As filed with the Securities and Exchange Commission on February 6, 2002
Registration No. 333-88797
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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MARATHON OIL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 5555 SAN FELIPE ROAD 25-0996816
(State or other jurisdiction HOUSTON, TEXAS 77056-2723
of incorporation or organization) (713) 629-6600 (I.R.S. Employer Identification No.)
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
WILLIAM F. SCHWIND, JR., ESQ.
VICE PRESIDENT, GENERAL COUNSEL & SECRETARY
5555 SAN FELIPE ROAD
HOUSTON, TEXAS 77056-2723
(713) 629-6600
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copy to:
R. JOEL SWANSON, ESQ.
BAKER BOTTS L.L.P.
3000 ONE SHELL PLAZA
910 LOUISIANA
HOUSTON, TEXAS 77002-4995
(713) 229-1330
FAX: (713) 229-1522
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Securities Act"), other than securities
offered only in connection with dividend or interest reinvestment plans, check
the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [X]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED FEBRUARY 6, 2002
PROSPECTUS
[Logo]
MARATHON OIL CORPORATION
5555 San Felipe Road
Houston, Texas 77056-2723
(713) 629-6600
$1,685,719,300
SENIOR DEBT SECURITIES
SUBORDINATED DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
WARRANTS
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THE OFFERING
We may offer from time to time:
o senior debt securities;
o subordinated debt securities;
o preferred stock;
o common stock; and
o warrants.
Our common stock is listed on the
New York Stock Exchange, the Pacific
Stock Exchange and the Chicago Stock
Exchange under the symbol
"MRO."
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 2.
We will provide additional terms of our securities in one or more supplements to
this prospectus. You should read this prospectus and the related prospectus
supplement carefully before you invest in our securities. No person may use this
prospectus to offer and sell our securities unless a prospectus supplement
accompanies this prospectus.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is , 2002.
TABLE OF CONTENTS
About This Prospectus.............................................................................................1
The Company.......................................................................................................1
Risk Factors......................................................................................................2
Forward-Looking Statements........................................................................................9
The Separation...................................................................................................10
Relationship Between Marathon and United States Steel After the Separation.......................................12
Use of Proceeds..................................................................................................15
Ratios of Earnings to Fixed Charges and Earnings to Combined Fixed Charges and Preferred Stock Dividends.........16
Description of Debt Securities...................................................................................17
Description of Capital Stock.....................................................................................27
Description of Warrants..........................................................................................33
Plan of Distribution.............................................................................................34
Legal Matters....................................................................................................36
Experts..........................................................................................................36
Where You Can Find More Information..............................................................................36
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we have filed
with the Securities and Exchange Commission under a "shelf" registration
process. Using this process, we may offer any combination of the securities this
prospectus describes in one or more offerings with a total initial offering
price of up to $1,685,719,300. This prospectus provides you with a general
description of the securities we may offer. Each time we use this prospectus to
offer securities, we will provide a prospectus supplement and, if applicable, a
pricing supplement. The prospectus supplement and any pricing supplement will
describe the specific terms of that offering. The prospectus supplement and any
pricing supplement may also add to, update or change the information this
prospectus contains. Please carefully read this prospectus, the prospectus
supplement and any pricing supplement, in addition to the information contained
in the documents we refer to under the heading "Where You Can Find More
Information."
THE COMPANY
Marathon Oil Corporation, a Delaware corporation ("Marathon"), is one
of the largest fully integrated oil and gas companies in the United States.
Through its subsidiaries, Marathon is engaged in the worldwide exploration and
production of crude oil and natural gas. It is also engaged in other
energy-related businesses, including the domestic refining, marketing and
transportation of petroleum products primarily through Marathon Ashland
Petroleum LLC ("MAP"), a company in which Marathon owns a 62% equity interest.
On December 31, 2001, in a transaction we refer to as the "Separation,"
we separated our businesses into two companies and changed our name from USX
Corporation to Marathon Oil Corporation. As a result of the Separation, United
States Steel Corporation ("United States Steel") now conducts the business of
our former U.S. Steel Group as a separate, publicly owned corporation. Marathon
and its subsidiaries are continuing the business of the Marathon Group. See "The
Separation."
In this prospectus, we refer to Marathon, its wholly owned and majority
owned subsidiaries and its ownership interest in equity affiliates as "we" or
"us," unless we specifically state otherwise or the context indicates otherwise.
Our principal executive offices are located at 5555 San Felipe Road, Houston,
Texas 77056-2723, and our telephone number at that location is (713) 629-6600.
1
RISK FACTORS
You should carefully consider the following matters, in addition to the
other information we have provided in this prospectus, the accompanying
prospectus supplement and the documents we incorporate by reference, before
reaching a decision regarding an investment in our securities.
RISKS RELATED TO THE SEPARATION
UNITED STATES STEEL HAS VARIOUS FINANCIAL AND OTHER OBLIGATIONS WHICH ITS
FAILURE TO PERFORM COULD MATERIALLY ADVERSELY AFFECT US.
In connection with the Separation, United States Steel agreed to hold
us harmless from and against various liabilities, including (amounts as of
December 31, 2001):
o approximately $554 million of long-term debt and capital-lease
obligations we are obligated by contract to pay third parties;
o approximately $96 million in guarantees relating to lease
arrangements and similar obligations associated with the
business of United States Steel; and
o any federal income tax liabilities that arise from the
Separation through a fault of United States Steel.
See "- Financial Matters Agreement" and "- Tax Sharing Agreement" under
"Relationship Between Marathon and United States Steel After the Separation." If
United States Steel fails to perform these agreements, our claims against it
would constitute general unsecured claims subordinate to the claims of secured
creditors and that failure could materially adversely affect us.
In addition, we could be contingently liable for other obligations
associated with the business of United States Steel, as more fully described
under "Relationship Between Marathon and United States Steel After the
Separation -- Financial Matters Agreement."
As a stand-alone company, United States Steel will need to fund any of
its negative operating cash flow from external sources, and adequate sources may
be unavailable or the cost of that funding may adversely impact United States
Steel. United States Steel is more highly leveraged than we are, has a
noninvestment grade credit rating and has granted security interests in some of
its assets, including its accounts receivable and inventory. The steel business
is highly competitive, and a large number of industry participants have sought
protection under bankruptcy laws in recent periods.
The enforceability of our claims against United States Steel could
become subject to the effect of any bankruptcy, fraudulent conveyance or
transfer or other law affecting creditors' rights generally, or of general
principles of equity, which might become applicable to those claims or other
claims arising from the facts and circumstances in which the Separation was
effected. Under fraudulent conveyance or transfer laws, for example, unsecured
obligations of a debtor which a court finds the debtor to have incurred while
insolvent or undercapitalized could be subordinated in right of payment to
other unsecured claims against the debtor.
Under applicable law and regulations, we also may be liable for any
defaults by Untied States Steel in the performance of its obligations to pay
federal income taxes, fund its ERISA pension plans and pay other obligations
respecting periods prior to the effective date of the Separation.
THE TRANSFER BY OUR FORMER PARENT ENTITY TO US OF OWNERSHIP OF THE BUSINESSES
REPRESENTING THE MARATHON GROUP COULD BE ATTACKED UNDER FRAUDULENT CONVEYANCE OR
TRANSFER LAWS BY OR ON BEHALF OF CREDITORS OF UNITED STATES STEEL, AND ANY SUCH
ATTACK, IF SUCCESSFUL, COULD MATERIALLY ADVERSELY AFFECT US AND THE VALUE OF OUR
SECURITIES.
2
In July 2001, USX Corporation ("Old USX") effected a reorganization of
the ownership of its businesses in which:
o it created Marathon as its publicly owned parent holding
company and transferred ownership of the businesses
representing the Marathon Group to Marathon; and
o it merged into a newly formed subsidiary which survives as
United States Steel.
Prior to this reorganization, the assets of Old USX available to satisfy its
then existing and future creditors included its ownership interest in the
businesses representing the Marathon Group.
If a court in a bankruptcy case respecting United States Steel or a
lawsuit brought by its creditors or their representative were to find that,
under the applicable state fraudulent conveyance or transfer law or
corresponding provisions of the federal bankruptcy code:
o the transfer by Old USX to us of ownership of the businesses
representing the Marathon Group or related transactions were
undertaken by Old USX with the intent of hindering, delaying
or defrauding its existing or future creditors; or
o Old USX received less than reasonably equivalent value or fair
consideration, or no value or consideration, in connection
with those transactions, and either it or United States Steel
o was insolvent or rendered insolvent by reason of
those transactions,
o was engaged or about to engage in a business or
transaction for which its assets constituted
unreasonably small capital, or
o intended to incur, or believed that it would incur,
debts beyond its ability to pay as they mature,
then that court could determine those transactions entitled one or more classes
of creditors of United States Steel to equitable relief from us. Such a
determination could permit the unpaid creditors to obtain recovery from us or
could result in other actions detrimental to the holders of our debt and equity
securities. The measure of insolvency for purposes of these considerations would
vary depending on the law of the jurisdiction being applied. Generally, however,
an entity would be considered insolvent if either:
o the sum of its debts and liabilities, including contingent
liabilities, was greater than the value of its assets, at a
fair valuation; or
o the fair saleable value of its assets was less than the amount
required to pay the probable liability on its total existing
debts and liabilities, including contingent liabilities, as
they become absolute and matured.
THE SEPARATION MAY BECOME TAXABLE UNDER SECTION 355(e) OF THE INTERNAL REVENUE
CODE IF CAPITAL STOCK REPRESENTING A 50% OR GREATER INTEREST IN EITHER MARATHON
OR UNITED STATES STEEL IS ACQUIRED AS PART OF A PLAN THAT INCLUDES THE
SEPARATION.
The Separation may become taxable to Marathon under section 355(e) of
the Internal Revenue Code of 1986 if capital stock representing a 50% or greater
interest in either Marathon or United States Steel is acquired, directly or
indirectly, as part of a plan or series of related transactions that include the
Separation. For this purpose, a "50% or greater interest" means capital stock
possessing at least 50% of the total combined voting power of all classes of
stock entitled to vote or at least 50% of the total value of shares of all
classes of capital stock. If section 355(e) applies, the amount of the tax could
be material. If an acquisition occurs that results in the Separation being
taxable under section 355(e), the tax sharing agreement described below under
"Relationship Between
3
Marathon and United States Steel After the Separation - Tax Sharing Agreement"
provides that the resulting corporate tax liability will be borne by the party
involved in that acquisition transaction.
RISKS RELATED TO OUR BUSINESS
A SUBSTANTIAL OR EXTENDED DECLINE IN OIL OR GAS PRICES WOULD HAVE A MATERIAL
ADVERSE EFFECT ON US.
Prices for oil and gas fluctuate widely. Our revenues, operating
results and future rate of growth are highly dependent on the prices we receive
for our oil, gas and refined products. Historically, the markets for oil, gas
and refined products have been volatile and may continue to be volatile in the
future. Many of the factors influencing prices of oil, gas and refined products
are beyond our control. These factors include:
o worldwide and domestic supplies of oil and gas;
o weather conditions;
o the ability of the members of OPEC to agree to and maintain
oil price and production controls;
o political instability or armed conflict in oil-producing
regions;
o the price and level of foreign imports;
o the level of consumer demand;
o the price and availability of alternative fuels;
o the availability of pipeline capacity; and
o domestic and foreign governmental regulations and taxes.
The long-term effects of these and other conditions on the prices of
oil and gas are uncertain. For example, oil prices declined significantly in
1998 and, for an extended period of time, remained substantially below prices
obtained in previous years. In late 1999, oil and natural gas prices increased
significantly and remained at higher levels through the first half of 2001. In
the second half of 2001, oil and natural gas prices declined significantly from
the price levels of 2000 and the first half of 2001.
Lower oil and gas prices may reduce the amount of oil and gas that we
produce, which may adversely affect our revenues and operating income.
Significant reductions in oil and gas prices may require us to reduce our
capital expenditures.
The recent terrorists' attacks on the United States may directly and
indirectly negatively affect our operating results. The national and global
responses to those terrorist attacks, many of which are still being formulated,
including recent military, diplomatic and financial responses and any possible
reprisals as a consequence of unilateral U.S. actions and/or allied actions, may
materially adversely affect us in ways we cannot predict at this time.
OUR OIL AND GAS RESERVE DATA AND FUTURE NET REVENUE ESTIMATES ARE UNCERTAIN.
Estimates of reserves by necessity are projections based on engineering
data, the projection of future rates of production and the timing of future
expenditures. We base the estimates of our proved oil and gas reserves and
projected future net revenues on reserve reports we prepare. The process of
estimating oil and gas reserves requires substantial judgment on the part of the
petroleum engineers, resulting in imprecise determinations, particularly with
respect to new discoveries. Different reserve engineers may make different
estimates of reserve quantities and revenues attributable to those reserves
based on the same data. Future performance that deviates significantly from the
reserve reports could have a material adverse effect on our business and
prospects.
