As filed with the Securities and Exchange Commission on May 31,
1995
Registration No. 33-58577
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
GLOBAL MARINE INC.
(Exact name of registrant as specified in its charter)
Delaware 95-1849298
(State or other jurisdiction of incorporation (IRS employer
or organization) identification number)
777 N. Eldridge Road
Houston, Texas 77079
(713) 596-5100
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
James L. McCulloch, Esq.
Vice President and General Counsel
Global Marine Inc.
777 N. Eldridge Road
Houston, Texas 77079
(713) 596-5100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE
PUBLIC: From time to time after the effective date of the
registration statement.
If the only securities being registered on this form are being
offered pursuant to dividend or interest reinvestment plans, please
check the following box. [ ]
If any of the securities being registered on this form are to
be offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, other than securities offered
only in connection with dividend or interest reinvestment plans,
check the following box. [X]
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.
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 MAY 31, 1995
PROSPECTUS
Global Marine Inc.
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
Global Marine Inc. (the "Company"), a Delaware corporation,
may offer from time to time (a) debt securities ("Debt
Securities"), which may be subordinated to other indebtedness of
the Company, (b) shares of preferred stock, $.01 par value per
share ("Preferred Stock"), or (c) shares of common stock, $.10 par
value per share ("Common Stock"), all having an aggregate initial
public offering price not to exceed $75,000,000 or the equivalent
thereof in one or more foreign currencies, foreign currency units,
or composite currencies. The Debt Securities, Preferred Stock, and
Common Stock are referred to herein collectively as the "Offered
Securities." The Offered Securities may be offered, separately or
as units with other Offered Securities in separate series in
amounts, at prices and on terms to be determined at or prior to the
time of sale.
The specific terms of the Offered Securities with respect to
which this Prospectus is being delivered will be set forth in an
accompanying supplement to this Prospectus (a "Prospectus
Supplement"), together with the terms of the offering of the
Offered Securities and the initial price and the net proceeds to
the Company from the sale thereof. The Prospectus Supplement will
include, with regard to the particular Offered Securities, the
following information: (a) in the case of Debt Securities, the
specific designation, aggregate principal amount, ranking,
authorized denomination, maturity, rate or method of calculation of
interest and dates for payment thereof, any exchangeability,
conversion, redemption, prepayment, or sinking fund provisions, the
currency or currency unit in which principal, premium, or interest
is payable, the designation of the trustee acting under the
applicable indenture, and the initial offering price; (b) in the
case of Preferred Stock, the designation, number of shares,
liquidation preference per share, initial public offering price,
dividend rate (or method of calculation thereof), dates on which
dividends shall be payable and dates from which dividends shall
accrue, any redemption or sinking fund provisions, and any
conversion or exchange rights; (c) in the case of Common Stock, the
number of shares and the terms of the offering and sale thereof;
and (d) in the case of all Offered Securities, whether such Offered
Securities will be offered separately or as a unit with other
Offered Securities. The Prospectus Supplement will also contain
information, where applicable, about material United States federal
income tax considerations relating to, and any listing on a
securities exchange of, the Offered Securities covered by such
Prospectus Supplement.
The Company may sell the Offered Securities directly, through
agents designated from time to time, or through underwriters or
dealers. If any agents, underwriters, or dealers are involved in
the sale of the Offered Securities, the names of such agents,
underwriters, or dealers and any applicable commissions or
discounts and the net proceeds to the Company from such sale will
be set forth in the applicable Prospectus Supplement.
AN INVESTMENT IN THE OFFERED SECURITIES INVOLVES A HIGH DEGREE
OF RISK. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE
MATTERS SET FORTH UNDER THE CAPTION "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF
OFFERED SECURITIES UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
The date of this Prospectus is , 1995
AVAILABLE INFORMATION
The Company is subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy statements
and other information with the Securities and Exchange Commission
(the "Commission"). These reports, proxy statements and other
information can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as
the regional offices of the Commission at Northwest Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60621-2511,
and 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of such materials also can be obtained by mail from the
Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. The Common
Stock is listed on the New York Stock Exchange, and such material
also can be inspected and copied at the offices of the New York
Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"), a
registration statement on Form S-3 (herein, together with all
amendments and exhibits thereto, the "Registration Statement") with
respect to the Offered Securities. This Prospectus, which
constitutes part of the Registration Statement, does not contain
all of the information set forth in the Registration Statement,
certain items of which are contained in the exhibits thereto, as
permitted by the rules and regulations of the Commission.
Statements made in this Prospectus as to the contents of any
contract, agreement or other document, the provisions of which are
required to be summarized or outlined herein, are not necessarily
complete; with respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description of
the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference. For further
information, reference is hereby made to the Registration Statement
and exhibits thereto, which can be inspected and copied at the
Commission's public reference facilities and regional offices
referred to above.
INCORPORATION BY REFERENCE
The following documents, which have been filed by the Company
with the Commission pursuant to the Exchange Act (File No. 1-5471),
are incorporated into this Prospectus by reference: (a) the
Company's Annual Report on Form 10-K for the year ended
December 31, 1994; (b) the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1995; (c) all other reports filed
pursuant to Section 13(a) or 15(d) of the Exchange Act since the
end of the last fiscal year covered by the Annual Report referred
to in (a) above; and (d) the description of the Company's Common
Stock contained in the Company's Registration Statement on Form 8-A
filed with the Commission pursuant to Section 12 of the Exchange
Act on March 6, 1989, as amended by Amendment No. 1 thereto on Form
8 filed with the Commission on March 15, 1989. In addition, all
documents filed by the Company pursuant to Section 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the
securities covered hereby shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the
date of filing of such documents.
Any statement in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for the purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company undertakes to provide, without charge, to each person,
including any beneficial owner, to whom a copy of this Prospectus
is delivered, upon written or oral request of such person, a copy
of any or all of the documents referred to above that have been or
may be incorporated by reference in the Prospectus (excluding exhibits
to such documents unless such exhibits are specifically incorporated
by reference). Requests should be directed to the Secretary,
Global Marine Inc., 777 N. Eldridge Road, Houston, Texas 77079,
telephone number (713) 596-5100.
THE COMPANY
Global Marine Inc., a Delaware corporation incorporated in
1964, is a major international offshore drilling contractor with a
modern, diversified fleet of 28 mobile offshore drilling rigs,
consisting of 24 cantilevered jackup drilling rigs, two
semisubmersible drilling rigs, one self-propelled drillship, and
one concrete island drilling system. The Company's marine drilling
business includes offshore contract drilling and drilling
management services on a turnkey basis. Substantially all of the
Company's offshore contract drilling operations are conducted by
Global Marine Drilling Company ("GMDC"), a wholly-owned subsidiary
of the Company. The remainder of the Company's marine drilling
business is conducted through Applied Drilling Technology Inc.
("ADTI"), a wholly-owned subsidiary of the Company, and Global
Marine Integrated Services-Europe, a division of GMDC, which
provide offshore drilling management services. The Company also
participates in oil and gas exploration, development and production
primarily in the United States through Challenger Minerals Inc.
("CMI"), which is a wholly-owned subsidiary of the Company. Unless
otherwise provided, the term "Company" as used in this Prospectus
refers to Global Marine Inc. and, unless the context otherwise
requires, to the Company's consolidated subsidiaries.
The Company's principal executive offices are located at 777
N. Eldridge Road, Houston, Texas 77079, and its telephone number is
(713) 596-5100.
RISK FACTORS
In addition to the other information contained in this
Prospectus and the Prospectus Supplement and incorporated herein by
reference, prospective investors should carefully consider the
matters set forth below before purchasing any of the Offered
Securities.
HIGH LEVERAGE
Notwithstanding the recapitalization of the Company in 1992,
the Company is highly leveraged. As a result, the Company will
require substantial cash flow to meet its semiannual interest
payment obligations on, and to repay at maturity the principal of,
the Company's 12-3/4% Senior Secured Notes due 1999 (the "Senior
Secured Notes"). The Company had total indebtedness of $225.0
million at December 31, 1994, as compared with total shareholders'
equity of $212.3 million.
LIMITED LIQUIDITY
The Company believes that it will be able to meet all of its
current obligations, including capital expenditures and debt
service, from its cash flow from operations and its cash, cash
equivalents and marketable securities for the foreseeable future.
The Company's ability, however, to pay the principal amount of the
Senior Secured Notes upon maturity in December 1999 from its cash
flow from operations would require a substantial improvement in
current industry conditions, including an increase in the average
dayrate earned by the Company's contract drilling fleet. The
Company may have available to it sources of liquidity other than
cash flow from the Company's contract drilling fleet, including
equity or debt financings, to retire or otherwise refinance the
principal amount of the Senior Secured Notes on or prior to
maturity.
RESTRICTIONS ON OPERATIONS
The ability of the Company to make scheduled semiannual
interest payments on, and retire at maturity the principal of, the
Senior Secured Notes is dependent on the Company's future
performance. The Company's performance is subject to financial,
economic and other factors, many of which are beyond its control.
In addition, the indenture under which the Senior Secured Notes
were issued (the "Senior Notes Indenture") imposes significant
operating and financial restrictions on the Company and provides
for the granting of a first lien in favor of the trustee under the
Senior Notes Indenture, for the benefit of the holders of Senior
Secured Notes, on a significant portion of the Company's material
assets. Such restrictions affect, and in many respects limit or
prohibit, among other things, the ability of the Company to incur
additional indebtedness, make investments in third parties, create
liens, sell assets, engage in mergers or acquisitions and pay
dividends or make other payments. Such restrictions currently
prohibit the issuance of certain of the securities, including the
Debt Securities, which may be offered by this Prospectus. The
highly leveraged position of the Company and the restrictive
covenants contained in and liens provided for under the Senior
Notes Indenture could significantly limit the ability of the
Company to respond to changing business or economic conditions or
to respond to substantial declines in operating results.
COMPETITION AND CURRENT OPERATING ENVIRONMENT
The offshore contract drilling industry is a highly
competitive and cyclical business. It is characterized by high
capital costs, long lead times for construction of new rigs and
numerous industry participants, none of which has a significant
market share but several of which have substantially greater
financial resources than the Company. Offshore drilling rigs have
few alternative uses and, because of their nature and the
environment in which they work, have relatively high maintenance
costs whether employed or unemployed. Contracts are awarded on a
competitive bid basis and, while an operator selecting a rig may
consider, among other things, quality of service and equipment, the
current oversupply of rigs has led to a market in which intense
price competition is the primary factor in determining which
qualified contractor is awarded a job. In addition, the Company's
offshore drilling business is subject to the usual risks associated
with having a limited number of customers for its services.
Each of the Company's drilling rigs is employed under an
individual contract which extends over a period of time covering
either a stated term or the time required to drill a well or number
of wells. While the final contract for employment of a rig is the
result of negotiations between the Company and the customer, most
contracts are awarded based upon competitive bidding. The rates
specified in drilling contracts are generally on a per day basis,
payable in U.S. dollars, and vary depending upon the equipment and
services supplied, the areas involved, the duration of the work,
competitive conditions and other variables. The contracts provide
for a basic dayrate during drilling operations, with no payments or
lower rates for periods of equipment breakdown, adverse weather, or
other conditions which may be beyond the control of the Company.
When a rig mobilizes to or demobilizes from an operating area, a
contract may provide for different dayrates, specified fixed
amounts, or for no payment during the redeployment period. As a
result of competitive conditions within the industry, the Company
is, in certain cases, paying the cost of mobilizing to and/or
demobilizing from an operating area, thus reducing further the
Company's operating margins. A contract may be terminated by the
customer if the rig is destroyed or lost, if drilling operations
are suspended for a specified period of time due to a breakdown of
major equipment or, in some cases, if other events occur that are
beyond the control of either party.
Since 1982, the offshore contract drilling market has been
adversely affected by a supply of offshore rigs that has
significantly exceeded the demand for such equipment as well as by
a reduced level of demand generally for such equipment. The
reduced demand principally has been the result of low oil and gas
prices, reductions in the exploration and development expenditures
of the Company's customers, and prolonged uncertainty and
volatility in oil and gas prices. Worldwide military, political
and economic events are likely to continue to cause oil and gas
price volatility. Factors which influence demand for the Company's
services include the ability of the Organization of Petroleum
Exporting Countries ("OPEC") to set and maintain production levels
and prices, the level of production by non-OPEC countries,
worldwide demand for oil and gas, and contract and other terms
sought by various governments to explore and develop oil, gas and
other hydrocarbons within their offshore waters. The Company
cannot predict the timing or extent of any improvement in the
industry or the future level of demand for the Company's drilling
services.
In the North Sea in 1994, volatile oil prices and the
reduction in U.K. tax relief for exploration and appraisal
expenditures continued to negatively affect demand for offshore
drilling services, resulting in low dayrates and utilization.
