 new notes 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
The new notes are not secured by any of our property or assets. Accordingly,
your ownership of new notes means you are one of our unsecured creditors. The
new notes are not subordinated to any of our other debt
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obligations and therefore they rank equally with all our other unsecured and
unsubordinated indebtedness. In addition, the new notes effectively will rank
junior to all liabilities of our subsidiaries.
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 new note on its due date.
. We do not pay interest on a new note within 30 days of its due date.
. We remain in breach of a covenant described on page 33 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 new notes 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
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 new notes may, but
will not necessarily, cause a default to occur under any other series of new
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 new notes of the affected series may declare the entire principal
amount of all the new notes 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 new notes will be
automatically accelerated, without any action by the trustee or any Holder. A
declaration of acceleration of maturity may be canceled by the holders of at
least a majority in principal amount of the new notes 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 new notes 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 new notes, 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 new notes 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.
. 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 new notes on or after its due date. (Section 508)
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"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 new notes, 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 existing banking relationships with The Chase
Manhattan Bank, including that one of its affiliates is a lender under our
revolving credit facility. In addition, Chase Securities Inc., an affiliate of
The Chase Manhattan Bank, was an initial purchaser of the initial notes.
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 new notes for
purposes of the Trust Indenture Act. 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.
Book-Entry Procedures and Transfer
General
The global security will be deposited with, or on behalf of, DTC and
registered in the name of Cede & Co., as nominee of DTC, or will remain in the
custody of the trustee pursuant to the FAST Balance Certificate Agreement
between DTC and the trustee.
Certain Book-Entry Procedures for the Global Security
The description of the operations and procedures of DTC set forth below is
provided solely as a matter of convenience. These operations and procedures
are solely within the control of DTC and are subject to change by it from time
to time. The information in this section concerning DTC has been obtained from
sources that we believe to be reliable, but we take no responsibility for its
accuracy or for these operations or procedures, and we urge you to contact DTC
directly to discuss these matters.
DTC is (i) a limited purpose trust company organized under the laws of the
State of New York, (ii) a "banking organization" within the meaning of the New
York Banking Law, (iii) a member of the Federal Reserve System, (iv) a
"clearing corporation" within the meaning of the Uniform Commercial Code, as
amended, and (v) a "clearing agency" registered pursuant to Section 17A of the
Securities Exchange Act of 1934. DTC was created to hold securities for its
participants (collectively, the "Participants") and facilitates the clearance
and settlement of securities transactions among Participants in deposited
securities through electronic book-entry changes to the accounts of its
Participants, thereby eliminating the need for physical transfer and delivery
of certificates. DTC's Participants include securities brokers and dealers,
banks and trust companies, clearing corporations and certain other
organizations. Indirect access to DTC's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively,
the "Indirect Participants") that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly. Investors who
are not Participants may beneficially own securities held by or on behalf of
DTC only through Participants or Indirect Participants.
We expect that pursuant to procedures established by DTC, ownership of the
new notes will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by DTC (with respect to the
interests of Participants) and the records of Participants and the Indirect
Participants (with respect to the interests of persons other than
Participants).
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The laws of some jurisdictions may require that certain purchasers of
securities take physical delivery of such securities in definitive form.
Accordingly, the ability to transfer interests in the new notes represented by
a global security to such persons may be limited. In addition, because DTC can
act only on behalf of its Participants, who in turn act on behalf of persons
who hold interests through Participants, the ability of a person having an
interest in new notes represented by a global security to pledge or transfer
such interest to persons or entities that do not participate in DTC's system,
or to otherwise take actions in respect of such interest, may be affected by
the lack of a physical definitive security in respect of such interest.
So long as DTC or its nominee is the registered owner of a global security,
DTC or such nominee, as the case may be, will be considered the sole owner or
holder of the new notes represented by the global security for all purposes
under the indenture. Except as provided above, owners of beneficial interests
in a global security will not be entitled to have new notes represented by
such global security registered in their names, will not receive or be
entitled to receive physical delivery of Certificated Securities and will not
be considered the owners or holders thereof under the indenture for any
purpose, including with respect to the giving of any direction, instruction or
approval to the trustee thereunder. Accordingly, each holder owning a
beneficial interest in a global security must rely on the procedures of DTC
and, if such holder is not a Participant or an Indirect Participant, on the
procedures of the Participant through which such holder owns its interest, to
exercise any rights of a Holder of new notes under the indenture or such
global security. We understand that under existing industry practice, in the
event that we request any action of holders of new notes, or a holder that is
an owner of a beneficial interest in a global security desires to take action
that DTC, as the Holder of such global security, is entitled to take, DTC
would authorize the Participants to take such action and the Participants
would authorize holders owning through such Participants to take such action
or would otherwise act upon the instruction of such holders. Neither we nor
the trustee will have any responsibility or liability for any aspect of the
records relating to or payments made on account of new notes by DTC, or for
maintaining, supervising or reviewing any records of DTC relating to such new
notes.
Payments with respect to the principal of, premium, if any, and interest on
any new notes represented by a global security registered in the name of DTC
or its nominee on the applicable record date will be payable by the trustee to
or at the direction of DTC or its nominee in its capacity as the registered
Holder of the global security representing such new notes under the indenture.
Under the terms of the indenture, we and the trustee may treat the persons in
whose name the new notes, including the global security, are registered as the
owners thereof for the purpose of receiving payment thereon and for any and
all other purposes whatsoever. Accordingly, neither we nor the trustee has or
will have any responsibility or liability for the payment of such amounts to
owners of beneficial interests in a global security, including principal,
premium, if any, and interest. We believe, however, that it is currently the
policy of DTC to immediately credit the accounts of the relevant Participants
with such payments, in amounts proportionate to their respective holdings of
beneficial interests in the relevant security as shown on the records of DTC.
Payments by the Participants and the Indirect Participants to the owners of
beneficial interests in a global security will be governed by standing
instructions and customary industry practice and will be the responsibility of
the Participants or the Indirect Participants and DTC.
Neither we nor the trustee will be liable for any delay by DTC or any
Participant or Indirect Participant in identifying the beneficial owners of
the related new notes and each such person may conclusively rely on, and will
be protected in relying on, instructions from DTC for all purposes (including
with respect to the registration and delivery, and the respective principal
amounts, of the new notes to be issued).
We have been informed by DTC that its management is aware that some computer
applications, systems and the like for processing data ("Systems") that are
dependent upon calendar dates, including dates before, on, and after January
1, 2000, may encounter "Year 2000 problems." We have also been informed by DTC
that it has informed its Participants and other members of the financial
community (the "Industry") that it has developed and is implementing a program
so that its Systems, as they relate to the timely payment of distributions
(including principal and income payments) to securityholders, book-entry
deliveries and settlement of trades within DTC ("DTC Services"), continue to
function appropriately. According to DTC, this program includes a technical
assessment and a remediation plan, each of which is complete. Additionally,
DTC has informed us that its plan includes a testing phase, which is expected
to be completed within appropriate time frames.
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However, we have been informed by DTC that its ability to perform properly
its services is also dependent upon other parties, including but not limited
to issuers and their agents, as well as third party vendors from whom DTC
licenses software and hardware, and third party vendors on whom DTC relies for
information or the provision of services, including telecommunications and
electrical utility service providers, among others. DTC has informed us that
it is contacting (and will continue to contact) third party vendors from whom
DTC acquires services to: (i) impress upon them the importance of such
services being Year 2000 compliant; and (ii) determine the extent of their
efforts for Year 2000 remediation (and, as appropriate, testing) of their
services. In addition, DTC has informed us that it is in the process of
developing such contingency plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to the Industry for informational purposes only and is not intended
to serve as a representation, warranty or contract modification of any kind.
PLAN OF DISTRIBUTION
This prospectus, as it may be amended or supplemented from time to time, may
be used by Participating Broker-Dealers in connection with resales of new
notes received in exchange for initial notes where such initial notes were
acquired as a result of market-making activities or other trading activities.
Each Participating Broker-Dealer that receives new notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such new notes.
