<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 22, 1994
REGISTRATION NO. 33-52287
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
USX CAPITAL LLC
(Exact name of Registrant
as specified in its charter)
TURKS AND CAICOS ISLANDS
(State or other jurisdiction of
incorporation or organization)
98-0137882
(I.R.S. Employer Identification No.)
WILLIAM F. SCHWIND, JR.
SECRETARY OF USX CAPITAL
MANAGEMENT COMPANY
5555 SAN FELIPE ROAD
HOUSTON, TEXAS 77056
(713) 629-6600
(Address, including zip code,
and telephone number, including area code,
of Registrant's principal executive offices
and agent for service)
USX CORPORATION
(Exact name of Registrant
as specified in its charter)
DELAWARE
(State or other jurisdiction of
incorporation or organization)
25-0996816
(I.R.S. Employer Identification No.)
DAN D. SANDMAN
GENERAL COUNSEL AND SECRETARY
600 GRANT STREET
PITTSBURGH, PA 15219
(412) 433-1121
(Address, including zip code,
and telephone number, including area code,
of Registrant's principal executive offices
and agent for service)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE
TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR
SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED FEBRUARY 22, 1994
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED FEBRUARY 22, 1994
8,000,000 SHARES
USX CAPITAL LLC
% CUMULATIVE MONTHLY INCOME PREFERRED SHARES ("MIPS"*), SERIES A
(LIQUIDATION PREFERENCE $25 PER SHARE)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
USX CORPORATION
------------------
The % Cumulative Monthly Income Preferred Shares, Series A (the "Series A
Preferred Shares"), offered hereby are being issued by USX Capital LLC, a
limited life company organized under the laws of the Turks and Caicos Islands
(the "Company"). The Company is a wholly owned subsidiary of USX Corporation, a
Delaware corporation ("USX").
The payment of dividends, if and to the extent declared out of moneys held by
the Company and legally available therefor, and payments on liquidation or
redemption with respect to the Series A Preferred Shares are guaranteed by USX
to the extent described in the accompanying Prospectus. The Series A Preferred
Shares will entitle holders to receive cumulative preferential cash dividends,
at an annual rate of % of the liquidation preference of $25 per share, accruing
from the date of original issuance and payable, in United States dollars,
monthly in arrears on the last day of each calendar month of each year,
commencing March 31, 1994.
The Series A Preferred Shares are redeemable, at the option of the Company
(with USX's consent), in whole or in part, from time to time, on or after March
31, 1999, at $25 per share plus accumulated and unpaid dividends (whether or not
declared) (the "Redemption Price") to the date fixed for redemption (the
"Redemption Date"), and will be redeemed at such price from the proceeds of any
repayment of the loan of the proceeds hereof to USX. In addition, if at any time
the Company or USX is or would be required to pay certain additional amounts or
to withhold or deduct certain amounts, the Series A Preferred Shares are
redeemable at the Redemption Price at the option of the Company with USX's
consent, from time to time. See "Description of Preferred Shares--Redemption"
and "Description of the Guarantees--Additional Amounts" in the Prospectus.
In the event of the liquidation of the Company, holders of Series A Preferred
Shares will be entitled to receive for each Series A Preferred Share a
liquidation preference of $25 plus accumulated and unpaid dividends to the date
of payment, subject to certain limitations. See "Certain Terms of the Series A
Preferred Shares--Liquidation Preference" herein and "Description of Preferred
Shares--Liquidation Distribution" in the Prospectus.
For a description of the various contractual backup undertakings of USX
relating to the Series A Preferred Shares, see "Description of Preferred
Shares--Miscellaneous", "Description of the Guarantee" and "Description of the
Loans" in the accompanying Prospectus.
The Series A Preferred Shares have been approved for listing on the New York
Stock Exchange, subject to official notice of issuance, under the symbol XLC Pr.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO THE
OFFERING PRICE(1) COMMISSION(2) COMPANY(1)(3)(4)
----------------- ------------- ----------------
<S> <C> <C> <C>
Per Series A Preferred Share................................... $25.00 (3) $25.00
Total(4)(5).................................................... $ 200,000,000 (3) $200,000,000
</TABLE>
- ---------
(1) Plus accrued dividends, if any, from the date of original issuance.
(2) USX and the Company have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting" herein.
(3) In view of the fact that the proceeds of the sale of the Series A Preferred
Shares will be loaned to USX, under the Underwriting Agreement USX has
agreed to pay to the Underwriters as compensation ("Underwriters
Compensation") for their services $ per Series A Preferred Share (or $
in the aggregate). See "Underwriting" herein.
(4) Expenses of the offering, which are payable by USX, are estimated to be
$500,000.
(5) The Company has granted to the Underwriters a 30-day option to purchase, on
the same terms set forth above, up to 1,200,000 additional Series A
Preferred Shares at the Initial Public Offering Price (with an additional
Underwriters' Compensation) solely to cover overallotments, if any. If the
option is exercised in full, the total initial Public Offering Price and
Proceeds to the Company will be $230,000,000.
------------------
The Series A Preferred Shares offered hereby are offered by the several
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that delivery of certificate for the Series A Preferred Shares will be made only
in book-entry form through the facilities of The Depository Trust Company on or
about March , 1994.
- ---------
* An application has been filed by Goldman, Sachs & Co. with the United States
Patent and Trademark Office for the registration of the MIPS servicemark.
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
A.G. EDWARDS & SONS, INC.
KIDDER, PEABODY & CO.
INCORPORATED
LEHMAN BROTHERS
MORGAN STANLEY & CO.
INCORPORATED
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SALOMON BROTHERS INC
SMITH BARNEY SHEARSON INC.
------------------
The date of this Prospectus Supplement is February , 1994.