Recent events, however, have resulted in higher North Sea dayrates
as operators began contracting available rigs to carry out 1995
drilling programs. The North Sea averaged 76% utilization for the
year ended December 31, 1994, with an average of 64 rigs under
contract. In West Africa, dayrates and utilization appear to have
stabilized during 1994, despite political unrest and volatile oil
prices. In West Africa, average industry demand was reflected by
75% utilization for the year ended December 31, 1994, with an
average of 24 rigs under contract. The strength in the Gulf of
Mexico offshore drilling market in 1994, which was attributable to
higher natural gas prices and a growing number of drilling
prospects developed from enhanced seismic technology, has resulted
in an increase in the supply of rigs competing for jobs in the
Gulf, as contractors have relocated a significant number of rigs to
the Gulf from weak overseas markets. In the U.S. Gulf of Mexico,
average industry demand was reflected by 75% utilization for the
year ended December 31, 1994, with an average of 131 rigs under
contract. Natural gas prices weakened in late 1994. In response
to lower gas prices, demand for offshore drilling rigs in the U.S.
Gulf of Mexico declined from late December through mid-February.
Gas prices have strengthened recently and drilling demand in the
Gulf has stabilized. Unless gas prices continue to strengthen,
however, drilling activity in the Gulf is expected to remain
depressed.
LOSSES FROM OPERATIONS
The Company reported a net loss of $35.8 million for 1990,
and net income of $1.0 million for 1991 and $57.2 million for
1992. In 1993, the Company reported a net loss of $26.5 million.
The Company reported net income of $1.3 million for 1994. Net
income for 1992 is primarily attributable to (i) the proceeds from
the settlement of the Company's take-or-pay litigation, (ii) an
extraordinary gain on the extinguishment of debt in connection with
the recapitalization of the Company, (iii) the gain realized upon
the sale of one of the Company's High Island class jackup rigs,
and, (iv) a lesser extent, to the residual effect of a limited
number of drilling contracts with dayrates higher than those
subsequently prevailing. The Company would have reported a net
loss of $37.1 million in 1992 absent the settlement of its take-or-
pay litigation, the gain on extinguishment of debt and the rig sale
transaction. Despite reporting net income in 1994, the Company's
return to continued profitability will be dependent upon an
improvement in the utilization of and dayrates for its drilling
units. The Company cannot predict when or if any such return to
continued profitability will occur.
LIMITATION ON CASH FLOW FROM OIL AND GAS AND TURNKEY DRILLING
OPERATIONS
Cash flow from the Company's oil and gas operations and
turnkey drilling operations may be limited by certain factors. In
particular, net operating cash flow from the Company's largest gas
property, Matagorda Island Block 668, decreased from $12 million in
1992 to $5 million in 1993 and $4 million in 1994, reflecting the
fact that previous production imbalances between the Company and
its working interest partner in the property were settled in 1992.
Capital expenditures during 1994 for oil and gas activities were
equal to approximately two-thirds of the net cash flow from the
Company's oil and gas properties.
Cash flow from turnkey drilling operations is dependent on the
ability of the Company to obtain and perform successfully turnkey
contracts based on competitive bids and the number of such
contracts available for bid. Accordingly, the Company's turnkey
results of operations may vary widely from year to year.
DIVIDEND RESTRICTIONS
The Company is restricted from paying dividends (other than
stock dividends) on the Common Stock and Preferred Stock under the
terms of the Senior Notes Indenture. Accordingly, it is not
expected that the Company will declare or pay dividends in the
foreseeable future.
OPERATIONAL RISKS AND INSURANCE
The Company's operations are subject to the usual hazards
incident to drilling oil and gas wells, such as blowouts,
explosions, oil spills and fires, which can severely damage or
destroy equipment or cause environmental damage. The Company's
activities are also subject to perils peculiar to marine
operations, such as collision, grounding and damage or loss from
severe weather. These hazards can cause personal injury and loss
of life, severe damage to and destruction of property and
equipment, pollution or environmental damage and suspension of
operations.
The Company maintains insurance coverage against certain
general and marine public liability, including liability for
personal injury, in the amount of $200 million, subject to a self-
insured retention of no more than $250,000 per occurrence. In
addition, the Company's rigs and related equipment are separately
insured under hull and machinery policies against certain marine
and other perils, subject to a self-insured retention generally of
no more than $300,000 per occurrence. The Company's current
practice is to insure each rig for its market value. Although each
rig is insured for more than its carrying value, the Company's
insurance may not cover all costs that would be required to replace
each rig. The Company purchases the majority of the insurance
protecting it from the consequences of these hazards from the
marine and energy insurance market. This market historically is
cyclical in nature, and over the past few years it has experienced
a decline in capacity of available insurance resulting in increased
premiums and reduced coverage for the Company. In particular, as
a result of historical claims involving damage to the "spud cans"
(i.e., the bases of the legs of jackup rigs) of certain of the
Company's jackup drilling units, insurers have excluded business
interruption coverage with respect to spud can damage incurred
after May 3, 1992. Business interruption coverage applies only to
business interruptions as a result of a loss insured under hull and
machinery policies. The deductible for rig business interruption
claims is 30 days. The Company currently purchases rig business
interruption insurance with respect to all of its operating rigs;
however, the decision to insure a rig against business interruption
risks is dependent on a number of factors, including dayrate and
utilization levels, and no assurance can be made that the Company
will continue to insure any or all of its operating rigs against
such risks. All of the Company's rigs which are operated
internationally are presently insured against loss due to war,
including terrorism.
The Company is permitted under the terms of the rig mortgages
securing the Senior Secured Notes to change the limits on its
general and marine public liability insurance to $150 million, and
to be subject, with respect to such liability insurance and its
marine hull and machinery insurance, to self-insured retention
amounts of up to $1 million per occurrence. In addition, the
Senior Notes Indenture contains certain restrictions regarding the
use of insurance proceeds realized by the Company due to the loss
of any Company-owned rig, other than the Glomar Baltic I, the
Glomar Adriatic IX, the Glomar Adriatic X and the Glomar Adriatic
XI.
While the general and marine public liability policies cover
liability for pollution under most circumstances, they do not cover
liability for bringing a well under control following a blowout.
In the case of turnkey drilling operations, the Company maintains
insurance covering the cost of controlling the well, including any
environmental damage resulting therefrom, the cost of cleanup and
the cost of redrilling ("well control liabilities") in an amount
not less than $20 million per occurrence subject to a self-insured
retention of $200,000 per occurrence. Under turnkey drilling
contracts, the Company generally assumes the risk of cost of well
control, but on occasion the Company receives indemnification from
the customer for such risk in excess of the $20 million insurance
coverage. In many instances, however, the Company is not
indemnified by its customers for well control liabilities.
Furthermore, the Company is not insured against certain drilling
risks, such as stuck drill stem and loss of in-hole equipment not
arising from an insured peril, that could result in delays or
nonperformance of a turnkey drilling contract. In connection with
the Company's offshore contract drilling operations, the Company is
generally indemnified for any cost of well control by its
customers; however, in any event, the Company maintains insurance
against such liabilities in the amount of $50 million per
occurrence, subject to a self-insured retention of $200,000 per
occurrence.
The occurrence of a significant event, including pollution or
environmental damage, not fully insured or indemnified against or
the failure of a customer to meet its indemnification obligations,
could materially and adversely affect the Company's operations and
financial condition. Moreover, no assurance can be given that the
Company will be able to maintain adequate insurance in the future
at rates it considers reasonable. See "Governmental Regulation and
Environmental Matters."
FOREIGN OPERATIONS
A significant portion of the Company's revenues is
attributable to drilling operations in foreign countries. Such
activities accounted for 29%, 44% and 71% of the Company's total
revenues in 1994, 1993, and 1992, respectively. Risks associated
with the Company's operations in foreign areas include risks of war
and civil disturbances or other risks that may limit or disrupt
markets, expropriation, nationalization, renegotiation or
nullification of existing contracts, foreign exchange restrictions
and currency fluctuations, foreign taxation, changing political
conditions and foreign and domestic monetary policies. To date,
the Company has experienced no material loss as a result of any of
these factors. Foreign currency exchange losses have not been and
are not expected to be material because the Company's revenues are
primarily denominated in U.S. dollars, revenues in each foreign
currency are approximately equal to the Company's local expenses in
that currency, and the Company does not speculate in foreign
currencies or maintain significant foreign currency cash balances.
The ability of the Company to compete in the international drilling
market may be adversely affected by foreign governmental
regulations favoring or requiring the awarding of drilling
contracts to local contractors, or by regulations requiring foreign
contractors to employ citizens of, or purchase supplies from, a
particular jurisdiction. Furthermore, foreign governmental
regulations, which may in the future become applicable to the
industry served by the Company, could reduce demand for the
Company's services, or such regulations could directly affect the
Company's ability to compete for customers.
GOVERNMENTAL REGULATION AND ENVIRONMENTAL MATTERS
The Company's business is affected by changes in public policy
and by federal, state, foreign and local laws and regulations
relating to the energy industry. The adoption of laws and
regulations curtailing exploration and development drilling for oil
and gas for economic, environmental and other policy reasons
adversely affects the Company's operations by limiting available
drilling and other opportunities in the energy service industry.
The Company's operations are subject to numerous federal,
state and local laws and regulations controlling the discharge of
materials into the environment or otherwise relating to the
protection of the environment. For example, the Company, as an
operator of mobile offshore drilling units in navigable U.S. waters
and certain offshore areas, including the Outer Continental Shelf,
is liable for damages and for the cost of removing oil spills for
which it may be held responsible, subject to certain limitations.
The Company's operations may involve the use or handling of
materials that may be classified as environmentally hazardous
substances. Laws and regulations protecting the environment have
generally become more stringent, and may in certain circumstances
impose "strict liability," rendering a person liable for
environmental damage without regard to negligence or fault. The
Company does not believe that environmental regulations have had
any material adverse effect on its capital expenditures, results of
operations or competitive position to date, and does not presently
anticipate that any material expenditures will be required to
enable it to comply with existing laws and regulations. It is
possible, however, that modification of existing regulations or the
adoption of new regulations in the future, particularly with
respect to environmental and safety standards, could have such a
material adverse effect on the Company's operations.
The U.S. Oil Pollution Act of 1990 ("OPA '90") and similar
legislation enacted in Texas, Louisiana and other coastal states
address oil spill prevention and control and significantly expand
liability exposure across all spectrums of the oil and gas
industry. The Company is of the opinion that it maintains
sufficient insurance coverage to respond to the added exposures.
OPA '90 also mandated increases in the amounts of financial
responsibility that must be certified with respect to mobile
offshore drilling units and offshore facilities (e.g., oil and gas
production platforms, among others) located in U.S. waters.
Operators of mobile offshore drilling units, together with
operators of vessels, must provide evidence of financial
responsibility based on a tonnage formula, which, in the Company's
case, would not exceed $15 million for its largest rig located in
U.S. waters. The Company has complied with the requirement by self
insuring by providing evidence of adequate U.S. - based net worth.
The Company's inability to comply with the rule in the future,
however, could have a material adverse effect on its operations and
financial condition. During 1994, 56% of the Company's contract
drilling revenues were attributable to operations in U.S. waters,
and, as of March 31, 1995, 13 of the Company's 25 rigs then in
service were located in U.S. waters.
Under OPA '90, operators of offshore facilities will be
required to certify evidence of financial responsibility in the
amount of $150 million. The Department of the Interior ("DOI") is
responsible for promulgating regulations implementing the new
financial responsibility requirements with respect to offshore
facilities, and its regulations are not expected to be finalized
until later this year. The Minerals Management Service of the DOI
issued an Advance Notice of Proposed Rulemaking in 1993 which
contemplated regulations for offshore facilities similar to the
Coast Guard regulations. The DOI solicited comments from the
offshore oil industry with respect to the proposed regulations,
which will also be subject to review and comment before adoption.
The DOI regulations, with the regulations promulgated by the Coast
Guard, could adversely affect CMI, the Company's wholly-owned oil
and gas producing subsidiary, as well as GMDC and ADTI. CMI
presently operates an offshore production platform, and ADTI's
business and GMDC's operations in the Gulf of Mexico are largely
dependent on oil and gas companies' drilling activities which, in
turn, ultimately depend on their ability to operate offshore
facilities. The Company cannot predict the exact nature or effect
of any regulations promulgated under OPA '90.
AVAILABILITY OF FEDERAL INCOME TAX BENEFITS
As of December 31, 1994, the Company had approximately $1.2
billion of net operating loss carryforwards ("NOLs"), expiring from
1999 to 2009, and $29.0 million in investment tax credit
carryforwards ("Credits") expiring from 1995 to 2000. The NOLs and
the Credits are subject to review and potential disallowance by the
Internal Revenue Service ("IRS") upon audit of the federal income
tax returns of the Company. Section 382 of the Internal Revenue
Code of 1986, as amended, may impair the future availability of the
NOL's and the Credits if there is a change in ownership of more
than 50% of the Company's voting securities, including future
changes in the ownership of the voting securities. This
limitation, if it applied, would limit the utilization of the NOL's
and the Credits in each taxable year to an amount equal to the
product of the federal long-term tax-exempt bond rate prescribed
monthly by the IRS and the fair market value of all the Company's
stock at the time of the ownership change. The interpretation of
Section 382 is subject to numerous uncertainties. Accordingly,
while the Company believes its loss carryforwards are available to
it without limitation, such availability is not certain, nor is it
certain that such carryforwards, if presently available without
limitation, will continue to be available without limitation.