4
Fluctuations in the price of oil and natural gas have the effect of
significantly altering reserve estimates, because the economic projections
inherent in the estimates may reduce or increase the quantities of commercially
recoverable reserves. We may not realize the prices our reserve estimates
reflect or produce the estimated volumes during the periods those estimates
reflect. Actual future production, oil and natural gas prices, revenues, taxes,
development expenditures, operating expenses and quantities of recoverable oil
and natural gas reserves most likely will vary from our estimates.
Any downward revision in our estimated quantities of reserves or
writedown of the book value of our reserves could have adverse consequences on
our financial results, such as decreasing earnings, which may result in noncash
losses and impairment charges.
IF WE FAIL TO ACQUIRE OR FIND ADDITIONAL RESERVES, OUR RESERVES AND PRODUCTION
WILL DECLINE MATERIALLY FROM THEIR CURRENT LEVELS.
The rate of production from oil and gas properties generally declines
as reserves are depleted. Except to the extent we acquire additional properties
containing proved reserves, conduct successful exploration and development
activities or, through engineering studies, identify additional behind-pipe
zones or secondary recovery reserves, our proved reserves will decline
materially as oil and gas is produced. Future oil and gas production is,
therefore, highly dependent on our level of success in acquiring or finding
additional reserves. Because we are smaller than many of our competitors, we
have fewer reserves and will be at an even greater disadvantage in relation to
our competitors if we fail to acquire or find additional reserves.
INCREASES IN CRUDE OIL PRICES AND ENVIRONMENTAL REGULATIONS MAY ADVERSELY
AFFECT OUR REFINED PRODUCT MARGINS.
We conduct domestic refining, marketing and transportation operations
primarily through MAP. MAP conducts its operations mainly in the Midwest, the
Southeast, the Ohio River Valley and the upper Great Plains. The profitability
of these operations depends largely on the margin between the cost of crude oil
and other feedstocks MAP refines and the selling prices it obtains for refined
products. MAP's overall profitability could be adversely affected by
availability of supply and rising crude oil and other feedstock prices which it
does not recover in the marketplace. Refined product margins have been
historically volatile and vary with the level of economic activity in the
various marketing areas, the regulatory climate, logistical capabilities and the
available supply of refined products.
In addition, environmental regulations, particularly the 1990
Amendments to the Clean Air Act, have imposed, and are expected to continue to
impose, increasingly stringent and costly requirements on refining and marketing
operations, which may have an adverse effect on margins.
THE OIL AND GAS EXPLORATION AND PRODUCTION INDUSTRY IS VERY COMPETITIVE, AND
MANY OF OUR EXPLORATION AND PRODUCTION COMPETITORS HAVE GREATER FINANCIAL AND
OTHER RESOURCES THAN WE DO.
Strong competition exists in all sectors of the oil and gas exploration
and production industry and, in particular, in the exploration and development
of new reserves. We compete with major integrated and independent oil and gas
companies for the acquisition of oil and gas leases and other properties, for
the equipment and labor required to develop and operate those properties and in
the marketing of oil and natural gas to end-users. Many of our competitors have
financial and other resources substantially greater than those available to us.
As a consequence, we may be at a competitive disadvantage in bidding for
drilling rights. In addition, many of our larger competitors may be better able
to respond to factors that affect the demand for oil and natural gas production,
such as changes in worldwide prices and levels of production, the cost and
availability of alternative fuels and the application of government regulations.
We also compete in attracting and retaining personnel, including geologists,
geophysicists and other specialists. We may not be able to attract or retain
technical personnel in the future.
5
ENVIRONMENTAL COMPLIANCE AND REMEDIATION COULD RESULT IN INCREASED CAPITAL
REQUIREMENTS AND OPERATING COSTS.
Our businesses are subject to numerous laws and regulations relating to
the protection of the environment. We have incurred and will continue to incur
substantial capital, operating and maintenance, and remediation expenditures as
a result of these laws and regulations. Our compliance with amended, new or more
stringent requirements, stricter interpretations of existing requirements or the
future discovery of contamination may require us to make material expenditures
or subject us to liabilities that we currently do not anticipate. In addition,
any failure by us to comply with existing or future laws could result in civil
or criminal fines and other enforcement action against us.
Our operations and those of our predecessors could expose us to civil
claims by third parties for alleged liability resulting from contamination of
the environment or personal injuries caused by releases of hazardous substances.
For example:
o we are investigating or remediating contamination at several
formerly and currently owned sites; and
o we have been identified as a potentially responsible party at
several Superfund sites where we or our predecessors are
alleged to have disposed of wastes in the past.
Environmental laws are subject to frequent change and many of them have
become more stringent. In some cases, they can impose liability for the entire
cost of cleanup on any responsible party without regard to negligence or fault
and impose liability on us for the conduct of others or conditions others have
caused, or for our acts that complied with all applicable requirements when we
performed them.
Of particular significance to MAP are the new Tier II Fuels regulations
issued by the U.S. Environmental Protection Agency. These rules require
substantially reduced sulfur levels in the manufacture of gasoline and diesel
fuel. We estimate that MAP's combined capital cost to achieve compliance with
these rules could amount to approximately $700 million between 2003 and 2005.
This is only a preliminary estimate because of the ongoing evolution of
regulatory requirements. Some factors that could potentially affect MAP's
gasoline and diesel fuel compliance costs include obtaining the necessary
construction and environmental permits, operating considerations and unforeseen
hazards, such as weather conditions. To the extent these expenditures are not
ultimately reflected in the prices of our products and services, our operating
results will be adversely affected.
In connection with government inspections at some of our refineries, we
have received a number of notices of violations of environmental laws from the
Environmental Protection Agency and state environmental agencies. In some cases,
we have entered into consent decrees or orders that require us to pay fines or
install pollution controls to settle our alleged liability. For example, MAP
agreed to settle alleged violations of several environmental laws, including New
Source Review regulations, with a global consent decree signed on May 11, 2001.
The agreement requires MAP to install environmental control equipment which we
expect to require approximately $270 million in capital expenditures over an
eight-year period, pay a $3.8 million fine and perform supplemental
environmental projects which we expect to cost approximately $8 million. These
supplemental environmental projects are being undertaken as part of a settlement
of an enforcement action for alleged Clean Air Act violations.
6
OUR RELIANCE ON OUR FOREIGN PRODUCTION OF OIL AND GAS EXPOSES US TO RISKS FROM
ABROAD, WHICH COULD NEGATIVELY AFFECT OUR RESULTS OF OPERATIONS.
Our production of oil and gas outside of the United States accounted
for 48%, 33% and 34%, respectively, of our total production in the years 2000,
1999 and 1998. Development of new production properties in countries outside the
United States may require protracted negotiations with host governments,
national oil companies and third parties and is frequently subject to economic
and political considerations, such as taxation, nationalization, inflation,
currency fluctuations, increased regulation and approval requirements and
governmental regulation, which could adversely affect the economics of projects.
OUR OPERATIONS ARE SUBJECT TO BUSINESS INTERRUPTIONS AND CASUALTY LOSSES, AND WE
DO NOT INSURE AGAINST ALL POTENTIAL LOSSES AND COULD BE SERIOUSLY HARMED BY
UNEXPECTED LIABILITIES.
Our exploration and production operations are subject to unplanned
occurrences, including blowouts, explosions, fires, loss of well control,
spills, adverse weather, labor disputes and maritime accidents. In addition, our
refining, marketing and transportation operations are subject to business
interruptions due to scheduled refinery turnarounds and unplanned events such as
explosions, fires, pipeline interruptions, crude oil or refined product spills,
inclement weather or labor disputes. They are also subject to the additional
hazards of marine operations, such as capsizing, collision and damage or loss
from severe weather conditions. We maintain insurance against many, but not all,
potential losses or liabilities arising from these operating hazards in amounts
that we believe to be prudent. Uninsured losses and liabilities arising from
operating hazards could reduce the funds available to us for exploration,
drilling and production and could have a material adverse effect on our
financial position or results of operations.
AS A HOLDING COMPANY WITH NO OPERATIONS OF ITS OWN, MARATHON WILL DEPEND ON
DISTRIBUTIONS FROM ITS SUBSIDIARIES TO MAKE PAYMENTS ON ANY DEBT SECURITIES IT
OFFERS UNDER THIS PROSPECTUS, AND PROVISIONS OF APPLICABLE LAW OR CONTRACTUAL
RESTRICTIONS COULD LIMIT THE AMOUNT OF THOSE DISTRIBUTIONS.
Marathon derives substantially all its operating income from, and holds
substantially all its assets through, its subsidiaries. As a result, Marathon
will depend on distributions of cash flow and earnings of its subsidiaries in
order to meet its payment obligations under any debt securities it offers under
this prospectus and its other obligations. These subsidiaries are separate and
distinct legal entities and will have no obligation to pay any amounts due on
Marathon's debt securities or to provide Marathon with funds for its payment
obligations, whether by dividends, distributions, loans or otherwise. In
addition, provisions of applicable law, such as those limiting the legal sources
of dividends, could limit their ability to make payments or other distributions
to Marathon, and they could agree to contractual restrictions on their ability
to make distributions.
Marathon's right to receive any assets of any subsidiary, and therefore
the right of the holders of Marathon's debt securities to participate in those
assets, will be effectively subordinated to the claims of that subsidiary's
creditors, including trade creditors. In addition, even if Marathon is a
creditor of any subsidiary, Marathon's rights as a creditor would be subordinate
to any security interest in the assets of that subsidiary and any indebtedness
of that subsidiary senior to that held by Marathon.
MARATHON MAY ISSUE PREFERRED STOCK WHOSE TERMS COULD ADVERSELY AFFECT THE VOTING
POWER OR VALUE OF ITS COMMON STOCK.
Marathon's restated certificate of incorporation authorizes it to
issue, without the approval of its stockholders, one or more classes or series
of preferred stock having such preferences, powers and relative, participating,
optional and other rights, including preferences over its common stock
respecting dividends and distributions, as its board of directors generally may
determine. The terms of one or more classes or series of preferred stock could
adversely impact the voting power or value of Marathon's common stock. For
example, Marathon might grant holders of preferred stock the right to elect some
number of its directors in all events or on the happening of specified events or
the right to veto specified transactions. Similarly, the repurchase or
redemption rights or liquidation preferences Marathon might assign to holders of
preferred stock could affect the residual value of the common stock. See
"Description of Capital Stock -- Preferred Stock."
7
PROVISIONS IN MARATHON'S CORPORATE DOCUMENTS AND DELAWARE LAW COULD DELAY OR
PREVENT A CHANGE IN CONTROL OF MARATHON, EVEN IF THAT CHANGE WOULD BE BENEFICIAL
TO ITS STOCKHOLDERS.
The existence of some provisions in Marathon's corporate documents and
Delaware law could delay or prevent a change in control of Marathon, even if
that change would be beneficial to its stockholders. Marathon's restated
certificate of incorporation and by-laws contain provisions that may make
acquiring control of Marathon difficult, including:
o provisions relating to the classification, nomination and
removal of its directors;
o a provision prohibiting stockholder action by written consent;
o a provision that allows only its board of directors to call a
special meeting of its stockholders;
o provisions regulating the ability of its stockholders to bring
matters for action at annual meetings of its stockholders; and
o the authorization given to its board of directors to issue and
set the terms of preferred stock.
In addition, Marathon has also adopted a stockholder rights plan, which
would cause extreme dilution to any person or group who attempts to acquire a
significant interest in Marathon without advance approval of its board of
directors, while a provision of the Delaware General Corporation Law would
impose some restrictions on mergers and other business combinations between
Marathon and any holder of 15% or more of its outstanding common stock. See
"Description of Capital Stock."
8
FORWARD-LOOKING STATEMENTS
This prospectus and the accompanying prospectus supplement, including
the information we incorporate by reference, include forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. You can identify our forward-looking
statements by words such as "estimate," "project," "predict," "believe,"
"expect," "anticipate," "plan," "forecast," "budget," "goal" or other words that
convey the uncertainty of future events or outcomes. When considering these
forward-looking statements, you should keep in mind the risk factors and other
cautionary statements contained in this prospectus, any prospectus supplement
and the documents we have incorporated by reference.
The forward-looking statements are not guarantees of future
performance, and we caution you not to rely unduly on them. We have based many
of these forward-looking statements on expectations and assumptions about future
events that may prove to be inaccurate. While our management considers these
expectations and assumptions to be reasonable, they are inherently subject to
significant business, economic, competitive, regulatory and other risks,
contingencies and uncertainties, most of which are difficult to predict and many
of which are beyond our control. These risks, contingencies and uncertainties
relate to, among other matters, the following:
o our financial exposure for obligations of United States Steel;
o fluctuations in crude oil and natural gas prices and refining
and marketing margins;
o potential failure or delays in achieving expected reserve or
production levels from existing and future oil and gas
development projects due to operating hazards, drilling risks
and the inherent uncertainties in predicting oil and gas
reserves and oil and gas reservoir performance;
o drilling rig availability;
o unexpected geological or other conditions or events
encountered in drilling operations;
o unsuccessful exploratory drilling activities;
o unexpected difficulties in refining, marketing or transporting
petroleum products;
o potential disruption or interruption of our production
facilities and our refining, marketing and transportation
operations due to accidents, acts of terrorism or political
events;
o our ability to achieve the benefits we expect to achieve from
the Separation;
o the highly competitive nature of our businesses;
o international monetary conditions and exchange controls;
o changes in, and our ability to comply with government
regulations, including those relating to the environment;
o liability for remedial actions under environmental
regulations;
o changes in tax laws applicable to us; and
o general domestic and international economic and political
conditions.