<PAGE> 3
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES A
PREFERRED SHARES OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK
STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------
USX CORPORATION
The following discussion is a brief description of USX Corporation ("USX")
and is qualified in its entirety by reference to the documents incorporated by
reference herein. See "Incorporation of Certain Documents by Reference" in the
accompanying Prospectus. Readers of this Prospectus Supplement are encouraged to
refer to such incorporated documents for a more complete description of USX.
USX is a diversified company engaged in the energy business through its
Marathon Group, in the steel business through its U.S. Steel Group and in the
gas gathering and processing business through its Delhi Group.
- The Marathon Group includes the operations of Marathon Oil Company, a
wholly owned subsidiary of USX ("Marathon"), which is engaged in worldwide
exploration, production, transportation and marketing of crude oil and
natural gas; and domestic refining, marketing and transportation of
petroleum products. Marathon Group sales (excluding sales from operations
now included in the Delhi Group) as a percentage of total USX consolidated
sales were 66% in 1993, 69% in 1992 and 72% in 1991.
- The U.S. Steel Group includes U.S. Steel, one of the largest integrated
steel producers in the United States, which is primarily engaged in the
production and sale of a wide range of steel mill products, coke and
taconite pellets. The U.S. Steel Group also includes the management of
mineral resources, domestic coal mining, engineering and consulting
services and technology licensing. Other businesses that are part of the
U.S. Steel Group include real estate development and management, fencing
products, leasing and financing activities and a majority interest in a
titanium metal products company. U.S. Steel Group sales as a percentage of
total USX consolidated sales were 31% in 1993, 28% in 1992 and 26% in
1991.
- The Delhi Group includes Delhi Gas Pipeline Corporation and certain
related companies which are engaged in the purchasing, gathering,
processing, transporting and marketing of natural gas. Prior to creation
of the Delhi Group on October 2, 1992, these businesses were included in
the Marathon Group. Sales from the businesses included in the Delhi Group
as a percentage of total USX consolidated sales were 3% in each of 1993
and 1992 and 2% in 1991.
USX has three classes of common stock: USX-Marathon Group Common Stock
("Marathon Stock"), USX-U.S. Steel Group Common Stock ("Steel Stock") and
USX-Delhi Group Stock ("Delhi Stock"). Each class of stock is intended to
provide the stockholders of such class with a separate equity security
reflecting the performance of the related group.
A portion of USX's corporate assets and liabilities are attributed to each
of the Marathon Group, the U.S. Steel Group and the Delhi Group. Although the
financial statements of the Marathon Group, the U.S. Steel Group and the Delhi
Group separately report the assets, liabilities (including contingent
liabilities) and stockholders' equity of USX attributed to each such group, such
attribution does not affect legal title to such assets or responsibility for
such liabilities. Holders of Marathon Stock, Steel Stock and Delhi Stock are
stockholders of USX and continue to be subject to all of the risks associated
with an investment in USX and all of its businesses and liabilities.
S-2
<PAGE> 4
The Guarantee (as defined in the accompanying Prospectus) will be an
obligation of USX and not of any segment, group or subsidiary of USX.
FINANCIAL HIGHLIGHTS
The following is a three-year summary of financial highlights for the
groups.
<TABLE>
<CAPTION>
OPERATING
INCOME ASSETS
SALES (LOSS)(A) (AT YEAR-END)
------- ---------- -------------
(MILLIONS)
<S> <C> <C> <C>
Marathon Group (b)
1993................................................ $11,962 $ 169 $10,806
1992................................................ 12,782 304 11,141
1991................................................ 13,975 358 11,644
U.S. Steel Group
1993................................................ 5,612 (149) 6,616
1992................................................ 4,919 (241) 6,251
1991................................................ 4,864 (617) 5,627
Delhi Group (c)
1993................................................ 535 36 580
1992................................................ 458 33 565
1991................................................ 423 31 584
Eliminations
1993................................................ (45) -- (628)
1992................................................ (346) (26) (705)
1991................................................ (437) (31) (816)
Total USX Corporation
1993................................................ $18,064 $ 56 $17,374
1992................................................ 17,813 70 17,252
1991................................................ 18,825 (259) 17,039
</TABLE>
- ---------
(a) Operating income (loss) included the following: a $342 million charge
related to the B&LE litigation for the U.S. Steel Group in 1993;
restructuring charges of $42 million, $10 million and $402 million for the
U.S. Steel Group in 1993, 1992, and 1991, respectively; restructuring
charges of $115 million and $24 million for the Marathon Group in 1992 and
1991, respectively; and inventory market valuation charges (credits) for the
Marathon Group of $241 million, $(62) million and $260 million in 1993, 1992
and 1991, respectively.
(b) Includes sales and operating income for the businesses comprising the Delhi
Group for periods prior to October 2, 1992, and assets related to the
businesses comprising the Delhi Group for year-end 1991.
(c) Includes historic sales, operating income and assets for the businesses
included in the Delhi Group which, prior to October 2, 1992, were included
in the Marathon Group.
USX CAPITAL LLC
USX Capital LLC, a wholly owned subsidiary of USX, is a limited life
company organized in December 1993 under the laws of the Turks and Caicos
Islands. The Company's registered offices are located at MacLaw House, P.O. Box
103, Duke Street, Grand Turk, Turks and Caicos Islands, British West Indies,
telephone: (809) 946-2476. The principal executive offices of the manager of the
Company, USX Capital Management Company (the "Manager"), are located at 5555 San
Felipe Road, Houston, Texas 77056, telephone (713) 629-6600. USX will own
directly or indirectly all of the common shares of the Company, which shares are
nontransferable. The Company exists solely for the purpose of issuing preferred
and common shares and lending the net proceeds thereof to USX.