For alternative minimum tax ("AMT") purposes, NOLs can be used
to offset no more than 90% of alternative minimum taxable income
("AMTI"). Thus, to the extent the NOLs of the Company are used to
offset its regular taxable income, the Company nevertheless will be
required to pay AMT on 10% of its AMTI at the AMT rate of 20%.
CHANGE OF CONTROL PROVISION WITH RESPECT TO SENIOR SECURED NOTES
Under the Senior Notes Indenture, in the event of a Change of
Control of the Company, as defined in the Senior Notes Indenture,
the Company would be required, subject to certain conditions, to
offer to purchase all outstanding Senior Secured Notes at a price
equal to 101% of principal amount, plus accrued interest. A Change
in Control includes a person becoming the beneficial owner of more
than 40% of the voting stock of the Company, certain mergers or
consolidations of the Company or transfers or leases of all or
substantially all of its assets, or a change in the majority of the
members of the Board of Directors in any two year period. As of
April 1, 1995, the Company would not have sufficient funds
available to purchase all of the outstanding Senior Secured Notes
were they to be tendered in response to an offer made as a result
of a Change of Control. If, following a Change of Control, the
Company has insufficient funds to purchase all of the outstanding
Senior Secured Notes tendered pursuant to such an offer, an event
of default with respect to the Senior Secured Notes would occur.
The Company has no other debt securities outstanding.
POTENTIAL RESTRICTIONS ON SALES OF CAPITAL STOCK TO NON-U.S.
CITIZENS
Pursuant to U.S. maritime laws, sales of interests in and
control of U.S. flag vessels owned by U.S. citizens to non-citizens
(including through the sale of stock) require the approval of the
Secretary of Transportation, acting through the United States
Maritime Administration ("MARAD"). Such transfers would include
those resulting in a majority of the outstanding capital stock
being held by non-U.S. citizens. Under recently promulgated
regulations (except while the United States is at war, during
periods of national emergency, or if transfers to non-U.S. citizens
would be contrary to declared U.S. policy), all of such transfers
of stock are granted approval by MARAD, so long as such transfers
are not done in conjunction with a transfer of a rig out of U.S.
registry. If an interest in or control of a U.S.-flag vessel were
to be transferred to a non-U.S. citizen in violation of U.S.
maritime laws without MARAD approval, to the extent such approval
is required, such transfer would be void, and the United States
would have the power to seek forfeiture of the Company's rigs, seek
civil penalties (including fines) and seek enforcement of certain
criminal penalties.
USE OF PROCEEDS
Unless otherwise indicated in a Prospectus Supplement with
respect to the proceeds from the sale of the particular Offered
Securities to which such Prospectus Supplement relates, the net
proceeds to be received by the Company from the sale of the Offered
Securities will be used for general corporate purposes, which may
include, but are not limited to, capital expenditures and the
financing of acquisitions.
RATIOS OF EARNINGS TO FIXED CHARGES
AND EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the Company's consolidated
ratio of earnings to fixed charges for each of the years 1994,
1993, 1992, 1991, and 1990. There were no shares of Preferred
Stock outstanding during any of the periods indicated; therefore,
the combined ratio of earnings to fixed charges and preferred stock
dividends would have been the same as below for all periods
indicated.
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges 1.05 .23 1.67 1.07 .42
</TABLE>
For purposes of the foregoing ratios (i) earnings represent income
before income taxes and cumulative effect of accounting change plus
fixed charges excluding interest capitalized, and (ii) fixed
charges represent interest expense, interest capitalized and the
portion of rental expense attributable to interest. Earnings for
the year ended December 31, 1992 include a $55.0 million gain
attributable to the settlement of take-or-pay litigation and an
$11.0 million gain on the sale of an offshore drilling rig.
Excluding the gains from the litigation settlement and sale of the
rig, the ratio of earnings before fixed charges to fixed charges
for the year ended December 31, 1992 would have been 0.23, and the
additional amount of earnings required to cover fixed charges would
have been $35.4 million. The Company's earnings before fixed
charges were inadequate on an historical basis to cover fixed
charges for the years ended December 31, 1993 and 1990. The
additional amount of earnings required to cover fixed charges would
have been $26.2 million for 1993 and $34.5 million for 1990.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities
sets forth certain general terms and provisions of the Debt Securities
to which any Prospectus Supplement may relate. The particular terms
of the Debt Securities offered by any Prospectus Supplement and the
extent, if any, to which such general provisions may apply to the
Debt Securities so offered will be described in the Prospectus
Supplement relating to such Debt Securities. Accordingly, for a
description of the terms of a particular issue of Debt Securities,
reference must be made to both the Prospectus Supplement relating
thereto and to the following description.
The Debt Securities will be general obligations of the
Company and may be subordinated to "Senior Indebtedness" (as
defined below) of the Company to the extent set forth in the
Prospectus Supplement relating thereto. See "Subordination" below.
Debt Securities will be issued under an indenture (the "Indenture")
between the Company and one or more commercial banks or trust
companies to be selected as trustees (collectively, the "Trustee").
A copy of the form of Indenture has been filed as an exhibit to the
Registration Statement filed with the Commission. The following
discussion of certain provisions of the Indenture is a summary only
and does not purport to be a complete description of the terms and
provisions of the Indenture. Accordingly, the following discussion
is qualified in its entirety by reference to the provisions of the
Indenture, including the definition therein of terms used below
with their initial letters capitalized.
The Debt Securities of any series will not be secured or
guaranteed except to the extent set forth in the applicable
Prospectus Supplement. The amount of outstanding indebtedness of
the Company to which Debt Securities of any series are expressly
subordinated in right of payment or to which Debt Securities of any
series are effectively subordinated as a result of such other
indebtedness being secured, or being the obligation of one or more
subsidiaries of the Company having substantial assets that are not
obligors of the Debt Securities of such series, will be described
in the applicable Prospectus Supplement.
GENERAL
The Indenture does not limit the aggregate principal amount of
Debt Securities that can be issued thereunder. The Debt Securities
may be issued in one or more series as may be authorized
from time to time by the Company. Reference is made to the
applicable Prospectus Supplement for the following terms of the
Debt Securities of the series with respect to which such Prospectus
Supplement is being delivered:
(a) The title of the Debt Securities of the series;
(b) Any limit on the aggregate principal amount of the Debt
Securities of the series that may be authenticated and delivered
under the Indenture;
(c) The date or dates on which the principal and premium, if
any, with respect to the Debt Securities of the series are
payable;
(d) The rate or rates (which may be fixed or variable) at
which the Debt Securities of the series shall bear interest (if
any) or the method of determining such rate or rates, the date
or dates from which such interest shall accrue, the interest
payment dates on which such interest shall be payable or the
method by which such dates will be determined, the record dates
for the determination of holders thereof to whom such interest
is payable (in the case of Registered Securities), and the basis
upon which interest will be calculated if other than that of a
360-day year of twelve 30-day months;
(e) The place or places, if any, in addition to or instead of
the corporate trust office of the Trustee (in the case of
Registered Securities) or the principal London office of the
Trustee (in the case of Bearer Securities), where the principal,
premium and interest with respect to Debt Securities of the
series shall be payable;
(f) The price or prices at which, the period or periods within
which, and the terms and conditions upon which Debt Securities
of the series may be redeemed, in whole or in part, at the
option of the Company or otherwise;
(g) Whether Debt Securities of the series are to be issued as
Registered Securities or Bearer Securities or both and, if
Bearer Securities are to be issued, whether coupons will be
attached thereto, whether Bearer Securities of the series may be
exchanged for Registered Securities of the series, and the
circumstances under which and the places at which any such
exchanges, if permitted, may be made;
(h) If any Debt Securities of the series are to be issued as
Bearer Securities or as one or more Global Securities
representing individual Bearer Securities of the series, whether
certain provisions for the payment of additional interest or tax
redemptions shall apply; whether interest with respect to any
portion of a temporary Bearer Security of the series payable
with respect to any interest payment date prior to the exchange
of such temporary Bearer Security for definitive Bearer
Securities of the series shall be paid to any clearing
organization with respect to the portion of such temporary
Bearer Security held for its account and, in such event, the
terms and conditions (including any certification requirements)
upon which any such interest payment received by a clearing
organization will be credited to the persons entitled to
interest payable on such interest payment date; and the terms
upon which a temporary Bearer Security may be exchanged for one
or more definitive Bearer Securities of the series;
(i) The obligation, if any, of the Company to redeem, purchase
or repay Debt Securities of the series pursuant to any sinking
fund or analogous provisions or at the option of a holder
thereof and the price or prices at which, the period or periods
within which, and the terms and conditions upon which Debt
Securities of the series shall be redeemed, purchased or repaid,
in whole or in part, pursuant to such obligations;
(j) The terms, if any, upon which the Debt Securities of the
series may be convertible into or exchanged for Capital Stock
(which may be represented by depositary shares), other Debt
Securities or warrants for Capital Stock or indebtedness or
other securities of any kind of the Company and the terms and
conditions upon which such conversion or exchange shall be
effected, including the initial conversion or exchange price or
rate, the conversion or exchange period, and any other
additional provisions;
(k) If other than denominations of $1,000 or any integral
multiple thereof, the denominations in which Debt Securities of
the series shall be issuable;
(l) If the amount of principal, premium or interest with
respect to the Debt Securities of the series may be determined
with reference to an index or pursuant to a formula, the manner
in which such amounts will be determined;
(m) If the principal amount payable at the stated maturity of
Debt Securities of the series will not be determinable as of any
one or more dates prior to such stated maturity, the amount that
will be deemed to be such principal amount as of any such date
for any purpose, including the principal amount thereof which
will be due and payable upon any maturity other than the stated
maturity or which will be deemed to be outstanding as of any
such date (or, in any such case, the manner in which such deemed
principal amount is to be determined);
(n) Any changes or additions to the provisions of the
Indenture dealing with defeasance, including the addition of
additional covenants that may be subject to the Company's
covenant defeasance option;
(o) If other than such coin or currency of the United States
as at the time of payment is legal tender for payment of public
and private debts, the coin or currency or currencies or units
of two or more currencies in which payment of the principal,
premium and interest with respect to Debt Securities of the
series shall be payable, and if necessary, the manner of
determining the equivalent thereof in United States currency;
(p) If other than the principal amount thereof, the portion
of the principal amount of Debt Securities of the series that
shall be payable upon declaration of acceleration of the
maturity thereof or provable in bankruptcy;
(q) The terms, if any, of the transfer, mortgage, pledge or
assignment as security for the Debt Securities of the series of
any properties, assets, moneys, proceeds, securities or other
collateral, including whether certain provisions of the Trust
Indenture Act are applicable and any corresponding changes to
provisions of the Indenture as then in effect;
(r) Any addition to or change in the Events of Default with
respect to the Debt Securities of the series and any change in
the right of the Trustee or the holders to declare the
principal, premium and interest with respect to such Debt
Securities due and payable;
(s) If the Debt Securities of the series shall be issued in
whole or in part in the form of a Global Security, the terms and
conditions, if any, upon which such Global Security may be
exchanged in whole or in part for other individual Debt
Securities in definitive registered form, the Depositary for
such Global Security, and the form of any legend or legends to
be borne by any such Global Security in addition to or in lieu
of the legend referred to in the Indenture;
(t) Any Trustee, authenticating or paying agents, transfer
agents or registrars;
(u) The applicability of, and any addition to or change in,
the covenants and definitions then set forth in the Indenture or
in the terms then set forth in the Indenture relating to
permitted consolidations, mergers or transfers of assets,
including conditioning any consolidation, merger or transfer
permitted by the Indenture upon the satisfaction of a financial
standard by the Company or any successor to the Company;
(v) The terms, if any, of any guarantee of the payment of
principal, premium and interest with respect to Debt Securities
of the series and any corresponding changes to the provisions of
the Indenture as then in effect;
(w) The subordination, if any, of the Debt Securities of the
series pursuant to the Indenture and any changes or additions to
the provisions of the Indenture relating to subordination;
(x) With regard to Debt Securities of the series that do not
bear interest, the dates for certain required reports to the
Trustee; and
(y) Any other terms of the Debt Securities of the series
(which terms shall not be prohibited by the provisions of the
Indenture).
The Prospectus Supplement will also describe any material United
States federal income tax consequences or other special
considerations applicable to the series of Debt Securities to which
such Prospectus Supplement relates, including those applicable to
(a) Bearer Securities, (b) Debt Securities with respect to which
payments of principal, premium or interest are determined with
reference to an index or formula (including changes in prices of
particular securities, currencies or commodities), (c) Debt
Securities with respect to which principal, premium or interest is
payable in a foreign or composite currency, (d) Debt Securities
that are issued at a discount below their stated principal amount,
bearing no interest or interest at a rate that at the time of
issuance is below market rates ("Original Issue Discount Debt
Securities"), and (e) variable rate Debt Securities that are
exchangeable for fixed rate Debt Securities.