We have discussed some of these factors in more detail in the "Risk Factors"
section of this prospectus. These factors are not necessarily all the important
factors that could affect us. We advise you that you should (1) be aware that
important factors we do not refer to above could affect the accuracy of our
forward-looking statements and (2) use caution and common sense when considering
our forward-looking statements. We do not intend to update these statements
unless the securities laws require us to do so.
9
THE SEPARATION
GENERAL
Marathon was originally organized in 2001 as USX HoldCo, Inc. ("USX
HoldCo") to become a holding company for the two principal businesses of our
former parent company, Old USX:
o the steel production and sale business, the steel mill
products, coke, taconite pellets and coal transportation
business and other steel-related businesses comprising the
U.S. Steel Group; and
o the oil and gas exploration and production and other energy
businesses conducted by Marathon Oil Company, an Ohio
corporation, and other subsidiaries comprising the Marathon
Group.
In a series of transactions (the "Holding Company Reorganization") Old USX
completed on July 2, 2001:
o USX HoldCo became the holding company for Marathon Oil
Company and United States Steel LLC;
o Old USX was merged with and into United States Steel LLC;
o USX HoldCo assumed a substantial part of the outstanding
indebtedness, obligations under various capital and operating
leases and guarantee obligations and other contingent
liabilities of Old USX; and
o USX HoldCo changed its name to USX Corporation.
On December 31, 2001, pursuant to an Agreement and Plan of
Reorganization dated as of July 31, 2001 (the "Reorganization Agreement"),
Marathon completed the Separation transaction, in which:
o United States Steel LLC converted into a Delaware corporation
named United States Steel Corporation and became a separate,
publicly traded company; and
o USX HoldCo, then known as USX Corporation, changed its name to
Marathon Oil Corporation.
Marathon and its subsidiaries are continuing the energy business that comprised
the Marathon Group of Old USX.
ASSUMPTION OF INDEBTEDNESS AND OTHER OBLIGATIONS BY UNITED STATES STEEL
Prior to the Separation, Old USX, and then Marathon, managed most of
its financial activities on a centralized, consolidated basis and, in its
financial statements, attributed amounts that related primarily to the following
items to the Marathon Group and the U.S. Steel Group on the basis of their cash
flows for the applicable periods and the initial capital structure for each
group:
o invested cash;
o short-term and long-term debt, including convertible debt, and
related net interest and other financing costs; and
o preferred stock and related dividends.
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The following items, however, were specifically attributed to and reflected in
their entirety in the financial statements of the group to which they related:
o leases;
o collateralized financings;
o indexed debt instruments;
o financial activities of consolidated entities that were not
wholly owned subsidiaries; and
o transactions that related to securities convertible solely
into common stock that tracked the performance of the Marathon
Group or the U.S. Steel Group.
These attributions were for accounting purposes only and did not reflect the
legal ownership of cash or the legal obligations to pay and discharge debt or
other obligations.
In connection with the Separation:
o United States Steel and its subsidiaries incurred indebtedness
to third parties and assumed various obligations from Marathon
in an aggregate amount approximately equal to all the net
amounts attributed to the U. S. Steel Group immediately prior
to the Separation, both absolute and contingent, less the
amount of a $900 million value transfer (the "Value
Transfer"); and
o Marathon and its subsidiaries remained responsible for all the
liabilities attributed to the Marathon Group, both absolute
and contingent, plus $900 million.
These arrangements will require a post-Separation cash settlement between
Marathon and United States Steel following the audit of the balance sheets for
both the Marathon Group and the U. S. Steel Group as of December 31, 2001, in
order to ensure that the Value Transfer was $900 million.
As a result of its assumption of various items of indebtedness and
other obligations from its former parent entity in the Holding Company
Reorganization, Marathon remained obligated after the Separation for the
following items of indebtedness and other obligations that were attributed to
the U.S. Steel Group in accordance with the provisions of the Reorganization
Agreement (amounts as of December 31, 2001):
o approximately $470 million of obligations under industrial
revenue bonds related to environmental projects for current
and former U. S. Steel Group facilities, with maturities
ranging from 2009 through 2033;
o approximately $84 million of capital lease obligations under
a lease for equipment at United States Steel's Fairfield Works
facility, with the lease term extending to 2012, subject to
extensions;
o approximately $96 million in guarantees relating to various
other lease arrangements and similar obligations associated
with the business of United States Steel; and
o other guarantees referred to under "Relationship Between
Marathon and United States Steel After the Separation --
Financial Matters Agreement."
As contemplated by the Reorganization Agreement, Marathon and United States
Steel entered into a financial matters agreement to reflect United States
Steel's agreement to assume and discharge all Marathon's principal repayment,
interest payment and other payment obligations under the industrial revenue
bonds, the capital lease arrangement and the guarantees associated with the
other lease and similar obligations referred to above. In addition, the
financial matters agreement requires United States Steel to use commercially
reasonable efforts to have Marathon released from its obligations under the
other guarantees referred to above. The financial matters agreement also
provides that on or before the tenth anniversary of the Separation, United
States Steel will provide for Marathon's discharge from any remaining liability
under any of the assumed industrial revenue bonds. United States Steel may
accomplish that discharge by refinancing or, to the extent not refinanced,
paying Marathon an amount equal to the remaining principal amount of, all
accrued and unpaid debt service outstanding on, and any premium required to
immediately retire, the then outstanding industrial revenue bonds. Only $1.8
million of the industrial revenue bonds are scheduled to mature in the period
extending through 2012. For additional information relating to the financial
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matters agreement, see "Relationship Between Marathon and United States Steel
After the Separation - Financial Matters Agreement."
EFFECTS ON HISTORICAL RELATIONSHIP
Historically, the U.S. Steel Group has funded its negative operating
cash flow with cash supplied by us, a portion of which was reflected as a
payment from us under our tax allocation policy and the remainder of which was
represented by increased amounts of debt attributed by us. As a stand-alone
company, United States Steel will need to fund any of its negative operating
cash flow from external sources, and adequate sources may be unavailable or the
cost of such funding may adversely impact United States Steel.
For the nine months ended September 30, 2001 and the year ended
December 31, 2000, the U.S. Steel Group had segment income (loss) from
operations of $(146) million and $25 million, respectively. Additionally, for
the year ended December 31, 2000, the U.S. Steel Group generated negative cash
flow of $494 million after investing activities and dividends, excluding an
additional $500 million elective employee benefit funding.
As we discuss below, the financial matters agreement does not contain
any financial covenants, and United States Steel is free to incur additional
debt and grant mortgages on or security interests in its property and sell or
transfer assets without our consent. United States Steel is more highly
leveraged than we are, has a noninvestment grade credit rating and has granted
security interests in some of its assets, including its accounts receivable and
inventory. Additionally, United States Steel's operations are capital intensive.
United States Steel's business also requires substantial expenditures for
routine maintenance. The steel business is highly competitive and a large number
of industry participants have sought protection under bankruptcy laws in recent
periods.
RELATIONSHIP BETWEEN MARATHON
AND UNITED STATES STEEL AFTER THE SEPARATION
As a result of the Separation, Marathon and United States Steel are
separate companies, and neither has any ownership interest in the other. Thomas
J. Usher is chairman of the board of both companies, and four of the remaining
ten members of Marathon's board of directors are also directors of United States
Steel.
In connection with the Separation and pursuant to the Reorganization
Agreement, Marathon and United States Steel have entered into a series of
agreements governing their relationship subsequent to the Separation and
providing for the allocation of tax and certain other liabilities and
obligations arising from periods prior to the Separation. Set forth below is a
summary of some of the provisions of each of those agreements.
TAX SHARING AGREEMENT
Marathon and United States Steel have a tax sharing agreement that
applies to each of their consolidated tax reporting groups. Provisions of this
agreement include the following:
o for any taxable period, or any portion of any taxable period,
ended on or before December 31, 2001, unpaid tax sharing
payments will be made between Marathon and United States Steel
generally in accordance with our general tax sharing
principles in effect prior to the Separation;
o no tax sharing payments will be made with respect to taxable
periods, or portions thereof, beginning after December 31,
2001; and
o provisions relating to the tax and related liabilities, if
any, that result from the Separation ceasing to qualify as a
tax-free transaction and limitations on post-Separation
activities that might jeopardize the tax-free status of the
Separation.
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Under the general tax sharing principles in effect prior to the
Separation:
o the taxes payable by each of the Marathon Group and the U.S.
Steel Group were determined as if each of them had filed its
own consolidated, combined or unitary tax return; and
o the U.S. Steel Group would receive the benefit, in the form of
tax sharing payments by the parent corporation, of the tax
attributes, consisting principally of net operating losses and
various credits, that its business generated and the parent
used on a consolidated basis to reduce its taxes otherwise
payable.
In accordance with the tax sharing agreement, at the time of the
Separation, we made a preliminary settlement with United States Steel of $441
million as the net tax sharing payments we owed to it for the year ended
December 31, 2001 under the pre-Separation tax sharing principles.
The tax sharing agreement also addresses the handling of tax audits and
contests and other matters respecting taxable periods, or portions of taxable
periods, ended prior to December 31, 2001.
In the tax sharing agreement, each of Marathon and United States Steel
promised the other party that it:
o would not, prior to January 1, 2004, take various actions or
enter into various transactions that might, under section 355
of the Internal Revenue Code of 1986, jeopardize the tax-free
status of the Separation; and
o would be responsible for, and indemnify and hold the other
party harmless from and against, any tax and related
liability, such as interest and penalties, that results from
the Separation ceasing to qualify as tax-free because of its
taking of any such action or entering into any such
transaction.
The proscribed actions and transactions include:
o the liquidation of Marathon or United States Steel; and
o the sale by Marathon or United States Steel of its assets,
except in the ordinary course of business.
In case a taxing authority seeks to collect a tax liability from one
party which the tax sharing agreement has allocated to the other party, the
other party has agreed in the sharing agreement to indemnify the first party
against that liability.
Even if the Separation otherwise qualifies for tax-free treatment under
section 355 of the Internal Revenue Code, the Separation may become taxable to
Marathon under section 355(e) of the Internal Revenue Code if capital stock
representing a 50% or greater interest in either Marathon or United States Steel
is acquired, directly or indirectly, as part of a plan or series of related
transactions that include the Separation. For this purpose, a "50% or greater
interest" means capital stock possessing at least 50% of the total combined
voting power of all classes of stock entitled to vote or at least 50% of the
total value of shares of all classes of capital stock. To minimize this risk,
both Marathon and United States Steel agreed in the tax sharing agreement that
they would not enter into any transactions or make any change in their equity
structures that could cause the Separation to be treated as part of a plan or
series of related transactions to which those provisions of section 355(e) of
the Internal Revenue Code may apply. If an acquisition occurs that results in
the Separation being taxable under section 355(e) of the Internal Revenue Code,
the agreement provides that the resulting corporate tax liability will be borne
by the party involved in that acquisition transaction.
Although the tax sharing agreement allocates tax liabilities relating
to taxable periods ending on or prior to the Separation, each of Marathon and
United States Steel, as members of the same consolidated tax reporting group
during any portion of a taxable period ended on or prior to the date of the
Separation, is jointly and severally liable under the Internal Revenue Code for
the federal income tax liability of the entire consolidated tax reporting group
13
for that year. To address the possibility that the taxing authorities may seek
to collect all or part of a tax liability from one party where the tax sharing
agreement allocates that liability to the other party, the agreement includes
indemnification provisions that would entitle the party from whom the taxing
authorities are seeking collection to obtain indemnification from the other
party, to the extent the agreement allocates that liability to that other party.
We can provide no assurance, however, that United States Steel will be able to
meet its indemnification obligations, if any, to Marathon that may arise under
the tax sharing agreement.
TRANSITION SERVICES AGREEMENT
Marathon and United States Steel have a transition services agreement
that will govern the provision of the following services until December 31,
2002:
o common corporate support services; and
o inter-unit computer services.
Common corporate support services include services personnel at our
former Pittsburgh corporate headquarters historically provided prior to the
Separation. These include accounting, finance and financial management,
government affairs, investor relations, public affairs and tax services. Most of
these personnel now work for Marathon or United States Steel. Each company has
agreed to provide these services to the other, to the extent it is able to do so
and the other company cannot satisfy its own needs.
Interunit computer services consist of computer and information
technology services either company historically provided to our former
Pittsburgh corporate headquarters or to the other company.
A company providing common corporate support or inter-unit computer
services under the transition services agreement will be entitled to recover the
costs it incurs in providing those services.
The transition services agreement also includes each company's grant to
the other company and its subsidiaries of a nonexclusive, fully paid, worldwide
license for their internal use only of the granting company's computer programs,
software, source code and know-how that were utilized prior to the Separation or
are utilized under the transition services agreement to provide common corporate
support or inter-unit computer services to the other company and its
subsidiaries.