Marriott will not receive any proceeds from any sale of new notes by broker-
dealers. New notes received by broker-dealers for their own account pursuant
to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the new notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from
any such broker-dealer or the purchasers of any such new notes. Any
Participating Broker-Dealer that acquired initial notes as a result of market
making activities or other trading activities and who resells new notes that
were received by it pursuant to the exchange offer and any broker or dealer
that participates in a distribution of such new notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of new notes and any commission or concessions received by any
such persons may be deemed to be underwriting compensation under the
Securities Act. The letter of transmittal states that, by acknowledging that
it will deliver and by delivering a prospectus, a Participating Broker-Dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
LEGAL MATTERS
The validity of the new notes will be passed upon for us by our Law
Department. Certain federal income tax matters will be passed upon for us by
Gibson, Dunn & Crutcher LLP, Washington, D.C. 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.
INDEPENDENT AUDITORS
The financial statements and schedules 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 herein in
reliance upon the authority of said firm as experts in giving such reports.
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$400,000,000
Exchange Offer
Marriott International, Inc.
$200,000,000 6 5/8% Series A Notes due 2003
$200,000,000 6 7/8% Series B Notes due 2005
PROSPECTUS
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PART II--INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. 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.
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 21. Exhibits and Financial Statement Schedules.
(a) Exhibits
<TABLE>
<C> <S>
3.1 Amended and Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 2 to the Form 8-A/A of the Company
filed on April 3, 1998)
3.2 Amended and Restated Bylaws of the Company (incorporated by reference to
Exhibit 3.3 to the Company's Form 10-K for the fiscal year ended January
1, 1999)
4.1 Rights Agreement, dated as of March 27, 1998, between the Company and the
Bank of New York, as Rights Agent (incorporated by reference to Exhibit 1
to the Form 8-A/A of the Company filed on April 3, 1998)
4.2 Indenture between the Company and The Chase Manhattan Bank, as trustee,
dated as of November 16, 1998 (incorporated by reference to Exhibit 4.1
to the Company's Form 10-K for the fiscal year ended January 1, 1999)
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
4.3 Exchange and Registration Rights Agreement between the Company and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Chase Securities,
Inc., Goldman, Sachs & Co., and Salomon Smith Barney dated as of November
16, 1998
5.1 Opinion of Marriott International, Inc.'s Law Department regarding the
legal validity of the securities being registered for issuance
8.1 Opinion of Gibson, Dunn & Crutcher LLP regarding certain federal income
tax matters
12.1 Statement of Computation of Ratio of Earnings to Fixed Charges
(incorporated by reference to Exhibit 12 to the Company's Form 10-K for
the fiscal year ended January 1, 1999)
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Marriott International, Inc.'s Law Department (included in its
opinion filed as Exhibit 5.1 hereto)
23.3 Consent of Gibson, Dunn & Crutcher LLP (included in its opinion filed as
Exhibit 8.1 hereto)
24.1 Powers of Attorney (included on the signature page hereto)
25.1 Statement of eligibility of trustee under the indenture, on Form T-1
</TABLE>
(b) Financial Statement Schedules
Schedules are omitted because of the absence of conditions under which they
are required under the pertinent portion of the instructions for Form S-4.
(c) Opinion Materially Relating to the Transaction
None.
Item 22. Undertakings.
(1) The undersigned hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or 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.
(2) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suite 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 counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(3) The undersigned registrant hereby undertakes that (1) for the 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 on 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 and (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 the time shall be deemed to be the initial bona fide offering
thereof.
II-2
<PAGE>
(4) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(5) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and 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 March 25, 1999.
Marriott International, Inc.
/s/ J.W. Marriott, Jr.
By: _________________________________
J.W. Marriott, Jr.
Chairman of the Board and
Chief Executive Officer
POWERS 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 connection therewith, 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 date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ J.W. Marriott, Jr. Chairman of the Board and March 25, 1999
______________________________________ Chief Executive Officer
J.W. Marriott, Jr. and Director (Principal
Executive Officer)
/s/ Arne M. Sorenson Executive Vice President March 25, 1999
______________________________________ and Chief Financial
Arne M. Sorenson Officer (Principal
Financial Officer)
/s/ Stephen E. Riffee Vice President--Finance March 25, 1999
______________________________________ and Chief Accounting
Stephen E. Riffee Officer (Principal
Accounting Officer)
/s/ Richard E. Marriott Director March 25, 1999
______________________________________
Richard E. Marriott
Director
______________________________________
Henry Cheng Kar Shun
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Gilbert M. Grosvenor Director March 25, 1999
______________________________________
Gilbert M. Grosvenor
/s/ Floretta Dukes McKenzie Director March 25, 1999
______________________________________
Floretta Dukes McKenzie
/s/ Harry J. Pearce Director March 25, 1999
______________________________________
Harry J. Pearce
/s/ W. Mitt Romney Director March 25, 1999
______________________________________
W. Mitt Romney
/s/ Roger W. Sant Director March 25, 1999
______________________________________
Roger W. Sant
/s/ William J. Shaw Director March 25, 1999
______________________________________
William J. Shaw
/s/ Lawrence M. Small Director March 25, 1999
______________________________________
Lawrence M. Small
</TABLE>
II-5
<PAGE>
Exhibit 4.3
---------------------------------
Exchange and Registration Rights Agreement
Dated As of November 16, 1998
among
Marriott International, Inc.
and
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
Chase Securities Inc.
Goldman, Sachs & Co.
Salomon Smith Barney
---------------------------------
<PAGE>
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
This Exchange and Registration Rights Agreement (the "Agreement") is made
and entered into this 16th day of November, 1998, between Marriott
International, Inc., a Delaware corporation (the "Company"), and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Chase Securities, Inc., Goldman, Sachs &
Co. and Salomon Smith Barney (the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement, dated November
16, 1998, among the Company and the Initial Purchasers (the "Purchase
Agreement"), which provides for the sale by the Company to the Initial
Purchasers of an aggregate of $200 million principal amount of the Company's
6.625% Series A Notes due November 15, 2003 (the "Series A Notes") and $200
million principal amount of the Company's 6.875% Series B Notes due November 15,
2005 (the "Series B Notes")(the Series A Notes and the Series B Notes,
collectively, the "Securities"). In order to induce the Initial Purchasers to
enter into the Purchase Agreement, the Company has agreed to provide to the
Initial Purchasers and their direct and indirect transferees the registration
rights set forth in this Agreement. The execution of this Agreement is a
condition to the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms shall
have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from time to
--------
time.
"1934 Act" shall mean the Securities Exchange Act of l934, as amended from
--------
time to time.
"Closing Date" shall mean the Closing Time as defined in the Purchase
------------
Agreement.
"Company" shall have the meaning set forth in the preamble and shall also
-------
include the Company's successors.
"Depositary" shall mean The Depository Trust Company, or any other
----------
depositary appointed by the Company, provided, however, that such depositary
must have an address in the Borough of Manhattan, in the City of New York.
"Effective Date" shall mean the date on which the Exchange Offer
--------------
Registration Statement is declared effective under the 1933 Act by the SEC.
<PAGE>
"Exchange Offer" shall mean the exchange offer by the Company of Exchange
--------------
Securities for Registrable Securities pursuant to Section 2.1 hereof.
"Exchange Offer Registration" shall mean a registration under the 1933 Act
---------------------------
effected pursuant to Section 2.1 hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
-------------------------------------
registration statement on Form S-4 (or, if applicable, on another appropriate
form), and all amendments and supplements to such registration statement,
including the Prospectus contained therein, all exhibits thereto and all
documents incorporated by reference therein.
"Exchange Period" shall have the meaning set forth in Section 2.1 hereof.
---------------
"Exchange Securities" shall mean the 6.625% Series A Notes due November 15,
------------------- -----
2003 and the 6.875% Series B Notes due November 15, 2005, each issued by the
Company under the Indenture containing terms identical to the Series A Notes and
the Series B Notes, respectively, in all material respects (except for
references to certain interest rate provisions, restrictions on transfers and
restrictive legends), to be offered to Holders of Securities in exchange for
Registrable Securities pursuant to the Exchange Offer.
"Holder" shall mean the Initial Purchasers, for so long as it owns any
------
Registrable Securities, and each of its successors, assigns and direct and
indirect transferees who become registered owners of Registrable Securities
under the Indenture and each Participating Broker-Dealer that holds Exchange
Securities for so long as such Participating Broker-Dealer is required to
deliver a prospectus meeting the requirements of the 1933 Act in connection with
any resale of such Exchange Securities.