Payments of interest on Registered Securities may be made at the
option of the Company by check mailed to the registered holders
thereof or, if so provided in the applicable Prospectus Supplement,
at the option of a holder by wire transfer to an account designated
by such holder. Except as otherwise provided in the applicable
Prospectus Supplement, no payment on a Bearer Security will be made
by mail to an address in the United States or by wire transfer to
an account in the United States.
Unless otherwise provided in the applicable Prospectus
Supplement, Registered Securities may be transferred or exchanged
at the office of the Trustee at which its corporate trust business
is principally administered in the United States or at the office
of the Trustee or the Trustee's agent in the Borough of Manhattan,
the City and State of New York, at which its corporate agency
business is conducted, subject to the limitations provided in the
Indenture, without the payment of any service charge, other than
any tax or governmental charge payable in connection therewith.
Bearer Securities will be transferable only by delivery.
Provisions with respect to the exchange of Bearer Securities will
be described in the Prospectus Supplement relating to such Bearer
Securities.
All funds paid by the Company to a paying agent for the payment
of principal, premium or interest with respect to any Debt
Securities that remain unclaimed at the end of two years after such
principal, premium or interest shall have become due and payable
will be repaid to the Company, and the holders of such Debt
Securities or any coupons appertaining thereto will thereafter look
only to the Company for payment thereof.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part
in the form of one or more Global Securities. A Global Security is
a Debt Security that represents, and is denominated in an amount
equal to the aggregate principal amount of, all outstanding Debt
Securities of a series or any portion thereof, in either case
having the same terms, including the same original issue date, date
or dates on which principal and interest are due, and interest rate
or method of determining interest. A Global Security will be
deposited with, or on behalf of, a Depositary, which will be
identified in the Prospectus Supplement relating to such Debt
Securities. Global Securities may be issued in either registered
or bearer form and in either temporary or definitive form. Unless
and until it is exchanged in whole or in part for the individual
Debt Securities represented thereby, a Global Security may not be
transferred except as a whole by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or
another nominee of the Depositary, or by the Depositary or any
nominee of the Depositary to a successor Depositary or any nominee
of such successor.
The specific terms of the depositary arrangement with respect to
a series of Debt Securities will be described in the Prospectus
Supplement relating to such Debt Securities. The Company
anticipates that the following provisions will generally apply to
depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such
Global Security will credit, on its book-entry registration and
transfer system, the respective principal amounts of the individual
Debt Securities represented by such Global Security to the accounts
of persons that have accounts with the Depositary ("participants").
Such accounts shall be designated by the dealers or underwriters
with respect to such Debt Securities or, if such Debt Securities
are offered and sold directly by the Company or through one or more
agents, by the Company or such agents. Ownership of beneficial
interests in a Global Security will be limited to participants or
persons that hold beneficial interests through participants.
Ownership of beneficial interests in such Global Security will be
shown on, and the transfer of that ownership will be effected only
through, records maintained by the Depositary (with respect to
interests of participants) or records maintained by participants
(with respect to interests of persons other than participants).
The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive
form. Such limitations and laws may impair the ability to transfer
beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee,
is the registered owner or holder of such Global Security, such
Depositary or nominee, as the case may be, will be considered the
sole owner or holder of the individual Debt Securities represented
by such Global Security for all purposes under the Indenture.
Except as provided below, owners of beneficial interests in a
Global Security will not be entitled to have any of the individual
Debt Securities represented by such Global Security registered in
their names, will not receive or be entitled to receive physical
delivery of any of such Debt Securities in definitive form, and
will not be considered the owners or holders thereof under the
Indenture.
Subject to the restrictions described under "Limitations on
Issuance of Bearer Securities" below, payments of principal,
premium and interest with respect to individual Debt Securities
represented by a Global Security will be made to the Depositary or
its nominee, as the case may be, as the registered owner or holder
of such Global Security. Neither the Company, the Trustee, any
paying agent or registrar for such Debt Securities, or any agent of
the Company or the Trustee will have any responsibility or
liability for (a) any aspect of the records relating to or payments
made by the Depositary, its nominee or any participants on account
of beneficial interests in the Global Security or for maintaining,
supervising or reviewing any records relating to such beneficial
interests, (b) the payment to the owners of beneficial interests in
the Global Security of amounts paid to the Depositary or its
nominee or (c) any other matter relating to the actions and
practices of the Depositary, its nominee or its participants.
Neither the Company, the Trustee, any paying agent or registrar for
such Debt Securities or any agent of the Company or the Trustee
will be liable for any delay by the Depositary, its nominee or any
of its participants in identifying the owners of beneficial
interests in the Global Security, and the Company and the Trustee
may conclusively rely on, and will be protected in relying on,
instructions from the Depositary or its nominee for all purposes.
The Company expects that the Depositary for a series of Debt
Securities or its nominee, upon receipt of any payment of
principal, premium or interest with respect to a definitive Global
Security representing any of such Debt Securities, will immediately
credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the
principal amount of such Global Security, as shown on the records
of the Depositary or its nominee. The Company also expects that
payments by participants to owners of beneficial interests in such
Global Security held through such participants will be governed by
standing instructions and customary practices, as is now the case
with securities held for the accounts of customers and registered
in "street name." Such payments will be the responsibility of such
participants. Receipt by owners of beneficial interests in a
temporary Global Security of payments of principal, premium or
interest with respect thereto will be subject to the restrictions
described under "Limitations on Issuance of Bearer Securities"
below.
If the Depositary for a series of Debt Securities is at any time
unwilling, unable or ineligible to continue as depositary, the
Company shall appoint a successor depositary. If a successor
depositary is not appointed by the Company within 90 days, the
Company will issue individual Debt Securities of such series in
exchange for the Global Security representing such series of Debt
Securities. In addition, the Company may at any time and in its
sole discretion, subject to any limitations described in the
Prospectus Supplement relating to such Debt Securities, determine
no longer to have Debt Securities of a series represented by a
Global Security and, in such event, will issue individual Debt
Securities of such series in exchange for the Global Security
representing such series of Debt Securities. Furthermore, if the
Company so specifies with respect to the Debt Securities of a
series, an owner of a beneficial interest in a Global Security
representing Debt Securities of such series may, on terms
acceptable to the Company, the Trustee and the Depositary for such
Global Security, receive individual Debt Securities of such series
in exchange for such beneficial interests, subject to any
limitations described in the Prospectus Supplement relating to such
Debt Securities. In any such instance, an owner of a beneficial
interest in a Global Security will be entitled to physical delivery
of individual Debt Securities of the series represented by such
Global Security equal in principal amount to such beneficial
interest and to have such Debt Securities registered in its name
(if the Debt Securities are issuable as Registered Securities).
Individual Debt Securities of such series so issued will be issued
(a) as Registered Securities in denominations, unless otherwise
specified by the Company, of $1,000 and integral multiples thereof
if the Debt Securities are issuable as Registered Securities,
(b) as Bearer Securities in the denomination or denominations
specified by the Company if the Debt Securities are issuable as
Bearer Securities or (c) as either Registered Securities or Bearer
Securities as described above if the Debt Securities are issuable
in either form. See, however, "Limitations on Issuance of Bearer
Securities" below for a description of certain restrictions on the
issuance of individual Bearer Securities in exchange for beneficial
interests in a bearer Global Security.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
The Debt Securities of a series may be issued as Registered
Securities (which will be registered as to principal and interest
in the register maintained by the registrar for such Debt
Securities) or Bearer Securities (which will be transferable only
by delivery). If such Debt Securities are issuable as Bearer
Securities, certain special limitations and considerations will
apply.
In compliance with United States federal income tax laws and
regulations, the Company and any underwriter, agent or dealer
participating in an offering of Bearer Securities will agree that,
in connection with the original issuance of such Bearer Securities
and during the period ending 40 days after the issue date, they
will not offer, sell or deliver any such Bearer Security, directly
or indirectly, to a United States Person (as defined below) or to
any person within the United States, except to the extent permitted
under United States Treasury Regulations.
Bearer Securities will bear a legend to the following effect "Any
United States Person who holds this obligation will be subject to
limitations under the United States federal income tax laws,
including the limitations provided in Sections 165(i) and 1287(a)
of the Internal Revenue Code." The sections referred to in the
legend provide that, with certain exceptions, a United States
taxpayer who holds Bearer Securities will not be allowed to deduct
any loss with respect to, and will not be eligible for capital gain
treatment with respect to any gain realized on the sale, exchange,
redemption or other disposition of, such Bearer Securities.
For this purpose, "United States" includes the United States of
America and its possessions, and "United States Person" means 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 an estate or trust the income of which
is subject to United States federal income taxation regardless of
its source.
Pending the availability of a definitive Global Security or
individual Bearer Securities, as the case may be, Debt Securities
that are issuable as Bearer Securities may initially be represented
by a single temporary Global Security, without interest coupons, to
be deposited with a common depositary in London for Morgan Guaranty
Trust Company of New York, Brussels Office, as operator of the
Euroclear System ("Euroclear"), or Centrale de Livraison de Valeurs
Mobilleres S.A. ("CEDEL") for credit to the accounts designated by
or on behalf of the purchasers thereof. Following the availability
of a definitive Global Security in bearer form, without coupons
attached, or individual Bearer Securities and subject to any
further limitations described in the applicable Prospectus
Supplement, the temporary Global Security will be exchangeable for
interests in such definitive Global Security or for such individual
Bearer Securities, respectively, only upon receipt of a
"Certificate of Non-U.S. Beneficial Ownership," which is a
certificate to the effect that a beneficial interest in a temporary
Global Security is owned by a person that is not a United States
Person or is owned by or through a financial institution in
compliance with applicable United States Treasury regulations. No
Bearer Security will be delivered in or to the United States. If
so specified in the applicable Prospectus Supplement, interest on
a temporary Global Security will be paid to Euroclear or CEDEL with
respect to that portion of such temporary Global Security held for
its account, but only upon receipt as of the relevant interest
payment date of a Certificate of Non-U.S. Beneficial Ownership.
SUBORDINATION
Debt Securities of a series may be subordinated ("Subordinated
Debt Securities") to Senior Indebtedness (as defined below) to the
extent set forth in the Prospectus Supplement relating thereto.
The Company currently conducts substantially all its operations
through subsidiaries, and the holders of Debt Securities (whether
or not Subordinated Debt Securities) will be structurally
subordinated to the creditors of the Company's subsidiaries.
Subordinated Debt Securities of a series and any coupons
appertaining thereto will be subordinate in right of payment, to
the extent and in the manner set forth in the Indenture and the
Prospectus Supplement relating to such Subordinated Debt
Securities, to the prior payment of all indebtedness of the Company
that is designated as "Senior Indebtedness" with respect to such
series. "Senior Indebtedness," with respect to any series of
Subordinated Debt Securities, will consist of any indebtedness of
the Company that is designated in a resolution of the Company's
Board of Directors or the supplemental indenture establishing such
series as Senior Indebtedness with respect to such series.
By reason of such subordination, in the event of insolvency,
creditors of the Company who are holders of Senior Indebtedness, as
well as certain general creditors of the Company, may recover more,
ratably, than the holders of the Subordinated Debt Securities.
EVENTS OF DEFAULT AND REMEDIES
The following events are defined in the Indenture as "Events of
Default" with respect to a series of Debt Securities:
(a) Default in the payment of any installment of interest on
any Debt Securities of that series or any payment with respect
to the related coupons, if any, as and when the same shall
become due and payable (whether or not, in the case of
Subordinated Debt Securities, such payment shall be prohibited
by reason of the subordination provisions described above) and
continuance of such default for a period of 30 days;
(b) Default in the payment of principal or premium with
respect to any Debt Securities of that series as and when the
same shall become due and payable, whether at maturity, upon
redemption, by declaration, upon required repurchase or
otherwise (whether or not, in the case of Subordinated Debt
Securities, such payment shall be prohibited by reason of the
subordination provisions described above);
(c) Default in the payment of any sinking fund payment with
respect to any Debt Securities of that series as and when the
same shall become due and payable;
(d) Failure on the part of the Company to comply with the
provisions of the Indenture relating to consolidations, mergers
and sales of assets;
(e) Failure on the part of the Company duly to observe or
perform any other of the covenants or agreements on the part of
the Company in the Debt Securities of that series, in any
resolution of the Board of Directors of the Company authorizing
the issuance of that series of Debt Securities, in the Indenture
with respect to such series or in any supplemental indenture
with respect to such series (other than a covenant a default in
the performance of which is otherwise specifically dealt with)
continuing for a period of 60 days after the date on which
written notice specifying such failure and requiring the Company
to remedy the same shall have been given to the Company by the
Trustee or to the Company and the Trustee by the holders of at
least 25 percent in aggregate principal amount of the Debt
Securities of that series at the time outstanding.