FINANCIAL MATTERS AGREEMENT
Marathon and United States Steel have a financial matters agreement
that provides for United States Steel's assumption of the obligations under
Marathon's outstanding industrial revenue bonds, the capital lease arrangement
and the guarantees associated with the other lease and similar obligations
referred to above under "The Separation - Assumption of Indebtedness and Other
Obligations by United States Steel." Under the financial matters agreement,
United States Steel has assumed and agreed to discharge all Marathon's principal
repayment, interest payment and other obligations under those industrial revenue
bonds and lease and guarantee arrangements described above, including any
amounts due on any default or acceleration of any of those obligations, other
than any default caused by Marathon. The financial matters agreement also
requires United States Steel to use commercially reasonable efforts to have
Marathon released from its obligations under:
o a guarantee we have provided with respect to United States
Steel's obligations under a partnership agreement among
General Electric Credit Corporation of Delaware, Southern
Energy Clairton, L.L.C. and United States Steel; and
o guarantees we have provided with respect to United States
Steel's obligations under certain ISDA swap agreements.
The financial matters agreement also provides that, on or before the
tenth anniversary of the Separation, United States Steel will provide for
Marathon's discharge from any remaining liability under any of the assumed
industrial revenue bonds.
The financial matters agreement requires Marathon to use commercially
reasonable efforts to take all necessary action or refrain from acting so as to
assure compliance with all covenants and other obligations under the documents
relating to the assumed obligations to avoid the occurrence of a default or the
acceleration of the payment obligations under the assumed obligations. The
agreement also obligates Marathon to use commercially reasonable efforts to
obtain and maintain letters of credit and other liquidity arrangements required
under the assumed obligations.
14
United States Steel's obligations to Marathon under the financial
matters agreement are general unsecured obligations which rank equal to United
States Steel's accounts payable and other general unsecured obligations. The
financial matters agreement does not contain any financial covenants, and United
States Steel is free to incur additional debt, grant mortgages on or security
interests in its property and sell or transfer assets without our consent.
LICENSE AGREEMENT
Marathon and United States Steel have entered into a license agreement
under which Marathon granted to United States Steel a nonexclusive, fully paid,
worldwide license to use the "USX" name and various trade secrets, know-how and
intellectual property rights previously used in connection with the business of
both companies. The license agreement provides that United States Steel may use
these rights solely in the conduct of its internal business. It also provides
United States Steel with the right to sublicense these rights to any of its
subsidiaries. The license agreement provides for a perpetual term, so long as
United States Steel performs its obligations under the agreement.
INSURANCE ASSISTANCE AGREEMENT
Marathon and United States Steel have an insurance assistance
agreement, which provides for:
o the division of responsibility for joint insurance
arrangements; and
o the entitlement to insurance claims and the allocation of
deductibles with respect to claims associated with
pre-Separation periods.
Under the insurance assistance agreement:
o Marathon is entitled to all rights in and to all claims and is
solely liable for the payment of uninsured retentions and
deductibles arising out of or relating to pre-Separation
events or conditions exclusively associated with the business
of the Marathon Group;
o United States Steel is entitled to all rights in and to all
claims and is solely liable for the payment of uninsured
retentions and deductibles arising out of or relating to
pre-Separation events or conditions exclusively associated
with the business of the U. S. Steel Group;
o Marathon is entitled to 65% and United States Steel is
entitled to 35% of all rights in and to all claims, and
Marathon and United States Steel are liable on the same
percentage basis for the payment of uninsured retentions and
deductibles, arising out of or relating to pre-Separation
events or conditions and not related exclusively to either the
Marathon Group or the U.S. Steel Group; and
o the cost of extended reporting insurance for pre-Separation
periods will be split between Marathon and United States Steel
on a 65%-35% basis, respectively, if both companies elect to
purchase the same extended reporting insurance.
USE OF PROCEEDS
Unless we inform you otherwise in the prospectus supplement, we will
use the net proceeds from the sale of the offered securities for general
corporate purposes. These purposes may include funding working capital
requirements, acquisitions and other capital expenditures, repayment and
refinancing of indebtedness and repurchases and redemptions of securities.
Pending any specific application, we may initially invest those funds in
short-term marketable securities or apply them to the reduction of short-term
indebtedness.
15
RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Our ratios of earnings to fixed charges and earnings to combined fixed
charges and preferred stock dividends for each of the periods indicated, in each
case determined on a total enterprise basis are as follows:
YEARS ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
------------------------------------- -----------------
1996 1997 1998 1999 2000 2000 2001
---- ---- ---- ---- ---- ---- ----
Ratio of earnings to fixed charges... 3.65 3.79 3.56 4.32 3.89 6.77 8.77
==== ==== ==== ==== ==== ==== ====
Ratio of earnings to combined fixed
charges and preferred stock dividends 3.41 3.63 3.45 4.20 3.79 6.60 8.51
==== ==== ==== ==== ==== ==== ====
The term "earnings" is the amount resulting from adding the following items
relating to Old USX and its consolidated subsidiaries:
o pre-tax income before adjustment for minority interests in
consolidated subsidiaries or income or loss from equity
investees;
o fixed charges;
o amortization of capitalized interest;
o distributed income of equity investees; and
o share of pre-tax losses of equity investees for which charges
arising from guarantees are included in fixed charges;
and subtracting from the total the following:
o interest capitalized; and
o preference security dividend requirements of consolidated
subsidiaries.
For this purpose, "fixed charges" consists of:
o interest on all indebtedness and amortization of debt discount
and expense;
o interest capitalized;
o an estimate of the portion of annual rental expense on
operating leases that represents the interest factor
attributable to rentals;
o pre-tax earnings required to cover preferred stock dividend
requirements; and
o fixed charges from debt of any entity less than 50% owned,
which is guaranteed by us if it is probable that we will have
to satisfy the guarantee.
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DESCRIPTION OF DEBT SECURITIES
The debt securities this prospectus covers will be Marathon's general
unsecured obligations. The debt securities will be either senior debt securities
or subordinated debt securities. Marathon will issue the debt securities under
one or more separate indentures between Marathon and JPMorgan Chase Bank, as
trustee. Senior debt securities will be issued under a senior indenture, and
subordinated debt securities will be issued under a subordinated indenture. In
this description, we sometimes call the senior indenture and the subordinated
indenture the "indentures."
We have summarized the provisions of the indentures and the debt
securities below. You should read the indentures for more details regarding the
provisions described below and for other provisions that may be important to
you. We have filed the forms of the indentures with the SEC as exhibits to the
registration statement, and we will include the applicable final indenture and
any other instrument establishing the terms of any debt securities we offer as
exhibits to a filing we will make with the SEC in connection with that offering.
See "Where You Can Find More Information."
The following description primarily relates to senior debt securities
that we may issue under the senior indenture. We have summarized some of the
provisions of the subordinated indenture below under the caption "-Subordinated
Debt Securities." If we offer subordinated debt securities, we will provide more
specific terms in the related prospectus supplement. In this summary description
of the debt securities, all references to "Marathon," "we" or "us" mean Marathon
Oil Corporation only, unless we state otherwise or the context clearly indicates
otherwise.
GENERAL
The senior debt securities will constitute senior debt of Marathon and
will rank equally with all its unsecured and unsubordinated debt. The
subordinated debt securities will be subordinated to, and thus have a position
junior to, any senior debt securities and all other senior debt of Marathon.
Neither indenture limits the amount of debt we may issue under the indentures,
and neither limits the amount of other unsecured debt or securities we may incur
or issue. We may issue debt securities under either indenture from time to time
in one or more series, each in an amount we authorize prior to issuance.
Marathon derives substantially all its operating income from, and holds
substantially all its assets through, its subsidiaries. As a result, Marathon
will depend on distributions of cash flow and earnings of its subsidiaries in
order to meet its payment obligations under any debt securities it offers under
this prospectus and its other obligations. These subsidiaries are separate and
distinct legal entities and will have no obligation to pay any amounts due on
Marathon's debt securities or to provide Marathon with funds for its payment
obligations, whether by dividends, distributions, loans or otherwise. In
addition, provisions of applicable law, such as those limiting the legal sources
of dividends, could limit their ability to make payments or other distributions
to Marathon and they could agree to contractual restrictions on their ability to
make distributions.
Marathon's right to receive any assets of any subsidiary, and therefore
the right of the holders of Marathon's debt securities to participate in those
assets, will be effectively subordinated to the claims of that subsidiary's
creditors, including trade creditors. In addition, even if Marathon is a
creditor of any subsidiary, Marathon's rights as a creditor would be subordinate
to any security interest in the assets of that subsidiary and any indebtedness
of that subsidiary senior to that held by Marathon.
We may issue the debt securities of any series in definitive form or as
a book-entry security in the form of a global security registered in the name of
a depositary we designate.
We may issue the debt securities in one or more series with various
maturities. They may be sold at par, at a premium or with an original issue
discount.
17
The prospectus supplement relating to any series of debt securities
being offered will specify whether the debt securities are senior debt
securities or subordinated debt securities and will include specific terms
relating to the offering. These terms will include some or all of the following:
o the title of the debt securities;
o any limit on the aggregate principal amount of the debt
securities;
o the person or entity to whom any interest will be payable, if
that person or entity is not the registered owner of the debt
securities;
o the date or dates on which the principal of and any premium on
the debt securities will be payable;
o the rates, which may be fixed or variable, per annum at which
the debt securities will bear interest, if any, and the date
or dates from which any interest will accrue;
o the dates on which the interest, if any, on the debt
securities will be payable, and the regular record dates for
the interest payment dates or the method for determining those
dates;
o the place or places where payments on the debt securities will
be payable;
o the terms and conditions on which the debt securities may,
under any optional or mandatory redemption provisions, be
redeemed;
o any mandatory or optional sinking fund or similar provisions
or provisions for mandatory redemption or purchase at the
option of the holder;
o the denominations in which the debt securities will be
issuable, if other than denominations of $1,000 or any
multiple of that amount;
o any index, formula or other method used to determine the
amount of payment of principal of or any premium or interest
on the debt securities;
o if other than the currency of the United States of America,
the currency of payment of principal of or any premium or
interest on the debt securities;
o if, at our election or the election of the holder, the
principal of or any premium or interest on any debt securities
is to be payable in one or more currencies or currency units
other than those in which the debt securities are stated to be
payable, the terms and conditions on which that election is to
be made and the amount so payable;
o if other than the full principal amount of the debt
securities, the portion of the principal amount of the debt
securities that will be payable on the declaration of
acceleration of the maturity of the debt securities;
o if the principal amount payable at maturity will not be
determinable as of one or more dates prior to maturity, the
amount that will be deemed to be the principal amount as of
any such date;
o any terms on which the debt securities may be convertible into
or exchanged for securities or indebtedness of any kind of
Marathon or of any other issuer or obligor and the terms and
conditions on which a conversion or exchange will be effected,
including the initial
18
conversion or exchange price or rate, the conversion period
and any other additional provisions;
o the applicability of the defeasance provisions described below
under "--Satisfaction and Discharge; Defeasance under the
Senior Indenture," and any conditions under which those
provisions will apply;
o if the debt securities will be issuable only in the form of a
global security as described below under "--Book-entry Debt
Securities," the depositary for the debt securities;
o any changes in or additions to the events of default or
covenants this prospectus describes;
o the payment of any additional amounts with respect to the debt
securities; and
o any other terms of the debt securities.
If we sell any of the debt securities for any foreign currency or
currency unit or if payments on the debt securities are payable in any foreign
currency or currency unit, we will describe in the prospectus supplement the
restrictions, elections, tax consequences, specific terms and other information
relating to those debt securities and the foreign currency or currency unit.
RESTRICTIVE COVENANTS UNDER THE SENIOR INDENTURE
Marathon has agreed to two principal restrictions on its activities for
the benefit of holders of the senior debt securities. The restrictive covenants
summarized below will apply to a series of senior debt securities (unless waived
or amended) as long as any of those senior debt securities are outstanding,
unless the prospectus supplement for the series states otherwise.
CREATION OF CERTAIN LIENS
If Marathon or any subsidiary of Marathon mortgages or encumbers as
security for money borrowed any property capable of producing oil or gas which
(1) is located in the United States and (2) is determined to be a principal
property by Marathon's board of directors in its discretion, Marathon will, or
will cause such subsidiary to, secure each series of senior debt equally and
ratably with all obligations secured by the mortgage then being given. This
covenant will not apply in the case of any mortgage:
o existing on the date of the senior indenture;
o incurred in connection with the acquisition or construction of
any property;
o previously existing on acquired property or existing on the
property of any entity when it becomes a subsidiary of ours;
o in favor of the United States, any state, or any agency,
department, political subdivision or other instrumentality of
either, to secure payments to us under the provisions of any
contract or statute;
o in favor of the United States, any state, or any agency,
department, political subdivision or other instrumentality of
either, to secure borrowings for the purchase or construction
of the property mortgaged;
19
o in connection with a sale or other transfer of (1) oil, gas or
other minerals in place for a period of time until, or in an
amount such that, the purchase will realize a specified amount
of money or a specified amount of minerals or (2) any interest
of the character commonly referred to as an "oil payment" or a
"production payment";
o to secure the cost of the repair, construction, improvement,
alteration, exploration, development or drilling of all or
part of a principal property;
o in various facilities and personal property located at or on a
principal property;
o arising in connection with the sale of accounts receivable
resulting from the sale of oil or gas at the wellhead; or
o that is a renewal of or substitution for any mortgage
permitted under any of the provisions described in the
preceding clauses.
