EXHIBIT 1.2
Execution Version
MARATHON OIL CORPORATION
DEBT SECURITIES
PRICING AGREEMENT
New York, New York
May 23, 2002
X.X. Xxxxxx Securities Inc.
Xxxxxxx Xxxxx Barney Inc.
As Representatives of the several Underwriters
named in Schedule I hereto,
c/o X.X. Xxxxxx Securities Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
c/o Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Marathon Oil Corporation, a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein and in the
Underwriting Agreement, dated May 23, 2002 (the "Underwriting Agreement"),
between the Company on the one hand and X.X. Xxxxxx Securities Inc. and Xxxxxxx
Xxxxx Barney Inc., as Representatives of the several underwriters, on the other
hand, to issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") the Securities specified in Schedule II hereto (the "Designated
Securities"). Each of the provisions of the Underwriting Agreement is
incorporated herein by reference in its entirety, and shall be deemed to be a
part of this Agreement to the same extent as if such provisions had been set
forth in full herein; and each of the representations and warranties set forth
therein shall be deemed to have been made at and as of the date of this Pricing
Agreement, except that each representation and warranty which refers to the
Final Prospectus in Section 2 of the Underwriting Agreement shall be deemed to
be a representation or warranty as of the date of the Underwriting Agreement in
relation to the Final Prospectus (as therein defined), and also a representation
and warranty as of the date of this Pricing Agreement in relation to the Final
Prospectus as amended or supplemented relating to the Designated Securities
which are the subject of this Pricing Agreement. Each reference to the
Representatives herein and in the provisions of the Underwriting Agreement so
incorporated by reference shall be deemed to refer to you. Unless otherwise
defined herein, terms defined in the Underwriting Agreement are used herein as
therein defined.
2
The Representatives designated to act on behalf of the
Representatives and on behalf of each of the Underwriters of the Designated
Securities pursuant to Section 12 of the Underwriting Agreement and the address
of the Representatives referred to in such Section 12 are set forth at the end
of Schedule II hereto.
The documents required to be delivered by Section 7 of the
Underwriting Agreement shall be delivered at the office of Cravath, Swaine &
Xxxxx, counsel for the Underwriters, at 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 at the Time of Delivery.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
issue and sell to each of the Underwriters and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at the time and place
and at the purchase price to the Underwriters set forth in Schedule II hereto,
the principal amount of Designated Securities set forth opposite the name of
such Underwriter in Schedule I hereto.
[THE REMAINDER OF PAGE IS INTENTIONALLY LEFT BLANK]
3
If the foregoing is in accordance with your understanding, please
sign and return to us seven counterparts hereof, and upon acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof, including the provisions of the Underwriting Agreement incorporated
herein by reference, shall constitute a binding agreement between each of the
Underwriters and the Company. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is or will be pursuant to the
authority set forth in a form of Agreement Among Underwriters, the form of which
shall be submitted to the Company for examination upon request, but without
warranty on the part of the Representatives as to the authority of the signers
thereof.
Very truly yours,
Marathon Oil Corporation
By: /s/ XXXX X. XXXXXXXX
-------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President, Finance and
Treasurer
4
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
X.X. XXXXXX SECURITIES INC.
XXXXXXX XXXXX XXXXXX INC.
By: X.X. Xxxxxx Securities Inc.
By: /s/ XXXXX XXXXXX
---------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
By: Xxxxxxx Xxxxx Xxxxxx Inc.
By: /s/ XXXX-XXXXXX XXXXX
---------------------------
Name: Xxxx-Xxxxxx Xxxxx
Title: Vice President
For each of themselves and the
other several Underwriters named
in Schedule I to this Agreement.
5
SCHEDULE I
PRINCIPAL AMOUNT OF DESIGNATED
UNDERWRITER SECURITIES TO BE PURCHASED
--------------------------------------------------------------------------------
X.X. Xxxxxx Securities Inc. $146,250,000
--------------------------------------------------------------------------------
Xxxxxxx Xxxxx Xxxxxx Inc. $146,250,000
--------------------------------------------------------------------------------
Commerzbank Capital Markets Corp. $ 25,000,000
--------------------------------------------------------------------------------
Credit Suisse First Boston Corporation $ 25,000,000
--------------------------------------------------------------------------------
Xxxxxx Brothers Inc. $ 25,000,000
--------------------------------------------------------------------------------
Scotia Capital (USA) Inc. $ 25,000,000
--------------------------------------------------------------------------------
BNY Capital Markets, Inc. $ 14,375,000
--------------------------------------------------------------------------------
Banc One Capital Markets, Inc. $ 14,375,000
--------------------------------------------------------------------------------
Mellon Financial Markets, LLC $ 14,375,000
--------------------------------------------------------------------------------
Mizuho International plc $ 14,375,000
--------------------------------------------------------------------------------
Total: $450,000,000
--------------------------------------------------------------------------------
6
SCHEDULE II
TITLE: 5.375% Notes Due 2007.