(f) Indebtedness for borrowed money of the Company or any
subsidiary of the Company is not paid within any applicable
grace period after final maturity or is accelerated by the
holders thereof because of a default, the total amount of such
indebtedness unpaid or accelerated exceeds $20 million or the
United States dollar equivalent thereof at the time, and such
default remains uncured or such acceleration is not rescinded
for 10 days after the date on which written notice specifying
such failure and requiring the Company to remedy the same shall
have been given to the Company by the Trustee or to the Company
and the Trustee by the holders of at least 25% in aggregate
principal amount of the Debt Securities of that series at the
time outstanding;
(g) The Company or any of its "Significant Subsidiaries"
(defined as any subsidiary of the Company that would be a
"significant subsidiary" as defined in Rule 405 under the
Securities Act as in effect on the date of the Indenture) shall
(1) voluntarily commence any proceeding or file any petition
seeking relief under the United States Bankruptcy Code or other
federal or state bankruptcy, insolvency or similar law, (2)
consent to the institution of, or fail to controvert within the
time and in the manner prescribed by law, any such proceeding or
the filing of any such petition, (3) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator or
similar official for the Company or any such Significant
Subsidiary or for a substantial part of its property, (4) file
an answer admitting the material allegations of a petition filed
against it in any such proceeding, (5) make a general assignment
for the benefit of creditors, (6) admit in writing its inability
or fail generally to pay its debts as they become due, (7) take
corporate action for the purpose of effecting any of the
foregoing or (8) take any comparable action under any foreign
laws relating to insolvency.
(h) The entry of an order or decree by a court having
competent jurisdiction for (1) relief with respect to the
Company or any of its Significant Subsidiaries or a substantial
part of any of their property under the United States Bankruptcy
Code or any other federal or state bankruptcy, insolvency or
similar law, (2) the appointment of a receiver, trustee,
custodian, sequestrator or similar official for the Company or
any such Significant Subsidiary or for a substantial part of any
of their property (except any decree or order appointing such
official of any Significant Subsidiary pursuant to a plan under
which the assets and operations of such Significant Subsidiary
are transferred to or combined with another Significant
Subsidiary or Subsidiaries of the Company or to the Company) or
(3) the winding-up or liquidation of the Company or any such
Significant Subsidiary (except any decree or order approving or
ordering the winding-up or liquidation of the affairs of a
Significant Subsidiary pursuant to a plan under which the assets
and operations of such Significant Subsidiary are transferred to
or combined with another Significant Subsidiary or Subsidiaries
of the Company or to the Company), and such order or decree
shall continue unstayed and in effect for 60 consecutive days or
any similar relief is granted under any foreign laws and the
order or decree stays in effect for 60 consecutive days;
(i) Any judgment or decree for the payment of money in excess
of $20 million or the United States dollar equivalent thereof at
the time is entered against the Company or any Subsidiary of the
Company by a court of competent jurisdiction, which judgment is
not covered by insurance, and is not discharged and either (1)
an enforcement proceeding has been commenced by any creditor
upon such judgment or decree or (2) there is a period of 60 days
following the entry of such judgment or decree during which such
judgment or decree is not discharged or waived or the execution
thereof stayed and, in either case, such default continues for
10 days after the date on which written notice specifying such
failure and requiring the Company to remedy the same shall have
been given to the Company by the Trustee or to the Company and
the Trustee by the holders of at least 25% in aggregate
principal amount of the Debt Securities of that series at the
time outstanding; and
(j) Any other Event of Default provided with respect to Debt
Securities of that series.
An Event of Default with respect to one series of Debt Securities
is not necessarily an Event of Default for another series.
If an Event of Default described in clause (a), (b), (c), (d),
(e), (f), (i) or (j) above occurs and is continuing with respect to
any series of Debt Securities, unless the principal and interest
with respect to all the Debt Securities of such series shall have
already become due and payable, either the Trustee or the holders
of not less than 25% in aggregate principal amount of the Debt
Securities of such series then outstanding may declare the
principal amount (or, if Original Issue Discount Debt Securities,
such portion of the principal amount as may be specified in such
series) of and interest on all the Debt Securities of such series
due payable immediately, if an Event of Default described in clause
(g) or (h) above occurs, unless the principal and interest with
respect to all the Debt Securities of all series shall have become
due and payable, the principal amount (or, if any series are
Original Issue Discount Debt Securities, such portion of the
principal amount as may be specified in such series) of and
interest on all Debt Securities of all series then outstanding
shall become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any holder
of Debt Securities. After any such acceleration with respect to
Debt Securities of any series, but before a judgment or decree
based on such acceleration, the holders of a majority in principal
amount of the Debt Securities of such series may, under certain
circumstances, rescind and annul such acceleration with respect to
such series if all Events of Default with respect to such series,
other than the non-payment of accelerated principal, have been
cured or waived as provided in the Indenture.
If an Event of Default occurs and is continuing, the Trustee
shall be entitled and empowered to institute any action or
proceeding for the collection of the sums so due and unpaid or to
enforce the performance of any provision of the Debt Securities of
the affected series or the Indenture, to prosecute any such action
or proceeding to judgment or final decree, and to enforce any such
judgment or final decree against the Company or any other obligor
on the Debt Securities of such series. In addition, if there shall
be pending proceedings for the bankruptcy or reorganization of the
Company or any other obligor on the Debt Securities or if a
receiver, trustee or similar official shall have been appointed for
its property, the Trustee shall be entitled and empowered to file
and prove a claim for the whole amount of principal, premium and
interest (or, in the case of Original Issue Discount Debt
Securities, such portion of the principal amount as may be
specified in the terms of such series) owing and unpaid with
respect to the Debt Securities. No holder of any Debt Security or
coupon of any series shall have any right to institute any action
or proceeding upon or under or with respect to the Indenture, for
the appointment of a receiver or trustee or for any other remedy,
unless (a) such holder previously shall have given to the Trustee
written notice of an Event of Default with respect to Debt
Securities of that series and of the continuance thereof, (b) the
holders of not less than 25% in aggregate principal amount of the
outstanding Debt Securities of that series shall have made written
request to the Trustee to institute such action or proceeding with
respect to such Event of Default and shall have offered to the
Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby,
(c) the Trustee, for 60 days after its receipt of such notice,
request, and offer of indemnity shall have failed to institute such
action or proceeding and (d) no direction inconsistent with such
written request shall have been given to the Trustee pursuant to
the provisions of the Indenture.
The holders of a majority in aggregate principal amount of the
Debt Securities of that series at the time outstanding may, on
behalf of the holders of all Debt Securities and any related
coupons of that series, waive any past default or Event of Default
and its consequences for that series, except (a) a default in the
payment of the principal, premium or interest with respect to such
Debt Securities or (b) a default with respect to a provision of the
Indenture that cannot be amended without the consent of each holder
affected thereby. In case of any such waiver, such default shall
cease to exist, and any Event of Default arising therefrom shall be
deemed to have been cured for all purposes.
The Trustee shall, within 90 days after the occurrence of a
default known to it with respect to a series of Debt Securities,
give to the holders of the Debt Securities of such series notice
of all uncured defaults with respect to such series known to it,
unless such defaults shall have been cured or waived before the
giving of such notice; provided, however, that except in the case
of default in the payment of principal, premium or interest with
respect to the Debt Securities of such series or in the making of
any sinking fund payment with respect to the Debt Securities of
such series, the Trustee shall be protected in withholding such
notice if it in good faith determines that the withholding of such
notice is in the interest of the holders of such Debt Securities.
MODIFICATION OF THE INDENTURE
The Company and the Trustee may enter into supplemental
indentures without the consent of the holders of Debt Securities
for one or more of the following purposes:
(a) To evidence the succession of another person to the
Company pursuant to the provisions of the Indenture relating to
consolidations, mergers and sales of assets and the assumption
by such successor of the covenants, agreements and obligations
of the Company in the Indenture and in the Debt Securities;
(b) To surrender any right or power conferred upon the Company
by the Indenture, to add to the covenants of the Company such
further covenants, restrictions, conditions or provisions for
the protection of the holders of all or any series of Debt
Securities as the Board of Directors of the Company shall
consider to be for the protection of the holders of such Debt
Securities, and to make the occurrence, or the occurrence and
continuance, of a default in any of such additional covenants,
restrictions, conditions or provisions a default or an Event of
Default under the Indenture (provided, however, that with
respect to any such additional covenant, restriction, condition
or provision, such supplemental indenture may provide for a
period of grace after default, which may be shorter or longer
than that allowed in the case of other defaults, may provide for
an immediate enforcement upon such default, may limit the
remedies available to the Trustee upon such default, or may
limit the right of holders of a majority in aggregate principal
amount of any or all series of Debt Securities to waive such
default);
(c) To cure any ambiguity or to correct or supplement any
provision contained in the Indenture, in any supplemental
indenture or in any Debt Securities that may be defective or
inconsistent with any other provision contained therein, to
convey, transfer, assign, mortgage or pledge any property to or
with the Trustee, or to make such other provisions in regard to
matters or questions arising under the Indenture as shall not
adversely affect the interests of any holders of Debt Securities
of any series in any material respect;
(d) To modify or amend the Indenture in such a manner as to
permit the qualification of the Indenture of any supplemental
indenture under the Trust Indenture Act as then in effect;
(e) To add to or change any of the provisions of the Indenture
to provide that Bearer Securities may be registerable as to
principal, to change or eliminate any restrictions on the
payment of principal or premium with respect to Registered
Securities or of principal, premium or interest with respect to
Bearer Securities, or to permit Registered Securities to be
exchanged for Bearer Securities, so long as any such action does
not adversely affect the interests of the holders of Debt
Securities or any coupons of any series in any material respect
or permit or facilitate the issuance of Debt Securities of any
series in uncertificated form;
(f) To comply with the provisions of the Indenture relating
to consolidations, mergers and sales of assets;
(g) In the case of Subordinated Debt Securities, to make any
change in the provisions of the Indenture relating to
subordination that would limit or terminate the benefits
available to any holder of Senior Indebtedness under such
provisions (but only if such holder of Senior Indebtedness
consents to such change);
(h) To add guarantees with respect to the Debt Securities or
to secure the Debt Securities;
(i) To make any change that does not adversely affect the
rights of any holder;
(j) To add to, change or eliminate any of the provisions of
the Indenture with respect to one or more series of Debt
Securities, so long as any such addition, change or elimination
not otherwise permitted under the Indenture shall (1) neither
apply to any Debt Security of any series created prior to the
execution of such supplemental indenture and entitled to the
benefit of such provision nor modify the rights of the holders
of any such Debt Security with respect to such provision or
(2) become effective only when there is no such Debt Security
outstanding;
(k) To evidence and provide for the acceptance of appointment
by a successor or separate Trustee with respect to the Debt
Securities of one or more series and to add to or change any of
the provisions of the Indenture as shall be necessary to provide
for or facilitate the administration of the Indenture by more
than one Trustee; and
(l) To establish the form or terms or Debt Securities and
coupons of any series, as described under "General" above.
With the consent of the holders of a majority in aggregate
principal amount of the outstanding Debt Securities of each series
affected thereby, the Company and the Trustee may from time to time
and at any time enter into a supplemental indenture for the purpose
of adding any provisions to, changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental
indenture or modifying in any manner the rights of the holder of
the Debt Securities of such series; provided, however, that without
the consent of the holders of each Debt Security so affected, no
such supplemental indenture shall (a) reduce the percentage in
principal amount of Debt Securities of any series whose holders
must consent to an amendment, (b) reduce the rate of or extend the
time for payment of interest on any Debt Security or coupon or
reduce the amount of any payment to be made with respect to any
coupon, (c) reduce the principal of or extend the stated maturity
of any Debt Security, (d) reduce the premium payable upon the
redemption of any Debt Security or change the time at which any
Debt Security may or shall be redeemed, (e) make any Debt Security
payable in a currency other than that stated in the Debt Security,
(f) in the case of any Subordinated Debt Security or coupons
appertaining thereto, make any changes in the provisions of the
Indenture relating to subordination that adversely affects the
rights of any holder under such provisions, (g) release any
security that may have been granted with respect to the Debt
Securities, (h) make any change in the provisions of the Indenture
relating to waivers of defaults or amendments that require
unanimous consent, (i) change any obligation of the Company
provided for in the Indenture to pay additional interest with
respect to Bearer Securities or (j) limit the obligation of the
Company to maintain a paying agency outside the United States for
payment on Bearer Securities or limit the obligation of the Company
to redeem certain Bearer Securities.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate with or merge with or into any
person, or convey, transfer or lease all or substantially all of
its assets, unless the following conditions have been satisfied:
(a) Either (1) the Company shall be the continuing person in
the case of a merger or (2) the resulting, surviving or
transferee person, if other than the Company (the "Successor
Company"), shall be a corporation organized and existing under
the laws of the United States, any State or the District of
Columbia and shall expressly assume all of the obligations of
the Company under the Debt Securities and coupons and the
Indenture;
(b) Immediately after giving effect to such transaction (and
treating any indebtedness that becomes an obligation of the
Successor Company or any subsidiary of the Company as a result
of such transaction as having been incurred by the Successor
Company or such subsidiary at the time of such transaction), no
Default or Event of Default would occur or be continuing;
(c) The Successor Company waives any right to redeem any
Bearer Security under circumstances in which the Successor
Company would be entitled to redeem such Bearer Security but the
Company would not have been so entitled to redeem if the
consolidation, merger, conveyance, transfer or lease had not
occurred; and
(d) The Company shall have delivered to the Trustee an
officers' certificate and an opinion of counsel, each stating
that such consolidation, merger, conveyance, transfer or lease
complies with the Indenture.