"Indenture" shall mean the Indenture relating to the Securities, dated as
---------
of November 16, 1998, between the Company and The Chase Manhattan Bank, as
----------- ------------------------
trustee, as the same may be amended, supplemented, waived or otherwise modified
from time to time in accordance with the terms thereof.
"Initial Purchasers" shall have the meaning set forth in the preamble.
------------------
"Majority Holders" shall mean the Holders of a majority of the aggregate
----------------
principal amount of Outstanding (as defined in the Indenture) Registrable
Securities; provided that whenever the consent or approval of Holders of a
--------
specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by the Company and other obligors on the Securities
or any Affiliate (as defined in the Indenture) of the Company shall be
disregarded in determining whether such consent or approval was given by the
Holders of such required percentage amount.
<PAGE>
"Participating Broker-Dealer" shall mean any of Merrill Lynch, Pierce,
---------------------------
Fenner & Smith Incorporated and any other broker-dealer which makes a market in
the Securities and exchanges Registrable Securities in the Exchange Offer for
Exchange Securities.
"Person" shall mean an individual, partnership (general or limited),
------
corporation, limited liability company, trust or unincorporated organization, or
a government or agency or political subdivision thereof.
"Private Exchange" shall have the meaning set forth in Section 2.1 hereof.
----------------
"Private Exchange Securities" shall have the meaning set forth in Section
---------------------------
2.1 hereof.
"Prospectus" shall mean the prospectus included in a Registration
----------
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including any such
prospectus supplement with respect to the terms of the offering of any portion
of the Registrable Securities covered by a Shelf Registration Statement, and by
all other amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.
"Purchase Agreement" shall have the meaning set forth in the preamble.
------------------
"Registrable Securities" shall mean the Securities and, if issued, the
----------------------
Private Exchange Securities; provided, however, that Securities and, if issued,
the Private Exchange Securities, shall cease to be Registrable Securities when
(i) a Registration Statement with respect to such Securities shall have been
declared effective under the 1933 Act and such Securities shall have been
disposed of pursuant to such Registration Statement, (ii) such Securities have
been sold to the public pursuant to Rule l44 (or any similar provision then in
force, but not Rule 144A) under the 1933 Act, (iii) such Securities shall have
ceased to be outstanding or (iv) the Exchange Offer is consummated (except in
the case of Securities purchased from the Company and continued to be held by
the Initial Purchasers).
"Registration Expenses" shall mean any and all expenses incident to
---------------------
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, or National Association of Securities Dealers,
Inc. (the "NASD") registration and filing fees, (ii) all fees and expenses
incurred in connection with compliance with state securities or blue sky laws,
(iii) all expenses of any Persons in preparing or assisting in preparing, word
processing, printing and distributing any Registration Statement, any
Prospectus, any amendments or supplements thereto, any underwriting agreements,
securities sales agreements and other documents relating to the performance of
and compliance with this Agreement, (iv) all rating agency fees, (vi) the fees
and disbursements of counsel for the Company and of the independent public
accountants of
<PAGE>
the Company, including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance, (vi) the
fees and expenses of the Trustee, and any escrow agent or custodian, (vii) the
reasonable fees and expenses of counsel to the Initial Purchasers in connection
therewith, (ix) the reasonable fees and disbursements of Gibson, Dunn & Crutcher
LLP, special counsel representing the Holders of Registrable Securities and (x)
any fees and disbursements of the underwriters customarily required to be paid
by issuers or sellers of securities and the fees and expenses of any special
experts retained by the Company in connection with any Registration Statement,
but excluding underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of Registrable Securities by a Holder.
"Registration Statement" shall mean any registration statement of the
----------------------
Company which covers any of the Exchange Securities or Registrable Securities
pursuant to the provisions of this Agreement, and all amendments and supplements
to any such Registration Statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission or any successor
---
agency or government body performing the functions currently performed by the
United States Securities and Exchange Commission.
"Series A Notes" shall have the meaning set forth in the preamble.
--------------
"Series B Notes" shall have the meaning set forth in the preamble.
--------------
"Shelf Registration" shall mean a registration effected pursuant to Section
------------------
2.2 hereof.
"Shelf Registration Statement" shall mean a "shelf" registration statement
----------------------------
of the Company pursuant to the provisions of Section 2.2 of this Agreement which
covers all of the Registrable Securities or all of the Private Exchange
Securities on an appropriate form under Rule 415 under the 1933 Act, or any
similar rule that may be adopted by the SEC, and all amendments and supplements
to such registration statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Special Counsel" shall mean Gibson, Dunn & Crutcher LLP, in its capacity
---------------
as special counsel representing the Holders of Registrable Securities.
"Trustee" shall mean the trustee with respect to the Securities under the
-------
Indenture.
<PAGE>
2. Registration Under the 1933 Act.
-------------------------------
2.1 Exchange Offer. The Company shall, for the benefit of the Holders, at
--------------
the Company's cost, (A) prepare and not later than 135 calendar days following
the Closing Date, file with the SEC an Exchange Offer Registration Statement on
an appropriate form under the 1933 Act with respect to a proposed Exchange Offer
and the issuance and delivery to the Holders, in exchange for the Registrable
Securities (other than Private Exchange Securities), of a like principal amount
of Exchange Securities, (B) use its reasonable efforts to cause the Exchange
Offer Registration Statement to be declared effective under the 1933 Act (the
"Effective Date") within 180 calendar days of the Closing Date, (C) use its
reasonable efforts to keep the Exchange Offer Registration Statement effective
until the closing of the Exchange Offer and (D) use its reasonable efforts to
cause the Exchange Offer to be consummated not later than 45 calendar days
following the Effective Date. The Exchange Securities will be issued under the
Indenture. Upon the effectiveness of the Exchange Offer Registration Statement,
within the agreed-upon time limits, the Company shall commence the Exchange
Offer, it being the objective of such Exchange Offer to enable each Holder
eligible and electing to exchange Registrable Securities for Exchange Securities
(assuming that such Holder (a) is not an affiliate of the Company within the
meaning of Rule 405 under the 1933 Act, (b) is not a broker-dealer tendering
Registrable Securities acquired directly from the Company for its own account,
(c) acquired the Exchange Securities in the ordinary course of such Holder's
business and (d) has no arrangements or understandings with any Person to
participate in the Exchange Offer for the purpose of distributing the Exchange
Securities) to transfer such Exchange Securities from and after their receipt
without any limitations or restrictions under the 1933 Act and under state
securities or blue sky laws.
In order to participate in the Exchange Offer, each Holder must represent
to the Company at the time of the Consummation of the Exchange Offer that it (a)
is not an affiliate of the Company within the meaning of Rule 405 under the 1933
Act, (b) is not a broker-dealer tendering Registrable Securities acquired
directly from the Company for its own account, (c) acquired the Exchange
Securities in the ordinary course of such Holder's business and (d) has no
arrangements or understandings with any Person to participate in the Exchange
Offer for the purpose of distributing the Exchange Securities.
In connection with the Exchange Offer, the Company shall:
(a) mail as promptly as practicable to each Holder a copy of the
Prospectus forming part of the Exchange Offer Registration Statement, together
with an appropriate letter of transmittal and related documents;
(b) keep the Exchange Offer open for acceptance for a period of not
less than 30 calendar days after the date notice thereof is mailed to the
Holders (or longer at the option of the Company or if required by applicable
law) (such period referred to herein as the "Exchange Period");
<PAGE>
(c) utilize the services of the Depositary for the Exchange Offer;
(d) permit Holders to withdraw tendered Registrable Securities at any
time prior to 5:00 p.m. (Eastern Time), on the last business day of the Exchange
Period, by sending to the institution specified in the notice, a telegram,
telex, facsimile transmission or letter setting forth the name of such Holder,
the principal amount of Registrable Securities delivered for exchange, and a
statement that such Holder is withdrawing such Holder's election to have such
Securities exchanged;
(e) notify each Holder that any Registrable Security not tendered will
remain outstanding and continue to accrue interest, but will not retain any
rights under this Agreement (except in the case of the Initial Purchasers and
Participating Broker-Dealers as provided herein); and
(f) otherwise comply in all respects with all applicable laws relating
to the Exchange Offer.