PRINCIPAL AMOUNT: $450,000,000.
INDENTURE: Indenture, dated as of February 26, 2002, between the Company
and JPMorgan Chase Bank, as Trustee.
INTEREST: 5.375% per annum, from May 29, 2002, payable semiannually on
June 1 and December 1, commencing December 1, 2002, to holders of record on the
preceding May 15 or November 15, as the case may be.
MATURITY: June 1, 2007.
PURCHASE PRICE: 98.941% of principal amount plus accrued interest, if any,
from May 29, 2002.
EXPECTED REOFFERING PRICE: 99.541% of principal amount, subject to change
by the Underwriters.
SINKING FUND: None.
DELAYED DELIVERY CONTRACTS: None.
OPTIONAL REDEMPTION: The Notes will be redeemable in whole or in part at
any time and from time to time, at the option of the Company, at a redemption
price equal to the greater of (1) 100% of the principal amount of the Notes to
be redeemed or (2) the sum of the present values of the remaining scheduled
payments of principal and interest on the Notes to be redeemed (exclusive of
interest accrued to the date of redemption) discounted to the date of redemption
on a semiannual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate (as defined in Schedule A attached hereto) plus 15
basis points, plus, in either case, accrued and unpaid interest on the principal
amount being redeemed to the date of redemption.
CLOSING: 10 a.m. on May 29, 2002, at the offices of Cravath, Swaine &
Xxxxx, 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, in same day funds.
NAMES AND ADDRESSES OF CO-REPRESENTATIVES:
--------------------------------------------------------------------------------
X.X. Xxxxxx Securities Inc. Xxxxxxx Xxxxx Xxxxxx Inc.
--------------------------------------------------------------------------------
000 Xxxx Xxxxxx 000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
--------------------------------------------------------------------------------
7
SCHEDULE A
"Business Day" means any calendar day that is not a Saturday, Sunday or
legal holiday in New York, New York or Houston, Texas and on which commercial
banks are open for business in New York, New York and Houston, Texas.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term ("Remaining Life") of the Notes to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of such Notes.
"Comparable Treasury Price" means, with respect to any redemption date,
(1) the average of the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest Reference Treasury Dealer
Quotations, or (2) if the Trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such quotations.
"Independent Investment Banker" means one of the Reference Treasury
Dealers that the Company appoints to act as the Independent Investment Banker
from time to time.
"Reference Treasury Dealer" means X.X. Xxxxxx Securities Inc. and Xxxxxxx
Xxxxx Xxxxxx Securities Inc., and their respective successors, and two other
firms that are primary U.S. Government securities dealers (each a "Primary
Treasury Dealer") which the Company specifies from time to time; provided,
however, that if any of them ceases to be a Primary Treasury Dealer, the Company
shall substitute therefor another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third Business Day preceding such redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to: (1) the yield, under the heading which represents the average
for the immediately preceding week, appearing in the most recently published
statistical release designated "H.15(519)" or any successor publication which is
published weekly by the Board of Governors of the Federal Reserve System and
which establishes yields on actively traded United States Treasury securities
adjusted to constant maturity under the caption "Treasury Constant Maturities,"
for the maturity corresponding to the Comparable Treasury Issue; provided that,
if no maturity is within three months before or after the Remaining Life of the
Notes to be redeemed, yields for the two published maturities most closely
corresponding to the Comparable Treasury Issue shall be determined and the
Treasury Rate shall be interpolated or extrapolated from such yields on a
straight line basis, rounding to the nearest month; or (2) if such release (or
any successor release) is not published during the week preceding the
calculation date or does
8
not contain such yields, the rate per annum equal to the semiannual equivalent
yield to maturity of the Comparable Treasury Issue, calculated using a price for
the Comparable Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such redemption date. The
Treasury Rate shall be calculated on the third Business Day preceding the
redemption date.