In addition, Marathon may, and may permit its subsidiaries to, grant mortgages
or incur liens on property covered by the restriction described above as long as
the net book value of the property so encumbered, together with all property
subject to the restriction on sale and leaseback transactions described below,
does not, at the time such Mortgage or lien is granted, exceed 10% of our
"Consolidated Net Tangible Assets," which the senior indenture defines to mean
the aggregate value of all assets of Marathon and its subsidiaries after
deducting:
o all current liabilities, excluding all long-term debt due
within one year;
o all investments in unconsolidated subsidiaries and all
investments accounted for on the equity basis; and
o all goodwill, patents and trademarks, unamortized debt
discount and other similar intangibles;
all determined in conformity with generally accepted accounting principles and
calculated on a basis consistent with our most recent audited consolidated
financial statements.
LIMITATIONS ON CERTAIN SALE AND LEASEBACK TRANSACTIONS
Marathon and its subsidiaries are generally prohibited from selling and
leasing back the principal properties described above under "--Creation of
Certain Liens." However, this covenant will not apply if:
o the lease is an intercompany lease between Marathon and one of
its subsidiaries or between any of its subsidiaries;
o the lease is for a temporary period by the end of which it is
intended that the use of the leased property will be
discontinued;
o Marathon or a subsidiary of Marathon could mortgage the
property without equally and ratably securing the senior debt
securities under the covenant described above under the
caption "--Creation of Certain Liens";
o the transfer is incident to or necessary to effect any
operating, farm-out, farm-in, unitization, acreage exchange,
acreage contribution, bottom-hole or dry-hole arrangement or
pooling agreement or other agreement of the same general
nature relating to the acquisition, exploration, maintenance,
development or operation of oil and gas properties in the
ordinary course of business or as required by any regulatory
agency having jurisdiction over the property; or
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o Marathon promptly informs the trustee of the sale, the net
proceeds of the sale are at least equal to the fair value of
the property and within 180 days of the sale the net proceeds
are applied to the retirement or in-substance defeasance of
our funded debt (subject to reduction, under circumstances the
senior indenture specifies).
As of the date of this prospectus, neither Marathon nor any subsidiary
of Marathon has any property that Marathon's board of directors has determined
to be a principal property.
MERGER, CONSOLIDATION AND SALE OF ASSETS
The senior indenture provides that Marathon may not merge or
consolidate with any other entity or sell or convey all or substantially all its
assets except as follows:
o Marathon is the continuing corporation or the successor entity
(if other than Marathon) is a corporation or other entity
organized under the laws of the United States or any state
thereof that expressly assumes the obligations of Marathon
under the senior indenture and the outstanding senior debt
securities; and
o immediately after the merger, consolidation, sale or
conveyance, no event of default under the senior indenture
shall have occurred and be continuing.
On the assumption by the successor of the obligations under the
indentures, the successor will be substituted for Marathon, and Marathon will be
relieved of any further obligation under the indentures and the debt securities.
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EVENTS OF DEFAULT UNDER THE SENIOR INDENTURE
The senior indenture defines an event of default with respect to the
senior debt securities of any series as being:
(1) Marathon's failure to pay interest on any senior debt security
of that series when due, continuing for 30 days;
(2) Marathon's failure to pay the principal of or premium on any
senior debt security of that series when due and payable;
(3) Marathon's failure to deposit any sinking fund payment when
due by the terms of the senior debt securities of that series;
(4) Marathon's failure to perform under any other covenant or
warranty applicable to the senior debt securities of that
series and not specifically dealt with in the definition of
"event of default" for a period of 90 days after written
notice to Marathon of that failure;
(5) specified events of bankruptcy, insolvency or reorganization
of Marathon; or
(6) any other event of default provided with respect to the senior
debt securities of that series.
The trustee is required to give holders of the senior debt securities
of any series written notice of a default with respect to that series as
provided by the Trust Indenture Act. In the case of any default of the character
described above in clause (4) of the immediately preceding paragraph, no such
notice to holders must be given until at least 60 days after the occurrence of
that default.
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Marathon is required annually to deliver to the trustee an officer's
certificate stating whether or not the signers have any knowledge of any default
by Marathon in its performance and observance of any terms, provisions and
conditions of the senior indenture.
In case an event of default (other than an event of default involving
an event of bankruptcy, insolvency or reorganization of Marathon) shall occur
and be continuing with respect to any series, the trustee or the holders of not
less than 25% in principal amount of the senior debt securities of that series
then outstanding may declare the principal amount of those senior debt
securities (or, in the case of any senior debt securities Marathon issues at an
original issue discount, the portion of such principal amount that we will
specify in the applicable prospectus supplement) to be due and payable. If an
event of default relating to any event of bankruptcy, insolvency or
reorganization of Marathon occurs, the principal of all the senior debt
securities then outstanding (or, in the case of any senior debt securities
Marathon issues at an original issue discount, the portion of such principal
amount that we will specify in the applicable prospectus supplement) will become
immediately due and payable without any action on the part of the applicable
trustee or any holder. The holders of a majority in principal amount of the
outstanding senior debt securities of any series affected by the default may in
some cases rescind this accelerated payment requirement. Depending on the terms
of our other indebtedness, an event of default may give rise to cross defaults
on our other indebtedness.
Any past default with respect to a series of senior debt securities may
be waived on behalf of all holders of those senior debt securities by at least a
majority in principal amount of the holders of the outstanding senior debt
securities of that series, except a default:
o in the payment of principal of or any premium or interest on
any senior debt security of that series; or
o respecting a covenant or provision that cannot be modified
without the consent of the holder of each outstanding senior
debt security of that series.
Any default that is so waived will cease to exist and any event of default
arising from that default will be deemed to be cured for every purpose under the
senior indenture, but no such waiver will extend to any subsequent or other
default or impair any right arising from a subsequent or other default.
A holder of a senior debt security of any series will be able to pursue
any remedy under the senior indenture only if:
o the holder has given prior written notice to the trustee of a
continuing event of default with respect to the senior debt
securities of that series;
o the holders of at least 25% in principal amount of the
outstanding senior debt securities of that series have made a
written request to the trustee to institute proceedings with
respect to the event of default;
o the holders making the request have offered the trustee
reasonable indemnity against costs, expenses and liabilities
to be incurred in compliance with the request;
o the trustee for 60 days after its receipt of the notice,
request and offer of indemnity has failed to institute any
such proceeding; and
o during that 60-day period, the holders of a majority in
principal amount of the senior debt securities of that series
do not give the trustee a direction inconsistent with the
request.
It is intended that rights provided for holders under the senior
indenture are for the equal and ratable benefit of all such holders.
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MODIFICATION OF THE SENIOR INDENTURE
Marathon and the trustee may modify the senior indenture without the
consent of the holders of the senior debt securities for one or more of the
following purposes:
o to evidence the succession of another person to Marathon;
o to add to covenants for the benefit of the holders of senior
debt securities or to surrender any right or power conferred
on Marathon by the senior indenture;
o to add additional events of default for the benefit of holders
of all or any series of senior debt securities;
o to add or change provisions of the senior indenture to allow
the issuance of senior debt securities in other forms;
o to add to, change or eliminate any of the provisions of the
senior indenture respecting one or more series of senior debt
securities under conditions the senior indenture specifies;
o to secure the senior debt securities under the requirements of
the senior indenture or otherwise;
o to establish the form or terms of senior debt securities of
any series as permitted by the senior indenture;
o to evidence the appointment of a successor trustee; or
o to cure any ambiguity or to correct or supplement any
provision of the senior indenture that may be defective or
inconsistent with any other provision in the senior indenture,
or to make any other provisions with respect to matters or
questions arising under the senior indenture as shall not
adversely affect the interests of the holders of senior debt
securities of any series in any material respect.
Marathon and the trustee may otherwise modify the senior indenture or any
supplemental senior indenture with the consent of the holders of not less than a
majority in aggregate principal amount of each series of senior debt securities
affected. However, without the consent of the holder of each outstanding senior
debt security affected, no modification may:
o change the fixed maturity or reduce the principal amount,
reduce the rate or extend the time of payment of any premium
or interest thereon, or change the currency in which the
senior debt securities are payable, or adversely affect any
right of the holder of any senior debt security to require
Marathon to repurchase that senior debt security; or
o reduce the percentage of senior debt securities required for
consent to any such modification or supplemental indenture.
SATISFACTION AND DISCHARGE; DEFEASANCE UNDER THE SENIOR INDENTURE
The senior indenture will be satisfied and discharged if:
o Marathon delivers to the trustee all senior debt securities
then outstanding for cancellation; or
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o all senior debt securities have become due and payable or are
to become due and payable within one year or are to be called
for redemption within one year and Marathon deposits an amount
of cash sufficient to pay the principal of and premium, if
any, and interest on those senior debt securities to the date
of maturity or redemption.
In addition to the right of discharge described above, we may deposit
with the trustee funds or government securities sufficient to make payments on
the senior debt securities of a series on the dates those payments are due and
payable, then, at our option, either of the following will occur:
o we will be discharged from our obligations with respect to the
senior debt securities of that series ("legal defeasance"); or
o we will no longer have any obligation to comply with the
restrictive covenants under the senior indenture, and the
related events of default will no longer apply to us, but some
of our other obligations under the senior indenture and the
senior debt securities of that series, including our
obligation to make payments on those senior debt securities,
will survive ("covenant defeasance").
If we defease a series of senior debt securities, the holders of the
senior debt securities of the series affected will not be entitled to the
benefits of the senior indenture, except for our obligations to:
o register the transfer or exchange of senior debt securities;
o replace mutilated, destroyed, lost or stolen senior debt
securities; and
o maintain paying agencies and hold moneys for payment in trust.
As a condition to either legal defeasance or covenant defeasance, we
must deliver to the trustee an opinion of counsel that the holders of the senior
debt securities will not recognize gain or loss for federal income tax purposes
as a result of the action.
SUBORDINATED DEBT SECURITIES
Although the senior indenture and the subordinated indenture are
generally similar and many of the provisions discussed above pertain to both
senior and subordinated debt securities, there are many substantive differences
between the two indentures. This section discusses some of those differences.
SUBORDINATION
Subordinated debt securities will be subordinate, in right of payment,
to all "senior debt," which the subordinated indenture defines to mean, with
respect to Marathon, the principal of and premium, if any, and interest on:
o all indebtedness of Marathon, whether outstanding on the date
of the subordinated indenture or subsequently created,
incurred or assumed, which is for money borrowed, or evidenced
by a note or similar instrument given in connection with the
acquisition of any business, properties or assets, including
securities;
o any indebtedness of others of the kinds described in the
preceding clause for the payment of which Marathon is
responsible or liable (directly or indirectly, contingently or
otherwise) as guarantor or otherwise; and
o amendments, renewals, extensions and refundings of any
indebtedness described in the two preceding clauses, unless in
any instrument or instruments evidencing or securing that
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indebtedness or pursuant to which the same is outstanding, or
in any such amendment, renewal, extension or refunding, it is
expressly provided that such indebtedness is not superior in
right of payment to the subordinated debt securities of any
series.
TERMS OF SUBORDINATED DEBT SECURITIES MAY CONTAIN CONVERSION OR
EXCHANGE PROVISIONS
The prospectus supplement for a particular series of subordinated debt
securities will include some or all of the specific terms discussed above under
"--General." Additionally, the prospectus supplement may contain subordination
provisions (to the extent that those provisions might differ from those provided
in the subordinated indenture) and, if applicable, conversion or exchange
provisions.
MODIFICATION OF THE SUBORDINATED INDENTURE
The subordinated indenture may be modified by Marathon and the trustee
without the consent of the holders of the subordinated debt securities for one
or more of the purposes we discuss above under "--Modification of the Senior
Indenture." Additionally, Marathon and the trustee may modify the subordinated
indenture to make provision with respect to any conversion or exchange rights as
contemplated in that indenture.
DEFEASANCE OF SUBORDINATED DEBT SECURITIES
The subordination of the subordinated debt securities is expressly made
subject to the provisions for legal defeasance and covenant defeasance (for
similar provisions, see "--Satisfaction and Discharge; Defeasance Under the
Senior Indenture." On the effectiveness of any legal defeasance or covenant
defeasance with respect to outstanding subordinated debt securities, those debt
securities will cease to be subordinated.
GOVERNING LAW
New York law will govern the indentures and the debt securities.
THE TRUSTEE
JPMorgan Chase Bank will be the trustee under each of the indentures.
If an event of default occurs and is continuing, the trustee must use
the degree of care and skill of a prudent person in the conduct of his own
affairs. The trustee will become obligated to exercise any of its powers under
the indentures at the request of any of the holders of any debt securities only
after those holders have offered the trustee indemnity reasonably satisfactory
to it.
Each indenture limits the right of the trustee, if it is one of our
creditors, to obtain payment of claims or to realize on certain property
received for any such claim, as security or otherwise. The trustee may engage in
other transactions with us. If it acquires any conflicting interest, however, it
must eliminate that conflict or resign.
