SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-5471
GLOBAL MARINE INC.
(Exact name of registrant as specified in its charter)
Delaware 95-1849298
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
777 N. Eldridge Parkway, Houston, Texas 77079-4493
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (281)596-5100
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [x] No [ ]
The number of shares of the registrant's Common Stock, par value $.10
per share, outstanding as of July 31, 1998 was 173,225,717.
<PAGE>
GLOBAL MARINE INC.
TABLE OF CONTENTS TO FORM 10-Q
QUARTER ENDED JUNE 30, 1998
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Report of Independent Accountants 2
Condensed Consolidated Statement of Operations for
the Three and Six Months Ended June 30, 1998
and 1997 3
Condensed Consolidated Balance Sheet as of June 30, 1998
and December 31, 1997 4
Condensed Consolidated Statement of Cash Flows for
the Six Months Ended June 30, 1998 and 1997 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 19
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURE 20
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of Global Marine Inc.
We have made a review of the condensed consolidated balance sheet of
Global Marine Inc. and subsidiaries as of June 30, 1998, and the
related condensed consolidated statement of operations for the
three- and six-month periods ended June 30, 1998 and 1997, and
the condensed consolidated statement of cash flows for the six-month
periods ended June 30, 1998, and 1997. These financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review
of interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of persons
responsible for financial and accounting matters. It is substantially
less in scope than an audit conducted in accordance with generally
accepted auditing standards, the objective of which is the expression
of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the condensed consolidated financial statements
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet as of December 31,
1997, and the related consolidated statements of operations, stockholders'
equity, and cash flows for the year then ended (not presented herein); and
in our report dated March 11, 1998, we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the information
set forth in the accompanying condensed consolidated balance sheet as of
December 31, 1997, is fairly stated, in all material respects, in relation
to the consolidated balance sheet from which it has been derived.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
August 5, 1998
<PAGE>
<TABLE>
GLOBAL MARINE INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In millions, except per share amounts)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues:
Contract drilling $196.7 $129.1 $373.2 $237.8
Drilling management 158.2 102.6 255.6 201.6
Oil and gas 1.1 1.4 2.3 4.0
------ ------ ------ ------
Total revenues 356.0 233.1 631.1 443.4
Expenses:
Contract drilling 66.2 58.0 126.9 109.8
Drilling management 157.1 91.6 254.3 176.6
Oil and gas .5 .7 1.0 1.5
Depreciation, depletion and
amortization 25.9 10.8 46.5 21.4
General and administrative 5.0 5.1 10.4 9.8
------ ------ ------ ------
Total operating expenses 254.7 166.2 439.1 319.1
------ ------ ------ ------
Operating income 101.3 66.9 192.0 124.3
Other income (expense):
Interest expense (12.0) (8.0) (20.4) (16.1)
Interest capitalized 5.0 4.9 10.2 8.2
Interest income 1.0 1.7 1.9 3.4
Other - .1 - -
------ ------ ------ ------
Total other income (expense) (6.0) (1.3) (8.3) (4.5)
------ ------ ------ ------
Income before income taxes 95.3 65.6 183.7 119.8
Provision (benefit) for income taxes:
Current tax provision 6.5 6.5 11.6 11.9
Deferred tax provision (benefit) 15.4 (25.0) 30.5 (55.0)
------ ------ ------ ------
Total provision (benefit) for
income taxes 21.9 (18.5) 42.1 (43.1)
------ ------ ------ ------
Net income $ 73.4 $ 84.1 $141.6 $162.9
====== ====== ====== ======
Earnings per share:
Basic $ 0.42 $ 0.49 $ 0.82 $ 0.96
Diluted $ 0.42 $ 0.48 $ 0.80 $ 0.93
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
GLOBAL MARINE INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
($ in millions)
ASSETS
<CAPTION>
June 30, December 31,
1998 1997
-------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 38.6 $ 78.9
Marketable securities 1.7 1.7
Accounts receivable, net of allowances 203.6 152.2
Future income tax benefits 70.0 70.0
Costs incurred on turnkey drilling contracts
in progress 10.5 11.7
Prepaid expenses 6.5 3.1
Other current assets 7.5 10.1
-------- --------
Total current assets 338.4 327.7
Properties and equipment:
Rigs and drilling equipment, less accumulated
depreciation of $317.5 and $275.4 at June 30,
1998 and December 31, 1997, respectively 1,014.6 609.2
Construction in progress 334.3 383.4
Oil and gas properties, full cost method, less
accumulated depreciation, depletion and
amortization of $30.6 and $29.7 at June 30,
1998 and December 31, 1997, respectively 8.5 6.4
-------- --------
Net properties and equipment 1,357.4 999.0
Future income tax benefits 51.3 79.4
Other assets 37.9 15.8
-------- --------
Total assets $1,785.0 $1,421.9
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
GLOBAL MARINE INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (Continued)
($ in millions)
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
June 30, December 31,
1998 1997
-------- ------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 92.6 $ 115.5
Accrued compensation and related employee costs 18.2 30.5
Accrued interest 9.4 6.6
Accrued income taxes 12.2 19.5
Other accrued liabilities 8.2 11.4
-------- --------
Total current liabilities 140.6 183.5
Long-term debt 655.6 399.4
Capital lease obligation 17.0 17.9
Other long-term liabilities 14.0 15.5
Stockholders' equity:
Preferred stock, $0.01 par value, 10 million
shares authorized, no shares issued or
outstanding - -
Common stock, $0.10 par value, 300 million
shares authorized, 173,210,092 shares and
172,202,785 shares issued and outstanding at
June 30, 1998 and December 31, 1997, respectively 17.3 17.2
Additional paid-in capital 320.6 310.1
Retained earnings 619.9 478.3
-------- --------
Total stockholders' equity 957.8 805.6
-------- --------
Total liabilities and stockholders' equity $1,785.0 $1,421.9
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
GLOBAL MARINE INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
<CAPTION>
Six Months Ended
June 30,
----------------
1998 1997
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 141.6 $ 162.9
Adjustments to reconcile net income to net
cash flow provided by operating activities:
Deferred income tax provision (benefit) 30.5 (55.0)
Depreciation, depletion and amortization 46.5 21.4
Increase in accounts receivable (54.1) (27.4)
Decrease (increase) in costs incurred on
turnkey drilling contracts in progress 1.2 (2.2)
Increase in other current assets (.8) (4.6)
(Decrease) increase in accounts payable (22.9) 29.3
(Decrease) increase in other accrued liabilities (15.6) .6
Other, net .3 .8
------- -------
Net cash flow provided by operating activities 126.7 125.8
Cash flows from investing activities:
Capital expenditures (426.6) (134.2)
Proceeds from sales of properties and equipment 2.8 .9
Proceeds from maturities of held-to-maturity securities 1.1 46.6
Purchases of held-to-maturity securities (1.1) (19.1)
------- -------
Net cash flow used in investing activities (423.8) (105.8)
Cash flows from financing activities:
Increases in long-term debt 496.0 -
Reductions of long-term debt (240.0) (1.1)
Proceeds from exercises of employee stock options 3.8 5.0
Other (3.0) (.2)
------- -------
Net cash flow provided by financing activities 256.8 3.7
------- -------
(Decrease) increase in cash and cash equivalents (40.3) 23.7
Cash and cash equivalents at beginning of period 78.9 92.9
------- -------
Cash and cash equivalents at end of period $ 38.6 $ 116.6
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
GLOBAL MARINE INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
Note 1 - General
The financial statements reflect all adjustments which are, in the opinion
of management, necessary for a fair statement of the results for the interim
periods. Such adjustments are considered to be of a normal recurring nature
unless otherwise identified.
The year-end condensed consolidated balance sheet was derived from audited
financial statements but does not include all disclosures required by
generally accepted accounting principles. Certain reclassifications were
made to the prior-year period to conform to the current-period presentation.
The term "Company" refers to Global Marine Inc. and, unless the context
otherwise requires, to the Company's consolidated subsidiaries.
Note 2 - Commitments to Purchase New Drillships
In the first quarter of 1998, the Company entered into agreements with
Harland and Wolff Shipbuilding and Heavy Industries Ltd. for the
construction of two dynamically-positioned deep-water drillships at a
cost of approximately $664 million, including all equipment, financing,
and other associated costs. The Company intends to finance the new
drillships, which are expected to enter service in the first and second
quarters of 2000, respectively, with internally generated funds and funds
available under the Company's existing bank credit facilities.
Note 3 - Long-term Debt
Long-term debt as of June 30, 1998 and December 31, 1997 consisted of the
following:
<TABLE>
<CAPTION>
6/30/98 12/31/97
------- --------
(In millions)
<S> <C> <C>
7-1/8% Notes due 2007, net of discount $299.4 $299.4
7% Notes due 2028, net of discount 296.2 -
Borrowings under $240 million bank revolving
credit facility 60.0 100.0
------ ------
Total long-term debt, including current maturities 655.6 399.4
Less current maturities - -
------ ------
Long-term debt $655.6 $399.4
====== ======
</TABLE>
The weighted average annual rate of interest on borrowings under the
Company's $240 million revolving credit facility was 5.91% as of June 30,
1998, as compared to 6.325% as of December 31, 1997.
On January 29, 1998, the Company entered into a one-year unsecured
revolving credit facility (the "$150 million credit facility") in
connection with the acquisition of the offshore drilling rig, Stena Forth,
which was subsequently renamed the Glomar Arctic IV. Under the $150
million credit facility, the Company may borrow up to $150 million at
interest rates determinable at the time of the borrowings. The unused
<PAGE>
portion of the credit facility is subject to an annual commitment fee of
one-tenth of one percent. As of June 30, 1998, there were no borrowings
under the $150 million credit facility.
On May 26, 1998, the Company issued $300 million of 7% Notes due 2028
(the "7% Notes") and received cash proceeds of $296.0 million after
deduction for discount and underwriting fees. The Company used $150.0
million of the proceeds to repay all amounts drawn under the $150 million
credit facility and used the remainder to repay a portion of the amount
drawn under the $240 million revolving bank credit facility. The
outstanding debt that was repaid from the net proceeds of the 7% Notes was
incurred to finance the upgrade, acquisition and construction of rigs and
for working capital requirements. Interest on the 7% Notes will be payable
on June 1 and December 1 of each year. The Company may redeem the 7% Notes
in whole at any time, or in part from time to time, at a price equal to
100% of the principal amount thereof plus accrued interest, if any, to the
date of redemption, plus a premium, if any, relating to the then prevailing
Treasury Yield and the remaining life of the 7% Notes. The indenture
relating to the 7% Notes contains limitations on the Company's ability
to incur indebtedness for borrowed money secured by certain liens and to
engage in certain sale/leaseback transactions.
Note 4 - Income Taxes
The Company's effective income tax rate for financial reporting purposes
for the three and six months ended June 30, 1998 was approximately 23
percent, which was lower than the United States federal statutory rate
of 35 percent. This lower effective rate was primarily the result of the
Company's December 1997 realignment which placed the ownership of its
foreign operating assets in foreign subsidiaries of the Company. Since
the Company intends to permanently reinvest outside the U.S. its foreign
subsidiaries' earnings that are not otherwise subject to U.S. taxation, the
Company will neither incur nor provide for any U.S. federal income taxes
on such foreign earnings. For the three and six months ended June 30, 1997,
the Company's effective tax rate differed from the U.S. statutory rate
primarily due to the Company's recognition of the future tax benefits of a
portion of the Company's unused net operating loss ("NOL") carryforwards.
<PAGE>
Note 5 - Earnings per Share
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 128, "Earnings per Share," in the fourth quarter of 1997.
As a result, the Company's reported earnings per share for the three and
six months ended June 30, 1997 have been restated. A reconciliation of
the numerators and denominators of the basic and diluted per-share
computations for net income follows:
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
-------------------------- ------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
($ in millions, except per share data)
<S> <C> <C> <C> <C>
Net income (numerator): $73.4 $84.1 $141.6 $162.9
===== ===== ====== ======
Shares (denominator):
Shares - Basic 172,948,809 170,744,743 172,770,698 170,394,235
Effect of employee
stock options 3,143,854 5,471,749 3,294,797 5,712,834
----------- ----------- ----------- -----------
Shares - Diluted 176,092,663 176,216,492 176,065,495 176,107,069
=========== =========== =========== ===========
Earnings per share:
Basic $0.42 $0.49 $0.82 $0.96
Diluted $0.42 $0.48 $0.80 $0.93
</TABLE>
Note 6 - Contingencies
In June 1998 the Company suspended drilling a well under a turnkey contract
after it experienced an underground blowout which made it impossible to
continue drilling. The Company attempted to re-drill the well and failed
when the casing buckled. The Company believes that the costs incurred on
the re-drill, plus any future costs incurred in re-drilling the well to
the depth at which the underground blowout occurred, should the Company
choose to re-drill the well a second time, would be reimbursed by its
insurance carrier under the terms of the Company's underground blowout
insurance. Should the Company choose to re-drill the well a second time,
there can be no assurance that the well would be successfully completed.