S-3
<PAGE> 5
CERTAIN INVESTMENT CONSIDERATIONS
Prospective purchasers of Series A Preferred Shares should carefully review
the information contained elsewhere in this Prospectus Supplement and in the
Prospectus and should particularly consider the following matters:
USX's obligations under the Guarantee are subordinate and junior in
right of payment to all other liabilities of USX and its obligations under
the Loan Agreement are subordinate and junior in right of payment to Senior
Indebtedness of USX. See "Description of the Guarantee--Status of the
Guarantee" and "Description of Loans--Subordination" in the Prospectus.
The Company is a newly formed, limited life subsidiary of USX
organized under the laws of the Turks and Caicos Islands with no physical
assets located in the United States. As a result, it may not be possible
for purchasers to effect service of process within the United States upon
the Company or to enforce civil judgments against the Company in United
States courts based upon federal securities laws of the United States. In
addition, there may be doubt as to the enforceability of actions based upon
the federal securities laws of the United States in the Turks and Caicos
Islands courts.
USX has the right under the Loan Agreement to extend interest payment
periods for up to 18 months, and, as a consequence, monthly dividends on
the Series A Preferred Shares can be deferred (but will continue to
accumulate) by the Company during any such extended interest payment
period. In the event that USX exercises this right, USX may not declare
dividends on any share of its preferred or common stock, and therefore, the
extension of a payment period is, in the view of the Company and USX,
remote. See "Description of the Loans--Interest" in the Prospectus.
Should an extended interest payment period occur, the Company will
continue to accrue income for U.S. federal income tax purposes which will
be allocated, but not distributed, to record holders of Series A Preferred
Shares. As a result, such holders will include such interest in gross
income for U.S. federal income tax purposes in advance of the receipt of
cash, and any such holders who dispose of Series A Preferred Shares prior
to the record date for payment of dividends following such period will also
include such interest in gross income but will not receive cash related
thereto. See "Taxation--United States--Potential Extension of Interest
Payment Period" in the Prospectus.
S-4
<PAGE> 6
USE OF PROCEEDS
Based on the offering price of $25.00 per share, the proceeds from the
offering (prior to deducting Underwriters' Compensation and estimated expenses)
will be $200,000,000 ($230,000,000 if the overallotment option is exercised in
full). The proceeds from the sale of the Series A Preferred Shares will be
loaned to USX to be used for general corporate purposes, including the refunding
of outstanding indebtedness and other financial obligations. In view of this
loan, USX has agreed under the Underwriting Agreement to pay Underwriters'
Compensation to the Underwriters, as set forth in Note (3) on the cover page of
this Prospectus Supplement.
CAPITALIZATION
The following table sets forth the total consolidated capitalization of USX
at December 31, 1993 and as adjusted to give effect to the sale of the Series A
Preferred Shares offered hereby and the application of the proceeds therefrom as
described under "Use of Proceeds" herein. The table should be read in
conjunction with USX's consolidated financial statements and notes thereto and
other financial data incorporated herein by reference. See "Incorporation of
Certain Documents by Reference" in the accompanying Prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1993
---------------------
ACTUAL AS ADJUSTED
------ -----------
(IN MILLIONS)
<S> <C> <C>
SHORT-TERM OBLIGATIONS (including notes payable and current
maturities of long-term debt)............................... $ 36 $ 36
LONG-TERM DEBT DUE AFTER ONE YEAR(A).......................... 5,888 5,888
MINORITY INTEREST............................................. 5 5
PREFERRED STOCK OF CONSOLIDATED SUBSIDIARY(B)................. -- 200
STOCKHOLDERS' EQUITY(C)....................................... 3,864 3,864
------ -----------
TOTAL CAPITALIZATION..................................... $9,793 $9,993
------ -----------
------ -----------
</TABLE>
- ---------
(a) At December 31, 1993, $699 million of Marathon 9 1/2% Guaranteed Notes due
March 1, 1994 was included in long-term debt of USX since unused long-term
credit agreements of $1,500 million were available for refinancing if
needed. In February 1994, USX sold $300 million principal amount of 7.20%
Notes Due 2004 and $150 million principal amount of medium-term LIBOR-based
Floating Rate Notes due 1996.
(b) If the over-allotment option is exercised in full, preferred stock of
consolidated subsidiary, as adjusted, would be $230 million.
(c) In February 1994, USX sold 5,000,000 shares of USX-U.S. Steel Group Common
Stock for net proceeds of $201 million.