EXCHANGE, REGISTRATION AND TRANSFER
Debt securities of any series will be exchangeable for other debt
securities of the same series with the same total principal amount and the same
terms but in different authorized denominations in accordance with the
applicable indenture. Holders may present registered debt securities for
registration of transfer at the office of the security registrar or any transfer
agent we designate. The security registrar or transfer agent will effect the
transfer or exchange when it is satisfied with the documents of title and
identity of the person making the request.
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Unless we inform you otherwise in the prospectus supplement, we will
appoint the trustee under each indenture as security registrar for the debt
securities we issue in registered form under that indenture. If the prospectus
supplement refers to any transfer agent initially designated by us, we may at
any time rescind that designation or approve a change in the location through
which any transfer agent acts. We will be required to maintain an office or
agency for transfers and exchanges in each place of payment. We may at any time
designate additional transfer agents for any series of debt securities or
rescind the designation of any transfer agent. No service charge will be made
for any registration of transfer or exchange of those securities. Marathon or
the trustee may, however, require the payment of any tax or other governmental
charge payable for that registration.
In the case of any redemption, neither the security registrar nor the
transfer agent will be required to register the transfer of or exchange of any
debt security:
o during a period beginning 15 business days before the day of
mailing of the relevant notice of redemption and ending on the
close of business on that day of mailing; or
o if we have called the debt security for redemption in whole or
in part, except the unredeemed portion of any debt security
being redeemed in part.
PAYMENT AND PAYING AGENTS
Unless we inform you otherwise in the prospectus supplement, we will
make payments on the debt securities in U.S. dollars at the office of the
applicable trustee or any paying agent we designate. At our option, we may make
payments by check mailed to the holder's registered address or, with respect to
global debt securities, by wire transfer. Unless we inform you otherwise in the
prospectus supplement, we will make interest payments to the person in whose
name the debt security is registered at the close of business on the record date
for the interest payment.
Unless we inform you otherwise in the prospectus supplement, we will
designate the trustee under each indenture as our paying agent for payments on
debt securities we issue under that indenture. We may at any time designate
additional paying agents or rescind the designation of any paying agent or
approve a change in the office through which any paying agent acts.
Subject to the requirements of any applicable abandoned property laws,
the trustee and paying agent will repay to us on our written request any funds
they hold for payments on the debt securities that remain unclaimed for two
years after the date upon which that payment has become due. After repayment to
us, holders entitled to those funds must look only to us for payment.
BOOK-ENTRY DEBT SECURITIES
We may issue the debt securities of a series in the form of one or more
global debt securities that would be deposited with a depositary or its nominee
identified in the prospectus supplement. We may issue global debt securities in
either temporary or permanent form. We will describe in the prospectus
supplement the terms of any depositary arrangement and the rights and
limitations of owners of beneficial interests in any global debt security.
DESCRIPTION OF CAPITAL STOCK
Marathon's authorized capital stock consists of:
o 550,000,000 shares of common stock; and
o 26,000,000 shares of preferred stock, issuable in series.
Each authorized share of common stock has a par value of $1.00. The authorized
shares of preferred stock have no par value. As of January 31, 2002, 309,424,276
shares of common stock were issued and outstanding. As of January 31, 2002, no
shares of Marathon's preferred stock were issued and outstanding.
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In the discussion that follows, we have summarized provisions of
Marathon's restated certificate of incorporation and by-laws relating to its
capital stock, as well as provisions of the rights agreement between Marathon
and National City Bank, as rights agent. You should read the provisions of the
restated certificate of incorporation, by-laws and rights agreement as currently
in effect for more details regarding the provisions described below and for
other provisions that may be important to you. We have filed copies of those
documents with the SEC, and they are incorporated by reference as exhibits to
the registration statement. See "Where You Can Find More Information."
COMMON STOCK
Each share of common stock has one vote in the election of each
director and on all other matters voted on generally by the stockholders. No
share of common stock affords any cumulative voting rights. This means that the
holders of a majority of the voting power of the shares voting for the election
of directors can elect all directors to be elected if they choose to do so.
Marathon's board of directors may grant holders of preferred stock, in the
resolutions creating the series of preferred stock, the right to vote on the
election of directors or any questions affecting Marathon.
Holders of common stock will be entitled to dividends in such amounts
and at such times as Marathon's board of directors in its discretion may declare
out of funds legally available for the payment of dividends. Dividends on the
common stock will be paid at the discretion of Marathon's board of directors
after taking into account various factors, including:
o our financial condition and performance;
o our cash needs and capital investment plans;
o our obligations to holders of any preferred stock we may
issue;
o income tax consequences; and
o the restrictions Delaware and other applicable laws and our
credit arrangements then impose.
In addition, the terms of the loan agreements, indentures and other agreements
we enter into from time to time may restrict the payment of cash dividends.
If Marathon liquidates or dissolves its business, the holders of common
stock will share ratably in all assets available for distribution to
stockholders after Marathon's creditors are paid in full and the holders of all
series of Marathon's outstanding preferred stock, if any, receive their
liquidation preferences in full.
The common stock has no preemptive rights and is not convertible or
redeemable or entitled to the benefits of any sinking or repurchase fund. All
issued and outstanding shares of common stock are fully paid and nonassessable.
Any shares of common stock Marathon may offer and sell under this prospectus
will also be fully paid and nonassessable.
Marathon's outstanding shares of the common stock are listed on the New
York Stock Exchange, the Pacific Stock Exchange and the Chicago Stock Exchange
and trade under the symbol "MRO." Any additional shares of common stock Marathon
may offer and sell under this prospectus will also be listed on those stock
exchanges.
The transfer agent and registrar for the common stock is National City
Bank.
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PREFERRED STOCK
At the direction of its board of directors, without any action by the
holders of its common stock, Marathon may issue one or more series of preferred
stock from time to time. Marathon's board of directors can determine the number
of shares of each series of preferred stock and the designation, powers,
preferences and relative, participating, optional or other special rights, and
the qualifications, limitations or restrictions applicable to any of those
rights, including dividend rights, voting rights, conversion or exchange rights,
terms of redemption and liquidation preferences, of each series.
The prospectus supplement relating to any series of preferred stock
Marathon offers will include specific terms relating to the offering. These
terms will include some or all of the following:
o the series designation of the preferred stock;
o the maximum number of shares of the series;
o the dividend rate or the method of calculating the dividend,
the date from which dividends will accrue and whether
dividends will be cumulative;
o any liquidation preference;
o any optional redemption provisions;
o any sinking fund or other provisions that would obligate us to
redeem or repurchase the preferred stock;
o any terms for the conversion or exchange of the preferred
stock for any other securities;
o any voting rights; and
o any other preferences and relative, participating, optional or
other special rights or any qualifications, limitations or
restrictions on the rights of the shares.
Any preferred stock Marathon offers and sells under this prospectus
will be fully paid and nonassessable.
The registration statement will include the certificate of designation
as an exhibit or will incorporate the certificate of designation by reference.
You should read that document for provisions that may be important to you.
The existence of undesignated preferred stock may enable Marathon's
board of directors to render more difficult or to discourage an attempt to
obtain control of Marathon by means of a tender offer, proxy contest, merger or
otherwise, and thereby to protect the continuity of its management. The issuance
of shares of preferred stock may adversely affect the rights of the holders of
common stock. For example, any preferred stock issued may rank prior to the
common stock as to dividend rights, liquidation preference or both, may have
full or limited voting rights and may be convertible into shares of common
stock. As a result, the issuance of shares of preferred stock may discourage
bids for common stock or may otherwise adversely affect the market price of the
common stock or any existing preferred stock.
THE RIGHTS AGREEMENT
Marathon has entered into a rights agreement with National City Bank,
as rights agent, providing for the issuance of preferred stock purchase rights
to holders of common stock. Under the plan, each share of common stock currently
includes one right to purchase from Marathon one one-hundredth of a share of its
Series A junior preferred stock at an exercise price of $110.00 per unit,
subject to adjustment. We have summarized selected provisions of the rights
agreement below. You should read the rights agreement for more details regarding
the
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provisions described below and for other provisions that may be important to
you. We have filed a copy of the rights agreement with the SEC, and it is
incorporated by reference as an exhibit to the registration statement. See
"Where You Can Find More Information."
Under the rights agreement, each right will become exercisable, subject
to some exceptions the rights agreement specifies, after any person or group of
affiliated or associated persons has acquired, obtained the right to acquire or
made a tender or an exchange offer for 15% or more of the outstanding voting
power represented by Marathon's outstanding common stock, except pursuant to a
qualifying all-cash tender offer for all outstanding common stock which results
in the offeror's owning common stock representing a majority of the voting power
(other than common stock beneficially owned by the offeror immediately prior to
the offer).
If the rights become exercisable, each right will entitle the holder,
other than the acquiring person or group, to purchase one one-hundredth of a
share of Marathon's series A junior preferred stock or, on the acquisition by
any person or group of affiliated or associated persons of 15% or more of the
outstanding voting power represented by Marathon's outstanding common stock,
shares of Marathon common stock (or, in some circumstances, cash, property or
other securities of Marathon) having a market value of twice the exercise price.
After a person or group of affiliated or associated persons has acquired 15% or
more of the outstanding voting power, if Marathon engages in a merger or other
business combination where it is not the surviving corporation or where it is
the surviving corporation and its common stock is changed or exchanged, or if
50% or more of its assets, earnings power or cash flow is sold or transferred,
each right will entitle the holder to purchase common stock of the acquiring
entity having a market value of twice the exercise price.
Marathon's board of directors may, at any time until ten days after the
public announcement that a person or group of affiliated or associated persons
has become an acquiring person, cause Marathon to redeem the rights in whole,
but not in part, at a redemption price of $.01 per right, subject to adjustment
for any stock split, stock dividend or similar transaction occurring before the
date of redemption. At its option, Marathon may pay that redemption price in
cash, shares of its common stock or any other consideration its board of
directors selects. The rights will not be exercisable after a person or group of
affiliated or associated persons has become an acquiring person until the rights
are no longer redeemable. If Marathon's board of directors timely orders the
redemption of the rights, the rights will terminate on the effectiveness of that
action.
The number of outstanding rights associated with a share of common
stock, the number of fractional shares of series A junior preferred stock
issuable on exercise of a right and the exercise price of the rights are subject
to adjustment in the event of a stock dividend on, or a subdivision, combination
or reclassification of, the common stock. The exercise price of the rights and
the number of fractional shares of series A junior preferred stock or other
securities or property issuable on exercise of the rights also are subject to
adjustment from time to time to prevent dilution in the event of some
transactions affecting the series A junior preferred stock.
Under limited circumstances, Marathon's board of directors has the
option to exchange one share of common stock for each exercisable right, subject
to adjustment for any stock split, stock dividend or similar transaction
occurring before the date of exchange.
The rights will expire on October 9, 2009, unless Marathon's board of
directors determines to extend that expiration date or to redeem or exchange the
rights on some earlier date.
Until a right is exercised, the holder thereof, as such, will have no
rights to vote or receive dividends or any other rights as a stockholder.
The rights have anti-takeover effects. They will cause severe dilution
to any person or group that attempts to acquire Marathon without the approval of
its board of directors. As a result, the overall effect of the rights may be to
render more difficult or discourage any attempt to acquire Marathon, even if the
acquisition may be favorable to the interests of its stockholders. Because
Marathon's board of directors can redeem the rights or approve a permitted
offer, the rights should not interfere with a merger or other business
combination that Marathon's board of directors approves.
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LIMITATION ON DIRECTORS' LIABILITY
Delaware law authorizes Delaware corporations to limit or eliminate the
personal liability of their directors to them and their stockholders for
monetary damages for breach of a director's fiduciary duty of care. The duty of
care requires that, when acting on behalf of the corporation, directors must
exercise an informed business judgment based on all material information
reasonably available to them. Absent the limitations Delaware law authorizes,
directors of Delaware corporations are accountable to those corporations and
their stockholders for monetary damages for conduct constituting gross
negligence in the exercise of their duty of care. Delaware law enables Delaware
corporations to limit available relief to equitable remedies such as injunction
or rescission. Marathon's restated certificate of incorporation limits the
liability of the members of its board of directors by providing that no director
will be personally liable to Marathon or its stockholders for monetary damages
for any breach of the director's fiduciary duty as a director, except for
liability:
o for any breach of the director's duty of loyalty to Marathon
or its stockholders;
o for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
o for unlawful payments of dividends or unlawful stock
repurchases or redemptions as provided in Section 174 of the
Delaware General Corporation Law; and
o for any transaction from which the director derived an
improper personal benefit.
This provision could have the effect of reducing the likelihood of
derivative litigation against Marathon's directors and may discourage or deter
Marathon's stockholders or management from bringing a lawsuit against Marathon's
directors for breach of their duty of care, even though such an action, if
successful, might otherwise have benefited Marathon and its stockholders.
Marathon's by-laws provide indemnification to its officers and directors and
other specified persons with respect to their conduct in various capacities.