In the event that the well could not be successfully completed, the
Company would bear all costs of the initial drilling and any re-drillings,
less any insurance proceeds, and would be unable to receive any revenue
under the terms of the turnkey drilling contract. The Company has notified
its insurance carrier of the claim but has not yet determined which costs,
if any, are reimbursable under the terms of the Company's insurance, nor has
it determined if it intends to re-drill the well a second time. As of
June 30, 1998, costs incurred in connection with the well totaled
approximately $13 million, which have been deferred pending resolution of
the matter. The Company is not able to predict the amount of loss, if any,
that it may incur in connection with the turnkey contract. Any such loss
could range from zero to $13 million. This maximum loss would occur only
in the event that the Company fails to collect any portion of the claim
under its insurance policy and is unable to successfully perform under the
drilling contract.
<PAGE>
The Company is seeking to resolve a dispute with Sedco Forex Offshore
("Sedco") with respect to a bareboat charter agreement for the drilling
rig, Glomar Grand Banks. The Company assumed rights to the bareboat
charter at the time it acquired ownership of the rig in July 1997. At
issue are the date of termination of the charter, the condition of the rig
upon its return to the Company, and Sedco's liability to pay additional
dayrate. With regard to the first issue, the Company has contended that
the charter expired on January 20, 1998. The parties commenced arbitration
proceedings in December 1997, and the arbitration panel ruled in favor of
the Company on that issue. With respect to the other issues, the Company
contends Sedco is responsible under the charter for paying the cost of
certain repairs to the rig and for paying a market dayrate for the period
following termination of the charter and while the rig is in the shipyard
for repairs prior to the rig's return to work for another customer. Sedco
completed using the rig for drilling on May 5, 1998, at which time the rig
entered a shipyard to undergo the repairs at issue. The rig is scheduled
to begin working for another customer in September 1998. An arbitration
hearing with regard to the outstanding issues is scheduled for the second
quarter of 1999. As of June 30, 1998, the amount of dayrate from Sedco
which the Company has recognized as revenue totaled $19.2 million, none
of which has been collected. The Company has not reserved any of this
amount, all of which it expects to collect. The total amount of dayrate
to be claimed by the Company is projected to be in excess of $30 million,
including the $19.2 million recognized through June 30. The Company
believes it has meritorious claims to the remaining amount of dayrate
revenues not yet recognized.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
OPERATING RESULTS
Summary
Operating income increased by $34.4 million to $101.3 million for the
second quarter of 1998 from $66.9 million for the second quarter of 1997.
Operating income increased by $67.7 million to $192.0 million for the
six months ended June 30, 1998 from $124.3 million for the six months
ended June 30, 1997. Operating results improved primarily due to higher
average contract drilling dayrates and the addition of four rigs to the
drilling fleet, partially offset by lower turnkey profit margins.
Data relating to the Company's operations by business segment follows:
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
-------------------------- -------------------------
% Increase % Increase
1998 1997 (Decrease) 1998 1997 (Decrease)
------ ------ ---------- ------ ------ ----------
($ in millions)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Contract drilling $202.7 $129.5 57% $384.2 $241.5 59%
Drilling management 161.3 103.1 56% 259.3 202.1 28%
Oil and gas 1.1 1.4 (21%) 2.3 4.0 (43%)
Less: Intersegment
revenues (9.1) (0.9) 911% (14.7) (4.2) 250%
------ ------ ------ ------
Total revenues $356.0 $233.1 53% $631.1 $443.4 42%
====== ====== ====== ======
Operating income:
Contract drilling $105.5 $ 61.0 73% $201.6 $108.2 86%
Drilling management 1.0 11.0 (91%) 1.1 24.9 (96%)
Oil and gas 0.2 0.3 (33%) 0.5 1.6 (69%)
Corporate expenses (5.4) (5.4) - (11.2) (10.4) 8%
------ ------ ------ ------
Total operating
income $101.3 $ 66.9 51% $192.0 $124.3 54%
====== ====== ====== ======
</TABLE>
The Company reported net income of $73.4 million for the second quarter of
1998 as compared with net income of $59.1 million for the second quarter of
1997. The results for the second quarter of 1997 are before a $25.0 million
net credit to deferred income taxes due to the recognition of tax benefits
of operating loss carryforwards.
The Company reported net income of $141.6 million for the six months ended
June 30, 1998 as compared with net income of $107.9 million for the six
months ended June 30, 1997. The results for the first half of 1997 are
before a $55.0 million net credit to deferred income taxes due to the
recognition of tax benefits of operating loss carryforwards.
The continuing weakness in worldwide oil prices, which began trending
downward in the fourth quarter of 1997, is depressing offshore drilling
activity, particularly in the U.S. Gulf of Mexico. This continuation
of low oil prices has caused some customers to reduce their 1998 drilling
budgets, primarily in the water depths where jackup drilling rigs are used.
This decreased drilling activity has in turn increased competition among
drilling contractors for the available work, and has recently forced dayrates
for some jackup rigs down by as much as 50 percent or more compared to levels
seen earlier in the year. Most of the Company's fleet, particularly its
deep-water rigs, are contracted into 1999 at fixed dayrates. If oil
<PAGE>
prices remain at current levels, however, the Company anticipates lower
dayrates and possibly lower utilization on some of its rigs, particularly
jackups in the U.S. Gulf of Mexico and offshore West Africa. Rigs that
have been repriced recently in the North Sea, West Africa, and Southeast
Asia have seen rate reductions of about 25 percent. The Company now
expects the slowdown in offshore drilling activity to negatively affect
results of operations for the last half of 1998, reducing second-half
earnings to less than those reported for the first half of 1998. Management
believes, however, that a rebound in the price of oil would result in
increased demand for the Company's services and corresponding increases
in dayrates and revenues.
In March 1998 the Company completed the purchase of a deep-water,
third-generation semisubmersible drilling rig, the Stena Forth, for $150
million. The Stena Forth, renamed the Glomar Arctic IV, is currently
operating in the U.K. sector of the North Sea under a drilling contract
that extends through November 1999.
In the first quarter of 1998, the Company received two ultra-deep-water
drilling commitments, each with a multinational oil company. To fulfill
the Company's obligations under the commitments, the Company entered into
agreements with Harland and Wolff Shipbuilding and Heavy Industries Ltd.
for construction of two dynamically-positioned, deep-water drillships at
a cost of approximately $664 million, including all equipment, financing,
and other associated costs. The first drillship, the Glomar C.R. Luigs,
will be capable of drilling in water depths of 9,000 feet, upgradable to
12,000 feet, and is expected to enter service in the first quarter of 2000.
The second drillship, the Glomar Irish Sea I, will be capable of drilling
in water depths of 8,000 feet, upgradable to 12,000 feet, and is expected
to enter service in the second quarter of 2000. The Company intends to
finance construction of the two ships with internally generated funds and
funds available under existing bank credit facilities. The Company's
deep-water fleet will total ten rigs with the addition of these two rigs.
Contract Drilling Operations
Data with respect to the Company's contract drilling operations follows:
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- ---------------------------
% Increase % Increase
1998 1997 (Decrease) 1998 1997 (Decrease)
------ ------ ---------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Contract drilling revenues by area
(in millions): (1)
Gulf of Mexico $ 75.2 $ 58.7 28% $ 146.7 $ 106.4 38%
West Africa 53.4 47.1 13% 112.9 91.4 24%
North Sea 43.5 20.3 114% 77.0 40.2 92%
Other 30.6 3.4 800% 47.6 3.5 1260%
------- ------- ------- -------
$ 202.7 $ 129.5 57% $ 384.2 $ 241.5 59%
======= ======= ======= =======
Average rig utilization (2) 97% 99% 98% 98%
Average dayrate $77,000 $53,100 $73,300 $50,300
_______________________
(1) Includes revenues earned from affiliates.
(2) Excludes the Glomar Beaufort Sea I concrete island drilling system, a
currently inactive, special-purpose mobile offshore rig designed for
arctic operations, and rigs during the periods they were being converted
to drilling operations from other uses.
</TABLE>
Of the $73.2 million increase in contract drilling revenues for the second
quarter of 1998 as compared with the comparable quarter of 1997, $43.5
million was attributable to increases in dayrates and $36.0
<PAGE>
million was attributable to fleet additions subsequent to the second quarter
of 1997, partially offset by a $3.8 million decrease attributable to lower rig
utilization and a $2.5 million decrease in non-dayrate revenues.
Of the $142.7 million increase in contract drilling revenues for the six
months ended June 30, 1998 as compared with the six months ended June 30,
1997, $92.8 million was attributable to increases in dayrates and $54.1
million was attributable to fleet additions subsequent to the second
quarter of 1997, partially offset by a $3.7 million decrease in non-dayrate
revenues and a $0.5 million decrease attributable to lower rig utilization.
The mobilization of rigs between the geographic areas shown in the above
table also affected each area's revenues over the periods indicated.
Specifically, the Company mobilized one jackup from the Gulf of Mexico to
Trinidad in June 1997, one jackup from West Africa to California in July
1997, one jackup from the North Sea to offshore Argentina in September 1997,
one drillship from West Africa to offshore Egypt in April 1998, and one
jackup from the Gulf of Mexico to the North Sea in May 1998.
The Company's operating profit margin for contract drilling operations
increased to 52 percent for the second quarter of 1998 from 47 percent
for the second quarter of 1997 primarily as a result of higher average
dayrates, partially offset by a decrease in average rig utilization.
Operating expenses increased by $28.7 million due to higher depreciation
and other operating costs in connection with the additions to the rig fleet,
higher labor expense and general price level increases, among other factors.
The Company's operating profit margin for contract drilling operations
increased to 52 percent for the six months ended June 30, 1998 from 45
percent for the six months ended June 30, 1997 as a result of higher
average dayrates. Operating expenses increased by $49.3 million due to
higher depreciation and other operating costs in connection with the
additions to the rig fleet, higher labor expense and general price-level
increases, among other factors.
The Company is seeking to resolve a dispute with Sedco Forex Offshore
("Sedco") with respect to a bareboat charter agreement for the drilling rig,
Glomar Grand Banks. The Company assumed rights to the bareboat charter at
the time it acquired ownership of the rig in July 1997. At issue are the
date of termination of the charter, the condition of the rig upon its return
to the Company, and Sedco's liability to pay additional dayrate. With regard
to the first issue, the Company has contended that the charter expired on
January 20, 1998. The parties commenced arbitration proceedings in December
1997, and the arbitration panel ruled in favor of the Company on that issue.
With respect to the other issues, the Company contends Sedco is responsible
under the charter for paying the cost of certain repairs to the rig and for
paying a market dayrate for the period following termination of the charter
and while the rig is in the shipyard for repairs prior to the rig's return
to work for another customer. Sedco completed using the rig for drilling on
May 5, 1998, at which time the rig entered a shipyard to undergo the repairs
at issue. The rig is scheduled to begin working for another customer in
September 1998. An arbitration hearing with regard to the outstanding
issues is scheduled for the second quarter of 1999. As of June 30, 1998,
the amount of dayrate from Sedco which the Company has recognized as revenue
totaled $19.2 million, none of which has been collected. The Company has not
reserved any of this amount, all of which it expects to collect. The total
amount of dayrate to be claimed by the Company is projected to be in excess
of $30 million, including the $19.2 million recognized through June 30. The
Company believes it has meritorious claims to the remaining amount of dayrate
revenues not yet recognized.
In February 1998 the Company completed the conversion of the Glomar Celtic
Sea semisubmersible to drilling operations from an accommodations unit and
began operating the rig in deep waters of the U.S.
<PAGE>
Gulf of Mexico under a three-year contract. The conversion of the Glomar
Explorer drillship to a deep-water drilling rig is expected to be completed
by mid-August 1998, at which time it will begin drilling in the U.S. Gulf
of Mexico under a five-year contract.
In July 1998 the Company completed the mobilization of the Glomar Adriatic IV
from offshore California to the North Sea where it is contracted to operate
through October 1998. The mobilization to the North Sea was paid by the
previous customer who had agreed to pay the cost of the rig's relocation
after completion of that customer's contract. As of August 5, 1998, eleven
of the Company's rigs were located in the U.S. Gulf of Mexico, nine were
offshore West Africa, six were in the North Sea, and one was offshore each
of Egypt, Argentina and Trinidad. In addition, the Glomar Grand Banks, upon
the completion of repairs about September 1998, will be mobilized to the east
coast of Canada where it will operate under a contract which is expected to
extend into September 1999. At August 5, 1998, 28 of the Company's 30 active
rigs were under contract.