S-5
<PAGE> 7
USX CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following selected consolidated financial information has been derived
from the consolidated financial statements of USX for each of the five years in
the period ended December 31, 1993. The information set forth below should be
read in connection with the USX consolidated financial statements and notes
thereto and accompanying "Management's Discussion and Analysis" contained in the
USX Form 8-K dated February 14, 1994, incorporated herein by reference.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1993 1992 1991 1990 1989
------- ------- ------- ------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales............................................ $18,064 $17,813 $18,825 $20,659 $18,717
Operating income (loss).......................... 56 70 (259) 1,556 1,570
Operating costs include:
Depreciation, depletion and amortization..... 1,077 1,091 1,128 1,304 1,336
Inventory market valuation charges
(credits)................................. 241 (62) 260 (140) (145)
Restructuring charges........................ 42 125 426 -- --
B&LE litigation charge....................... 342 -- -- -- --
Other income (loss).............................. 257 (2) 39 37 406
Other income (loss) includes:
Gain on disposal of assets................... 253 24 30 7 370
Total income (loss) before income taxes and
cumulative effect of changes in accounting
principles..................................... (239) (189) (691) 1,216 1,358
Total income (loss) before cumulative effect of
changes in accounting principles............... (167) (160) (578) 818 965
Net income (loss)................................ $ (259) $(1,826) $ (578) $ 818 $ 965
BALANCE SHEET DATA (AT YEAR END):
Cash and cash equivalents........................ $ 268 $ 57 $ 279 $ 263 $ 786
Working capital.................................. (154) (370) (215) 351 273
Capital expenditures--for year................... 1,151 1,505 1,392 1,391 1,429
Property, plant and equipment--net............... 11,603 11,759 11,593 11,584 11,995
Total assets..................................... 17,374 17,252 17,039 17,268 17,500
Capitalization:
Notes payable.................................. $ 1 $ 47 $ 79 $ 138 $ 16
Total long-term debt........................... 5,923 6,302 6,438 5,527 5,875
Total proceeds from production agreements...... -- -- 17 142 327
Minority interest.............................. 5 16 37 67 --
Stockholders' equity........................... 3,864 3,709 4,987 5,869 5,737
------- ------- ------- ------- -------
Total capitalization.................... $ 9,793 $10,074 $11,558 $11,743 $11,955
------- ------- ------- ------- -------
------- ------- ------- ------- -------
</TABLE>
S-6
<PAGE> 8
CERTAIN TERMS OF THE SERIES A PREFERRED SHARES
GENERAL
The following summary of certain terms and provisions of the Series A
Preferred Shares supplements the description of certain terms and provisions of
the Preferred Shares of any series set forth in the accompanying Prospectus
under the heading "Description of Preferred Shares," to which description
reference is hereby made. Capitalized terms used and not defined in this
Prospectus Supplement shall have the meanings ascribed to them in the Prospectus
unless otherwise defined in this Prospectus Supplement. The Series A Preferred
Shares constitute a series of Preferred Shares of the Company, which Preferred
Shares may be issued from time to time in one or more series with such
designations, dividend rights, liquidation value per share, redemption
provisions, voting rights and other rights, preferences, privileges, limitations
and restrictions as are established by the Memorandum of Association of the
Company (the "Memorandum"), the Articles of Association of the Company (the
"Articles") and resolutions (the "Resolutions") adopted, or to be adopted, by
USX Capital Management Company (the "Manager") prior to the closing of the sale
of the Series A Preferred Shares offered hereby. The Resolutions will provide
that so long as any Series A Preferred Shares are outstanding, the Company may
not issue any shares of capital stock ranking, as to participation in the
profits or assets of the Company, senior to the Series A Preferred Shares. The
summary of certain terms and provisions of the Series A Preferred Shares set
forth below does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the Memorandum, the Articles and the Resolutions
adopted by the Manager establishing the rights, preferences, privileges,
limitations and restrictions relating to the Series A Preferred Shares. A copy
of the Resolutions will be included as an exhibit to a Current Report on Form
8-K to be filed by USX at or prior to the closing of the sale of the Series A
Preferred Shares offered hereby.
DIVIDENDS
Dividends on the Series A Preferred Shares will be cumulative, will accrue
from the date of the original issuance thereof and will be payable in United
States dollars monthly in arrears on the last day of each calendar month of each
year, commencing March 31, 1994, when, as and if declared by the Company, except
as otherwise described under "Description of Preferred Shares--Dividends" in the
accompanying Prospectus.
The dividend payable on each Series A Preferred Share will be fixed at a
rate per annum of % of the stated liquidation preference thereof.
LIQUIDATION PREFERENCE
The liquidation preference of the Series A Preferred Shares is $25 per
share.
REDEMPTION
The Series A Preferred Shares are redeemable as described in the
accompanying Prospectus. Additionally, the Series A Preferred Shares are
redeemable, at the option of the Company and subject to the prior consent of
USX, in whole or part, from time to time, on or after March 31, 1999, upon not
less than 30 nor more than 60 days' notice, at the redemption price of $25 per
share, plus accumulated and unpaid dividends (whether or not declared) to the
date fixed for redemption (the "Redemption Price").
S-7
<PAGE> 9
CERTAIN TERMS OF THE LOANS
Pursuant to the Loan Agreement, the Company will agree to make loans to USX
in an aggregate principal amount equal to $253,164,557, such amount being the
aggregate stated liquidation preference of $25 per Series A Preferred Share
issued and sold by the Company and the proceeds from the issuance of the
Company's Common Shares and related capital contributions (the "Common Share
Payments"). In the event that the Underwriters' over-allotment option is
exercised, the Company will agree to make additional Loans to USX pursuant to
the Loan Agreement equal to the aggregate stated liquidation preference of the
Series A Preferred Shares so sold plus the related Common Share Payments. If the
over allotment option is exercised in full, such additional Loans will equal
$37,974,684.
The entire principal amount of the Loans will become due and payable,
together with any accrued and unpaid interest thereon, including Additional
Interest, if any, on the earliest of the date that is the 50th anniversary of
the issuance of the Series A Preferred Shares or the date upon which USX, the
Manager or the Company is dissolved, wound-up or liquidated.
INTEREST
The Loans will bear interest at an annual rate equal to % from the date
they are made until maturity. Such interest will be payable on the last day of
each calendar month of each year, commencing March 31, 1994.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Company has agreed to sell to each of the Underwriters named below, and each of
the Underwriters, for whom Goldman, Sachs & Co., Bear, Stearns & Co. Inc., A.G.
Edwards & Sons, Inc., Kidder, Peabody & Co. Incorporated, Lehman Brothers Inc.,
Morgan Stanley & Co. Incorporated, PaineWebber Incorporated, Prudential
Securities Incorporated, Salomon Brothers Inc and Smith Barney Shearson Inc. are
acting as Representatives, has severally agreed to purchase from the Company the
respective number of Series A Preferred Shares set forth opposite its name
below:
<TABLE>
<CAPTION>
NUMBER OF
SERIES A
UNDERWRITERS PREFERRED SHARES
------------ ----------------
<S> <C>
Goldman, Sachs & Co. ...................................................