If, prior to consummation of the Exchange Offer, the Initial Purchasers
hold any Securities acquired by them and having the status of an unsold
allotment in the initial distribution, the Company upon the request of any
Initial Purchasers shall, simultaneously with the delivery of the Exchange
Securities in the Exchange Offer, issue and deliver to such Initial Purchasers
in exchange (the "Private Exchange") for the Securities held by such Initial
Purchasers, a like principal amount of debt securities of the Company on a
senior basis, that are identical (except that such securities shall bear
appropriate transfer restrictions) to the Exchange Securities (the "Private
Exchange Securities").
The Exchange Securities and the Private Exchange Securities shall be issued
under (i) the Indenture or (ii) an indenture identical in all material respects
to the Indenture and which, in either case, has been qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"), or is exempt from such
qualification and shall provide that the Exchange Securities shall not be
subject to the transfer restrictions set forth in the Indenture but that the
Private Exchange Securities shall be subject to such transfer restrictions. The
Indenture or such indenture shall provide that the Exchange Securities, the
Private Exchange Securities and the Securities shall vote and consent together
on all matters as one class and that none of the Exchange Securities, the
Private Exchange Securities or the Securities will have the right to vote or
consent as a separate class on any matter. The Private Exchange Securities shall
be of the same series as and the Company shall use all commercially reasonable
efforts to have the Private Exchange Securities bear the same CUSIP numbers as
the Exchange Securities. The Company shall not have any liability under this
Agreement solely as a result of such Private Exchange Securities not bearing the
same CUSIP numbers as the Exchange Securities.
As soon as practicable after the close of the Exchange Offer and/or the
Private Exchange, as the case may be, the Company shall:
<PAGE>
(i) accept for exchange all Registrable Securities duly tendered and
not validly withdrawn pursuant to the Exchange Offer in accordance with the
terms of the Exchange Offer Registration Statement and the letter of
transmittal which shall be an exhibit thereto;
(ii) accept for exchange all Securities properly tendered pursuant to
the Private Exchange;
(iii) deliver to the Trustee for cancellation all Registrable
Securities so accepted for exchange; and
(iv) cause the Trustee promptly to authenticate and deliver Exchange
Securities or Private Exchange Securities, as the case may be, to each
Holder of Registrable Securities so accepted for exchange in a principal
amount equal to the principal amount of the Registrable Securities of such
Holder so accepted for exchange.
Interest on each Exchange Security and Private Exchange Security will
accrue from the last date on which interest was paid on the Registrable
Securities surrendered in exchange therefor or, if no interest has been paid on
the Registrable Securities, from the date of original issuance. The Exchange
Offer and the Private Exchange shall not be subject to any conditions, other
than (i) that the Exchange Offer or the Private Exchange, or the making of any
exchange by a Holder, does not violate applicable law or any applicable
interpretation of the staff of the SEC, (ii) the due tendering of Registrable
Securities in accordance with the Exchange Offer and the Private Exchange, (iii)
that each Holder of Registrable Securities exchanged in the Exchange Offer shall
have represented that all Exchange Securities to be received by it shall be
acquired in the ordinary course of its business and that at the time of the
consummation of the Exchange Offer it shall have no arrangement or understanding
with any person to participate in the distribution (within the meaning of the
1933 Act) of the Exchange Securities and shall have made such other
representations as may be reasonably necessary under applicable SEC rules,
regulations or interpretations to render the use of Form S-4 or other
appropriate form under the 1933 Act available and (iv) that no action or
proceeding shall have been instituted or threatened in any court or by or before
any governmental agency with respect to the Exchange Offer or the Private
Exchange which, in the Company's judgment, would reasonably be expected to
impair the ability of the Company to proceed with the Exchange Offer or the
Private Exchange. The Company shall inform the Initial Purchasers of the names
and addresses of the Holders to whom the Exchange Offer is made, and the Initial
Purchasers shall have the right to contact such Holders and otherwise facilitate
the tender of Registrable Securities in the Exchange Offer.
<PAGE>
2.2 Shelf Registration. If
------------------
(i) because of any changes in law, SEC rules or regulations or applicable
interpretations thereof by the staff of the SEC occurring after the Closing
Date, the Company is not permitted to effect the Exchange Offer as contemplated
by Section 2.1 hereof,
(ii) for any other reason the Exchange Offer Registration Statement is not
declared effective within 180 calendar days following the original issue of the
Registrable Securities or the Exchange Offer is not consummated within 45
calendar days after the Effective Date (provided that if the Exchange Offer
Registration Statement shall be declared effective after such 180-day period or
if the Exchange Offer shall be consummated after such 45-day period, then the
Company's obligations under this clause (ii) arising from failure of the
Exchange Offer Registration Statement to be declared effective within such
180-day period or failure of the Exchange Offer to be consummated within such
45-day period, respectively, shall terminate),
(iii) any of the Initial Purchasers requests within 90 calendar days after
the consummation of the Exchange Offer with respect to Notes or Private Exchange
Notes which are not eligible to be exchanged for Exchange Notes in the Exchange
Offer and are held by it following the consummation of the Exchange Offer, or
(iv) because of any changes in law, SEC rules or regulations or applicable
interpretations thereof by the staff of the SEC occurring after the Closing
Date, a Holder is not permitted to participate in the Exchange Offer or does not
receive fully transferable Exchange Securities pursuant to the Exchange Offer,
then in case of each of clauses (i) through (iv) the Company shall, at its cost:
(a) No later than the later of (i) 180 calendar days after the date
of the original issue of the Registrable Securities and (ii) 60 calendar
days after so required or requested pursuant to this Section 2.2, file with
the SEC, and thereafter shall use its reasonable efforts to cause to be
declared effective no later than 60 calendar days after such filing is
made, a Shelf Registration Statement relating to the offer and sale of the
Registrable Securities by the Holders from time to time in accordance with
the methods of distribution elected by the Majority Holders participating
in the Shelf Registration and set forth in such Shelf Registration
Statement.
(b) Subject to the provisions of the fourth paragraph of Section
2.5, use its reasonable efforts to keep the Shelf Registration Statement
continuously effective in order to permit the Prospectus forming part
thereof to be usable by Holders for a period of two years from the Closing
Date, or for such shorter period that will terminate when all Registrable
Securities covered by the Shelf Registration Statement have been sold
pursuant to the Shelf Registration Statement or cease to be outstanding or
otherwise to be Registrable Securities (the
<PAGE>
"Effectiveness Period"); provided, however, that the Effectiveness Period
in respect of the Shelf Registration Statement shall be extended to the
extent required to permit dealers to comply with the applicable prospectus
delivery requirements of Rule 174 under the 1933 Act and as otherwise
provided herein.
(c) Notwithstanding any other provisions hereof, use its reasonable
efforts to ensure that (i) any Shelf Registration Statement and any
amendment thereto, at the time each such registration statement or
amendment thereto becomes effective, and any Prospectus as of the date
thereof forming part thereof and any supplement thereto complies in all
material respects with the 1933 Act and the rules and regulations
thereunder, (ii) any Shelf Registration Statement and any amendment thereto
does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading and
(iii) any Prospectus forming part of any Shelf Registration Statement, and
any supplement to such Prospectus (as amended or supplemented from time to
time)(each, as of the date thereof), does not include an untrue statement
of a material fact or omit to state a material fact necessary in order to
make the statements, in light of the circumstances under which they were
made, not misleading; provided that clauses (ii) and (iii) of this
paragraph shall not apply to any information provided by the Initial
Purchasers or any Holder.
The Company further agrees, if necessary, to supplement or amend the Shelf
Registration Statement, as required by Section 3(b) below, and to furnish to the
Holders of Registrable Securities copies of any such supplement or amendment
promptly after its being used or filed with the SEC.
No Holder may use the Shelf Registration Statement unless it (i) provides
the Company with the information required by Section 3(v) of this Agreement on a
timely basis and (ii) agrees in writing to be bound by this Agreement, including
the indemnification provisions.
2.3 Expenses. The Company shall pay all Registration Expenses in connection
--------
with the registration pursuant to Section 2.1 or 2.2. Each Holder shall pay all
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such Holder's Registrable Securities pursuant to the
Shelf Registration Statement.