SATISFACTION AND DISCHARGE OF THE INDENTURE; DEFEASANCE
The Indenture shall generally cease to be of any further effect
with respect to a series of Debt Securities if (a) the Company has
delivered to the Trustee for cancellation all Debt Securities of
such series (with certain limited exceptions) or (b) all Debt
Securities and coupons of such series not theretofore delivered to
the Trustee for cancellation shall have become due and payable, or
are by their terms to become due and payable within one year or are
to be called for redemption, and the Company shall have deposited
with the Trustee as trust funds the entire amount sufficient to pay
at maturity or upon redemption all such Debt Securities and coupons
(and if, in either case, the Company shall also pay or cause to be
paid all other sums payable under the Indenture by the Company).
In addition, the Company shall have a "legal defeasance option"
(pursuant to which it may terminate, with respect to the Debt
Securities of a particular series, all of its obligations under
such Debt Securities and the Indenture with respect to such Debt
Securities) and a "covenant defeasance option" (pursuant to which
it may terminate, with respect to the Debt Securities of a
particular series, its obligations with respect to such Debt
Securities under certain specified covenants contained in the
Indenture). If the Company exercises its legal defeasance option
with respect to a series of Debt Securities, payment of such Debt
Securities may not be accelerated because of an Event of Default.
If the Company exercises its covenant defeasance option with
respect to a series of Debt Securities, payment of such Debt
Securities may not be accelerated because of an Event of Default
related to the specified covenants.
The Company may exercise its legal defeasance option or its
covenant defeasance option with respect to the Debt Securities of
a series only if (a) the Company irrevocably deposits in trust with
the Trustee cash or U.S. Government Obligations (as defined in the
Indenture) for the payment of principal, premium and interest with
respect to such Debt Securities to maturity or redemption, as the
case may be, (b) the Company delivers to the Trustee a certificate
from a nationally recognized firm of independent accountants
expressing their opinion that the payments of principal and
interest when due and without reinvestment on the deposited U.S.
Government Obligations plus any deposited money without investment
will provide cash at such times and in such amounts as will be
sufficient to pay the principal, premium and interest when due with
respect to all the Debt Securities of such series to maturity or
redemption, as the case may be, (c) 123 days pass after the deposit
is made and during the 123-day period no default described in
clause (g) or (h) under "Events of Default and Remedies" above with
respect to the Company occurs that is continuing at the end of such
period, (d) no Default has occurred and is continuing on the date
of such deposit and after giving effect thereto, (e) the deposit
does not constitute a default under any other agreement binding on
the Company and, in the case of Subordinated Debt Securities, is
not prohibited by the provisions of the Indenture relating to
subordination, (f) the Company delivers to the Trustee an opinion
of counsel to the effect that the trust resulting from the deposit
does not constitute, or is qualified as, a regulated investment
company under the Investment Company Act of 1940, (g) the Company
shall have delivered to the Trustee an opinion of counsel
addressing certain federal income tax matters relating to the
defeasance, and (h) the Company delivers to the Trustee an
officers' certificate and an opinion of counsel, each stating that
all conditions precedent to the defeasance and discharge of the
Debt Securities of such series as contemplated by the Indenture
have been complied with.
The Trustee shall hold in trust cash or U.S. Government
Obligations deposited with it as described above and shall apply
the deposited cash and the proceeds from deposited U.S. Government
Obligations to the payment of principal, premium and interest with
respect to the Debt Securities and coupons of the defeased series.
In the case of Subordinated Debt Securities and coupons related
thereto, the money and U.S. Government Obligations so held in trust
will not be subject to the subordination provisions of the
Indenture.
THE TRUSTEE
The Company may appoint a separate Trustee for any series of Debt
Securities. As used herein in the description of a series of Debt
Securities, the term "Trustee" refers to the Trustee appointed with
respect to such series of Debt Securities.
The Company may maintain banking and other commercial
relationships with the Trustee and its affiliates in the ordinary
course of business, and the Trustee may own Debt Securities.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of the Company consists of (a)
300,000,000 shares of Common Stock and (b) 10,000,000 shares of
Preferred Stock issuable in series. As of April 30, 1995, there
were 164,652,491 shares of Common Stock issued and outstanding,
251,293 shares awaiting distribution pending the settlement of
contingent claims under the Company's plan of reorganization, and
15,096,151 shares reserved for issuance under stock option and
incentive plans. As of the date hereof, there are no shares of
Preferred Stock issued or outstanding. No class of capital stock
of the Company entitles the holder thereof to any preemptive rights
to purchase or subscribe for shares of any class or any other
securities, other than as the Board of Directors may fix.
The following description of the capital stock of the Company is
subject to the detailed provisions of the Company's Restated
Certificate of Incorporation, as amended (the "Certificate"), and
by-laws as currently in effect (the "By-laws"). This description
does not purport to be complete or to give full effect to the terms
of the provisions of statutory or common law and is subject to, and
qualified in its entirety by reference to, the Certificate and the
By-laws, each of which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part.
COMMON STOCK
All issued and outstanding shares of Common Stock are fully paid
and nonassessable, and any shares of Common Stock offered hereby
will, upon full payment of the purchase price therefor, likewise be
fully paid and nonassessable. Each share of Common Stock is
entitled to participate equally in dividends, as and when declared
by the Company's Board of Directors, and in the distribution of
assets in the event of liquidation, subject in all cases to any
prior rights of outstanding shares of Preferred Stock. The shares
of Common Stock have no preemptive or conversion rights, redemption
rights, or sinking fund provisions.
The outstanding shares of Common Stock are listed on the New York
Stock Exchange and trade under the symbol "GLM."
PREFERRED STOCK
The following description of the terms of the Preferred Stock
sets forth certain general terms and provisions of the Preferred
Stock to which a Prospectus Supplement may relate. Specific terms
of any series of Preferred Stock offered by a Prospectus Supplement
will be described in the Prospectus Supplement relating to such
series. The description set forth below is subject to and
qualified in its entirety by reference to the certificate of
designations establishing a particular series of Preferred Stock,
which will be filed with the Commission in connection with the
offering of such series.
Under the Certificate, the Board of Directors of the Company is
authorized, without further stockholder action, to provide for the
issuance of up to 10,000,000 shares of Preferred Stock in one or
more series. The rights, preferences, privileges, and
restrictions, including dividend rights, voting rights, conversion
rights, terms of redemption, and liquidation preferences, of the
Preferred Stock of each series will be fixed or designated by the
Board of Directors pursuant to a certificate of designations. The
specific terms of a particular series of Preferred Stock offered
hereby will be described in a Prospectus Supplement relating to
such series and will include the following: (a) the maximum number
of shares to constitute the series and the distinctive designation
thereof; (b) the annual dividend rate, if any, on shares of the
series (or the method of calculating such rate), whether such rate
is fixed or variable or both, the date or dates from which
dividends will begin to accrue or accumulate, and whether dividends
will be cumulative; (c) whether the shares of the series will be
redeemable and, if so, the price at and the terms and conditions on
which such shares may be redeemed, including the time during which
such shares may be redeemed and any accumulated dividends thereon
that the holders of such shares shall be entitled to receive upon
the redemption thereof; (d) the liquidation preference, if any,
applicable to shares of the series; (e) whether the shares of the
series will be subject to operation of a retirement or sinking fund
and, if so, the extent and manner in which any such fund shall be
applied to the purchase or redemption of such shares for retirement
or for other corporate purposes, and the terms and provisions
relating to the operation of such fund; (f) the terms and
conditions, if any, on which the shares of the series will be
convertible into, or exchangeable for, shares of any other class or
classes of capital stock of the Company or another corporation or
any series of any other class or classes, or of any other series of
the same class, including the price or rate of conversion or
exchange and the method, if any, of adjusting the same; (g) the
voting rights, if any, on the shares of the series, provided,
however, that such voting rights can not be other than one vote per
share; and (h) any other preferences and relative, participating,
optional, or other special rights or qualifications, limitations,
or restrictions thereof.
The Preferred Stock will, when issued, be fully paid and
nonassessable.
The transfer agent, registrar, and dividend disbursement agent
for a series of Preferred Stock will be selected by the Company and
will be described in the applicable Prospectus Supplement. The
registrar for shares of Preferred Stock will send notices to
stockholders of any meetings at which holders of the Preferred
Stock have the right to elect directors of the Company or to vote
on any other matter.
VOTING RIGHTS
Each holder of shares of Common Stock, except where otherwise
provided by law or the Company's Certificate, is entitled to one
vote, in person or by proxy, for each share of Common Stock
standing in his, her or its name on the books of the Company.
Holders of the Preferred Stock, if any, will only be entitled to
vote upon the election of directors or upon any questions affecting
the Company if and to the extent that the holders of any series of
Preferred Stock are granted voting rights fixed for such series by
the Board of Directors in the resolution creating such series. In
no event will a holder of Preferred Stock be entitled to other than
one vote, in person or by proxy, for each share of Preferred Stock
standing in his, her or its name on the books of the Company.
Certain Business Transactions, as defined in the Company's
Certificate and discussed under "Certain Business Transactions"
below, require a vote greater than a simple majority.
CLASSIFICATION OF BOARD OF DIRECTORS; CUMULATIVE VOTING
The Board of Directors of the Company is divided into three
classes, as nearly equal in number of directors as possible. The
directors of each class serve until the annual meeting of
stockholders in the year in which the term of their class expires
and until their respective successors are elected and qualified,
subject to prior death, resignation, or removal from office.
Classification of the Board of Directors potentially affects the
ability of a substantial stockholder to effect a rapid change in
control of the Company, could further the entrenchment of
management, and could render it more difficult to effect a merger
or similar transaction even if such transaction is favored by a
majority of independent stockholders. The classification of the
Board of Directors may discourage actions to acquire control of the
Company by extending the time needed to effect a change in control
of the Board of Directors because only a minority of the directors
are elected at each annual meeting.
At all elections of directors of the Company, each stockholder
entitled to vote has a number of votes equal to the number of votes
to which such stockholder's shares are entitled (without regard to
the provision for cumulative voting) multiplied by the number of
directors to be elected. Such stockholder may cast all such votes
for a single director or may distribute them among the number to be
voted for or any two or more of them.
CERTAIN BUSINESS TRANSACTIONS
The affirmative vote of the holders of at least 75% of the voting
power of the then outstanding shares of capital stock of the
Company eligible to vote generally in the election of directors (as
of the date of this Prospectus, the shares of Common Stock) (the
"Voting Stock") is required to approve certain Business
Transactions (as such term is defined in the Company's
Certificate). The transactions included in the definition of
Business Transaction are those between the Company and an
Interested Stockholder or an Affiliate of an Interested Stockholder
(as such terms are defined in the Company's Certificate) or, in
certain instances, proposed by an Interested Stockholder or
Affiliate of an Interested Stockholder and include (i) any merger
or consolidation of the Company or any subsidiary, (ii) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition of
any assets of the Company with a fair market value of $10 million
or more, (iii) with certain exceptions, the issuance or transfer by
the Company or any subsidiary of any securities of the Company or
any subsidiary in exchange for consideration of $10 million or
more, (iv) the adoption of any plan or proposal for liquidation or
dissolution of the Company, and (v) any reclassification of
securities or recapitalization of the Company which has the effect
of increasing the proportionate share of the outstanding shares of
any class or series of equity securities of the Company or any
subsidiary which is directly or indirectly beneficially owned by
any Interested Stockholder or an Affiliate of an Interested
Stockholder.
The provisions of the Company's Certificate described in the
preceding paragraph may have the effect of delaying, deferring or
preventing a change in control of the Company, could further the
entrenchment of management, and could render it more difficult to
effect a business transaction even if such transaction is favored
by a majority of the independent stockholders. The special vote
requirement of such provisions may be waived if the Business
Transaction is duly approved by the Disinterested Directors (as
such term is defined in the Company's Certificate) or if certain
fair price, nature of consideration and procedural requirements are
met. There is no requirement that a Business Transaction duly
approved by the Disinterested Directors meet any minimum price,
nature of consideration or procedural requirements.
DELAWARE ANTI-TAKEOVER STATUTE
The Company is a Delaware corportion and is subject to Section
203 of the General Corporation Law of Delaware ("Delaware Law").