Bear, Stearns & Co. Inc. ...............................................
A.G. Edwards & Sons, Inc. ..............................................
Kidder, Peabody & Co. Incorporated......................................
Lehman Brothers Inc. ...................................................
Morgan Stanley & Co. Incorporated.......................................
PaineWebber Incorporated................................................
Prudential Securities Incorporated......................................
Salomon Brothers Inc ...................................................
Smith Barney Shearson Inc. .............................................
</TABLE>
S-8
<PAGE> 10
<TABLE>
<CAPTION>
NUMBER OF
SERIES A
UNDERWRITERS PREFERRED SHARES
------------ ----------------
<S> <C>
----------------
Total.............................................................. 8,000,000
----------------
----------------
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all such Series A Preferred
Shares offered hereby, if any are taken.
The Underwriters propose to offer the Series A Preferred Shares in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus Supplement, and in part to certain securities
dealers at such price less a concession of $. per Series A Preferred Share.
The Underwriters may allow, and such dealers may reallow, a concession not in
excess of $. per Series A Preferred Share to certain brokers and dealers.
After the Series A Preferred Shares are released for sale to the public, the
offering price and other selling terms may from time to time be varied by the
Representatives.
In view of the fact that the proceeds of the sale of the Series A Preferred
Shares will be loaned to USX, under the Underwriting Agreement USX has agreed to
pay as compensation ("Underwriters' Compensation") for the Underwriters'
Services, an amount in New York Clearing House (next day) funds of $ per
Series A Preferred Share for the accounts of the several Underwriters.
The Company has granted the Underwriters an option exercisable for 30 days
after the date of this Prospectus Supplement to purchase up to 1,200,000
additional Series A Preferred Shares to cover over-allotments, if any, at the
initial public offering price (with additional Underwriters' Compensation), as
set forth on the cover page of this Prospectus Supplement. If the Underwriters
exercise their over-allotment option, the Underwriters have severally agreed,
subject to certain conditions, to purchase approximately the same percentage
thereof that the number of Series A Preferred Shares to be purchased by each of
them, as shown in the foregoing table, bears to the 8,000,000 Series A Preferred
Shares offered hereby.
S-9
<PAGE> 11
Certain of the Underwriters are customers of, or engage in transactions
with, and from time to time have performed services for, USX and its
subsidiaries and associated companies in the ordinary course of business.
Prior to this offering, there has been no public market for the Series A
Preferred Shares. In order to meet one of the requirements for listing the
Series A Preferred Shares on the New York Stock Exchange, the Underwriters will
undertake to sell lots of 100 or more Series A Preferred Shares to a minimum of
400 beneficial holders.
The Company and USX have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the United States Securities
Act of 1933, as amended.
VALIDITY OF SECURITIES
The validity of the Series A Preferred Shares is being passed upon by
Misick and Stanbrook, Turks and Caicos Islands counsel to the Company. The
validity of the Backup Undertakings relating to the Series A Preferred Shares,
consisting of the Guarantee, the Loan Agreement, the Expense Agreement and the
Keep Well Agreement, will be passed upon on behalf of the Company and USX by Dan
D. Sandman, General Counsel of USX. The validity of such Backup Undertakings of
USX relating to the Series A Preferred Shares will be passed upon on behalf of
the Underwriters by Sullivan & Cromwell, United States counsel to the
Underwriters. As to all matters of Turks and Caicos Islands law, Mr. Sandman
will rely on the opinion of Misick and Stanbrook and as to all matters of New
York law, he will rely on the opinion of Sullivan & Cromwell.
S-10
<PAGE> 12
USX CAPITAL LLC
CUMULATIVE MONTHLY INCOME PREFERRED SHARES ("MIPS*")
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
USX CORPORATION
------------------
USX Capital LLC (the "Company"), a limited life company organized under the
laws of the Turks and Caicos Islands, may offer from time to time, in one or
more series, its authorized but unissued shares of Cumulative Monthly Income
Preferred Shares (the "MIPS*" or "Preferred Shares"). The Company is a wholly
owned subsidiary of USX Corporation ("USX"), a Delaware corporation. The payment
of dividends, if and to the extent declared out of moneys held by the Company
and legally available therefor, and payments on liquidation or redemption with
respect to the Preferred Shares are guaranteed (the "Guarantee") by USX to the
extent set forth herein. No portion of the dividends received by a holder of the
Preferred Shares will be eligible for the dividends received deduction for
federal income tax purposes. The Guarantee will rank subordinate and junior in
right of payment to all other liabilities of USX and senior to the most senior
preferred or preference stock issued by USX. See "USX Capital LLC", "Description
of Preferred Shares--Miscellaneous," "Description of the Guarantee" and
"Description of the Loans" for a description of the various contractual backup
obligations of USX Corporation relating to the Preferred Shares. The total
number of Preferred Shares of all series to be issued under the registration
statement of which this Prospectus forms a part will not exceed 10,000,000.
The terms of the Preferred Shares of a particular series will be determined
at the time of sale. The specific designation, liquidation value per share,
initial public offering price, dividend rate (or method of calculation thereof),
dates on which dividends will be payable, voting rights, any redemption
provisions and the other rights, preferences, privileges, limitations and
restrictions relating to the Preferred Shares of the particular series in
respect of which this Prospectus is being delivered will be set forth in the
Prospectus Supplement pertaining to such series (the "Prospectus Supplement").