2.4. Effectiveness. An Exchange Offer Registration Statement pursuant to
-------------
Section 2.1 hereof or a Shelf Registration Statement pursuant to Section 2.2
hereof will not be deemed to have become effective unless it has been declared
effective by the SEC; provided, however, that if, after it has been declared
effective, the offering of Registrable Securities pursuant to an Exchange Offer
Registration Statement or a Shelf Registration Statement is interfered with by
any stop order, injunction or other order or requirement of the SEC or any other
governmental agency or court, such Registration Statement will be deemed not to
have
<PAGE>
become effective during the period of such interference, until the offering of
Registrable Securities pursuant to such Registration Statement may legally
resume.
2.5 Interest. The Company agrees that in the event that either (a) the
--------
Exchange Offer Registration Statement is not filed with the Commission on or
prior to the 135th calendar day following the date of original issue of the
Securities, (b) the Exchange Offer Registration Statement has not been declared
effective on or prior to the 180th calendar day following the date of original
issue of the Securities, (c) the Exchange Offer is not consummated on or prior
to the 45th calendar day following the Effective Date or (d) a Shelf
Registration Statement is not filed on or prior to the deadline for such filing
pursuant to Section 2.2(a) or is not declared effective on or prior to the 60th
calendar day following the date of filing of the Shelf Registration Statement
(each such event referred to in clauses (a) through (d) above, a "Registration
Default"), the interest rate borne by the Securities shall be increased
("Additional Interest") immediately upon occurrence of a Registration Default by
one-quarter of one percent (0.25%) per annum with respect to the first 90-day
period while one or more Registration Defaults is continuing, which rate will
increase by one-quarter of one percent (0.25%) at the beginning of each
subsequent 90-day period while one or more Registration Defaults is continuing,
until all Registration Defaults have been cured, provided that the maximum
aggregate increase in the interest rate will in no event exceed one-half of one
percent (0.50%) per annum, and provided further that Additional Interest shall
accrue only for those days that a Registration Default occurs and is continuing.
Such Additional Interest shall be calculated based on a year consisting of 360
days comprised of twelve 30-day months. Following the cure of all Registration
Defaults the accrual of Additional Interest will cease and the interest rate
will revert to the original rate. Additional Interest shall not be payable with
respect to the Registration Defaults described in clauses (a), (b) and (c) above
for any period during which a Shelf Registration Statement is effective and
usable by the Holders.
If the Shelf Registration Statement is unusable by the Holders for any
reason, then the interest rate borne by the Securities will be increased by
one-quarter of one percent (0.25%) per annum of the principal amount of the
Securities for the first 90-day period (or portion thereof) that such Shelf
Registration Statement ceases to be usable, which rate shall be increased by an
additional one-quarter of one percent (0.25%) per annum of the principal amount
of the Securities at the beginning of each subsequent 90-day period, provided
that the maximum aggregate increase in the interest rate will in no event exceed
one-half of one percent (0.50%) per annum. Any amounts payable under this
paragraph shall also be deemed "Additional Interest" for purposes of this
Agreement. Upon the Shelf Registration Statement once again becoming usable, the
interest rate borne by the Securities will be reduced to the original interest
rate if the Company is otherwise in compliance with this Agreement at such time.
Additional Interest shall be computed based on the actual number of days elapsed
in each 90-day period in which the Shelf Registration Statement is unusable.
The Company shall notify the Trustee within three business days after each
and every date on which an event occurs in respect of which Additional Interest
is required to be paid (an "Event Date"). Additional Interest shall be paid by
depositing with the Trustee, in
<PAGE>
trust, for the benefit of the Holders of Registrable Securities, on or before
the applicable semiannual interest payment date, immediately available funds in
sums sufficient to pay the Additional Interest then due. The Additional Interest
due shall be payable on each interest payment date to the record Holder of
Securities entitled to receive the interest payment to be paid on such date as
set forth in the Indenture. Each obligation to pay Additional Interest shall be
deemed to accrue from and including the day following the applicable Event Date.
Notwithstanding anything else contained herein, no Additional Interest
shall be payable in relation to the applicable Shelf Registration Statement or
the related prospectus if (i) such Additional Interest is payable solely as a
result of (x) the filing of a post-effective amendment to such Shelf
Registration Statement to incorporate annual audited or, if required by the
rules and regulations under the 1933 Act, quarterly unaudited financial
information with respect to the Company where such post-effective amendment is
not yet effective and needs to be declared effective to permit Holders to use
the related prospectus or (y) for a period not to exceed an aggregate of 45 days
in any calendar year, other material events or developments with respect to the
Company that would need to be described in such Shelf Registration Statement or
the related prospectus and (ii) in the case of clause (y), the Company is
proceeding promptly and in good faith to amend or supplement such Shelf
Registration Statement and related prospectus to describe such events; provided,
however, that in no event shall the Company be required to disclose the business
purpose for such suspension if the Company determines in good faith that such
business purpose must remain confidential. Notwithstanding the foregoing, the
Company shall not be required to pay Additional Interest with respect to the
Securities to Holder if the failure arises from the Company' failure to file, or
cause to become effective, a Shelf Registration Statement within the time
periods specified in this Section 2 by reason of the failure of such Holder to
provide such information as (i) the Company may reasonably request, with
reasonable prior written notice, for use in the Shelf Registration Statement or
any prospectus included therein to the extent the Company reasonably determine
that such information is required to be included therein by applicable law, (ii)
the NASD or the Commission may request in connection with such Shelf
Registration Statement or (iii) is required to comply with the agreements of
such Holder as contained herein to the extent compliance thereof is necessary
for the Shelf Registration Statement to be declared effective.
3. Registration Procedures.
-----------------------
In connection with the obligations of the Company with respect to
Registration Statements pursuant to Sections 2.1 and 2.2 hereof, the Company
shall:
(a) prepare and file with the SEC a Registration Statement, within the
relevant time period specified in Section 2, on the appropriate form under the
1933 Act, which form (i) shall be selected by the Company, (ii) shall, in the
case of a Shelf Registration, be available for the sale of the Registrable
Securities by the selling Holders thereof, (iii) shall, at the time of
effectiveness, comply as to form in all material respects with the requirements
of the applicable form and include or incorporate by reference all financial
statements required by the SEC to be filed therewith or incorporated by
reference therein, and (iv) shall comply in all material
<PAGE>
respects with the requirements of Regulation S-T under the 1933 Act, and use its
best efforts to cause such Registration Statement to become effective and remain
effective in accordance with Section 2 hereof;
(b) subject to the limitations contained in the fourth paragraph of Section
2.5, prepare and file with the SEC such amendments and post-effective amendments
to each Registration Statement as may be necessary under applicable law to keep
such Registration Statement effective for the applicable period; and cause each
Prospectus to be supplemented by any required prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 (or any similar provision then in
force) under the 1933 Act and comply with the provisions of the 1933 Act, the
1934 Act and the rules and regulations thereunder applicable to them with
respect to the disposition of all securities covered by each Registration
Statement during the applicable period in accordance with the intended method or
methods of distribution by the selling Holders thereof (including sales by any
Participating Broker-Dealer)(provided, however, that nothing contained herein
shall imply that the Company is liable for any action or inaction of any Holder
(including any Participating Broker-Dealer));
(c) in the case of a Shelf Registration, (i) notify each Holder of
Registrable Securities, at least five business days prior to filing, that a
Shelf Registration Statement with respect to the Registrable Securities is being
filed and advising such Holders that the distribution of Registrable Securities
will be made in accordance with the method selected by the Majority Holders
participating in the Shelf Registration; (ii) furnish to each Holder of
Registrable Securities and to each underwriter of an underwritten offering of
Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder or underwriter may
reasonably request, including financial statements and schedules and, if the
Holder so requests, all exhibits in order to facilitate the public sale or other
disposition of the Registrable Securities; and (iii) hereby consent to the use
of the Prospectus or any amendment or supplement thereto by each of the selling
Holders of Registrable Securities in connection with the offering and sale of
the Registrable Securities covered by the Prospectus or any amendment or
supplement thereto;
(d) use its reasonable efforts to register or qualify the Registrable
Securities under all applicable state securities or "blue sky" laws of such
jurisdictions as any Holder of Registrable Securities covered by a Registration
Statement and each underwriter of an underwritten offering of Registrable
Securities shall reasonably request by the time the applicable Registration
Statement is declared effective by the SEC, and do any and all other acts and
things which may be reasonably necessary or advisable to enable each such Holder
and underwriter to consummate the disposition in each such jurisdiction of such
Registrable Securities owned by such Holder; provided, however, that the Company
shall not be required to (i) qualify as a foreign corporation or as a dealer in
securities in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(d), or (ii) take any action which would subject
it to general service of process or taxation in any such jurisdiction where it
is not then so subject;
<PAGE>
(e) notify promptly Special Counsel and, with respect to clauses (i),
(iii), (iv) and (v) of this paragraph only each Holder of Registrable Securities
under a Shelf Registration or any Participating Broker-Dealer who has notified