A continuation of low oil prices has caused oil and gas operators to reduce
their 1998 drilling budgets, primarily in water depths where jackup rigs are
used. This decreased drilling activity has in turn increased competition
among drilling contractors for available work, and has recently forced
dayrates for some jackup rigs down by as much as 50 percent or more compared
to levels seen earlier in the year. Among the Company's 23 jackups, one was
recontracted recently at approximately 67 percent of its previous dayrate
for about 90 days, and another was recontracted at approximately 45 percent
of its previous dayrate for about 100 days. The Company has a letter of
intent from a customer for use of another jackup for about four months
beginning in September 1998 at a dayrate approximating 60 percent of its
previous dayrate. Among the remaining 20 jackups at August 5, 1998, two
were without contracts, one becomes available prior to the end of August
1998, eight become available between August and December 1998, eight become
available in 1999, and one becomes available in 2000.
Drilling Management Services
Drilling management revenues increased by $58.2 million to $161.3 million
in the second quarter of 1998 from $103.1 million in the second quarter of
1997. Operating income decreased by $10.0 million to $1.0 million in the
second quarter of 1998 from $11.0 million in the second quarter of 1997.
The increase in revenues consisted of a $33.3 million increase attributable
to higher average turnkey revenues per well and a $38.7 million increase
attributable to daywork and other revenues, partially offset by a decrease
of $13.8 million attributable to a reduction in the number of turnkey wells
drilled to 23 in the second quarter of 1998 from 26 in the second quarter
of 1997.
Drilling management revenues increased by $57.2 million to $259.3 million
for the six months ended June 30, 1998 from $202.1 million for the six
months ended June 30, 1997. Operating income decreased by $23.8 million to
$1.1 million for the first six months of 1998 from $24.9 million for the
first six months of 1997. The increase in revenues consisted of a $39.4
million increase attributable to higher average turnkey revenues per well
and a $44.7 million increase attributable to daywork and other revenues,
partially offset by a decrease of $26.9 million attributable to a reduction
in the number of turnkey wells drilled to 46 in the first six months of
1998 from 53 in the first six months of 1997.
Operating income from drilling management services as a percentage of
drilling management revenues decreased to less than one percent for the
second quarter of 1998 from 11 percent for the second quarter of 1997. The
decrease in profit margin for the second quarter of 1998 was attributable
primarily to losses totaling $5.3 million on two of the 23 wells completed
during the quarter and to fixed costs of approximately 16 third-party rigs
under contract for use in turnkey operations, partially offset by the
<PAGE>
favorable effects of changes in accounting estimates of the costs of wells
completed in prior periods. The Company incurred total losses of $6.3
million on five of the 23 wells completed in the second quarter of 1998
compared to losses totaling $1.1 million on two of the 26 wells completed
in the second quarter of 1997.
Operating income from drilling management services as a percentage of
drilling management revenues decreased to less than one percent for the
six months ended June 30, 1998 from 12 percent for the six months ended
June 30, 1997. The Company incurred losses totaling $14.4 million on ten
of the 46 wells completed in the first six months of 1998 compared to
losses totaling $1.3 million on three of the 53 wells completed in the
first six months of 1997. Such losses were offset in part by the
favorable effects of changes in accounting estimates of the costs of wells
completed in prior periods.
A significant factor which contributed to the lower margins in the quarter
and six months ended June 30, 1998, as compared with the comparable periods
of 1997, was the fixed cost of rigs under term contracts. During the six
months ended June 30, 1998, the Company had an average of 16 third-party
rigs under contracts for use in turnkey drilling operations, with initial
terms ranging from six months to one year. The Company has from time to time
subcontracted some of these rigs to clients when they are not needed for the
Company's turnkey operations. Due to the slowdown in drilling activity
primarily in the U.S. Gulf of Mexico, these 16 rigs were neither subcontracted
out nor utilized internally for approximately ten percent of the time, on
average, during the first six months of 1998, resulting in idle-time costs of
$7.2 million and $11.9 million for the quarter and six months, respectively.
As of August 5, 1998, the Company had 12 rigs under contracts with expirations
ranging from September 1998 to February 1999 and two rigs under contracts
expiring in June and August 1999, respectively. As of August 5, 1998, two of
these rigs were leased to clients under subcontracts expiring in August 1998
at rates below the Company's cost for these rigs. If present market conditions
continue, the Company estimates its third quarter 1998 costs attributable to
idle rigs and rigs under subcontracts at below cost to exceed those costs
incurred in the second quarter.
In June 1998 the Company suspended drilling a well under a turnkey contract
after it experienced an underground blowout which made it impossible to
continue drilling. The Company attempted to re-drill the well and failed
when the casing buckled. The Company believes that the costs incurred on
the re-drill, plus any future costs incurred in re-drilling the well to the
depth at which the underground blowout occurred, should the Company choose
to re-drill the well a second time, would be reimbursed by its insurance
carrier under the terms of the Company's underground blowout insurance.
Should the Company choose to re-drill the well a second time, there can be
no assurance that the well would be successfully completed. In the event
that the well could not be successfully completed, the Company would bear
all costs of the initial drilling and any re-drillings, less any insurance
proceeds, and would be unable to receive any revenue under the terms of the
turnkey drilling contract. The Company has notified its insurance carrier of
the claims but has not yet determined which costs, if any, are reimbursable
under the terms of the Company's insurance, nor has it determined if it
intends to re-drill the well a second time. As of June 30, 1998, costs
incurred in connection with the well totaled approximately $13 million, which
have been deferred pending resolution of the matter. The Company is not able
to predict the amount of loss, if any, that it may incur in connection with
the turnkey contract. Any such loss could range from zero to $13 million.
This maximum loss would occur only in the event that the Company fails to
collect any portion of the claim under its insurance policy and is unable to
successfully perform under the drilling contract.
<PAGE>
Other Income and Expense
General and administrative expenses increased to $10.4 million in the six
months ended June 30, 1998 from $9.8 million in the six months ended June 30,
1997. The increase was partially attributable to expenses incurred in
connection with improvements to the Company's information systems and to
general price-level increases, among other factors.
Interest expense for the three and six months ended June 30, 1998, increased
by $4.0 million and $4.3 million, respectively, from the comparable prior-year
periods primarily due to higher debt incurred to finance the upgrade,
acquisition and construction of rigs and for working capital requirements.
The Company capitalized $10.2 million of interest expense in the six months
ended June 30, 1998 as compared to $8.2 million in the six months ended
June 30, 1997, an increase of $2.0 million. The increase is primarily due
to construction of two drillships, the Glomar C.R. Luigs and the Glomar
Irish Sea I.
Interest income for the three and six months ended June 30, 1998 decreased by
$0.7 million and $1.5 million, respectively, from the comparable prior-year
periods primarily due to lower cash balances.
The Company's effective income tax rate for financial reporting purposes for
the three and six months ended June 30, 1998 was approximately 23 percent,
which was lower than the U.S. federal statutory rate of 35 percent. This
lower effective rate was primarily the result of the Company's December 1997
realignment which placed the ownership of its foreign operating assets in
foreign subsidiaries of the Company. Since the Company intends to permanently
reinvest outside the U.S. its foreign subsidiaries' earnings that are not
otherwise subject to U.S. taxation, the Company will neither incur nor provide
for any U.S. federal income taxes on such foreign earnings. The Company
estimates that its overall effective income tax rate for 1998 will approximate
the 23 percent rate incurred to date. Most of the tax expense for 1998 will
be noncash because the Company will use its NOL carryforwards to significantly
reduce its current U.S. federal income tax liability for the year.
In the three and six months ended June 30, 1997, the Company's effective
income tax rate differed from the U.S. statutory rate primarily due to the
Company's recognition of the future tax benefits of a portion of the Company's
unused NOL carryforwards.
LIQUITY AND CAPITAL RESOURCES
On March 10, 1998, the Company purchased a deep-water, third-generation
semisubmersible drilling rig, the Stena Forth, for $150 million. The Company
financed the purchase through borrowings under its bank credit facilities.
The Stena Forth, renamed the Glomar Arctic IV, is currently operating in the
U.K. sector of the North Sea under a drilling contract that extends through
November 1999.
On March 18, 1998, the Company entered into an agreement to purchase from
Transocean ASA, a Norwegian drilling contractor ("Transocean"), the remaining
43.4 percent interest of the partnership operating the Glomar Adriatic V,
Glomar Adriatic VI, and Glomar Adriatic VII. Under the agreement, which was
effective January 31, 1998, the Company paid Transocean $20.3 million in cash,
which will be amortized over approximately 5-1/2 years. The Company and
Transocean previously shared in the net revenues of the aforementioned rigs
and a Transocean rig, the Nordic, as part of a 1993 rig purchase and sale
agreement.
<PAGE>
On May 26, 1998, the Company issued $300 million of 7% Notes due 2028 and
received cash proceeds of $296.0 million after deduction for discount and
underwriting fees. The Company used $150.0 million of the proceeds to repay
all amounts drawn under the $150 million credit facility and used the
remainder to repay a portion of the amount drawn under the $240 million
credit facility. The outstanding debt that was repaid from the net proceeds
of the 7% Notes was incurred to finance the upgrade, acquisition and
construction of rigs and for working capital requirements.
For the six months ended June 30, 1998, $126.7 million of cash flow was
provided by operating activities, $296.0 million was provided from the
issuance of the 7% Notes, and $3.8 million was provided from exercises of
employee stock options. From these amounts, together with cash on hand,
$426.6 million was used for capital expenditures, and $40.0 million was
used to reduce amounts drawn under the Company's bank revolving credit
facilities, net of borrowings.
For the six months ended June 30, 1997, $125.8 million of cash flow was
provided by operating activities, $27.5 million was provided by maturities
of marketable securities (net of purchases), and $5.0 million was provided
from exercises of employee stock options. From these amounts, $134.2 million
was used for capital expenditures.
In the first quarter of 1998, the Company entered into agreements with
Harland and Wolff Shipbuilding and Heavy Industries Ltd. for the construction
of two dynamically-positioned drillships in order to fulfill the Company's
obligations under two multi-year, deep-water drilling contracts. The two
drillships are expected to be completed at a cost of approximately $664
million, of which approximately $262 million in construction costs and $8
million of capitalized interest are expected to be incurred in 1998. The
Company intends to finance construction of the drillships with internally
generated funds and funds available under existing bank credit facilities.
The Company anticipates the two drillships will enter service in the first
and second quarters of 2000, respectively.
The first of the new drillships, the Glomar C.R. Luigs, will be used by the
customer for thirty of the first thirty-six months after delivery, followed
by two one-year options. Revenues to be generated over the thirty-month
period will be approximately $186 million. The second of the two drillships,
the Glomar Irish Sea I, is under contract with a customer for a period of
three years and is expected to generate revenues of approximately $208 million.
Capital expenditures for the full year 1998 are anticipated to be $646 million,
including $262 million for construction of the new drillships, $150 million
for the purchase of the Glomar Arctic IV, $81 million for the conversion of
the Glomar Explorer, $41 million for the conversion of the Glomar Celtic Sea,
$67 million for improvements to the remainder of the drilling fleet, $20
million for the Transocean transaction, $19 million for capitalized interest,
and $6 million for other expenditures.
As of June 30, 1998, the Company had $40.3 million in cash, cash equivalents
and marketable securities (including $4.4 million which was restricted from
use for general corporate purposes) and $330.0 million available for
borrowings under the Company's bank revolving credit facilities. As of
December 31, 1997, the Company had $80.6 million in cash, cash equivalents
and marketable securities, including restricted amounts of $1.5 million.
In April 1998, the Company filed with the U.S. Securities and Exchange
Commission a registration statement on Form S-3 under which, together with
a previous registration statement on Form S-3, the Company may offer to
sell from time to time (i) unsecured debt securities consisting of notes,
debentures or other evidences of indebtedness, (ii) shares of preferred stock,
$0.01 par value per share, and/or (iii)
<PAGE>
shares of common stock, $0.10 par value per share, for an aggregate initial
public offering price not to exceed $500 million. The amount of securities
available for issuance was reduced from $500 million to $200 million as a
result of the issuance of the $300 million of 7% Notes in May 1998.
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, its existing bank credit facilities, and its cash,
cash equivalents and marketable securities.
As part of upgrading and expanding its rig fleet and other assets, the
Company considers and pursues the acquisition of suitable additional rigs
and other assets on an ongoing basis. If the Company decides to undertake
an acquisition or the construction of a vessel, the incurrence of additional
debt or issuance of additional shares of stock could be required.
Forward-Looking Statements
Under the Private Securities Litigation Reform Act of 1995, companies are
provided a "safe harbor" for discussing their expectations regarding future
performance. We believe it is in the best interests of our stockholders to
use these provisions and provide such forward-looking information. We do
so in this report and other communications. Our forward-looking statements
include things such as our expectations for future Company performance and
earnings; our projections regarding costs of the Company's rigs that are
under construction and the dates they will enter service; our expectations
regarding contract completion dates; our expectations regarding reimbursements
under the Company's insurance coverages; estimated future costs attributable
to idle third-party rigs under contract to the Company; our expectations
regarding disputed amounts of dayrate revenue that can be claimed and
collected by the Company; statements regarding future oil and gas prices and
demand and future demand for offshore drilling services; our expectations
regarding future income tax rates and capital expenditures; an estimate of
the possible financial impact of a presently-suspended turnkey drilling
project; our belief in the Company's ability to meet its current obligations;
and other statements that are not historical facts.