The Preferred Shares may be sold for public offering to or through
underwriters, including Goldman, Sachs & Co., or dealers or may be sold through
agents designated from time to time or directly by the Company. See "Plan of
Distribution". The names of any such underwriters, dealers or agents involved in
the sale of the Preferred Shares of the particular series in respect of which
this Prospectus is being delivered, the number of Preferred Shares to be
purchased by any such underwriters and any applicable commissions or discounts
will be set forth in the Prospectus Supplement. The net proceeds to the Company
will also be set forth in the Prospectus Supplement.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------
No person has been authorized to give any information or to make any
representations, other than as contained herein or incorporated by reference in
this Prospectus, in connection with the offer contained in this Prospectus, and,
if given or made, such information or representations must not be relied upon.
Neither the delivery of this Prospectus nor any sale hereunder shall under any
circumstances create an implication that there has been no change in the affairs
of the Company or the Guarantor since the date hereof.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby in any jurisdiction to any
person to whom it is unlawful to make such offer in such jurisdiction.
This Prospectus may not be used to consummate sales of Preferred Shares
unless accompanied by a Prospectus Supplement.
- ---------
* An application has been filed by Goldman, Sachs & Co. with the United States
Patent and Trademark Office for the registration of the MIPS servicemark.
GOLDMAN, SACHS & CO.
--------------------
The date of this Prospectus is February 22, 1994.
<PAGE> 13
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information ................................................................ 2
Incorporation of Certain Documents by Reference ...................................... 3
USX Corporation ...................................................................... 3
USX Corporation Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends ...................................................... 4
USX Capital LLC ...................................................................... 4
Use of Proceeds ...................................................................... 5
Description of Preferred Shares ...................................................... 5
Description of the Guarantee ......................................................... 13
Description of the Loans ............................................................. 15
Taxation ............................................................................. 20
Plan of Distribution ................................................................. 23
Validity of Securities ............................................................... 24
Experts .............................................................................. 24
</TABLE>
AVAILABLE INFORMATION
USX Corporation ("USX" or the "Guarantor") is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, in accordance therewith, files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information filed by USX can be inspected
and copied at prescribed rates at the Public Reference Room of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
public reference facilities maintained by the Commission at 7 World Trade
Center, New York, New York 10048, and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Documents filed by USX can
also be inspected at the offices of the New York Stock Exchange, Inc. (the "New
York Stock Exchange"), the Chicago Stock Exchange and the Pacific Stock
Exchange.
USX and USX Capital LLC (the "Company") have filed a Registration Statement
on Form S-3 (the "Registration Statement") with the Commission pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), covering the
Preferred Shares. This Prospectus does not contain all the information set forth
in the Registration Statement and the exhibits thereto, to which reference is
hereby made.
No separate financial statements of the Company have been included herein.
The Company and USX Corporation do not consider that such financial statements
would be material to holders of the Preferred Shares because the Company is a
newly organized special purpose entity, has no operating history and no
independent operations and is not engaged in, and does not propose to engage in,
any activity other than the issuance of the Preferred Shares and its common
shares, and the lending of the net proceeds thereof to USX Corporation. See "USX
Capital LLC". The Company is a limited life company organized under the laws of
the Turks and Caicos Islands and will be managed by USX Capital Management
Company (the "Manager"), an indirect wholly owned subsidiary of USX. USX owns,
directly or indirectly, all of the Company's common stock, which is
nontransferable. All or a substantial portion of the Company's assets will be
located outside the United States. The Company has been advised by its Turks and
Caicos Islands legal counsel, Misick and Stanbrook, that there is doubt as to
the enforceability, in the Turks and Caicos Islands in original actions or in
actions for enforcement of judgments of United States courts, of liabilities
predicated solely upon the federal securities laws of the United States.
2
<PAGE> 14
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by USX with the Commission (file no. 1-5153)
are incorporated herein by reference:
(a) Annual Report on Form 10-K for the year ended December 31, 1992.
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31,
June 30, and September 30, 1993.
(c) Current Reports on Form 8-K dated January 26, February 11,
February 24, May 27, June 11, June 29, and July 27, 1993, January 21,
January 24, and February 14, 1994.
All reports and other documents filed by USX pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the offering described herein shall be deemed to
be incorporated by reference herein. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus and any Prospectus
Supplement to the extent that a statement contained herein or in any other
subsequently filed document which also is incorporated or deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus or any Prospectus
Supplement.
USX undertakes to provide without charge to each person to whom a
Prospectus or any Prospectus Supplement is delivered, on the written or oral
request of such person, a copy of any or all of the information incorporated by
reference in this Prospectus or any Prospectus Supplement other than exhibits to
such information (unless such exhibits are specifically incorporated by
reference into the information that this Prospectus or any Prospectus Supplement
incorporates). Requests for such copies should be directed to the Office of the
Corporate Secretary, USX Corporation, 600 Grant Street, Pittsburgh, Pennsylvania
15219-4776 (telephone: 412-433-2885).
USX CORPORATION
USX, a Delaware corporation organized in 1901, is a diversified company
engaged in the energy business through its Marathon Group, in the steel business
through its U.S. Steel Group and in the gas gathering and processing business
through its Delhi Group.
USX has three classes of common stock, USX--Marathon Group Common Stock
("Marathon Stock"), USX--U.S. Steel Group Common Stock ("Steel Stock") and
USX--Delhi Group Common Stock ("Delhi Stock"). Each class of common stock is
intended to provide the stockholders of such class with a separate security
reflecting the performance of the related group.
The Marathon Group includes the operations of Marathon Oil Company
("Marathon"), a wholly owned subsidiary of USX, which is engaged in worldwide
exploration, production, transportation and marketing of crude oil and natural
gas; and domestic refining, marketing and transportation of petroleum products.