STATUTORY BUSINESS COMBINATION PROVISION
As a Delaware corporation, Marathon is subject to Section 203 of the
Delaware General Corporation Law. In general, Section 203 prevents an
"interested stockholder," which is defined generally as a person owning 15% or
more of a Delaware corporation's outstanding voting stock or any affiliate or
associate of that person, from engaging in a broad range of "business
combinations" with the corporation for three years following the date that
person became an interested stockholder unless:
o before that person became an interested stockholder, the board
of directors of the corporation approved the transaction in
which that person became an interested stockholder or approved
the business combination;
o on completion of the transaction that resulted in that
person's becoming an interested stockholder, that person owned
at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, other than
stock held by (1) directors who are also officers of the
corporation or (2) any employee stock plan that does not
provide employees with the right to determine confidentially
whether shares held subject to the plan will be tendered in a
tender or exchange offer; or
o following the transaction in which that person became an
interested stockholder, both the board of directors of the
corporation and the holders of at least two-thirds of the
outstanding voting stock of the corporation not owned by that
person approve the business combination.
Under Section 203, the restrictions described above also do not apply
to specific business combinations proposed by an interested stockholder
following the announcement or notification of designated extraordinary
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transactions involving the corporation and a person who had not been an
interested stockholder during the previous three years or who became an
interested stockholder with the approval of a majority of the corporation's
directors, if a majority of the directors who were directors prior to any
person's becoming an interested stockholder during the previous three years, or
were recommended for election or elected to succeed those directors by a
majority of those directors, approve or do not oppose that extraordinary
transaction.
OTHER MATTERS
Some of the provisions of Marathon's restated certificate of
incorporation and by-laws discussed below may have the effect, either alone or
in combination with the provisions of Marathon's restated certificate of
incorporation that we have discussed above, the Marathon rights agreement and
Section 203 of the Delaware General Corporation Law, of making more difficult or
discouraging a tender offer, proxy contest, merger or other takeover attempt
that Marathon's board of directors opposes but that a stockholder might consider
to be in its best interest.
Marathon's restated certificate of incorporation provides that its
stockholders may act only at an annual or special meeting of stockholders and
may not act by written consent. Marathon's by-laws provide that only its board
of directors may call a special meeting of its stockholders.
Marathon's restated certificate of incorporation provides for a
classified board of directors. Marathon's board of directors is divided into
three classes, with the directors of each class as nearly equal in number as
possible. At each annual meeting of Marathon's stockholders, the term of a
different class of Marathon's directors will expire. As a result, the
stockholders will elect approximately one-third of Marathon's board of directors
each year. Board classification could prevent a party who acquires control of a
majority of Marathon's outstanding voting stock from obtaining control of its
board of directors until the second annual stockholders' meeting following the
date that party obtains that control.
Marathon's restated certificate of incorporation provides that the
number of directors will be fixed from time to time by, or in the manner
provided in, its by-laws, but will not be less than three. It also provides that
directors may be removed only for cause. This provision, along with provisions
authorizing the board of directors to fill vacant directorships, will prevent
stockholders from removing incumbent directors without cause and filling the
resulting vacancies with their own nominees.
Marathon's by-laws contain advance-notice and other procedural
requirements that apply to stockholder nominations of persons for election to
the board of directors at any annual meeting of stockholders and to stockholder
proposals that stockholders take any other action at any annual meeting. A
stockholder proposing to nominate a person for election to the board of
directors or proposing that any other action be taken at an annual meeting of
stockholders must give Marathon's corporate secretary written notice of the
proposal not less than 45 days and not more than 75 days before the first
anniversary of the date on which Marathon first mailed its proxy materials for
the immediately preceding year's annual meeting of stockholders. These
stockholder proposal deadlines are subject to exceptions if the pending annual
meeting date is more than 30 days prior to or more than 30 days after the first
anniversary of the immediately preceding year's annual meeting. Marathon's
by-laws prescribe specific information that any such stockholder notice must
contain. These advance-notice provisions may have the effect of precluding a
contest for the election of directors or the consideration of stockholder
proposals if the proper procedures are not followed, and of discouraging or
deterring a third party from conducting a solicitation of proxies to elect its
own slate of directors or to approve its own proposal, without regard to whether
consideration of those nominees or proposals might be harmful or beneficial to
Marathon and its stockholders.
Marathon's restated certificate of incorporation provides that its
stockholders may adopt, amend and repeal its by-laws at any regular or special
meeting of stockholders by an affirmative vote of at least two-thirds of the
shares outstanding and entitled to vote on that action, provided the notice of
intention to adopt, amend or repeal the by-laws has been included in the notice
of that meeting.
32
DESCRIPTION OF WARRANTS
Marathon may issue warrants to purchase debt securities, common stock,
preferred stock or other securities. Marathon may issue warrants independently
or together with other securities. Warrants issued with other securities may be
attached to or separate from those other securities. If Marathon issues
warrants, it will do so under one or more warrant agreements between Marathon
and a warrant agent that we will name in the prospectus supplement.
If Marathon offers any warrants, we will file the forms of warrant
certificate and warrant agreement with the SEC, and you should read those
documents for provisions that may be important to you.
The prospectus supplement relating to any warrants being offered will
include specific terms relating to the offering. These terms will include some
or all of the following:
o the title of the warrants;
o the aggregate number of warrants offered;
o the designation, number and terms of the debt securities,
common stock, preferred stock or other securities purchasable
on exercise of the warrants, and procedures that may result in
the adjustment of those numbers;
o the exercise price of the warrants;
o the dates or periods during which the warrants are
exercisable;
o the designation and terms of any securities with which the
warrants are issued;
o if the warrants are issued as a unit with another security,
the date on and after which the warrants and the other
security will be separately transferable;
o if the exercise price is not payable in U.S. dollars, the
foreign currency, currency unit or composite currency in which
the exercise price is denominated;
o any minimum or maximum amount of warrants that may be
exercised at any one time;
o any terms, procedures and limitations relating to the
transferability, exchange or exercise of the warrants; and
o any other terms of the warrants.
Warrant certificates will be exchangeable for new warrant certificates
of different denominations at the office indicated in the prospectus supplement.
Prior to the exercise of their warrants, holders of warrants will not have any
of the rights of holders of the securities subject to the warrants.
MODIFICATIONS
Marathon may amend the warrant agreements and the warrants without the
consent of the holders of the warrants to cure any ambiguity, to cure, correct
or supplement any defective or inconsistent provision, or in any other manner
that will not materially and adversely affect the interests of holders of
outstanding warrants.
33
Marathon may also modify or amend various other terms of the warrant
agreements and the warrants with the consent of the holders of not less than a
majority in number of the then outstanding unexercised warrants affected.
Without the consent of the holders affected, however, no modification or
amendment may:
o shorten the period of time during which the warrants may be
exercised; or
o otherwise materially and adversely affect the exercise rights
of the holders of the warrants.
ENFORCEABILITY OF RIGHTS
The warrant agent will act solely as Marathon's agent and will not
assume any agency or trust obligation or relationship for or with any holder or
beneficial owner of warrants. The warrant agent will not have any duty or
responsibility if Marathon defaults under the warrant agreements or the warrant
certificates. A warrant holder may, without the consent of the warrant agent,
enforce by appropriate legal action on its own behalf the holder's right to
exercise the holder's warrants.
PLAN OF DISTRIBUTION
We may sell the offered securities in and outside the United States (1)
through underwriters or dealers, (2) directly to purchasers or (3) through
agents. The prospectus supplement will set forth the following information:
o the terms of the offering;
o the names of any underwriters or agents;
o the name or names of any managing underwriter or underwriters;
o the purchase price of the securities from us;
o the net proceeds we will receive from the sale of the
securities;
o the place and time of delivery of the securities;
o any delayed delivery arrangements;
o any underwriting discounts, commissions and other items
constituting underwriters' compensation;
o any initial public offering price;
o any discounts or concessions allowed or reallowed or paid to
dealers; and
o any commissions paid to agents.
SALE THROUGH UNDERWRITERS OR DEALERS
If we use underwriters in the sale of the offered securities, the
underwriters will acquire the securities for their own account. The underwriters
may resell the securities from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. Underwriters may offer securities
to the public either through underwriting syndicates represented by one or more
managing underwriters or directly by one or more firms acting as underwriters.
Unless we inform you otherwise in the prospectus supplement, the obligations of
the underwriters to purchase the securities will be subject to several
conditions, and the underwriters will be obligated to purchase all the offered
securities if they purchase any of them. The underwriters may change from time
to time any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers.
If we use underwriters in the sale of the offered securities, rules of
the SEC may limit the ability of the underwriters and certain selling group
members to bid for and purchase our securities until the distribution of the
offered securities is completed. As an exception to these rules, the
underwriters are permitted to engage in certain transactions that stabilize,
maintain or otherwise affect the price of the offered securities.
In connection with an underwritten offering, the underwriters may make
short sales of the offered securities and may purchase our securities on the
open market to cover positions created by short sales. Short sales involve the
sale by the underwriters of a greater number of securities than they are
required to purchase in the offering.
34
"Covered" short sales are made in an amount not greater than the over-allotment
option we may grant to the underwriters in connection with the offering. The
underwriters may close out any covered short position by either exercising the
over-allotment option or purchasing our securities in the open market. In
determining the source of securities to close out the covered short position,
the underwriters will consider, among other things, the price of securities
available for purchase in the open market as compared to the price at which they
may purchase securities through the over-allotment option. "Naked" short sales
are sales in excess of the over-allotment option. The underwriters must close
out any naked short position by purchasing our securities in the open market. A
naked short position is more likely to be created if the underwriters are
concerned that there may be downward pressure on the price of the securities in
the open market after pricing that could adversely affect investors who purchase
in the offering.
The underwriters may also impose a penalty bid on certain selling group
members. This means that if the underwriters purchase our securities in the open
market to reduce the selling group members' short position or to stabilize the
price of the securities, they may reclaim the amount of the selling concession
from the selling group members who sold those securities as part of the
offering.
In general, purchases of a security for the purpose of stabilization or
to reduce a short position could cause the price of the security to be higher
than it might be in the absence of those purchases or those purchases could
prevent or retard a decline in the price of the security. The imposition of a
penalty bid might also have an effect on the price of a security to the extent
that it were to discourage resales of the security.
Neither we nor the underwriters will make any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the offered securities. In addition,
neither we nor the underwriters will make any representation that the
underwriters will engage in these transactions or that these transactions, once
commenced, will not be discontinued without notice.
If we use dealers in the sale of securities, we will sell the
securities to them as principals. They may then resell those securities to the
public at varying prices determined by the dealers at the time of resale. We
will include in the prospectus supplement the names of the dealers and the terms
of the transaction.
DIRECT SALES AND SALES THROUGH AGENTS
We may sell the securities directly. In that event, no underwriters or
agents would be involved. We may also sell the securities through agents we
designate from time to time. In the prospectus supplement, we will name any
agent involved in the offer or sale of the offered securities, and we will
describe any commissions payable by us to the agent. Unless we inform you
otherwise in the prospectus supplement, any agent will agree to use its
reasonable best efforts to solicit purchases for the period of its appointment.
We may sell the securities directly to institutional investors or
others who may be deemed to be underwriters within the meaning of the Securities
Act of 1933 with respect to any sale of those securities. We will describe the
terms of any such sales in the prospectus supplement.
DELAYED DELIVERY CONTRACTS
If we so indicate in the prospectus supplement, we may authorize
agents, underwriters or dealers to solicit offers from various types of
institutions to purchase securities from us at the public offering price under
delayed delivery contracts. These contracts would provide for payment and
delivery on a specified date in the future. The contracts would be subject only
to those conditions the prospectus supplement describes. The prospectus
supplement will describe the commission payable for solicitation of those
contracts.
GENERAL INFORMATION
We may have agreements with the agents, dealers and underwriters to
indemnify them against civil liabilities, including liabilities under the
Securities Act of 1933, or to contribute with respect to payments that the
35
agents, dealers or underwriters may be required to make. Agents, dealers and
underwriters may be customers of, engage in transactions with or perform
services for us in the ordinary course of their businesses.
LEGAL MATTERS
Baker Botts L.L.P., Houston, Texas, our outside counsel, will issue an
opinion about the legality of any securities we offer through this prospectus.
Any underwriters will be advised about issues relating to any offering by their
own legal counsel.
EXPERTS
The consolidated financial statements of USX Corporation and the
financial statements of the Marathon Group and the U.S. Steel Group incorporated
in this prospectus by reference to the annual report on Form 10-K/A of USX
Corporation for the year ended December 31, 2000 have been so incorporated in
reliance on the reports of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
Marathon files annual, quarterly and current reports, proxy statements
and other information with the SEC. You can read and copy any materials filed by
Marathon, including materials it filed under its former name, USX Corporation,
with the SEC at the SEC's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You can obtain information about the operation of the
SEC's public reference room by calling the SEC at 1-800-SEC-0330. The SEC also
maintains a Web site that contains information Marathon files electronically
with the SEC, which you can access over the Internet at http://www.sec.gov. You
can also obtain information about Marathon at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
This prospectus is part of a registration statement Marathon has filed
with the SEC relating to the securities. This prospectus does not contain all
the information the registration statement sets forth or includes in its
exhibits and schedules, in accordance with the rules and regulations of the SEC,
and we refer you to that omitted information. The statements this prospectus
makes pertaining to the content of any contract, agreement or other document
that is an exhibit to the registration statement necessarily are summaries of
their material provisions, and we qualify them in their entirety by reference to
those exhibits for complete statements of their provisions. The registration
statement and its exhibits and schedules are available at the SEC's public
reference room or through its Web site.