Our forward-looking statements speak only as of the date of this report and
are based on currently available industry, financial and economic data and
our operating plans. They are also inherently uncertain, and investors must
recognize that events could turn out to be materially different from our
expectations.
Factors that could cause or contribute to such differences include, but are
not limited to, the Company's ability to generate cash flows or obtain
financing to fund its growth; identify and respond to changes in the markets
for oil and gas and for offshore drilling services, including decreases in
demand for the Company's services which may result from curtailments of
oil and gas operators' drilling programs due to low oil and gas prices;
prevail on its claims in disputed matters; manage its business in the face
of existing or changing tax laws; respond to challenges in international
markets, including changes in political or economic conditions and trade
and regulatory matters; complete its construction projects on schedule and
within budget; market its services competitively and cost effectively; manage
the operational risks and uncertainties inherent in offshore oil and gas
drilling, particularly on a turnkey basis; and manage other risk factors as
may be discussed in the Company's reports filed with the U.S. Securities and
Exchange Commission.
<PAGE>
The Company disclaims any obligation or undertaking to disseminate any
updates or revisions to its statements, forward-looking or otherwise, to
reflect changes in the Company's expectations or any change in events,
conditions or circumstances on which any such statements are based.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not significant.
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
The federal proxy rules specify what constitutes timely submission for a
stockholder proposal to be included in the Company's proxy statement for
an annual meeting of stockholders. Effective August 5, 1998, Section II-7
of the Company's By-laws was amended to require that certain procedures
be followed by any stockholder who desires to bring before an annual meeting
a proposal, nomination or other business which is not the subject of a
proposal timely submitted for inclusion in the Company's proxy statement.
At the present time, the only class of the Company's securities eligible to
be voted at an annual meeting is the Common Stock, par value $.10 per share.
Copies of the Company's By-laws and Section II-7 as amended are filed as
exhibits to this Quarterly Report on Form 10-Q, and copies are also available
upon request from the Company's Corporate Secretary, 777 N. Eldridge Parkway,
Houston, Texas 77079-4493.
One of the procedural requirements in amended Section II-7 is timely notice
in writing of the proposal, nomination or other business the stockholder
proposes to bring before the meeting. In addition to the other requirements
in amended Section II-7, the notice must be delivered to, or mailed and
received at, the above address not later than the close of business on the
90th day prior to the first anniversary of the preceding year's annual
meeting. The deadline for delivery and receipt of such notices for the 1999
annual meeting of stockholders is the close of business on February 4, 1999.
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of stockholders of the Company was held on May 5, 1998. At
the meeting, four directors were elected by a vote of holders of Common Stock,
$.10 par value per share, as outlined in the Company's Proxy Statement relating
to the meeting. With respect to the election of directors, (i) proxies were
solicited pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended, (ii) there was no solicitation in opposition to the management's
nominees as listed in the Proxy Statement, and (iii) each of such nominees
was elected. The following numbers of votes were cast as to the director
nominees: C. Russell Luigs, 150,555,083 votes for and 1,954,493 votes withheld;
Edward R. Muller, 150,536,575 votes for and 1,973,001 votes withheld; Paul J.
Powers, 150,545,241 votes for and 1,964,335 votes withheld; and John G. Ryan,
150,613,837 votes for and 1,895,739 votes withheld. A vote was also taken
on a proposal to approve the Global Marine 1998 Stock Option and Incentive
Plan, including performance measures to be used for certain performance-based
compensation, with 143,427,061 votes being cast for approval, 8,111,256 votes
being cast against approval, and 971,258 abstentions and broker non-votes.
In addition, a vote was taken on ratification of the appointment of Coopers
& Lybrand L.L.P. (now known as PricewaterhouseCoopers LLP) as independent
certified public accountants of the Company and its subsidiaries for 1998,
with 151,663,513 votes being cast for ratification, 524,868 votes being cast
against ratification, and 321,195 abstentions and broker non-votes.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3(ii).1 Amendment of By-laws of Global Marine Inc., effective
August 5, 1998.
3(ii).2 By-laws of Global Marine Inc. as amended through August 5, 1998.
4.1 Section II-7 of the By-laws of Global Marine Inc. as amended
August 5, 1998.
10.1 Form of Letter Severance Agreement dated August 5, 1998,
between the Company and nine executive officers, respectively.
15.1 Letter of Independent Accountants regarding Awareness of
Incorporation by Reference.
27.1 Financial Data Schedule. (Exhibit 27.1 is being submitted as
an exhibit only in the electronic format of this Quarterly
Report on Form 10-Q being submitted to the Securities and
Exchange Commission. Exhibit 27.1 shall not be deemed filed
for purposes of Section 11 of the Securities Act of 1933,
Section 18 of the Securities Exchange Act of 1934 or Section
323 of the Trust Indenture Act, or otherwise be subject to
the liabilities of such sections, nor shall it be deemed a
part of any registration statement to which it relates.)
(b) Reports on Form 8-K
During the second quarter of 1998, the Company filed one report on Form
8-K, which was dated May 20, 1998. Under Item 5, Other Events, the
Company reported that it had entered into various agreements relating
to the offering of $300,000,000 aggregate principal amount of its 7%
Notes Due 2028. Certain agreements relating to the 7% Notes and the
terms of the 7% Notes were filed as exhibits and listed under Item 7,
Financial Statements and Exhibits.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GLOBAL MARINE INC.
(Registrant)
Dated: August 7, 1998 /s/ Thomas R. Johnson
---------------------------------------
Thomas R. Johnson
Vice President and Corporate Controller
(Duly Authorized Officer and Principal
Accounting Officer of the Registrant)
INDEX TO EXHIBITS
3(ii).1 Amendment of By-laws of Global Marine Inc., effective
August 5, 1998.
3(ii).2 By-laws of Global Marine Inc. as amended through August
5, 1998.
4.1 Section II-7 of the By-laws of Global Marine Inc. as
amended August 5, 1998.
10.1 Form of Letter Severance Agreement dated August 5,
1998, between the Company and nine executive officers,
respectively.
15.1 Letter of Independent Accountants regarding Awareness
of Incorporation by Reference.
27.1 Financial Data Schedule. (Exhibit 27.1 is being submitted
as an exhibit only in the electronic format of this
Quarterly Report on Form 10-Q being submitted to the
Securities and Exchange Commission. Exhibit 27.1 shall
not be deemed filed for purposes of Section 11 of the
Securities Act of 1933, Section 18 of the Securities
Exchange Act of 1934 or Section 323 of the Trust Indenture
Act, or otherwise be subject to the liabilities of such
sections, nor shall it be deemed a part of any registration
statement to which it relates.)
EXHIBIT 3(ii).1
Amendment of By-laws of Global Marine Inc., Effective August 5,
1998
Sections II-7, II-9, and III-10 of the By-laws of Global
Marine Inc. are amended in their entirety to change said sections
from the old version to the new version, in each case, as indicated
below:
OLD VERSION:
SECTION II-7 BUSINESS TRANSACTED AT SPECIAL MEETING: Business
transacted at any special meeting of stockholders shall be limited
to the purposes stated in the notice.
NEW VERSION:
SECTION II-7 BUSINESS TO BE CONDUCTED AND NOMINATIONS: (a) At any
special meeting of stockholders, only such business shall be
conducted, and only such proposals shall be acted upon, as shall
have been set forth in the notice relating to the meeting.
(b) At any annual meeting of stockholders, only such business
shall be conducted, and only such proposals shall be acted upon, as
shall have been brought before the annual meeting (i) by or at the
direction of the Board of Directors or (ii) by any stockholder of
the corporation who is a stockholder of record at the time of the
giving of such stockholder's notice provided for in this paragraph
(b), who shall be entitled to vote at such meeting, and who
complies with the requirements of this paragraph (b) and as shall
otherwise be proper subjects for stockholder action and shall be
properly introduced at the meeting. For a proposal to be properly
brought before an annual meeting by a stockholder, in addition to
any other applicable requirements, the stockholder must have given
timely advance notice thereof in writing to the Secretary of the
corporation. To be timely, a stockholder's notice must be
delivered to, or mailed and received at, the principal executive
offices of the corporation not later than the close of business on
the 90th day prior to the first anniversary of the beginning of the
preceding year's annual meeting; provided, however, that in the
event that the date of the annual meeting is more than 30 days
before or more than 60 days after such anniversary date, notice by
the stockholder to be timely must be so delivered not later than
the close of business on the later of the 90th day prior to the
scheduled day of such annual meeting or the 10th day following the
day on which public announcement of the date of such meeting is
first made by the corporation, including, without limitation, by
press release, by filing with the Securities and Exchange
Commission, and/or by any written material sent to stockholders.
Any such stockholder's notice to the Secretary of the corporation
shall set forth as to each matter the stockholder proposes to bring
before the annual meeting (i) a description of the proposal desired
to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the name and
address, as they appear on the corporation's books, of the
stockholder proposing such business and any other stockholders
known by such stockholder to be supporting such proposal, (iii) the
class and number of shares of the corporation's stock that are
beneficially owned by the stockholder on the date of such notice,
(iv) any financial interest of the stockholder in such proposal,
and (v) a representation that the stockholder intends to appear in
<PAGE>
person or by proxy at the meeting to bring the proposed business
before the annual meeting. The presiding officer of the annual
meeting shall determine whether the requirements of this paragraph
(b) have been met with respect to any stockholder proposal. If the
presiding officer determines that a stockholder proposal was not
made in accordance with the terms of this paragraph (b), he shall
so declare at the meeting and such proposal shall not be acted upon
at the meeting.
(c) Subject to such rights of the holders of any class or
series of preferred stock as may be prescribed in the Certificate
of Incorporation or in the resolutions of the Board of Directors
providing for the issuance of any such class or series, only
persons who are nominated in accordance with the procedures set
forth in this paragraph (c) shall be eligible for election as, and
to serve as, directors. Nominations of persons for election to the
Board of Directors may be made at a meeting of the stockholders at
which directors are to be elected (i) by or at the direction of the
Board of Directors or (ii) by any stockholder of the corporation
who is a stockholder of record at the time of the giving of such
stockholder's notice provided for in this paragraph (c), who shall
be entitled to vote at such meeting in the election of directors,
and who complies with the requirements of this paragraph (c). Such
nominations, other than those made by or at the direction of the
Board of Directors, shall be preceded by timely advance notice
thereof in writing to the Secretary of the corporation. To be
timely, a stockholder's notice must be delivered to, or mailed and
received at, the principal executive offices of the corporation not
later than the close of business on the 90th day prior to the first
anniversary of the beginning of the preceding year's annual
meeting; provided, however, that in the event that the date of the
annual meeting is more than 30 days before or more than 60 days
after such anniversary date, notice by the stockholder to be timely
must be so delivered not later than the close of business on the
later of the 90th day prior to the scheduled day of such annual
meeting or the 10th day following the day on which public
announcement of the date of such meeting is first made by the
corporation, including, without limitation, by press release, by
filing with the Securities and Exchange Commission, and/or by any
written material sent to stockholders. Any such stockholder's
notice to the Secretary of the corporation shall set forth (x) as
to each person whom the stockholder proposes to nominate for
election or re-election as a director, (i) the name, age, business
address and residence address of such person, (ii) the principal
occupation or employment of such person, (iii) the number of shares
of each class of capital stock of the corporation beneficially
owned by such person and (iv) the written consent of such person to
having such person's name placed in nomination at the meeting and
to serve as a director if elected, and (y) as to the stockholder
giving the notice, (i) the name and address, as they appear on the
corporation's books, of such stockholder, (ii) the class and number
of shares of the corporation's stock that are beneficially owned by
the stockholder on the date of such notice, (iii) any arrangement
between the nominee or nominees and the stockholder, (iv) any other
facts about the nominee or nominees that would be required in a
proxy statement and (v) a representation that the stockholder
intends to appear in person or by proxy at the meeting to make the
nomination or nominations. The presiding officer of the meeting of
stockholders shall determine whether the requirements of this
paragraph (c) have been met with respect to any nomination or
intended nomination. If the presiding officer determines that any
nomination was not made in accordance with the terms of this
paragraph (c), he shall so declare at the meeting and such
nomination shall be disregarded.
(d) Notwithstanding the foregoing provisions of this Section
II-7, a stockholder shall also comply with all applicable
requirements of the Securities Exchange Act of 1934, as amended,
<PAGE>
and the rules and regulations thereunder with respect to the
matters set forth in this Section II-7.
OLD VERSION:
SECTION II-9 MAJORITY VOTE: When a quorum is present at any
meeting, the vote of the holders of a majority of the stock having
voting power present in person or represented by proxy shall decide
any question brought before such meeting, unless the question is
one upon which by express provision of the statutes or of the
Certificate of Incorporation, a different vote is required in which
case such express provision shall govern and control the decision
of such question. In any election at a meeting when a quorum is
present, the individual or individuals elected shall be the nominee
or nominees, equal in number to the position or positions to be
filled, who receives or receive a plurality of the votes cast.