The U.S. Steel Group includes U.S. Steel, one of the largest integrated
steel producers in the United States, which is primarily engaged in the
production and sale of a wide range of steel mill products, coke and taconite
pellets. The U.S. Steel Group also includes the management of mineral resources,
domestic coal mining, engineering and consulting services and technology
licensing. Other businesses that are part of the U.S. Steel Group include real
estate development and management, fencing products, leasing and financing
activities, and a majority interest in a titanium metal products company.
The Delhi Group includes Delhi Gas Pipeline Corporation and certain related
companies which are engaged in the purchasing, gathering, processing,
transporting and marketing of natural gas.
3
<PAGE> 15
Prior to October 2, 1992, the businesses which are now included in the Delhi
Group were included in the Marathon Group and data regarding the Delhi Group for
periods prior to that date reflect the combined historical financial data of the
businesses comprising the Delhi Group.
USX continues to include consolidated financial information in its periodic
reports required by the Exchange Act, in its annual shareholder reports and in
other financial communications. The consolidated financial statements are
supplemented with separate financial statements of the Marathon Group, the U.S.
Steel Group and the Delhi Group, together with the related Management's
Discussion and Analyses, descriptions of business and other financial and
business information to the extent such information is required to be presented
in the report being filed. The financial information of the Marathon Group, the
U.S. Steel Group and the Delhi Group, taken together, includes all accounts
which comprise the corresponding consolidated financial information of USX.
For consolidated financial reporting purposes, USX's reportable industry
segments correspond with its three groups. The attribution of assets,
liabilities (including contingent liabilities) and stockholders' equity among
the Marathon Group, the U.S. Steel Group and the Delhi Group for the purpose of
preparing their respective financial statements does not affect legal title to
such assets and responsibility for such liabilities. Accordingly, USX is
responsible for its liabilities (including those pursuant to the Guarantee (as
defined under "Description of the Guarantee") and the Loan Agreement (as defined
under "Description of the Loans")) without regard to the attribution of
shareholders' equity among the three Groups.
Marathon Stock stockholders, Steel Stock stockholders and Delhi Stock
stockholders are holders of common stock of USX and continue to be subject to
all of the risks associated with an investment in USX and all of its businesses
and liabilities. Financial impacts arising from any of the Marathon Group, the
U.S. Steel Group or the Delhi Group which affect the overall cost of USX's
capital could affect the results of operations and financial condition of all
groups. Accordingly, the USX consolidated financial information should be read
in connection with the Marathon Group, the U.S. Steel Group and the Delhi Group
financial information.
The executive offices of USX are located at 600 Grant Street, Pittsburgh,
PA 15219-4776 (tel: (412) 433-1121). The term "USX" when used herein refers to
USX Corporation and its subsidiaries, as required by the context.
USX CORPORATION RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------
1993 1992 1991 1990 1989
----- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to combined fixed charges and preferred
stock dividends........................................ (a) (a) (a) 2.69 2.33
----- ---- ---- ---- ----
----- ---- ---- ---- ----
</TABLE>
- ---------
(a) Earnings did not cover combined fixed charges and preferred stock dividends
by $325 million for 1993, by $211 million for 1992 and by $696 million for
1991.
USX CAPITAL LLC
USX Capital LLC, a wholly owned subsidiary of USX, is a limited life
company organized in December 1993 under the laws of the Turks and Caicos
Islands. The Company's registered offices are located at MacLaw House, P.O. Box
103, Duke Street, Grand Turk, Turks and Caicos Islands, British West Indies,
telephone: (809) 946-2476. The principal executive offices of the Manager are
located at 5555 San Felipe Road, Houston, Texas 77056, telephone (713) 629-6600.
USX will own directly or indirectly all of the common shares of the Company,
which shares are nontransferable.
4
<PAGE> 16
The Company exists solely for the purpose of issuing preferred and common shares
and lending the net proceeds thereof to USX.
USE OF PROCEEDS
The proceeds from the sale of the Preferred Shares will be loaned to USX to
be used for general corporate purposes, including the refunding of outstanding
indebtedness and other financial obligations.
As of December 31, 1993, USX had long-term debt obligations maturing within
one year of $734 million, including $699 million of Marathon 9 1/2% Guaranteed
Notes Due March 1, 1994.
DESCRIPTION OF PREFERRED SHARES
The following is a summary of certain terms and provisions of the Preferred
Shares of any series (collectively referred to as the "Preferred Shares").
Certain terms and provisions of the Preferred Shares of a particular series will
be summarized in the Prospectus Supplement relating to the Preferred Shares of
such series. If so indicated in the Prospectus Supplement, the terms and
provisions of the Preferred Shares of a particular series may differ from the
terms set forth below. The summaries set forth below and in the applicable
Prospectus Supplement address the material terms of the Preferred Shares of any
particular series but do not purport to be complete and are subject to, and
qualified in their entirety by reference to, the Memorandum of Association of
the Company (the "Memorandum"), the Articles of Association of the Company (the
"Articles") and the resolutions adopted, or to be adopted, as the case may be,
by the Manager establishing the rights, preferences, privileges, limitations and
restrictions relating to the Preferred Shares of any series or of a particular
series. Copies of the Memorandum and the Articles have been filed as exhibits to
the Registration Statement of which this Prospectus forms a part.
GENERAL
The Company's authorized capital is US $10,005,000, divided into 5,000
ordinary shares of US $1.00 each (the "Common Shares"), of which 4,998 are
issued and outstanding and owned directly or indirectly by USX, and 10,000,000
Preferred Shares of US $1.00 each, which may be issued in one or more series or
classes, with such dividend rights, liquidation preference per share, redemption
provisions, voting rights and other rights, preferences, privileges, limitations
and restrictions as shall be set forth in the Articles and the resolutions
providing for the issuance thereof to be adopted by the Manager. The Manager by
resolution may increase the number of authorized Preferred Shares and establish
other classes of shares having such preferred, deferred or other special rights
or such restrictions, whether in regard to dividends, voting, return of capital
or otherwise, as the Manager may determine. All of the Preferred Shares, to be
issued in one or more series or classes, will rank pari passu with each other
with respect to participation in profits and assets. The resolutions providing
for the issuance of Preferred Shares of any particular series will not permit
the issuance of any preference shares ranking, as to participation in the
profits or the assets of the Company, senior to the Preferred Shares of any
particular series. The initial offering price of the Preferred Shares of any
particular series will be reasonably related to the liquidation preference
thereof.