the Company that it is utilizing the Exchange Offer Registration Statement as
provided in paragraph (f) below and, if requested by such Holder or
Participating Broker-Dealer, confirm such advice in writing promptly (i) when a
Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of any request by the
SEC or any state securities authority for post-effective amendments and
supplements to a Registration Statement and Prospectus or for additional
information after the Registration Statement has become effective, (iii) of the
issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of a Registration Statement or the initiation of
any proceedings for that purpose, (iv) of the happening of any event or the
discovery of any facts during the period a Shelf Registration Statement is
effective which makes any statement made in such Registration Statement or the
related Prospectus untrue in any material respect or which requires the making
of any changes in such Registration Statement or Prospectus in order to make the
statements therein not misleading, (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities or the Exchange Securities, as the case may be, for sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose and (vi) of any determination by the Company that a post-effective
amendment to such Registration Statement would be appropriate;
(f) in the case of the Exchange Offer Registration Statement (i) include in
the Exchange Offer Registration Statement a section entitled "Plan of
Distribution" which section shall be reasonably acceptable to Merrill Lynch on
behalf of the Participating Broker-Dealers, and which shall contain a summary
statement of the positions taken or policies made by the staff of the SEC with
respect to the potential "underwriter" status of any broker-dealer that holds
Registrable Securities acquired for its own account as a result of market-making
activities or other trading activities and that will be the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act) of Exchange Securities to be
received by such broker-dealer in the Exchange Offer, whether such positions or
policies have been publicly disseminated by the staff of the SEC or such
positions or policies, in the reasonable judgment of Merrill Lynch on behalf of
the Participating Broker-Dealers and its counsel, represent the prevailing views
of the staff of the SEC, including a statement that any such broker-dealer who
receives Exchange Securities for Registrable Securities pursuant to the Exchange
Offer may be deemed a statutory underwriter and must deliver a prospectus
meeting the requirements of the 1933 Act in connection with any resale of such
Exchange Securities, (ii) furnish to each Participating Broker-Dealer who has
delivered to the Company the notice referred to in Section 3(e), without charge,
as many copies of each Prospectus included in the Exchange Offer Registration
Statement, including any preliminary prospectus, and any amendment or supplement
thereto, as such Participating Broker-Dealer may reasonably request, (iii)
hereby consent to the use of the Prospectus forming part of the Exchange Offer
Registration Statement or any amendment or supplement thereto, by any Person
subject to the prospectus delivery requirements of the SEC, including all
Participating Broker-Dealers, in connection with the sale or transfer of the
Exchange Securities
<PAGE>
covered by the Prospectus or any amendment or supplement thereto, and (iv)
include in the transmittal letter or similar documentation to be executed by an
exchange offeree in order to participate in the Exchange Offer (x) the following
provision:
"If the exchange offeree is a broker-dealer holding Registrable Securities
acquired for its own account as a result of market-making activities or
other trading activities, it will deliver a prospectus meeting the
requirements of the 1933 Act in connection with any resale of Exchange
Securities received in respect of such Registrable Securities pursuant to
the Exchange Offer;" and
(y) a statement to the effect that by a broker-dealer making the acknowledgment
described in clause (x) and by delivering a Prospectus in connection with the
exchange of Registrable Securities, the broker-dealer will not be deemed to
admit that it is an underwriter within the meaning of the 1933 Act; and
(g) (i) in the case of an Exchange Offer, furnish counsel for the Initial
Purchasers and (ii) in the case of a Shelf Registration, furnish Special Counsel
copies of any comment letters received from the SEC or any other request by the
SEC or any state securities authority for amendments or supplements to a
Registration Statement and Prospectus or for additional information;
(h) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment;
(i) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities upon request, and each underwriter, if any, without
charge, at least one conformed copy of each Registration Statement and any
post-effective amendment thereto, including financial statements and schedules
(without documents incorporated therein by reference and all exhibits thereto,
unless requested);
(j) in the case of a Shelf Registration, cooperate with the selling Holders
of Registrable Securities to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
restrictive legends; and enable such Registrable Securities to be in such
denominations (consistent with the provisions of the Indenture) and registered
in such names as the selling Holders or the underwriters, if any, may reasonably
request at least three business days prior to the closing of any sale of
Registrable Securities;
(k) in the case of a Shelf Registration, upon the occurrence of any event
or the discovery of any facts, each as contemplated by Sections 3(e)(iv) and
3(e)(v) hereof, as promptly as practicable after the occurrence of such an
event, use its best efforts to prepare a supplement or post-effective amendment
to the Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
<PAGE>
as thereafter delivered to the purchasers of the Registrable Securities or
Participating Broker-Dealers, such Prospectus will not contain at the time of
such delivery any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or will remain so
qualified. At such time as such public disclosure is otherwise made or the
Company determines that such disclosure is not necessary, in each case to
correct any misstatement of a material fact or to include any omitted material
fact, the Company agrees promptly to notify each Holder of such determination
and to furnish each Holder such number of copies of the Prospectus as amended or
supplemented, as such Holder may reasonably request;
(l) [reserved];
(m) obtain a CUSIP number for all Exchange Securities, Private
Exchange Securities or Registrable Securities, as the case may be, not later
than the effective date of a Registration Statement, and provide the Trustee
with printed certificates for the Exchange Securities, Private Exchange
Securities or the Registrable Securities, as the case may be, in a form eligible
for deposit with the Depositary;
(n) (i) cause the Indenture to be qualified under the TIA in
connection with the registration of the Exchange Securities or Registrable
Securities, as the case may be, (ii) cooperate with the Trustee and the Holders
to effect such changes to the Indenture as may be required for the Indenture to
be so qualified in accordance with the terms of the TIA and (iii) execute, and
use its best efforts to cause the Trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents required to
be filed with the SEC to enable the Indenture to be so qualified in a timely
manner;
(o) in the case of a Shelf Registration, enter into agreements
(including, if requested, an underwriting agreement in customary form containing
customary representations, warranties, terms and conditions, provided that the
Company shall not be required to enter into such agreement more than once with
respect to all the Registrable Securities and may delay entering into such
agreement until the consummation of any underwritten public offering which the
Company may have then undertaken) and take all other customary and appropriate
actions in order to expedite or facilitate the disposition of such Registrable
Securities and in such connection whether or not an underwriting agreement is
entered into and whether or not the registration is an underwritten
registration.
(p) in the case of a Shelf Registration or if a Prospectus is required
to be delivered by any Participating Broker-Dealer in the case of an Exchange
Offer, make available for inspection by a representative of the Holders of the
Registrable Securities, any underwriters participating in any disposition
pursuant to a Shelf Registration Statement, any Participating Broker-Dealer and
Special Counsel, all relevant financial and other records, pertinent corporate
documents and properties of the Company reasonably requested by any such
persons, and use reasonable efforts to have the respective officers, directors,
employees, and any other agents of the Company supply all relevant information
reasonably requested by any such representative,
<PAGE>
underwriter, Special Counsel or accountant in connection with a Registration
Statement, in each case, as is customary for similar due diligence
investigations;
(q) a reasonable time prior to the filing of any Exchange Offer
Registration Statement or Shelf Registration Statement, any Prospectus forming a
part thereof, any amendment to an Exchange Offer Registration Statement or Shelf
Registration Statement or amendment or supplement to such Prospectus, provide
copies of such document to the Initial Purchasers, Special Counsel and to the
underwriter or underwriters of an underwritten offering of Registrable
Securities, if any, and make such changes in any Shelf Registration Statement,
any Prospectus forming a part thereof or amendment or supplement thereto prior
to the filing thereof as Special Counsel may reasonably request within three
business days of being sent a draft thereof and make the representatives of the
Company available for discussion of such documents as shall be reasonably
requested by the Initial Purchasers;
(r) [reserved];
(s) in the case of a Shelf Registration, use its best efforts to cause
the Registrable Securities to be rated by the appropriate rating agencies, if so
requested by the Majority Holders, or if requested by the underwriter or
underwriters of an underwritten offering of Registrable Securities, if any;
(t) otherwise comply with all applicable rules and regulations of the
SEC and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering at least 12 months which shall
satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158 thereunder;
(u) cooperate and assist in any filings required to be made with the
National Association of Securities Dealers, Inc. ("NASD") and
(v) upon consummation of an Exchange Offer or a Private Exchange,
obtain a customary opinion of counsel to the Company addressed to the Trustee
for the benefit of all Holders of Registrable Securities participating in the
Exchange Offer or Private Exchange, and which includes an opinion that (i) the
Company has duly authorized, executed and delivered the Exchange Securities
and/or Private Exchange Securities, as applicable, and the related indenture,
and (ii) each of the Exchange Securities and related indenture constitute a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its respective terms (with customary exceptions).