NEW VERSION:
SECTION II-9 REQUIRED VOTE: When a quorum is present at any
meeting, in all matters other than the election of directors, the
affirmative vote of the majority of shares present in person or
represented by proxy at the meeting and entitled to vote on the
subject matter shall be the act of the stockholders, unless the
matter is one upon which by express provision of the statutes or of
the Certificate of Incorporation a different vote is required, in
which case such express provision shall govern and control the
decision of such matter. In any election of directors at a meeting
when a quorum is present, the individual or individuals elected
shall be the nominee or nominees, equal in number to the position
or positions to be filled, who receives or receive a plurality of
the votes of the shares present in person or represented by proxy
at the meeting and entitled to vote on the election of directors.
OLD VERSION:
SECTION III-10 COMPENSATION: The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director.
No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
NEW VERSION:
SECTION III-10 COMPENSATION: The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each
meeting of the Board of Directors and a retainer for their service
as directors. No such payment shall preclude any director from
serving the corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees
may be allowed like compensation for attending committee meetings.
EXHIBIT 3(ii).2
BY-LAWS OF GLOBAL MARINE INC.
As Amended Through August 5, 1998
ARTICLE I
OFFICES
SECTION I-1 PRINCIPAL OFFICE: The principal office shall be in
the City of Wilmington, County of New Castle, state of Delaware.
SECTION I-2 OTHER OFFICES: The corporation may also have offices
at such other places both within and without the state of
Delaware as the Board of Directors may from time to time
determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION II-1 PLACE: All meetings of the stockholders for the
election of directors shall be held at such place, within or
without the state of Delaware, as may be fixed from time to time
by the Board of Directors. Meetings of stockholders for any
other purpose may be held at such time and place, within or
without the state of Delaware, as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
SECTION II-2 DATE, TIME, AND PURPOSE OF ANNUAL MEETING: The
annual meeting of stockholders shall be held at such date and
time as may be determined by the Board of Directors. In the
event that the Board does not set a date and time, such meeting
shall be held at 11:00 a.m. on the fourth Wednesday in May of
each year if not a legal holiday, and if a legal holiday, then at
the same time on the next business day following. At such annual
meeting the stockholders shall elect directors and shall transact
such other business as may properly be brought before the
meeting.
SECTION II-3 WRITTEN NOTICE: Written notice of the annual
meeting shall be given to each stockholder entitled to vote
thereat at least ten days before the date of the meeting.
SECTION II-4 STOCKHOLDER LIST: The officer who has charge of
the stock ledger of the corporation shall prepare and make, at
least ten days before every meeting of stockholders, a complete
<PAGE>
list of the stockholders entitled to vote at said meeting,
arranged in alphabetical order, and showing the address of and
the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting
is to be held, and the list shall be produced and kept at the
time and place of the meeting during the whole time thereof, and
subject to the inspection of any stockholder who is present.
SECTION II-5 SPECIAL MEETING: Special meetings of the
stockholders may only be called at any time by a majority of the
directors then in office or the President, or by the holders of
at least 25% of the issued and outstanding common stock of the
corporation as provided in the Certificate of Incorporation.
SECTION II-6 NOTICE OF SPECIAL MEETING: Written notice of a
special meeting of stockholders, stating the time, place and
object thereof, shall be given to each stockholder entitled to
vote thereat, at least five days before the date fixed for the
meeting.
SECTION II-7 BUSINESS TO BE CONDUCTED AND NOMINATIONS: (a) At
any special meeting of stockholders, only such business shall be
conducted, and only such proposals shall be acted upon, as shall
have been set forth in the notice relating to the meeting.
(b) At any annual meeting of stockholders, only such
business shall be conducted, and only such proposals shall be
acted upon, as shall have been brought before the annual meeting
(i) by or at the direction of the Board of Directors or (ii) by
any stockholder of the corporation who is a stockholder of record
at the time of the giving of such stockholder's notice provided
for in this paragraph (b), who shall be entitled to vote at such
meeting, and who complies with the requirements of this paragraph
(b) and as shall otherwise be proper subjects for stockholder
action and shall be properly introduced at the meeting. For a
proposal to be properly brought before an annual meeting by a
stockholder, in addition to any other applicable requirements,
the stockholder must have given timely advance notice thereof in
writing to the Secretary of the corporation. To be timely, a
stockholder's notice must be delivered to, or mailed and received
at, the principal executive offices of the corporation not later
than the close of business on the 90th day prior to the first
anniversary of the beginning of the preceding year's annual
meeting; provided, however, that in the event that the date of
the annual meeting is more than 30 days before or more than 60
days after such anniversary date, notice by the stockholder to be
timely must be so delivered not later than the close of business
on the later of the 90th day prior to the scheduled day of such
annual meeting or the 10th day following the day on which public
announcement of the date of such meeting is first made by the
corporation, including, without limitation, by press release, by
filing with the Securities and Exchange Commission, and/or by any
written material sent to stockholders. Any such stockholder's
notice to the Secretary of the corporation shall set forth as to
each matter the stockholder proposes to bring before the annual
meeting (i) a description of the proposal desired to be brought
before the annual meeting and the reasons for conducting such
business at the annual meeting, (ii) the name and address, as
they appear on the corporation's books, of the stockholder
proposing such business and any other stockholders known by such
stockholder to be supporting such proposal, (iii) the class and
<PAGE>
number of shares of the corporation's stock that are beneficially
owned by the stockholder on the date of such notice, (iv) any
financial interest of the stockholder in such proposal, and (v) a
representation that the stockholder intends to appear in person
or by proxy at the meeting to bring the proposed business before
the annual meeting. The presiding officer of the annual meeting
shall determine whether the requirements of this paragraph (b)
have been met with respect to any stockholder proposal. If the
presiding officer determines that a stockholder proposal was not
made in accordance with the terms of this paragraph (b), he shall
so declare at the meeting and such proposal shall not be acted
upon at the meeting.
(c) Subject to such rights of the holders of any class or
series of preferred stock as may be prescribed in the Certificate
of Incorporation or in the resolutions of the Board of Directors
providing for the issuance of any such class or series, only
persons who are nominated in accordance with the procedures set
forth in this paragraph (c) shall be eligible for election as,
and to serve as, directors. Nominations of persons for election
to the Board of Directors may be made at a meeting of the
stockholders at which directors are to be elected (i) by or at
the direction of the Board of Directors or (ii) by any
stockholder of the corporation who is a stockholder of record at
the time of the giving of such stockholder's notice provided for
in this paragraph (c), who shall be entitled to vote at such
meeting in the election of directors, and who complies with the
requirements of this paragraph (c). Such nominations, other than
those made by or at the direction of the Board of Directors,
shall be preceded by timely advance notice thereof in writing to
the Secretary of the corporation. To be timely, a stockholder's
notice must be delivered to, or mailed and received at, the
principal executive offices of the corporation not later than the
close of business on the 90th day prior to the first anniversary
of the beginning of the preceding year's annual meeting;
provided, however, that in the event that the date of the annual
meeting is more than 30 days before or more than 60 days after
such anniversary date, notice by the stockholder to be timely
must be so delivered not later than the close of business on the
later of the 90th day prior to the scheduled day of such annual
meeting or the 10th day following the day on which public
announcement of the date of such meeting is first made by the
corporation, including, without limitation, by press release, by
filing with the Securities and Exchange Commission, and/or by any
written material sent to stockholders. Any such stockholder's
notice to the Secretary of the corporation shall set forth (x) as
to each person whom the stockholder proposes to nominate for
election or re-election as a director, (i) the name, age,
business address and residence address of such person, (ii) the
principal occupation or employment of such person, (iii) the
number of shares of each class of capital stock of the
corporation beneficially owned by such person and (iv) the
written consent of such person to having such person's name
placed in nomination at the meeting and to serve as a director if
elected, and (y) as to the stockholder giving the notice, (i) the
name and address, as they appear on the corporation's books, of
such stockholder, (ii) the class and number of shares of the
corporation's stock that are beneficially owned by the
stockholder on the date of such notice, (iii) any arrangement
between the nominee or nominees and the stockholder, (iv) any
other facts about the nominee or nominees that would be required
in a proxy statement and (v) a representation that the
stockholder intends to appear in person or by proxy at the
meeting to make the nomination or nominations. The presiding
officer of the meeting of stockholders shall determine whether
the requirements of this paragraph (c) have been met with respect
to any nomination or intended nomination. If the presiding
officer determines that any nomination was not made in accordance
with the terms of this paragraph (c), he shall so declare at the
meeting and such nomination shall be disregarded.
<PAGE>
(d) Notwithstanding the foregoing provisions of this
Section II-7, a stockholder shall also comply with all applicable
requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder with respect to the
matters set forth in this Section II-7.
SECTION II-8 QUORUM: The holders of a majority of the stock
issued and outstanding and entitled to vote thereat, present in
person or represented by proxy, shall constitute a quorum at all
meetings of the stockholders for the transaction of business
except as otherwise provided by statute or by the Certificate of
Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a
quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any
business may be transacted which might have been transacted at
the meeting as originally notified.
SECTION II-9 REQUIRED VOTE: When a quorum is present at any
meeting, in all matters other than the election of directors, the
affirmative vote of the majority of shares present in person or
represented by proxy at the meeting and entitled to vote on the
subject matter shall be the act of the stockholders, unless the
matter is one upon which by express provision of the statutes or
of the Certificate of Incorporation a different vote is required,
in which case such express provision shall govern and control the
decision of such matter. In any election of directors at a
meeting when a quorum is present, the individual or individuals
elected shall be the nominee or nominees, equal in number to the
position or positions to be filled, who receives or receive a
plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote on the
election of directors.
SECTION II-10 THE STOCKHOLDER VOTE: Each stockholder shall at
every meeting of the stockholders be entitled to one vote in
person or by proxy for each share of the capital stock having
voting power held by such stockholder, but no proxy shall be
voted on after three years from its date, unless the proxy
provides for a longer period. At all elections of directors of
the corporation each stockholder having voting power shall be
entitled to exercise the right of cumulative voting as provided
in the Certificate of Incorporation.
ARTICLE III
DIRECTORS
SECTION III-1 NUMBER, QUALIFICATION, ELECTION, AND TERM OF
OFFICE: The exact number of directors, within the limits stated
in the Certificate of Incorporation, shall be determined by
resolution or resolutions passed by a majority of the whole Board
of Directors. If it is proposed to reduce the authorized number
of directors below five (5), the vote of stockholders holding
more than eighty percent (80%) of the voting power shall be
necessary for such reduction. No person shall serve as a
director of this corporation who at the time of his or her
election has reached his or her 70th birthday unless such person
was elected as a director at the annual meeting of holders of
<PAGE>
common stock of this corporation held on May 18, 1979, in which
case such person shall be entitled to serve as a director without
regard to any limitation of age. Each director shall serve for a
term of office within the limits stated in the Certificate of
Incorporation. Directors need not be stockholders.
SECTION III-2 LOCATION OF BOARD MEETING: The Board of Directors
of the corporation may hold meetings, both regular and special,
either within or without the state of Delaware.
SECTION III-3 FIRST MEETING OF THE NEWLY ELECTED BOARD: The
first meeting of each newly elected Board of Directors shall be
held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting
shall be necessary to the newly elected directors in order to
legally constitute the meeting, provided a quorum shall be
present. In the event of the failure of the stockholders to fix
the time or place of such first meeting of the newly elected
Board of Directors, or in the event such meeting is not held at
the time and place so fixed by the stockholders, the meeting may
be held at such time and place as shall have been determined for
the next regular meeting by the previous Board of Directors or as
shall be determined by the President, which time and place shall
be specified in a notice given as hereinafter provided for
meetings of the Board of Directors, or as shall be specified in a
written waiver signed by all of the directors.
SECTION III-4 REGULAR MEETINGS: Regular meetings of the Board of
Directors may be held without notice at such time and at such
place as shall from time to time be determined by the Board.
SECTION III-5 SPECIAL MEETINGS; Telephonic Meetings Permitted:
Special meetings of the Board of Directors may be called by the
President on reasonable notice to each director, which notice may
be written, oral, or by any other mode of notice; special
meetings shall be called by the President or Secretary in like
manner and on like notice on the written request of two
directors. Unless otherwise restricted by the Certificate of
Incorporation or these By-laws, members of the Board of
Directors, or any committee designated by the Board, may
participate in a meeting of the Board or of such committee, as
the case may be, by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other, and
participation in a meeting pursuant to this provision shall
constitute presence in person at such meeting.