In general, Section 203 prevents an "interested stockholder"
(defined generally as a person owning 15% or more of the Company's
outstanding voting stock) from engaging in a "business combination"
(as defined in Section 203) with the Company for three years
following the date that person becomes an interested stockholder
unless (a) before that person became an interested stockholder, the
Company's Board of Directors approved the transaction in which the
interested stockholder became an interested stockholder or approved
the business combination, (b) upon completion of the transaction
that resulted in the interested stockholder's becoming an
interested stsockholder, the interested stockholder owns at least
85% of the Company's voting stock outstanding at the time the
transaction commenced (excluding stock held by directors who are
also officers of the Company and by employee stock plans that do
not provide employees with the right to determine confidentially
whether shares held subject to the plan will be tendered in a
tender or exchange offer), or (c) following the transaction in
which that person became an interested stockholder, the business
combination is approved by the Company's Board of Directors and
authorized at a meeting of stockholders by the affirmative vote of
the holders of at least two-thirds of the outstanding Company
voting stock not owned by the interested stockholder.
Under Section 203, these restrictions also do not apply to
certain business combinations proposed by an interested stockholder
following the announcement or notification of one of certain
extraordinary transactions involving the Company and a person who
was not an interested stockholder during the previous three years
or who became an interested stockholder with the approval of a
majority of the Company's directors, if that extraordinary
transaction is approved or not opposed by a majority of the
directors who were directors before any person became an interested
stockholder in the previous three years or who were recommended for
election or elected to succeed such directors by a majority of such
directors then in office.
POTENTIAL RESTRICTIONS ON SALES OF CAPITAL STOCK TO NON-U.S.
CITIZENS.
Pursuant to recent amendments to United States maritime laws
relating to sales of interests in and control of vessels owned by
United States citizens to non-citizens, the Secretary of
Transportation, acting through the United States Maritime
Administration, has prior consent authority over certain transfers
of the Company's capital stock. See "Risk Factors -- Potential
Restrictions on Sales of Capital Stock to Non-U.S. Citizens."
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is Harris
Trust and Savings Bank, Chicago, Illinois.
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities in or outside the
United States in any of the following ways: (i) through
underwriters or dealers; (ii) through agents; or (iii) directly to
one or more purchasers. The accompanying Prospectus Supplement
will set forth the terms of the offering of the Offered Securities,
including the name or names of any underwriters or agents, the
purchase price of the Offered Securities and the proceeds to the
Company of the sale thereof, any underwriting discounts and other
items constituting underwriters compensation, and any discounts or
concessions allowed or reallowed or paid to dealers. The
distribution of the Offered Securities may be effected from time to
time in one or more transactions (which may involve crosses or
block transactions) (A) on the New York Stock Exchange (or on such
other national stock exchanges on which the Offered Securities may
be listed from time to time) (B) in the over-the-counter market,
(C) in transactions other than on such exchanges or in the over-
the-counter market, or a combination of such transactions, or (D)
through the writing of options on the shares (whether such options
are listed on an options exchange or otherwise). Any such
transactions may be effected at market prices prevailing at the
time of sale, at prices related to such prevailing market prices,
at negotiated prices or at fixed prices.
The Company or any underwriter for the Offered Securities may
effect such transactions by selling shares to or through broker-
dealers, and such broker-dealers may receive compensation in the
form of underwriting discounts, concessions or commissions from the
Company or such underwriter and/or commissions from purchasers of
shares for whom they may act as agent (which discounts, concessions
or commissions will not exceed those customary in the types of
transactions involved). Any underwriter of the shares also may
receive commissions from purchasers of shares for whom it may act
as agent. The Company and any underwriters, broker-dealers or
agents that participate in the distribution of shares might be
deemed to be underwriters, and any profit on the sale of shares by
them and any discounts, commissions or concessions received by any
such underwriters, broker-dealers or agents might be deemed to be
underwriting discounts and commissions under the Securities Act.
Under agreements which may be entered into by the Company,
underwriters, dealers and agents who participate in the
distribution of Offered Securities may be entitled to
indemnification by the Company against certain liabilities,
including liabilities under the Securities Act.
The Offered Securities may or may not be listed on a national
securities exchange. No assurances can be given that there will be
a market for the Offered Securities.
LEGAL MATTERS
Certain legal matters in connection with the Offered Securities
will be passed upon for the Company by James L. McCulloch, Vice
President and General Counsel of the Company, and for any
underwriters or agents by a firm named in the Prospectus Supplement
relating to a particular issue of Offered Securities.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's consolidated balance sheet at December 31, 1994 and
1993 and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three years
ended December 31, 1994, 1993 and 1992, as incorporated by
reference from the Company's Annual Report on Form 10-K for the
year ended December 31, 1994 into this Prospectus and the
Registration Statement (including the related financial statement
schedule which is incorporated by reference) of which this
Prospectus is a part, have been incorporated herein in reliance on
the report on the audits of the consolidated financial statements,
which report includes an explanatory paragraph that describes the
Company's adoption of the method of accounting for income taxes,
the method of accounting for postretirement benefits other than
pensions, and the method of accounting for postemployment benefits,
as prescribed by applicable statements of the Financial Accounting
Standards Board, and the report on the audits of the consolidated
financial statement schedule of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as
experts in accounting and auditing.
With respect to the unaudited interim financial information
included in the Company's quarterly report on Form 10-Q for the
quarter ended March 31, 1995, filed pursuant to the Exchange Act
and incorporated by reference in this Prospectus, the Company's
independent accountants have reported that they have applied
limited procedures in accordance with professional standards for a
review of such information. However, their separate report
included in the Company's quarterly report on Form 10-Q for the
quarter ended March 31, 1995 and incorporated by reference herein,
states that they did not audit and they do not express an opinion
on that interim financial information. With respect to the
unaudited interim financial information included in the Company's
quarterly reports on Form 10-Q subsequently filed pursuant to the
Exchange Act and deemed to be incorporated by reference in this
Prospectus, it is anticipated that the Company's independent
accountants will report that they have applied limited procedures
in accordance with professional standards for a review of such
information. However, their separate reports included in the
Company's subsequent quarterly reports on Form 10-Q and
incorporated by reference herein will state that they did not audit
and do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their reports
on interim financial information should be restricted in light of
the limited nature of the review procedures applied. The
independent accountants are not subject to the liability provisions
of Section 11 of the Securities Act for their reports on unaudited
interim financial information because these reports are not a
"report" or a "part" of a registration statement prepared or
certified by the accountants within the meaning of Sections 7 and
11 of the Securities Act.
EXPERTS
The information regarding oil and gas reserves of the Company for
each of the three years ended December 31, 1994, 1993 and 1992,
included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1994 has been included therein and incorporated
by reference into this Prospectus and the Registration Statement of
which this Prospectus is a part in reliance upon the reports and
the authority as experts of Ryder Scott Company Petroleum
Engineeers.
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATES AS OF WHICH INFORMATION IS GIVEN
IN THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION
IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION.
Table of Contents
Page
Available Information 2
Incorporation by Reference 2
The Company 3
Risk Factors 3
Use of Proceeds 9
Ratios of Earnings to Fixed Charges and
Earnings to Fixed Charges and
Preferred Stock Dividends 9
Description of Debt Securities 9
Description of Capital Stock 21
Plan of Distribution 25
Legal Matters 25
Independent Public Accountants 25
Experts 26
GLOBAL MARINE INC.
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
PROSPECTUS
Dated , 1995
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses to be paid by the Company in connection with the
offering described in this Registration Statement (other than
underwriting discounts and commissions) are estimated as follows:
Securities and Exchange Commission registration fee $25,862.07
NASD filing fee *
Printing *
Accounting fees and expenses *
Legal fees and expenses *
Blue Sky fees and expenses (including counsel fees) *
Miscellaneous expenses *
Total $ *
* To be supplied by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law empowers a
Delaware corporation to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of such corporation) by reason of the fact that such person
is or was a director or officer, employee or agent of such
corporation, or is or was serving at the request of such
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise.
The indemnity may include expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action,
suit or proceeding, provided that he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his
conduct was unlawful. A Delaware corporation may indemnify
directors, officers, employees and others in an action by or in the
right of the corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the
person to be indemnified has been adjudged to be liable to the
corporation. Where a director or officer is successful on the
merits or otherwise in the defense of any action referred to above
or in defense of any claim, issue or matter therein, the
corporation must indemnify such director or officer against the
expenses (including attorneys' fees) which he or she actually and
reasonably incurred in connection therewith.
Section III-11 of the By-laws of Global Marine Inc. provides for
indemnification of the directors and officers of Global Marine Inc.
to the full extent permitted by law, as now in effect or later
amended. Section III-11 of the By-laws provides that expenses
incurred by a director or officer in defending a suit or other
similar proceeding shall be paid by the Company upon receipt of an
undertaking by or on behalf of the director or officer to repay
such amount if it is ultimately determined that such director or
officer is not entitled to be indemnified by the Company.
Additionally, the Company's Restated Certificate of Incorporation
(the "Charter") contains a provision that limits the liability of
the Company's directors to the fullest extent permitted by the
Delaware General Corporation Law. The provision eliminates the
personal liability of directors to the Company or its stockholders
for monetary damages for breach of the director's fiduciary duty of
care as a director. As a result, stockholders may be unable to
recover monetary damages against directors for negligent or grossly
negligent acts or omissions in violation of their duty of care.
The provision does not change the liability of a director for
breach of his duty of loyalty to the Company or to stockholders,
for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, the
declaration or payment of dividends in violation of Delaware law,
or in respect of any transaction from which a director receives an
improper personal benefit.
In addition to its Charter and By-law provisions, the Company has
taken such other steps as are reasonably necessary to effect its
indemnification policy. Included among such other steps is
liability insurance provided by the Company for its directors and
officers for certain losses arising from claims or charges made
against them in their capacities as directors or officers of the
Company. The Company has also entered into indemnification
agreements with individual officers and directors. These
agreements generally provide such officers and directors with a
contractual right to indemnification to the full extent provided by
applicable law and the By-laws of the Company as in effect at the
respective dates of such agreements.
Agreements which may be entered into with underwriters, dealers
and agents who participate in the distribution of Common Stock may
contain provisions relating to the indemnification of the Company's
officers and directors.
ITEM 16. EXHIBITS.
The following instruments and documents are included as exhibits
to this Registration Statement and are filed herewith unless
otherwise indicated. Exhibits incorporated by reference are so
indicated by parenthetical information.
1.1 Underwriting Agreement.*
4.1 Restated Certificate of Incorporation of the Company as
filed with the Secretary of State of Delaware on March
15, 1989, effective March 16, 1989. (Incorporated herein
by this reference to Exhibit 3(i).1 of the Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1993.)
4.2 Certificate of Amendment of the Restated Certificate of
Incorporation of the Company as filed with the Secretary
of State of Delaware on May 11, 1990. (Incorporated
herein by this reference to Exhibit 3(i).2 of the
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1993.)
4.3 Certificate of Correction of the Restated Certificate of
Incorporation of the Company as filed with the Secretary
of State of Delaware on September 25, 1990.
(Incorporated herein by this reference to Exhibit 3(i).3
of the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993.)
4.4 Certificate of Amendment of the Restated Certificate of
Incorporation of the Company as filed with the Secretary
of State of Delaware on May 11, 1992. (Incorporated
herein by this reference to Exhibit 3(i).4 of the
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1993.)
4.5 Certificate of Amendment of the Restated Certificate of
Incorporation of the Company as filed with the Secretary
of State of Delaware on May 12, 1994. (Incorporated
herein by this reference to Exhibit 4.5 of the
Registrant's Registration Statement on Form S-3 (No. 33-
53691) filed with the Commission on May 18, 1994.)
4.6 By-laws of the Company as amended on May 10, 1989.
(Incorporated herein by this reference to Exhibit 3(ii).1
of the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993.)
4.7 Indenture, dated as of December 23, 1992, between the
Company and Wilmington Trust Company, as Trustee, with
respect to the Senior Secured Notes. (Incorporated
herein by this reference to Exhibit 4.5 of Post-Effective
Amendment No. 2 to the Registrant's Registration
Statement on Form S-3 (No. 33-34013) filed with the
Commission on January 22, 1993.)
4.8 First Priority Naval Mortgage, dated April 29, 1993, from
Global Marine Drilling Company to Wilmington Trust
Company, as Trustee. (Incorporated herein by this
reference to Exhibit 4.6 of the Registrant's Registration
Statement on Form S-3 (No. 33-65272) filed with the
Commission on June 30, 1993.)
4.9 First Preferred Fleet Mortgage, dated December 23, 1992,
from Global Marine Drilling Company to Wilmington Trust
Company, as Trustee. (Incorporated herein by this
reference to Exhibit 4.7 of Post-Effective Amendment No.
2 to the Registrant's Registration Statement on Form S-3
(No. 33-34013) filed with the Commission on January 22,
1993.)
4.10 Release of Vessel from Lien of First Preferred Fleet
Mortgage, dated April 30, 1993, by Wilmington Trust
Company, as Trustee. (Incorporated herein by this
reference to Exhibit 4.8 of the Registrant's Registration
Statement on Form S-3 (No. 33-65272) filed with the
Commision on June 30, 1993.)