In the case of a Shelf Registration Statement, the Company may (as a
condition to the participation of such Holder and the beneficial owner of
Registrable Securities in the Shelf Registration) require each Holder of
Registrable Securities to furnish to the Company prior to the 30th day following
the Company's filing of such request for information with the Trustee for
delivery to the Holders such information regarding the Holder and the proposed
distribution
<PAGE>
by such Holder or beneficial owner of such Registrable Securities as the Company
may from time to time reasonably request in writing.
In the case of a Shelf Registration Statement, each Holder agrees that,
upon receipt of any notice from the Company of the happening of any event or the
discovery of any facts, each of the kind described in Section 3(e)(v) hereof,
such Holder will forthwith discontinue disposition of Registrable Securities
pursuant to a Registration Statement until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 3(k) hereof,
and, if so directed by the Company, such Holder will deliver to the Company (at
its expense) all copies in such Holder's possession, other than permanent file
copies then in such Holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice.
If any of the Registrable Securities covered by any Shelf Registration
Statement are to be sold in an underwritten offering, the underwriter or
underwriters and manager or managers that will manage such offering will be
selected by the Majority Holders of such Registrable Securities included in such
offering and shall be acceptable to the Company. No Holder of Registrable
Securities may participate in any underwritten registration hereunder unless
such Holder (a) agrees to sell such Holder's Registrable Securities on the basis
provided in any underwriting arrangements approved by the persons entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
4. Indemnification; Contribution.
-----------------------------
(a) The Company agrees to indemnify and hold harmless the Initial
Purchasers, each Holder, each Participating Broker-Dealer, each Person who
participates as an underwriter (any such Person being an "Underwriter") and each
Person, if any, who controls any Holder or Underwriter within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement (or any amendment or supplement thereto) pursuant to which
Exchange Securities or Registrable Securities were registered under the
1933 Act, including all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading,
or arising out of any untrue statement or alleged untrue statement of a
material fact contained in any Prospectus (or any amendment or supplement
thereto) or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
<PAGE>
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid
in settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
4(d) below) any such settlement is effected with the written consent of the
Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by any indemnified
party), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense
is not paid under subparagraph (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
- -------- -------
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by the
Holder or Underwriter expressly for use in a Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto).
(b) Each Holder severally, but not jointly, agrees to indemnify and
hold harmless the Company, the Initial Purchasers, each Underwriter and the
other selling Holders, and each of their respective directors and officers, and
each Person, if any, who controls the Company, the Initial Purchasers, any
Underwriter or any other selling Holder within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section 4(a)
hereof, as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Shelf Registration Statement
(or any amendment thereto) or any Prospectus included therein (or any amendment
or supplement thereto) in reliance upon and in conformity with written
information with respect to such Holder furnished to the Company by such Holder
expressly for use in the Shelf Registration Statement (or any amendment thereto)
or such Prospectus (or any amendment or supplement thereto); provided, however,
that no such Holder shall be liable for any claims hereunder in excess of the
amount of net proceeds received by such Holder from the sale of Registrable
Securities pursuant to such Shelf Registration Statement.
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action or proceeding commenced
against it in respect of which indemnity may be sought hereunder, but failure so
to notify an indemnifying party shall not relieve such indemnifying party from
any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any
<PAGE>
liability which it may have otherwise than on account of this indemnity
agreement. An indemnifying party may participate at its own expense in the
defense of such action; provided, however, that counsel to the indemnifying
party shall not (except with the consent of the indemnified party) also be
counsel to the indemnified party. In no event shall the indemnifying party or
parties be liable for the fees and expenses of more than one counsel (in
addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 4 (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 4(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
(e) If the indemnification provided for in this Section 4 is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, in such proportion as is appropriate to reflect
the relative benefit received by the indemnified party, on the one hand, and the
indemnifying party, on the other hand, in connection with the Exchange Offer and
the Shelf Registration and the relative fault of the Company on the one hand and
the Holders and the Initial Purchasers on the other hand in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative fault of the Company on the one hand and the Holders and the
Initial Purchasers on the other hand shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Company, the Holders or the Initial Purchasers and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
<PAGE>
The Company, the Holders and the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to this Section 4 were determined
by pro rata allocation (even if the Initial Purchasers were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
4. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 4 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 4, no Initial Purchasers
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities sold by it were offered exceeds the amount
of any damages which such Initial Purchasers has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission.
No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 4, each Person, if any, who controls an
Initial Purchasers or Holder within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
Initial Purchasers or Holder, and each director of the Company, and each Person,
if any, who controls the Company within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act shall have the same rights to contribution as
the Company. The Initial Purchasers' respective obligations to contribute
pursuant to this Section 7 are several in proportion to the principal amount of
Securities set forth opposite their respective names in Schedule A to the
Purchase Agreement and not joint.
5. Miscellaneous.
-------------
5.1 [reserved]
----------
5.2 No Inconsistent Agreements. The Company has not entered into
--------------------------
and the Company will not after the date of this Agreement enter into any
agreement which is inconsistent with the rights granted to the Holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not and will
not for the term of this Agreement in any way conflict with the rights granted
to the holders of the Company's other issued and outstanding securities under
any such agreements.
5.3 Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or
<PAGE>
consents to departures from the provisions hereof may not be given unless the
Company has obtained the written consent of Holders of at least a majority in
aggregate principal amount of the outstanding Registrable Securities affected by
such amendment, modification, supplement, waiver or departure.
5.4 Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand delivery, registered first-
class mail, telex, telecopier, or any courier guaranteeing overnight delivery
(a) if to a Holder, at the most current address given by such Holder to the
Company by means of a notice given in accordance with the provisions of this
Section 5.4, which address initially is the address set forth in the Purchase
Agreement with respect to the Initial Purchasers; and (b) if to the Company,
initially at the Company's address set forth in the Purchase Agreement, and
thereafter at such other address of which notice is given in accordance with the
provisions of this Section 5.4.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; two business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications shall
be concurrently delivered by the person giving the same to the Trustee under the
Indenture, at the address specified in such Indenture.
5.5 Successor and Assigns. This Agreement shall inure to the
---------------------
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Purchase Agreement or the Indenture.
If any transferee of any Holder shall acquire Registrable Securities, in any
manner, whether by operation of law or otherwise, such Registrable Securities
shall be held subject to all of the terms of this Agreement, and by taking and
holding such Registrable Securities such person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement, including the restrictions on resale set forth in this Agreement
and, if applicable, the Purchase Agreement, and such person shall be entitled to
receive the benefits hereof.
5.6 Third Party Beneficiaries. The Initial Purchasers (even if the
-------------------------
Initial Purchasers are not Holders of Registrable Securities) shall be third
party beneficiaries to the agreements made hereunder between the Company, on the
one hand, and the Holders, on the other hand, and shall have the right to
enforce such agreements directly to the extent they deem such enforcement
necessary or advisable to protect their rights or the rights of Holders
hereunder. Each Holder of Registrable Securities shall be a third party
beneficiary to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers,
<PAGE>
on the other hand, and shall have the right to enforce such agreements directly
to the extent it deems such enforcement necessary or advisable to protect its
rights hereunder.