SECTION III-6 QUORUM AND MAJORITY VOTE: At any meeting of the
Board or of any committee of the Board, one-third of the
directors holding office or one-third of the members constituting
such committee, as the case may be, shall constitute a quorum for
the transaction of business, provided however that a quorum for
the transaction of business at any meeting of a committee of the
Board shall not be less than two members. The act of a majority
of the directors or members present at any meeting at which there
is a quorum shall be the act of the Board of Directors or such
committee, as the case may be, except as may be otherwise
specifically provided by statute or by the Certificate of
Incorporation. If a quorum shall not be present at any meeting
of the Board of Directors or of any committee of the Board, the
directors or members present thereat may adjourn the meeting from
time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
SECTION III-7 UNANIMOUS WRITTEN CONSENT: Unless otherwise
restricted by the Certificate of Incorporation or these By-laws,
<PAGE>
any action required or permitted to be taken at a meeting of the
Board of Directors or of any committee thereof may be taken
without a meeting, if a written consent thereto is signed by all
members of the Board or of such committee as the case may be, and
such written consent or consents are filed with the minutes of
proceedings of the Board or committee.
SECTION III-8 COMMITTEES - FORMATION AND POWERS: The Board of
Directors may designate one or more committees, each committee to
consist of two or more of the directors of the corporation,
which, to the extent provided by the Board, shall have and may
exercise the powers of the Board of Directors in the management
of the business and affairs of the corporation and may authorize
the seal of the corporation to be affixed to all papers which may
require it. Such committee or committees shall have such name or
names as may be determined from time to time by the Board of
Directors. The Board of Directors may designate one or more
directors as alternate members of any committee, who may replace
any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a
committee, and in the absence of a designation by the Board of
Directors of an alternate member to replace the absent or
disqualified member, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member
of the Board of Directors to act at the meeting in place of any
absent or disqualified member.
SECTION III-9 COMMITTEE MINUTES: Each committee shall keep
regular minutes of its meeting and report the same to the Board
of Directors when required.
SECTION III-10 COMPENSATION: The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each
meeting of the Board of Directors and a retainer for their
service as directors. No such payment shall preclude any
director from serving the corporation in any other capacity and
receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending
committee meetings.
SECTION III-11 INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
AND AGENTS: (a)(i) The corporation, to the full extent
permitted, and in the manner required by the laws of the state of
Delaware, as in effect at the time of the adoption of this
revised Section III-11 or as such laws may be amended from time
to time, shall indemnify any person who was or is made a party to
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (including any appeal
thereof), whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
corporation), by reason of the fact that such person is or was a
director or officer of the corporation, or, if at a time when he
was a director or officer of the corporation, is or was serving
at the request of the corporation as a director, officer,
partner, trustee, fiduciary, employee or agent (a "Subsidiary
Officer") of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise (an "Affiliated
Entity"), against expenses (including attorneys' fees), costs,
judgments, fines, penalties and amounts paid in settlement
actually and reasonably incurred by such person in connection
with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or
not opposed to the best interest of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe his or her conduct was unlawful; provided,
<PAGE>
however, that the corporation shall not be obligated to indemnify
against any amount paid in settlement unless the corporation has
consented to such settlement, which consent shall not be
unreasonably withheld. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a
plea of NOLO CONTENDERE or its equivalent shall not, of itself,
create a presumption that the person did not act in good faith
and in a manner which such person reasonably believed to be in or
not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, that such person
had reasonable cause to believe that his conduct was unlawful.
Notwithstanding anything to the contrary in the foregoing
provisions of this subparagraph (i) and except for any action,
suit or proceeding brought on behalf of a person to enforce the
right to indemnification hereunder or otherwise, a person shall
not be entitled, as a matter of right, to indemnification
pursuant to this subparagraph (i) against costs or expenses
incurred in connection with any action, suit or proceeding
commenced by such person against any person who is or was a
director, officer, fiduciary, employee or agent of the
corporation or a Subsidiary Officer of an Affiliated Entity, but
such indemnification may be provided by the corporation in any
specific case as permitted by paragraph (f) of this Section III-
11.
(ii) The corporation may indemnify any employee or agent of
the corporation in the manner and to the extent that it shall
indemnify any director or officer under this paragraph (a),
including indemnity in respect of service at the request of the
corporation as a Subsidiary Officer of an Affiliated Entity.
(b)(i) The corporation, to the full extent permitted, and
in the manner required by the laws of the state of Delaware, as
in effect at the time of the adoption of this Section III-11 or
as such laws may be amended from time to time, shall indemnify
any person who was or is made a party to or is threatened to be
made a party to any threatened, pending or completed action or
suit (including any appeal thereof) brought in the right of the
corporation to procure a judgment in its favor by reason of the
fact that such person is or was a director or officer of the
corporation, or, if at a time when he was a director or officer
of the corporation, is or was serving at the request of the
corporation as a Subsidiary Officer of an Affiliated Entity,
against expenses (including attorneys' fees) and costs actually
and reasonably incurred by such person in connection with such
action or suit if such person acted in good faith and in a manner
such person reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification
shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the
corporation unless, and except to the extent that, the Court of
Chancery of the state of Delaware or the court in which such
judgment was rendered shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses and costs as the Court of
Chancery of the state of Delaware or such other court shall deem
proper. Notwithstanding anything to the contrary in the
foregoing provisions of this subparagraph (b)(i), a person shall
not be entitled, as a matter of right, to indemnification
pursuant to this subparagraph (b)(i) against costs and expenses
incurred in connection with any action or suit in the right of
the corporation commenced by such person, but such
indemnification may be provided by the corporation in any
specific case as permitted by paragraph (f) of this Section III-
11.
(ii) The corporation may indemnify any employee or agent of
the corporation in the manner and to the extent that it shall
<PAGE>
indemnify any director or officer under this paragraph (b),
including indemnity in respect of service at the request of the
corporation as a Subsidiary Officer of an Affiliated Entity.
(c) Any indemnification under paragraph (a) or (b) of this
Section III-11 (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer,
employee or agent is proper under the circumstances because such
person has met the applicable standard of conduct set forth in
paragraph (a) or (b) of this Section III-11. Such determination
shall be made (i) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to the
action, suit or proceeding in respect of which indemnification is
sought or by majority vote of the members of a committee of the
Board of Directors composed of at least three members each of
whom is not a party to such action, suit or proceeding, or (ii)
if such a quorum is not obtainable and/or such a committee is not
established or obtainable, or, even if obtainable, if a quorum of
disinterested directors so directs, by independent legal counsel
in a written opinion, or (iii) by the stockholders. In the event
a request for indemnification is made by any person referred to
in subparagraph (i) of paragraph (a) or subparagraph (i) of
paragraph (b), the corporation shall cause such determination to
be made not later than 60 days after such request is made.
(d)(i) Notwithstanding the other provisions of this Section
III-11, to the extent that a director, officer, employee or agent
of the corporation has been successful on the merits or otherwise
in defense of any action, suit or proceeding referred to in
paragraph (a) or (b) of this Section III-11, or in defense of any
claim, issue or matter therein, such person shall be indemnified
against expenses (including attorneys' fees) and costs actually
and reasonably incurred by such person in connection therewith.
(ii) To the extent any person who is or was a director or
officer of the corporation has served or prepared to serve as a
witness in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, or in any
investigation by the corporation or the Board of Directors
thereof or a committee thereof or by any securities exchange on
which securities of the corporation are or were listed or any
national securities association, by reason of his services as a
director or officer of the corporation or, if at a time when he
was a director or officer of the corporation, is or was serving
at the request of the corporation as a Subsidiary Officer of an
Affiliated Entity, the corporation shall indemnify such person
against expenses (including attorneys' fees) and costs actually
and reasonably incurred by such person in connection therewith
within 30 days after the receipt by the corporation from such
person of a statement requesting such indemnification, averring
such service and reasonably evidencing such expenses and costs.
The corporation may indemnify any employee or agent of the
corporation to the same extent it is required to indemnify any
director or officer of the corporation pursuant to the foregoing
sentence of this paragraph.
(e)(i) Expenses and costs incurred by any person referred
to in subparagraph (i) of paragraph (a) or subparagraph (i) of
paragraph (b) of this Section III-11 in defending a civil,
criminal, administrative or investigative action, suit or
proceeding shall be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such person to repay such
amount if it shall ultimately be determined that such person is
<PAGE>
not entitled to be indemnified by the corporation as authorized
by this Section III-11.
(ii) Expenses and costs incurred by any person referred to
in subparagraph (ii) of paragraph (a) or subparagraph (ii) of
paragraph (b) of this Section III-11 in defending a civil,
criminal, administrative or investigative action, suit or
proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding as authorized by
the Board of Directors, a committee thereof or an officer of the
corporation or a committee thereof authorized to so act by the
Board of Directors upon receipt of an undertaking by or on behalf
of such person to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by
the corporation as authorized by this Section III-11.
(f) The provision of indemnification to or the advancement
of expenses and costs to any person under this Section III-11, or
the entitlement of any person to indemnification or advancement
of expenses and costs under this Section III-11, shall not limit
or restrict in any way the power of the corporation to indemnify
or advance expenses and costs to such person in any other way
permitted by law or be deemed exclusive of any right to which any
person seeking indemnification or advancement of expenses and
costs may be entitled under any law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to
action in such person's capacity as an officer, director,
employee or agent of the corporation and as to action in any
other capacity while holding any such position.
(g) The indemnification provided or permitted under this
Section III-11 shall apply in respect of any expense, costs,
judgment, fine, penalty or amount paid in settlement, whether or
not the claim or cause of action in respect thereof accrued or
arose before or after the effective date of this revised Section
III-11. The right of any person who is or was a director,
officer, employee or agent of the corporation to indemnification
and advance payment of expenses and costs under this Section III-
11 shall continue after he shall have ceased to be a director,
officer, employee or agent and shall inure to the benefit of the
heirs, distributees, executors, administrators and other legal
representatives of such person.
(h) This Section III-11 shall be deemed to create a binding
obligation on the part of the corporation to its current and
former officers and directors and their heirs, distributees,
executors, administrators and other legal representatives, and
each director or officer in acting in such capacity shall be
entitled to rely on the provisions of this Section III-11,
without giving notice thereof to the corporation.
(i) The corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request
of the corporation as a Subsidiary Officer of any Affiliated
Entity, against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of
such person's status as such, whether or not the corporation
would have the power to indemnify such person against such
liability under the provisions of this Section III-11 or
applicable law.
(j)(i) For purposes of this Section III-11, references to
"the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any
<PAGE>
constituent of a constituent) absorbed in a consolidation or
merger which, if its corporate existence had continued, would
have been permitted under applicable law to indemnify its
directors, officers, employees or agents, so that any person who
is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of
such constituent corporation as a Subsidiary Officer of any
Affiliated Entity, shall stand in the same position under the
provisions of this Section III-11 with respect to the resulting
or surviving corporation as such person would have with respect
to such constituent corporation if its separate existence had
continued.
(ii) For purposes of this Section III-11, references to
"fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan; references to "serving at
the request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director,
officer, employee or agent with respect to an employee benefit
plan, its participants, or beneficiaries; and a person who acted
in good faith and in a manner such person reasonably believed to
be in the interest of the participants and beneficiaries of an
employee benefit plan shall be deemed to have acted in a manner
"not opposed to the best interest of the corporation" as referred
to in this Section III-11.
SECTION III-12 DIRECTORS EMERITUS: The Board of Directors may,
from time to time, elect one or more Directors Emeritus, each of
whom shall serve until the first meeting of the Board next
following the annual meeting of stockholders or until his earlier
resignation or removal by the Board. Directors Emeritus shall
serve as advisors and consultants to the Board of Directors,
shall be invited to attend all meetings of the Board and may
participate in all discussions occurring during such meetings.
Directors Emeritus shall not be privileged to vote on matters
brought before the Board and shall not be counted for the purpose
of determining whether a quorum of the Board is present.
ARTICLE IV
NOTICES AND WAIVERS THEREOF
SECTION IV-1 NOTICES: Whenever under the provisions of these
By-laws notice is required to be given to any stockholder,
director or officer, such notice may be written, oral or by any
other mode of notice unless otherwise provided by law, the
Certificate of Incorporation or these By-laws. If given by
United States mail, notice is given when deposited in the United
States mail, postage prepaid, directed to such stockholder,
director, or officer at his address as it appears on the records
of the corporation, or in default of other address, to such
stockholder, director, or officer at the general post office in
the City of Wilmington, County of New Castle, Delaware.
SECTION IV-2 WAIVER OF NOTICE: Whenever any notice whatever is
required to be given by law, or under the provisions of the
Certificate of Incorporation, or of these By-laws, a waiver
thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein,
shall be deemed equivalent to receipt of such required notice.
<PAGE>
ARTICLE V
OFFICERS
SECTION V-1 ELECTION OF OFFICERS: The officers of the
corporation shall be chosen by the Board of Directors, and shall
be a Chairman of the Board, a President, a Vice President, a
Secretary and a Treasurer. The Board of Directors may also
choose additional vice presidents, and one or more assistant
secretaries and/or assistant treasurers, and one or more such
other officers, with such other titles, as the Board may deem
necessary or desirable. Two or more offices may be held by the
same person, except that where the offices of president and
secretary are held by the same person, such person shall not hold
any other office. The Board of Directors shall designate either
the Chairman of the Board or the President to be the Chief
Executive Officer of the corporation.