4.11 First Preferred Fleet Mortgage, dated December 23, 1992,
from Global Marine Deepwater Drilling Inc. to Wilmington
Trust Company, as Trustee. (Incorporated herein by this
reference to Exhibit 4.8 of Post-Effective Amendment No.
2 to the Registrant's Registration Statement on Form S-3
(No. 33-34013) filed with the Commission on January 22,
1993.)
4.12 Release of Vessel from Lien of Mortgage, dated January
27, 1993, by Wilmington Trust Company, as Trustee.
(Incorporated herein by this reference to Exhibit 4.6 of
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1993.)
4.13 First Priority Naval Mortgage, dated March 17, 1993, from
Global Marine Nautilus Inc. to Wilmington Trust Company,
as Trustee. (Incorporated herein by the reference to
Exhibit 4.10 of the Registrant's Registration Statement
on Form S-3 (No. 33-65272) filed with the Commission on
June 30, 1993.)
4.14 Release of Vessel from Lien of First Priority Naval Fleet
Mortgage, dated September 8, 1993, by Wilmington Trust
Company, as Trustee. (Incorporated herein by this
reference to Exhibit 4.8 of the Registrant's Annual
Report on Form 10-K for the year ended December 31,
1993.)
4.15 Supplement No.1, dated September 8, 1993, to First
Priority Naval Fleet Mortgage from Global Marine Nautilus
Inc. to Wilmington Trust Company, as Trustee.
(Incorporated herein by this reference to Exhibit 4.9 of
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1993.)
4.16 Assumption Agreement and Supplement No. 2 dated December
16, 1993, to First Priority Naval Fleet and Mortgage
among Global Marine Drilling Company and Wilmington Trust
Company, as Trustee. (Incorporated herein by this
reference to Exhibit 4.10 of the Registrant's Annual
Report on Form 10-K for the year ended December 31,
1993.)
4.17 First Preferred Fleet Mortgage, dated December 23, 1992,
from Global Marine West Africa Inc. to Wilmington Trust
Company, as Trustee. (Incorporated herein by this
reference to Exhibit 4.10 of Post-Effective Amendment No.
2 to the Registrant's Registration Statement on Form S-3
(No. 33-34013) filed with the Commission on January 22,
1993.)
4.18 First Preferred Ship Mortgage, dated December 23, 1992,
from Global Marine Adriatic Inc. to Wilmington Trust
Company, as Trustee. (Incorporated herein by this
reference to Exhibit 4.11 of Post-Effective Amendment No.
2 to the Registrant's Registration Statement on Form S-3
(No. 33-34013) filed with the Commission on January 22,
1993.)
4.19 Assumption Agreement and Supplement No. 1, dated March 4,
1993, to First Preferred Ship Mortgage among Global
Marine Adriatic Inc., as Original Mortgagor, Global
Marine Drilling Company, as Assuming Mortgagor, and
Wilmington Trust Company, as Trustee. (Incorporated
herein by this reference to Exhibit 4.13 of the
Registrant's Registration Statement on Form S-3 (No. 33-
65272) filed with the Commission on June 30, 1993.)
4.20 First Preferred Ship Mortgage, dated December 23, 1992,
from Global Marine Australia Inc. to Wilmington Trust
Company, as Trustee. (Incorporated herein by this
reference to Exhibit 4.12 of Post-Effective Amendment No.
2 to the Registrant's Registration Statement on Form S-3
(No. 33-34013) filed with the Commission on January 22,
1993.)
4.21 First Preferred Ship Mortgage, dated December 23, 1992,
from Global Marine Bismarck Sea Inc. to Wilmington Trust
Company, as Trustee. (Incorporated herein by this
reference to Exhibit 4.13 of Post-Effective Amendment No.
2 to the Registrant's Registration Statement on Form S-3
(No. 33-34013) filed with the Commission on January 22,
1993.)
4.22 First Priority Naval Mortgage, dated March 17, 1993, from
Global Marine North Sea Inc. to Wilmington Trust Company,
as Trustee. (Incorporated herein by this reference to
Exhibit 4.16 of the Registrant's Registration Statement
on Form S-3 (No. 33-65272) filed with the Commission on
June 30, 1993.)
4.23 Subsidiary Pledge Agreement, dated December 23, 1992,
between Global Marine Adriatic Inc. and Wilmington Trust
Company, as Trustee. (Incorporated herein by this
reference to Exhibit 4.15 of Post-Effective Amendment No.
2 to the Registrant's Registration Statement on Form S-3
(No. 33-34013) filed with the Commission on January 22,
1993.)
4.24 Subsidiary Pledge Agreement, dated December 23, 1992,
between Global Marine Australia Inc. and Wilmington Trust
Company, as Trustee. (Incorporated herein by this
reference to Exhibit 4.16 of Post-Effective Amendment No.
2 to the Registrant's Registration Statement on Form S-3
(No. 33-34013) filed with the Commission on January 22,
1993.)
4.25 Subsidiary Pledge Agreement, dated December 23, 1992,
between Global Marine Bismarck Sea Inc. and Wilmington
Trust Company, as Trustee. (Incorporated herein by this
reference to Exhibit 4.17 of Post-Effective Amendment No.
2 to the Registrant's Registration Statement on Form S-3
(No. 33-34013) filed with the Commission on January 22,
1993.)
4.26 Subsidiary Pledge Agreement, dated December 23, 1992,
between Global Marine Deepwater Drilling Inc. and
Wilmington Trust Company, as Trustee. (Incorporated
herein by this reference to Exhibit 4.18 of Post-
Effective Amendment No. 2 to the Registrant's
Registration Statement on Form S-3 (No. 33-34013) filed
with the Commission on January 22, 1993.)
4.27 Subsidiary Pledge Agreement, dated December 23, 1992,
between Global Marine Drilling Company Inc. and
Wilmington Trust Company, as Trustee. (Incorporated
herein by this reference to Exhibit 4.19 of Post-
Effective Amendment No. 2 to the Registrant's
Registration Statement on Form S-3 (No. 33-34013) filed
with the Commission on January 22, 1993.)
4.28 Subsidiary Pledge Agreement, dated December 23, 1992,
between Global Marine Nautilus Inc. and Wilmington Trust
Company, as Trustee. (Incorporated herein by this
reference to Exhibit 4.20 of Post-Effective Amendment No.
2 to the Registrant's Registration Statement on Form S-3
(No. 33-34013) filed with the Commission on January 22,
1993.)
4.29 Subsidiary Pledge Agreement, dated December 23, 1992,
between Global Marine North Sea Inc. and Wilmington Trust
Company, as Trustee. (Incorporated herein by this
reference to Exhibit 4.21 of Post-Effective Amendment No.
2 to the Registrant's Registration Statement on Form S-3
(No. 33-34013) filed with the Commission on January 22,
1993.)
4.30 Subsidiary Pledge Agreement, dated December 23, 1992,
between Global Marine West Africa Inc. and Wilmington
Trust Company, as Trustee. (Incorporated herein by this
reference to Exhibit 4.22 of Post-Effective Amendment No.
2 to the Registrant's Registration Statement on Form S-3
(No. 33-34013) filed with the Commission on January 22,
1993.)
4.31 Form of Indenture between the Company and one or more
commercial banks to be named, as trustee.+
4.32 Form of Debt Security.*
5.1 Opinion and Consent of James L. McCulloch, Vice President
and General Counsel of the Company.+
12.1 Statement re computation of earnings to fixed charges.+
15.1 Letter regarding unaudited interim financial information.
23.1 Consent of James L. McCulloch (contained in the opinion
filed as Exhibit 5.1 hereof).+
23.2 Consent of Coopers & Lybrand L.L.P., Independent
Accountants.
23.3 Consent of Ryder Scott Company Petroleum Engineers.+
24.1 Power of Attorney pursuant to which amendments to this
Registration Statement may be filed.+
25.1 Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of Trustee.**
99.1 Sale and Purchase Agreement, dated April 10, 1995,
between Global Marine Australia Inc. and Dual Drilling
Company.+
+ Previously filed.
* To be filed, if applicable, as an exhibit to a report on Form 8-K
at the time of the sale of the Offered Securities.
** To be filed at or prior to the time of the sale of the Offered
Securities.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement;
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the
registration statement (or the most recent post-
effective amendment thereof) which, individually
or in the aggregate, represent a fundamental
change in the information set forth in the
registration statement;
(iii) To include any material information with respect
to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic
reports filed by the registrant pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
The undersigned registrant 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 Section 15(d) of the Securities Exchange Act of
1934 that is incorporated by reference in this 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.
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 provisions
outlined in Item 15 above or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
The undersigned registrant hereby undertakes to file an
application for the purpose of determining the eligibility of the
trustee to act under subsection (a) of Section 310 of the Trust
Indenture Act ("Act") in accordance with the rules and regulations
prescribed by the Commission under Section 305(b) (2) of the Act.
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and
has duly caused this Amendment No. 1 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on the 31st
day of May, 1995.
GLOBAL MARINE INC.
By: /s/ J. C. Martin
J. C. Martin
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933,
this Amendment No. 1 to the Registration Statement has been signed
below by the following persons in the capacities and on the dates
indicated.
Signature Title Date
C. R. Luigs* Chairman of the Board, President
(C. R. Luigs) and Chief Executive Officer
/s/J. C. Martin Senior Vice President, Chief May 31, 1995
(J. C. Martin) Financial Officer (Principal
Financial Officer) and Director
Thomas R. Johnson* Vice President and Corporate
(Thomas R. Johnson) Controller (Principal Accounting
Officer)
Patrick M. Ahern* Director
(Patrick M. Ahern)
Donald B. Brown* Director
(Donald B. Brown)
E. J. Campbell* Director
(E. J. Campbell)
Peter T. Flawn* Director
(Peter T. Flawn)
John M. Galvin* Director
(John M. Galvin)
L. L. Leigh* Director
(L. L. Leigh)
Sidney A. Shuman* Director
(Sidney A. Shuman)
William R. Thomas* Director
(William R. Thomas)
William C. Walker* Director
(William C. Walker)
*By: /s/ J. C. Martin May 31, 1995
( J. C. Martin, Attorney-in-Fact)
EXHIBIT INDEX
Exhibit
15.1 Letter regarding unaudited interim financial information.
23.2 Consent of Coopers & Lybrand L.L.P., Independent Accountants.
The following exhibits are incorporated by reference into
the Registration Statement with which this set of Exhibits is
filed, as stated at pages II-2 through II-5 of the Registration
Statement. Descriptions of said exhibits are incorporated herein
by this reference to Item 16 of the Registration Statement.
4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12,
4.13, 4.14, 4.15, 4.16, 4.17, 4.18, 4.19, 4.20, 4.21, 4.22,
4.23, 4.24, 4.25, 4.26, 4.27, 4.28, 4.29 and 4.30
The following exhibits were filed previously, as stated
at pages II-2 through II-5 of the Registration Statement.
Descriptions of said exhibits are incorporated herein by this
reference to Item 16 of the Registration Statement.
4.31, 5.1, 12.1, 23.1, 23.3, 24.1 and 99.1
EXHIBIT 15.1
ACCOUNTANTS' AWARENESS LETTER
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Global Marine Inc.
Registration Statement on Form S-3
We are aware that our report dated May 10, 1995 on our review
of the condensed consolidated interim financial information of
Global Marine Inc. and subsidiaries for the quarter ended March 31,
1995 and included the Company's Quarterly Report on Form 10-Q for
the quarter then ended is incorporated by reference into the
prospectus pertaining to the proposed offering of up to $75,000,000
of Debt Securities, Preferred Stock and/or Common Stock of Global
Marine Inc. that constitutes part of this Registration Statement on
Form S-3 being filed by Global Marine Inc. with the Securities and
Exchange Commission under the Securities Act of 1933, as amended.
Pursuant to Rule 436 (c) under the Securities Act of 1933, said
report should not be considered a part of said Registration
Statement prepared or certified by us within the meaning of
Sections 7 and 11 of that Act.
/s/ Coopers & Lybrand L.L.P.
Houston, Texas
May 31, 1995
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent (i) to the incorporation by reference into the
Prospectus pertaining to the proposed offering of up to $75,000,000
of Debt Securities, Preferred Stock and/or Common Stock of Global
Marine Inc. that constitutes part of this Registration Statement on
Form S-3, being filed by Global Marine Inc. with the Securities and
Exchange Commission under the Securities Act of 1933, as amended,
of our report, which includes an explanatory paragraph that
describes the Company's adoption of the method of accounting for
income taxes, the method of accounting for postretirement benefits
other than pensions and the method of accounting for postemployment
benefits, as prescribed by applicable statements of the Financial
Accounting Standards Board, dated February 10, 1995, on our audits
of the consolidated financial statements and financial statement
schedule of Global Marine Inc. and subsidiaries, as of December 31,
1994 and 1993, and for each of the three years in the period ended
December 31, 1994, and (ii) to the reference to our firm under the
heading "Independent Public Accountants" in said Prospectus.
/s/ Coopers & Lybrand L.L.P.
Houston, Texas
May 31, 1995