5.7. Specific Enforcement. Without limiting the remedies available
--------------------
to the Initial Purchasers and the Holders, the Company acknowledges that any
failure by the Company to comply with its obligations under Sections 2.1 through
2.4 hereof may result in material irreparable injury to the Initial Purchasers
or the Holders for which there is no adequate remedy at law, that it would not
be possible to measure damages for such injuries precisely and that, in the
event of any such failure, the Initial Purchasers or any Holder may obtain such
relief as may be required to specifically enforce the Company's obligations
under Sections 2.1 through 2.4 hereof.
5.8. [reserved]
----------
5.9 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
5.10 Headings. The headings in this Agreement are for convenience
--------
of reference only and shall not limit or otherwise affect the meaning hereof.
5.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
5.12 Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
MARRIOTT INTERNATIONAL, INC.
By: /s/ Carolyn B. Handlon
-------------------------
Name: Carolyn B. Handlon
Title: Vice President and Assistant Treasurer
Confirmed and accepted as
of the date first above
written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
CHASE SECURITIES INC.
GOLDMAN, SACHS & CO.
SALOMON SMITH BARNEY
BY: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Michael Santini
--------------------
Name: Michael Santini
Title: Vice President
<PAGE>
Exhibit 5.1
[Marriott Letterhead]
March 25, 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 $200,000,000 aggregate principal amount of its 6-5/8% Series A Notes due 2003
and up to $200,000,000 aggregate principal amount of its 6-7/8% Series B Notes
due 2005 (collectively, the "New Notes") on a Registration Statement on Form S-4
(the "Registration Statement") to be filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Act"). The New
Notes will be offered in exchange for like principal amounts of the Company's
6-5/8% Series A Notes due 2003 and 6-7/8% Series B Notes due 2005 (collectively,
the "Old Notes") pursuant to that certain Exchange and Registration Rights
Agreement between the Company and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Chase Securities, Inc., Goldman, Sachs & Co., and Salomon Smith
Barney dated as of November 16, 1998, which was executed in connection with the
private placement of the Old Notes. The New Notes 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").
We are familiar with the actions taken and to be taken by the Company in
connection with the offering of the New Notes. On the basis of such knowledge
and such investigations as we have deemed necessary or appropriate, we are of
the opinion that the New Notes have been duly authorized by the Company and,
when issued in exchange for the Old Notes pursuant to the Indenture and the
terms of the exchange offer described in the Registration Statement, will be
validly issued and will constitute legal and binding obligations of the Company.
Our opinions are subject to the assumptions and qualifications that (a) at the
time the New Notes are issued, the Registration Statement will be effective and
all applicable "Blue Sky" and state securities laws will have been complied
with; and (b) the Indenture shall have been qualified under the Trust Indenture
Act of 1939, as amended.
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 8.1
March 25, 1999
(202) 955-8500 C 58129-00058
Marriott International, Inc.
One Marriott Drive, Dept. 52/923.23
Washington, D.C. 20058
Re: Exchange of 6 5/8% Series A Notes Due 2003 and 6 7/8% Series B Notes
Due 2005
Ladies and Gentlemen:
We have acted as special counsel for Marriott International, Inc., a
Delaware corporation (the "Company"), in connection with the issuance by the
Company of its 6 5/8% Series A Notes Due 2003 and of its 6 7/8% Series B Notes
Due 2005 (collectively, the "Exchange Notes") in exchange for any and all of its
6 5/8% Series A Notes Due 2003 and any and all of its 6 7/8% Series B Notes Due
2005, respectively (collectively, the "Old Notes"). The terms of the Old Notes
and the Exchange Notes are described in the Prospectus of even date herewith
(the "Prospectus") and the operative documents described therein. The terms of
the Offering, which are set forth in the Prospectus, are incorporated herein by
reference.
In formulating our opinion as to the matters certified, we have examined
such documents as we have deemed appropriate, including the Prospectus, and we
have made such other legal and factual examinations as we have deemed necessary
or appropriate for purposes of this opinion. Our opinion relates only to the
federal income tax laws of the United States, and we express no opinion with
respect to other federal laws or with respect to the laws of any other
jurisdiction. No opinion is expressed on any matters other than those
specifically referred to herein.
Based upon the terms of the Offering, as set forth in the Prospectus, we
hereby confirm our opinion in the Prospectus described under the caption
"Certain Federal Income Tax Considerations".
This opinion is based on current provisions of the United States Internal
Revenue Code of 1986, as amended, the Treasury Regulations promulgated
thereunder (including proposed Treasury Regulations), published pronouncements
of the Internal Revenue Service, and case law, any of which may be changed at
any time with retroactive effect. Any variation or difference in the facts from
those set forth in the Prospectus or the operative documents described therein
may affect the conclusions stated herein.
We hereby consent to the use of our name and opinion under the captions
"Certain Federal Income Tax Considerations" and "Legal Matters".
Very Truly Yours,
GIBSON, DUNN & CRUTCHER LLP
<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.
Arthur Andersen LLP
Vienna, VA
March 25, 1999
<PAGE>
Exhibit 25.1
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
--------------------------------------------
Marriott International, Inc.
(Exact name of obligor as specified in its charter)
Delaware 52-0936594
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
Marriott Drive
Washington, D.C. 20058
(Address of principal executive offices) (Zip Code)
6 5/8% Series A Notes due 2003
-------------------------------------------
6 7/8% Series B Notes due 2005
-------------------------------------------
(Title of the indenture securities)
-------------------------------------------------------------------
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of Philadelphia and State of Pennsylvania, on the 15th day of March,
1999.
THE CHASE MANHATTAN BANK
By /s/ Joseph C. Progar
-----------------------------
Joseph C. Progar
Authorized Officer
- 3 -
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business September 30,
1998, in accordance with a call made by the Federal
Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Millions
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ................................................. $ 11,951
Interest-bearing balances ......................................... 4,551
Securities:
Held to maturity securities............................................. 1,740
Available for sale securities .......................................... 48,537
Federal funds sold and securities purchased under
agreements to resell .............................................. 29,730
Loans and lease financing receivables:
Loans and leases, net of unearned income ....... $127,379
Less: Allowance for loan and lease losses ...... 2,719
Less: Allocated transfer risk reserve .......... 0
--------
Loans and leases, net of unearned income,
allowance, and reserve ............................................ 124,660
Trading Assets ......................................................... 51,549
Premises and fixed assets (including capitalized
leases) ........................................................... 3,009
Other real estate owned ................................................ 272
Investments in unconsolidated subsidiaries and
associated companies .............................................. 300
Customers' liability to this bank on acceptances
outstanding ....................................................... 1,329
Intangible assets ...................................................... 1,429
Other assets ........................................................... 13,563
------
TOTAL ASSETS ........................................................... $292,620
==========
</TABLE>
- 4 -
<PAGE>
LIABILITIES
Deposits
In domestic offices .................................... $98,760
Noninterest-bearing ......................$39,071
Interest-bearing ......................... 59,689
------
In foreign offices, Edge and Agreement,
subsidiaries and IBF's ................................. 75,403
Noninterest-bearing ......................$ 3,877
Interest-bearing ......................... 71,526
------
Federal funds purchased and securities sold under agree-
ments to repurchase ......................................... 34,471
Demand notes issued to the U.S. Treasury .................... 1,000
Trading liabilities ......................................... 41,589
Other borrowed money (includes mortgage indebtedness and
obligations under capitalized leases):
With a remaining maturity of one year or less .......... 3,781
With a remaining maturity of more than one year
through three years ............................. 213
With a remaining maturity of more than three years ... 104
Bank's liability on acceptances executed and outstanding .... 1,329
Subordinated notes and debentures ........................... 5,408
Other liabilities ........................................... 12,041
TOTAL LIABILITIES ........................................... 274,099
-------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ............. 0
Common stock .............................................. 1,211
Surplus (exclude all surplus related to preferred stock).. 10,441
Undivided profits and capital reserves .................... 6,287
Net unrealized holding gains (losses) on available-for-sale
securities .................................... 566
Cumulative foreign currency translation adjustments ....... 16
TOTAL EQUITY CAPITAL ...................................... 18,521
--------
TOTAL LIABILITIES AND EQUITY CAPITAL ...................... $292,620
========
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR. )
-5-