SECTION V-2 TIME OF ELECTION OF PRINCIPAL OFFICERS: The Board of
Directors at its first meeting after each annual meeting of
stockholders shall choose a Chairman of the Board, a President,
one or more Vice Presidents, a Secretary and a Treasurer; the
Chairman of the Board shall be a member of the Board; none of the
other officers need be a member of the Board.
SECTION V-3 TIME OF ELECTION OF OTHER OFFICERS: The Board of
Directors may appoint such other officers and agents as it shall
deem necessary who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be
determined from time to time by the Board.
SECTION V-4 SALARIES: The salaries of the Chairman of the Board
and the President shall be fixed by the Board of Directors. The
salaries of other officers shall be fixed by the Chief Executive
Officer subject to review by the Board of Directors.
SECTION V-5 TERM OF OFFICE, Removal and Filling of Vacancies:
The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or
appointed by the Board of Directors may be removed at any time by
the affirmative vote of a majority of the Board of Directors.
Any vacancy occurring in any office of the corporation shall be
filled by the Board of Directors.
SECTION V-5a THE CHAIRMAN OF THE BOARD: The Chairman of the
Board shall preside at all meetings of the Board of Directors,
and shall exercise and perform such other powers and duties as
may be from time to time assigned to him by the Board of
Directors or prescribed by the By-laws.
SECTION V-5b CHIEF EXECUTIVE OFFICER: The Board shall designate
either the Chairman of the Board or the President to be the Chief
Executive Officer of this corporation; the Chief Executive
Officer shall see that all orders and resolutions of the Board of
Directors are carried into effect, and shall exercise or perform
such other powers and duties as may be from time to time assigned
to him by the Board of Directors or prescribed by the By-laws.
SECTION V-6 THE PRESIDENT - DUTIES: The President shall have
general and active management of the business of the corporation
subject to the direction and control of the Board of Directors,
<PAGE>
and if the President is not the Chief Executive Officer, subject
also to the direction and control of the Chief Executive Officer.
The President shall assume the duties and responsibilities of the
Chairman of the Board in the absence of the Chairman of the
Board, or if there shall be no person occupying that office.
SECTION V-7 THE PRESIDENT - EXECUTION OF DOCUMENTS REQUIRING A
SEAL: He shall execute bonds, mortgages, and the contracts
requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed
and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other
officer or agent of the corporation.
SECTION V-8 THE VICE PRESIDENT: The Vice President, or if there
shall be more than one, the Vice Presidents in the order
determined by the Board of Directors, shall in the absence or
disability of the President, perform the duties and exercise the
powers of the President and shall perform such other duties and
have such other powers as the Board of Directors may from time to
time prescribe.
SECTION V-9 THE SECRETARY: The Secretary shall attend all
meetings of the Board of Directors and all meetings of the
stockholders and record all the proceedings of the meetings of
the corporation and of the Board of Directors in a book to be
kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, or cause to be
given, notice of all meetings of the stockholders and special
meetings of the Board of Directors, and shall perform other such
duties as may be prescribed by the Board of Directors or
President, under whose supervision he shall be. He shall keep in
safe custody the seal of the corporation, and when authorized by
the Board of Directors, affix the same to any instrument
requiring it.
SECTION V-10 THE ASSISTANT SECRETARY: The Assistant Secretary,
or if there be more than one, the Assistant Secretaries in the
order determined by the Board of Directors, shall, in the absence
or disability of the Secretary, perform the duties and exercise
the powers of the Secretary and shall perform such other duties
and have such other powers as the Board of Directors may from
time to time prescribe.
SECTION V-11 THE TREASURER - Responsibility for Funds: The
Treasurer shall have custody of and be responsible for all the
monies and funds of the company. He shall deposit or cause to be
deposited all company monies, funds and other valuables in the
name and to the credit of the company in such banks or other
financial institutions as in his judgment is proper or as shall
be directed by the Board, Chairman of the Board or the President,
and shall disburse the funds of the company which have been duly
approved for disbursement. He shall enter regularly in the books
of the company to be kept by him for the purpose of full and
accurate accounts of all monies received and paid out by him on
account of the company.
SECTION V-12 THE TREASURER - OTHER DUTIES: The Treasurer shall
have such other powers and perform such other duties as may from
time to time be prescribed by the Board, the Chairman of the
Board, the President or the By-laws, and he shall in general,
subject to control of the Board, the Chairman of the Board and
the President, perform all the duties usually incident to the
office of treasurer of a corporation.
<PAGE>
SECTION V-13 THE ASSISTANT TREASURER: Each Assistant Treasurer
shall assist the Treasurer and, in the absence or disability of
the Treasurer, any Assistant Treasurer may perform the duties of
the Treasurer unless and until the contrary is expressed by the
Board, and shall perform such other duties as may be prescribed
by the Board or the Treasurer.
ARTICLE VI
CERTIFICATE OF STOCK
SECTION VI-1 RIGHT OF STOCKHOLDER TO CERTIFICATE: Every holder
of stock in the corporation shall be entitled to have a
certificate, signed by, or in the name of the corporation by, the
President or a Vice President and the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the
corporation, certifying the number of shares owned by him in the
corporation.
SECTION VI-2 FACSIMILE SIGNATURE: Where a certificate is signed
(1) by a transfer agent other than the corporation or its
employee or (2) by a registrar other than the corporation or its
employee, the signature of any such President, Vice President,
Treasurer, Assistant Treasurer, Secretary or Assistant Secretary
may be by facsimile. In case any officer or officers who have
signed, or whose facsimile signature or signatures have been used
on any such certificate or certificates shall cease to be such
officer or officers of the corporation, whether because of death,
resignation or otherwise, before such certificate or certificates
have been delivered by the corporation, such certificate or
certificates may nevertheless be adopted by the corporation and
be issued and delivered as though the person or persons who
signed such certificate or certificates or whose facsimile
signature or signatures have been used thereon had not ceased to
be such officer or officers of the corporation.
SECTION VI-3 LOST CERTIFICATES: The Board of Directors may
direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the
corporation alleged to have been lost or destroyed, upon the
making of an affidavit of that fact by the person claiming the
certificate of stock to be lost or destroyed. When authorizing
such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or to
give the corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been
lost or destroyed.
SECTION VI-4 TRANSFER OF STOCK: Upon surrender to the
corporation or the transfer agent of the corporation of a
certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it
shall be the duty of the corporation to issue a new certificate
to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
SECTION VI-5 RECORD DATE: (a) In order that the corporation may
determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, the Board
<PAGE>
of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date shall
not be more than sixty nor less than ten days before the date of
such meeting. If no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at
the close of business on the day next preceding the day on which
notice is given, or, if notice is waived, at the close of
business on the day next preceding the day on which the meeting
is held. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the Board
of Directors may fix a new record date for the adjourned meeting.
(b) In order that the corporation may determine the
stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights or the stockholders
entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date,
which record date shall not precede the date upon which the
resolution fixing the record date is adopted, and which record
date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of
business on the day on which the Board of Directors adopts the
resolution relating thereto.
(c) In each case when a record date has been duly fixed,
such stockholders and only such stockholders as shall be
stockholders of record on the date so fixed shall be entitled to
notice of and to vote at the meeting of stockholders and any
adjournment thereof, or to receive payment of the dividend or
other distribution, or to receive the allotment of rights, or to
exercise the rights or participate in the other action, as the
case may be, notwithstanding any transfer of any stock on the
books of the corporation after such record date is fixed.
SECTION VI-6 REGISTERED STOCKHOLDERS: The corporation shall be
entitled to recognize the exclusive right of a person registered
on its books as the owner of shares to receive dividends, and to
vote as such owner, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by
the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
SECTION VII-1 DIVIDENDS - DECLARATION AND PAYMENT: Dividends
upon the capital stock of the corporation, subject to the
provisions of the Certificate of Incorporation, if any, may be
declared by the Board of Directors at any regular or special
meeting pursuant to law. Dividends may be paid in cash, in
property, or in shares of the capital stock of the corporation,
subject to the provisions of the Certificate of Incorporation.
SECTION VII-2 RESERVE OUT OF FUNDS AVAILABLE FOR DIVIDENDS:
Before payment of any dividend, there may be set aside out of any
<PAGE>
funds of the corporation available for dividends such sum or sums
as the directors from time to time in their absolute discretion,
think proper as a reserve or reserves to meet contingencies, or
for equalizing dividends, or for repairing and maintaining any
property of the corporation, or for such other purpose as the
directors think conducive to the interest of the corporation, and
the directors may modify or abolish any such reserve in the
manner in which it was created.
SECTION VII-3 ANNUAL REPORT: The Board of Directors shall cause
an annual report to be sent to the stockholders, not later than
three months after the close of the fiscal year, but at least
fifteen days in advance of the annual meeting of stockholders,
such report to include a balance sheet as of such closing date
and a statement of income and profit and loss for the year ended
on such closing date.
SECTION VII-4 EXECUTION OF DOCUMENTS: Unless otherwise
authorized or prescribed by the Board of Directors, all
contracts, leases, deeds, deeds of trust, mortgages, bonds,
indentures, endorsements, assignments, powers of attorney to
transfer stock or for other purposes, and other documents and
instruments of whatever kind shall be executed for and on behalf
of the corporation by the President, a Vice President, or the
Treasurer, or by any such officer and the Secretary or an
Assistant Secretary, who shall have authority to affix the
corporate seal to the same.
The Board of Directors also may authorize any other officer or
officers, or agent or agents, to execute any contract, document
or instrument of whatever kind for and on behalf of the
corporation and such authority may be general or be confined to
specific instances.
SECTION VII-5 UNDERTAKINGS AND COMMITMENTS: No undertaking,
commitment, contract, instrument or document shall be binding
upon the corporation unless previously authorized or subsequently
ratified by the Board of Directors or executed by an officer or
officers or an agent or agents of the corporation acting under
powers conferred by the Board of Directors or by these By-laws.
SECTION VII-6 CHECKS: All checks, notes and other obligations
for collection, deposit or transfer, and all checks and drafts
for disbursement from company funds, and all bills of exchange
and promissory notes, and all acceptances, obligations and other
instruments for the payment of money, shall be endorsed or signed
by such officer or officers, agent or agents, as shall be
thereunto authorized from time to time by the Board of Directors.
SECTION VII-7 REPRESENTATION OF SHARES OF OTHER CORPORATIONS:
Shares standing in the name of the corporation may be voted or
represented and all rights incident thereto may be exercised on
behalf of the corporation by the President, a Vice President, the
Secretary or the Treasurer, or by such other officers as to whom
the Board of Directors may from time to time confer like powers.
SECTION VII-8 FISCAL YEAR: The fiscal year of the corporation
shall end the thirty-first day of December in each year.
SECTION VII-9 CORPORATE SEAL: The corporate seal shall have
inscribed thereon the name of the corporation, the year of its
organization and the words "Corporate Seal, Delaware." The seal
may be used by causing it or a facsimile thereof to be impressed
or affixed or reproduced or otherwise.
<PAGE>
ARTICLE VIII
AMENDMENT OF BY-LAWS
SECTION VIII-1 AMENDMENT: These By-laws may be altered or
repealed at any meeting of the stockholders or of the Board of
Directors.
EXHIBIT 4.1
Section II-7 of the By-laws of Global Marine Inc. as amended
August 5, 1998
SECTION II-7 BUSINESS TO BE CONDUCTED AND NOMINATIONS: (a) At
any special meeting of stockholders, only such business shall be
conducted, and only such proposals shall be acted upon, as shall
have been set forth in the notice relating to the meeting.