The SEC allows us to "incorporate by reference" the information
Marathon files with it, which means we can disclose important information to you
by referring you to those documents. The information we incorporate by reference
is an important part of this prospectus, and later information that Marathon
files with the SEC will automatically update and supersede that information. We
incorporate by reference the documents listed below, and any future filings
Marathon makes with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until all the offered securities are sold:
o our annual report on Form 10-K for the year ended December 31,
2000, as amended by Forms 10-K/A filed on September 14, 2001
and October 11, 2001;
o our quarterly reports on Form 10-Q for the quarters ended
March 31, June 30, and September 30, 2001;
o our current reports on Form 8-K dated February 27, 2001, April
24, 2001 (filed on April 25, 2001), June 15, 2001, July 2,
2001, July 31, 2001, August 1, 2001, August 2, 2001, August 6,
2001, October 12, 2001, October 22, 2001 (as amended by a Form
8-K/A filed on October 22, 2001), October 25, 2001, November
2, 2001, November 5, 2001, November 7, 2001, November 28,
2001, December 4, 2001, December 9, 2001, December 10, 2001,
December 13, 2001, December 17, 2001 and December 31, 2001 (as
amended by a Form 8-K/A filed on January 15, 2002);
36
o the description of the common stock included in our Form 8
amendment to the registration statement on Form 8-B filed with
the SEC on April 11, 1991; and
o the description of the rights to purchase preferred stock
included in our registration statement on Form 8-A filed with
the SEC on September 28, 1999, as amended.
We will provide without charge to each person, including any beneficial
owner, to whom a copy of this prospectus has been delivered, upon written or
oral request, a copy of any or all the documents we incorporate by reference in
this prospectus, other than any exhibit to any of those documents, unless we
have specifically incorporated that exhibit by reference into the information
this prospectus incorporates. You may request copies by writing or telephoning
Marathon at the following address:
Marathon Oil Corporation
5555 San Felipe Road
Houston, Texas 77056-2723
Attention: Corporate Secretary
Telephone: (713) 629-6600
YOU SHOULD RELY ONLY ON THE INFORMATION WE HAVE PROVIDED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT OR
PRICING SUPPLEMENT. WE HAVE NOT AUTHORIZED ANY PERSON (INCLUDING ANY SALESMAN OR
BROKER) TO PROVIDE INFORMATION OTHER THAN THAT WHICH THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT OR PRICING SUPPLEMENT PROVIDES. WE HAVE NOT AUTHORIZED
ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF
THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER IS NOT PERMITTED. YOU
SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON ITS COVER PAGE OR
THAT ANY INFORMATION IN ANY DOCUMENT WE HAVE INCORPORATED BY REFERENCE IS
ACCURATE AS OF ANY DATE OTHER THAN THE DATE OF THE DOCUMENT INCORPORATED BY
REFERENCE. ACCORDINGLY, WE URGE YOU TO REVIEW EACH DOCUMENT WE SUBSEQUENTLY FILE
WITH THE SEC AND INCORPORATE BY REFERENCE AS DESCRIBED ABOVE FOR UPDATED
INFORMATION.
37
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth expenses payable by Marathon Oil
Corporation (the "Company") in connection with the issuance and distribution of
the securities being registered. All the amounts shown are estimates, except the
SEC registration fee.
SEC registration fee..................................................... $ 278,000
Printing and engraving expenses.......................................... 100,000
Legal fees and expenses.................................................. 100,000
Accounting fees and expenses............................................. 50,000
Fees and expenses of trustee and counsel................................. 25,000
Rating agency fees....................................................... 475,000
Miscellaneous expenses................................................... 72,000
-----------
Total............................................................... $ 1,100,000
===========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Delaware General Corporation Law
Section 145 of the Delaware General Corporation Law (the "DGCL")
empowers a Delaware corporation to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he or she is or was a director or officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by that person in connection with such action,
suit or proceeding, provided that such person acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
A Delaware corporation may indemnify directors, officers, employees and others
against expenses (including attorneys' fees) in an action by or in the right of
the corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the person to be indemnified has been
adjudged to be liable to the corporation. Where a director or an officer is
successful on the merits or otherwise in the defense of any action referred to
above or in defense of any claim, issue or matter therein, the corporation must
indemnify that director or officer against the expenses (including attorneys'
fees) which he or she actually and reasonably incurred in connection therewith.
Section 102(b)(7) of the DGCL provides that a certificate of
incorporation may contain a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director (1) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (2) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (3) under Section 174 of the DGCL or (4) for any
transaction from which the director derived an improper personal benefit.
Certificate of Incorporation and Bylaws
Article Eleventh of the Company's restated certificate of incorporation
states that:
No director shall be personally liable to the Corporation or
its stockholders for monetary damages for any breach of fiduciary duty
by such director as a director, except (i) for any breach of the
director's
II-1
duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) pursuant to Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from
which the director derived an improper personal benefit. No amendment
to or repeal of this Article Eleventh shall apply to or have any effect
on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment or repeal.
In addition, Article V of the Company's by-laws provides that the
Company shall indemnify and hold harmless to the fullest extent permitted by law
any person who was or is made or is threatened to be made a party or is involved
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was a director,
officer, employee or agent of the Company or is or was serving at the request of
the Corporation as an officer, director, employee or agent of another
corporation, partnership, joint venture, trust, enterprise or nonprofit entity,
including service with respect to employee benefit plans, against all expenses,
liability and loss reasonably incurred or suffered by such person.
Indemnification Agreements and Insurance
Agreements the Company may enter into with underwriters, dealers and
agents who participate in the distribution of securities of the Company may
contain provisions relating to the indemnification of the Company's officers and
directors.
The Company also maintains directors' and officers' liability insurance
for its directors and officers that protects them from certain losses arising
from claims or charges made against them in their capacities as directors or
officers of the Company.
The Company maintains insurance policies under which the Company's
directors and officers are insured, within the limits and subject to the
limitations of the policies, against certain expenses in connection with the
defense of actions, suits or proceedings, and certain liabilities which might be
imposed as a result of such actions, suits or proceedings, to which they are
parties by reason of being or having been such directors or officers.
ITEM 16. EXHIBITS.*
EXHIBIT NO. DESCRIPTION OF EXHIBIT
*+1.1 Form of Underwriting Agreement.
**2.1 Holding Company Reorganization Agreement dated as of July
1, 2001 by and among USX Corporation, USX HoldCo, Inc. and
United States Steel LLC (incorporated by reference to
Exhibit 2.1 to USX Corporation's Current Report on Form 8-K
dated July 2, 2001 (File No. 1-05153)).
**2.2 Agreement and Plan of Reorganization, dated as of July 31,
2001, by and between USX Corporation and United States
Steel LLC (incorporated by reference to Exhibit 2.1 to
USX Corporation's Registration Statement on Form S-4
(Reg. No. 333-69090)).
**4.1 Restated Certificate of Incorporation of Marathon Oil
Corporation (incorporated by reference herein to Exhibit
99.2 to USX Corporation's Current Report on Form 8-K dated
December 31, 2001 (File No. 1-05153)).
**4.2 By-laws of Marathon Oil Corporation (incorporated by
reference herein to Exhibit 3.2 to USX Corporation's
Current Report on Form 8-K dated July 2, 2001
(File No. 1-05153)).
4.3 Specimen of Common Stock certificate.
4.4 Form of Indenture relating to the Senior Debt Securities,
with form of Senior Debt Securities.
4.5 Form of Indenture relating to the Subordinated Debt
Securities, with form of Subordinated Debt Securities.
II-2
4.6 Rights Agreement between Marathon Oil Corporation and
National City Bank, as Rights Agent, as amended.
*5.1 Opinion of Baker Botts L.L.P.
**12.1 Statement showing computation of ratios of earnings to
fixed charges and earnings to combined fixed charges and
preferred stock dividends (incorporated by reference to
Exhibits 12.1 and 12.2 to USX Corporation's Quarterly
Report on Form 10-Q for the quarter ended September 30,
2001).
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Baker Botts L.L.P. (included in Exhibit 5.1).
24.1 Powers of Attorney.
25.1 Statement of Eligibility of Trustee on Form T-1.
----------
* The Company will file as an exhibit to a current report on Form 8-K
(i) any underwriting agreement relating to securities offered hereby,
(ii) the instruments setting forth the terms of any debt securities,
preferred stock or warrants, (iii) any additional required opinion of
counsel to the Company as to the legality of the securities offered
hereby or (iv) any required opinion of counsel to the Company as to
certain tax matters relative to securities offered hereby.
** Incorporated by reference to the filing indicated.
+ Previously filed.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
under the Securities Act if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in
the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities
II-3
offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule
430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under
the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Marathon
Oil Corporation certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
post-effective amendment to registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Houston, the State of
Texas, on February 5, 2002.
MARATHON OIL CORPORATION
By: /s/ CLARENCE P. CAZALOT, JR.
-------------------------------------
Clarence P. Cazalot, Jr.
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
post-effective amendment to registration statement has been signed by the
following persons in the capacities indicated on February 5, 2002.
SIGNATURE TITLE
-------------------------------------------------------- ----------------------------------------
/s/ CLARENCE P. CAZALOT, JR. President, Chief Executive
-------------------------------------------------------- Officer and Director
Clarence P. Cazalot, Jr. (Principal Executive Officer)
/s/ JOHN T. MILLS Chief Financial Officer
-------------------------------------------------------- (Principal Financial Officer)
John T. Mills
/s/ ALBERT G. ADKINS Vice President-Accounting and Controller
-------------------------------------------------------- (Principal Accounting Officer)
Albert G. Adkins
NEIL A. ARMSTRONG* Director
--------------------------------------------------------
Neil A. Armstrong
CHARLES A. CORRY* Director
--------------------------------------------------------
Charles A. Corry
DAVID A. DABERKO* Director
--------------------------------------------------------
David A. Daberko
DR. SHIRLEY ANN JACKSON* Director
--------------------------------------------------------
Dr. Shirley Ann Jackson
CHARLES R. LEE* Director
--------------------------------------------------------
Charles R. Lee
DENNIS H. REILLEY* Director
--------------------------------------------------------
Dennis H. Reilley
SETH E. SCHOFIELD* Director
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Seth E. Schofield
THOMAS J. USHER* Chairman of the Board
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Thomas J. Usher
DOUGLAS C. YEARLY* Director
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Douglas C. Yearly
*By: /s/ JOHN T. MILLS
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John T. Mills
(Attorney-in-Fact)
II-5
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
*+1.1 Form of Underwriting Agreement.
**2.1 Holding Company Reorganization Agreement dated as of
July 1, 2001 by and among USX Corporation, USX HoldCo,
Inc. and United States Steel LLC (incorporated by
reference to Exhibit 2.1 to USX Corporation's Current
Report on Form 8-K dated July 2, 2001 (File No.
1-05153)).
**2.2 Agreement and Plan of Reorganization, dated as of July
31, 2001, by and between USX Corporation and United
States Steel LLC (incorporated by reference to Exhibit
2.1 to USX Corporation's Registration Statement on Form
S-4 (Reg. No. 333-69090)).
**4.1 Restated Certificate of Incorporation of Marathon Oil
Corporation (incorporated by reference herein to
Exhibit 99.2 to USX Corporation's Current Report on
Form 8-K dated December 31, 2001 (File No. 1-05153)).
**4.2 By-laws of Marathon Oil Corporation (incorporated by
reference herein to Exhibit 3.2 to USX Corporation's
Current Report on Form 8-K dated July 2, 2001 (File No.
1-05153)).
4.3 Specimen of Common Stock certificate.
4.4 Form of Indenture relating to the Senior Debt
Securities, with form of Senior Debt Securities.
4.5 Form of Indenture relating to the Subordinated Debt
Securities, with form of Subordinated Debt Securities.
4.6 Rights Agreement between Marathon Oil Corporation and
National City Bank, as Rights Agent, as amended.
*5.1 Opinion of Baker Botts L.L.P.
**12.1 Statement showing computation of ratios of earnings to
fixed charges and earnings to combined fixed charges
and preferred stock dividends (incorporated by
reference to Exhibits 12.1 and 12.2 to USX
Corporation's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2001).
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Baker Botts L.L.P. (included in Exhibit
5.1).
24.1 Powers of Attorney.
25.1 Statement of Eligibility of Trustee on Form T-1.
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* The Company will file as an exhibit to a current report on Form 8-K (i)
any underwriting agreement relating to securities offered hereby, (ii)
the instruments setting forth the terms of any debt securities, preferred
stock or warrants, (iii) any additional required opinion of counsel to
the Company as to the legality of the securities offered hereby or (iv)
any required opinion of counsel to the Company as to certain tax matters
relative to securities offered hereby.
** Incorporated by reference to the filing indicated.
+ Previously filed.