(b) At any annual meeting of stockholders, only such
business shall be conducted, and only such proposals shall be
acted upon, as shall have been brought before the annual meeting
(i) by or at the direction of the Board of Directors or (ii) by
any stockholder of the corporation who is a stockholder of record
at the time of the giving of such stockholder's notice provided
for in this paragraph (b), who shall be entitled to vote at such
meeting, and who complies with the requirements of this paragraph
(b) and as shall otherwise be proper subjects for stockholder
action and shall be properly introduced at the meeting. For a
proposal to be properly brought before an annual meeting by a
stockholder, in addition to any other applicable requirements,
the stockholder must have given timely advance notice thereof in
writing to the Secretary of the corporation. To be timely, a
stockholder's notice must be delivered to, or mailed and received
at, the principal executive offices of the corporation not later
than the close of business on the 90th day prior to the first
anniversary of the beginning of the preceding year's annual
meeting; provided, however, that in the event that the date of
the annual meeting is more than 30 days before or more than 60
days after such anniversary date, notice by the stockholder to be
timely must be so delivered not later than the close of business
on the later of the 90th day prior to the scheduled day of such
annual meeting or the 10th day following the day on which public
announcement of the date of such meeting is first made by the
corporation, including, without limitation, by press release, by
filing with the Securities and Exchange Commission, and/or by any
written material sent to stockholders. Any such stockholder's
notice to the Secretary of the corporation shall set forth as to
each matter the stockholder proposes to bring before the annual
meeting (i) a description of the proposal desired to be brought
before the annual meeting and the reasons for conducting such
business at the annual meeting, (ii) the name and address, as
they appear on the corporation's books, of the stockholder
proposing such business and any other stockholders known by such
stockholder to be supporting such proposal, (iii) the class and
number of shares of the corporation's stock that are beneficially
owned by the stockholder on the date of such notice, (iv) any
financial interest of the stockholder in such proposal, and (v) a
representation that the stockholder intends to appear in person
or by proxy at the meeting to bring the proposed business before
the annual meeting. The presiding officer of the annual meeting
shall determine whether the requirements of this paragraph (b)
have been met with respect to any stockholder proposal. If the
presiding officer determines that a stockholder proposal was not
made in accordance with the terms of this paragraph (b), he shall
so declare at the meeting and such proposal shall not be acted
upon at the meeting.
(c) Subject to such rights of the holders of any class or
series of preferred stock as may be prescribed in the Certificate
of Incorporation or in the resolutions of the Board of Directors
providing for the issuance of any such class or series, only
persons who are nominated in accordance with the procedures set
forth in this paragraph (c) shall be eligible for election as,
and to serve as, directors. Nominations of persons for election
to the Board of Directors may be made at a meeting of the
<PAGE>
stockholders at which directors are to be elected (i) by or at
the direction of the Board of Directors or (ii) by any
stockholder of the corporation who is a stockholder of record at
the time of the giving of such stockholder's notice provided for
in this paragraph (c), who shall be entitled to vote at such
meeting in the election of directors, and who complies with the
requirements of this paragraph (c). Such nominations, other than
those made by or at the direction of the Board of Directors,
shall be preceded by timely advance notice thereof in writing to
the Secretary of the corporation. To be timely, a stockholder's
notice must be delivered to, or mailed and received at, the
principal executive offices of the corporation not later than the
close of business on the 90th day prior to the first anniversary
of the beginning of the preceding year's annual meeting;
provided, however, that in the event that the date of the annual
meeting is more than 30 days before or more than 60 days after
such anniversary date, notice by the stockholder to be timely
must be so delivered not later than the close of business on the
later of the 90th day prior to the scheduled day of such annual
meeting or the 10th day following the day on which public
announcement of the date of such meeting is first made by the
corporation, including, without limitation, by press release, by
filing with the Securities and Exchange Commission, and/or by any
written material sent to stockholders. Any such stockholder's
notice to the Secretary of the corporation shall set forth (x) as
to each person whom the stockholder proposes to nominate for
election or re-election as a director, (i) the name, age,
business address and residence address of such person, (ii) the
principal occupation or employment of such person, (iii) the
number of shares of each class of capital stock of the
corporation beneficially owned by such person and (iv) the
written consent of such person to having such person's name
placed in nomination at the meeting and to serve as a director if
elected, and (y) as to the stockholder giving the notice, (i) the
name and address, as they appear on the corporation's books, of
such stockholder, (ii) the class and number of shares of the
corporation's stock that are beneficially owned by the
stockholder on the date of such notice, (iii) any arrangement
between the nominee or nominees and the stockholder, (iv) any
other facts about the nominee or nominees that would be required
in a proxy statement and (v) a representation that the
stockholder intends to appear in person or by proxy at the
meeting to make the nomination or nominations. The presiding
officer of the meeting of stockholders shall determine whether
the requirements of this paragraph (c) have been met with respect
to any nomination or intended nomination. If the presiding
officer determines that any nomination was not made in accordance
with the terms of this paragraph (c), he shall so declare at the
meeting and such nomination shall be disregarded.
(d) Notwithstanding the foregoing provisions of this
Section II-7, a stockholder shall also comply with all applicable
requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder with respect to the
matters set forth in this Section II-7.
EXHIBIT 10.1
Form of Letter Severance Agreement dated August 5, 1998,
Between Global Marine Inc. and Nine Executive Officers,
Respectively
August 5, 1998
[Name and Address]
Dear ___________:
In consideration of your continued services to Global Marine
Inc. (the "Company") and/or any direct or indirect subsidiary of
the Company ("Subsidiary") and the other agreements contained
herein, the Company hereby agrees that a severance payment will
be made to you if:
A. Your employment with the Company or any Subsidiary is
terminated by the Company or any Subsidiary and such
termination is other than for Cause, as hereinafter
defined; or
B. Such employment is terminated by you within six (6)
months following (i) any reduction in your base salary
without your consent or (ii) any substantial alteration
in the nature of your position without your consent, or
(iii) your office being moved from the Houston, Texas
area without your consent; or
C. Such employment is terminated by you within twelve (12)
months following a Change of Ownership, as hereinafter
defined, of the Company or of any Subsidiary by which
you are employed or which directly or indirectly owns
or controls any Subsidiary by which you are employed.
"Cause" will mean acts of misconduct harmful to the Company and
will not mean inadequate performance or incompetence. A "Change
of Ownership" will have occurred if direct or indirect beneficial
ownership of securities representing, or other direct or indirect
control of, 35% or more of the voting power of the Company or of
any Subsidiary by which you are employed or which directly or
indirectly owns or controls any Subsidiary by which you are
employed is held by one holder or by a group of holders working
in concert for the purpose of such ownership or control where
such holder or holders are not the Company or any Subsidiary.
The severance payment will be made to you at such time on or
after the date of this letter as your employment with the Company
or any Subsidiary is terminated in the circumstances specified.
The severance payment will consist of salary continuation and the
continuation of your medical, dental and life insurance benefits
for an additional twenty-four (24) months based on your highest
base salary and benefits at any time within the nine (9) months
immediately preceding such termination. It is expressly
understood and agreed that any and all periods during which you
receive salary continuation payments under this agreement, until
the earlier to occur of your retirement under one or more of the
Company's retirement plans or your death, will be "Service" for
<PAGE>
all purposes under the Company's retirement plans. In the event
you begin or your spouse begins to receive a benefit under one or
more of the Company's retirement plans before you become or would
have become eligible for normal retirement under any such plan at
age 65, the salary continuation payments that you or your spouse
would otherwise be entitled to receive thereafter under this
agreement will be reduced by the amount of any payments received
by you or your spouse under such plan or plans. The salary and
benefit continuation described herein will be provided in the
event of termination due to disability, in which event the salary
continuation payments that you would otherwise be entitled to
receive under this agreement will be reduced by the amount of any
disability payments received by you that have been funded or
insured wholly or in part at the expense of the Company or any
Subsidiary. In the event you die while entitled to the salary
continuation provided in this agreement, the salary continuation
payments provided for in this agreement will be made to your
designated beneficiary or your estate for the remainder of the
twenty-four (24) months. In no event, however, will the salary
or benefit continuation described herein be provided to you, your
spouse, your designated beneficiary or your estate beyond the
date you become or would have become eligible for normal
retirement under one or more of the Company's retirement plans at
age 65.
Subject to the foregoing salary and benefit continuation,
this agreement does not affect the right of the Company or any
Subsidiary to terminate your employment at any time for any
reason. Furthermore, this agreement does not prejudice or
otherwise affect your participation in the other benefits and
perquisites generally applicable to the Company's employees or
appropriate to your position, provided, however, that the above-
mentioned salary and benefit continuation is separate and apart
from and, to the extent such salary and benefit continuation is
actually paid, will be in lieu of any payment under any policy of
the Company regarding severance payments generally.
Because it is important that the Company and its
Subsidiaries protect secret, proprietary and confidential
information pertaining to their businesses, and because it is
reasonable to expect that you have obtained or will obtain such
information in the course of your employment, you agree that you
will not:
(a) divulge or appropriate to your own use or to the use of
others any secret, proprietary or confidential information
pertaining to the business of the Company or any Subsidiary
that was obtained in any way during your employment by the
Company or any Subsidiary, it being understood and agreed
that you will promptly deliver to the Company or any
Subsidiary upon the earlier of the request of the Company or
such Subsidiary or the date of your termination of such
employment all documents, copies thereof, and other material
in your possession relating to any of the kinds of
information identified above; or
(b) during the period of two years commencing with any
termination of your employment with the Company or any
Subsidiary solicit on your own behalf, or on behalf of any
other person, firm or company, the employment of any person
employed by the Company or any Subsidiary; or
(c) during the period of two years commencing with any
termination of your employment with the Company or any
Subsidiary compete with the Company or any Subsidiary in
<PAGE>
obtaining or performing offshore drilling contracts or
services, offshore turnkey drilling, integrated drilling or
drilling management contracts or services, or other similar
offshore contracts or services, either as an employee,
officer, director, consultant, independent contractor or
agent of a direct competitor of the Company or any
Subsidiary or on your own behalf, it being understood and
agreed, however, that this agreement shall not preclude you
from working for any person, firm or company that drills oil
and gas wells for its own account or provides onshore oil
and gas drilling services and does not compete with the
company or any Subsidiary in obtaining or performing
offshore drilling contracts or services, offshore turnkey
drilling, integrated drilling or drilling management
contracts or services, or other similar offshore services;
and you further agree that if you violate any provision of this
paragraph (i) the Company may bring such action or actions in
such court or courts as it shall deem necessary or advisable in
order to enforce your compliance with the provisions of this
paragraph and for damages in respect of such violation, (ii) you
will be ineligible to receive any further salary, benefit or
other compensation hereunder from and after the commencement of
such violation, and (iii) you will immediately repay to the
Company any and all amounts paid, before or after the
commencement of such violation, as salary continuation.
This agreement integrates all the terms and conditions
mentioned herein or incidental hereto and supersedes all oral
negotiations or statements and prior writings with respect to the
subject matter hereof.
This agreement shall be governed by the laws of the state of
Texas, without regard to the laws that might otherwise be
applicable under principles of conflicts of laws.
If you accept the agreement contained in this letter, please
date and sign the copy of this letter enclosed for that purpose
and return it to the Company, attention of the Corporate
Secretary.
GLOBAL MARINE INC.
By: _________________________
[Title]
Accepted and Agreed to this
___ day of ____________, 1998.
________________________
Signature
EXHIBIT 15.1
ACCOUNTANTS' AWARENESS LETTER
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Global Marine Inc. Registration Statements
We are aware that our report dated August 5, 1998, on our review of the
condensed consolidated interim financial information of Global Marine Inc.
and subsidiaries for the three and six months ended June 30, 1998, and
included in this Quarterly Report on Form 10-Q is incorporated by reference
in (i) the prospectus constituting part of the Company's Registration
Statements on Form S-8 (Registration Nos. 33-32088, 33-40961, and 33-63326),
respectively, for the Global Marine Inc. 1989 Stock Option and Incentive
Plan, (ii) the prospectus constituting part of the Company's Registration
Statement on Form S-8 (Registration No. 33-40266) for the Global Marine
Savings Incentive Plan, (iii) the prospectus constituting part of the
Company's Registration Statement on Form S-8 (Registration No. 33-40961)
for the Global Marine Inc. 1990 Non-Employee Director Stock Option Plan,
(iv) the prospectus constituting part of the Company's Registration
Statement on Form S-8 (Registration No. 33-57691) for the Global Marine Inc.
1994 Non-Employee Stock Option and Incentive Plan and (v) the combined
prospectus constituting part of the Company's Registration Statements on
Form S-3 (Registration Nos. 33-58577 and 333-49807) for the proposed offering
of up to $500,000,000 of debt securities, preferred stock and/or common stock.
Pursuant to Rule 436(c) under the Securities Act of 1933, this report should
not be considered a part of any of said registration statements prepared or
certified by us within the meaning of Sections 7 and 11 of that Act.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
August 7, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated balance sheet of Global Marine Inc. and subsidiaries
as of 6-30-98 and the related condensed consolidated statement of operations
for the six months ended 6-30-98, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 38,600
<SECURITIES> 1,700
<RECEIVABLES> 206,400
<ALLOWANCES> 2,800
<INVENTORY> 0
<CURRENT-ASSETS> 338,400
<PP&E> 1,705,500
<DEPRECIATION> 348,100
<TOTAL-ASSETS> 1,785,000
<CURRENT-LIABILITIES> 140,600
<BONDS> 595,600
0
0
<COMMON> 17,300
<OTHER-SE> 940,500
<TOTAL-LIABILITY-AND-EQUITY> 1,785,000
<SALES> 2,300
<TOTAL-REVENUES> 631,100
<CGS> 1,800
<TOTAL-COSTS> 428,700
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,400
<INCOME-PRETAX> 183,700
<INCOME-TAX> 42,100
<INCOME-CONTINUING> 141,600
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 141,600
<EPS-PRIMARY> .82
<EPS-DILUTED> .80
</TABLE>