The Preferred Shares of any series will be issued in registered form only
without dividend coupons. Registration of, and registration of transfers of, the
Preferred Shares of any series will be by book-entry only. The Preferred Shares
of any series will have the dividend rights, rights upon liquidation, redemption
provisions and voting rights set forth below, unless otherwise provided in the
Prospectus Supplement relating to the Preferred Shares of a particular series.
Reference is made to the Prospectus Supplement relating to the Preferred Shares
of a particular series for specific terms including (i) the designation of the
Preferred Shares of such series, (ii) the liquidation value,
5
<PAGE> 17
(iii) the price at which the Preferred Shares of such series will be issued,
(iv) the dividend rate (or method of calculation thereof) and the dates on which
dividends will be payable, (v) the voting rights of the Preferred Shares of such
series, (vi) any redemption provisions, (vii) any other rights, preferences,
privileges, limitations and restrictions relating to the Preferred Shares of
such series and (viii) the terms upon which the proceeds from the sale of the
Preferred Shares of such series will be loaned to USX.
DIVIDENDS
Dividends on the Preferred Shares will be cumulative. Cumulative dividends
on the Preferred Shares of a series will accrue from the date of original issue
thereof and will be payable in United States dollars monthly in arrears on the
last day of each calendar month of each year, commencing on the dates specified
in the Prospectus Supplement relating to such series.
The dividend payable on Preferred Shares of a particular series will be
fixed at the rate per annum specified in the Prospectus Supplement relating to
such series. The amount of dividends payable for any period will be computed on
the basis of twelve 30-day months and a 360-day year and, for any period shorter
than a full monthly dividend period, will be computed on the basis of the actual
number of days elapsed in such period. Payment of dividends is limited in
relation to the amount of funds held by the Company and legally available
therefor. See "Description of the Loans--Interest" and "Description of the
Guarantee--General" below.
Dividends on the Preferred Shares of any series must be declared by the
Manager of the Company in any calendar year or portion thereof to the extent
that the Manager reasonably anticipates that at the time of payment the Company
will have, and must be paid by the Company to the extent that at the time of
proposed payment it has, (x) funds legally available for the payment of such
dividends and (y) cash on hand sufficient to permit such payments. It is
anticipated that the Company's earnings will be limited to payments under the
Loans of the proceeds from the issuance and sale of the Preferred Shares and the
Company's common shares. See "Description of the Loans".
Dividends declared on the Preferred Shares of any series will be payable to
the record holders thereof as they appear on the register for the Preferred
Shares of such series on the relevant record dates which will be, unless
otherwise specified in the Prospectus Supplement relating to each such series,
one Business Day (as hereinafter defined) prior to the relevant payment dates.
Subject to any applicable fiscal or other laws and regulations, each such
payment will be made as described under "Book-Entry-Only Issuance; The
Depository Trust Company" below. In the event that any date on which dividends
are payable on the Preferred Shares of any series is not a Business Day, then
payment of the dividend payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. A "Business Day" shall mean any day other than a day on which
banking institutions in The City of New York are authorized or required by law
to close.
CERTAIN RESTRICTIONS ON THE COMPANY
If dividends have not been paid in full on the Preferred Shares of a
particular series, the Company shall not:
(i) pay, or declare and set aside for payment, any dividends on the
Preferred Shares of any other series or any other preferred or preference
stock of the Company ranking pari passu with the Preferred Shares of such
series as regards participation in profits of the Company ("Company
Dividend Parity Shares"), unless the amount of any dividends declared on
any Company Dividend Parity Shares is paid on the Company Dividend Parity
Shares and the
6
<PAGE> 18
Preferred Shares of such series on a pro rata basis on the date such
dividends are paid on such Company Dividend Parity Shares, so that:
(x) (A) the aggregate amount of dividends paid on the Preferred
Shares of such series bears to (B) the aggregate amount of dividends
paid on such Company Dividend Parity Shares the same ratio as
(y) (A) the aggregate of all accumulated arrears of unpaid
dividends in respect of the Preferred Shares of such series bears to (B)
the aggregate of all accumulated arrears of unpaid dividends in respect
of such Company Dividend Parity Shares;
(ii) pay, or declare and set aside for payment, any dividends on any
shares of the Company ranking junior to the Preferred Shares of such series
as to dividends ("Company Dividend Junior Shares"); or
(iii) redeem, purchase or otherwise acquire any Company Dividend
Parity Shares or Company Dividend Junior Shares;
until, in each case, such time as all accumulated arrears of unpaid dividends on
the Preferred Shares of such series shall have been paid in full for all
dividend periods terminating on or prior to, in the case of clauses (i) and
(ii), such payment, and in the case of clause (iii), the date of such
redemption, purchase or acquisition. As of the date of this Prospectus, there
are no Company Dividend Parity Shares outstanding.
REDEMPTION
The Preferred Shares of a series will be redeemable at the option of the
Company and subject to the prior consent of USX, in whole or in part from time
to time, on or after the date specified in the Prospectus Supplement relating to
such series, at the stated liquidation preference per share for such series,
plus accumulated and unpaid dividends (whether or not declared) (the "Redemption
Price") to the date fixed for redemption (the "Redemption Date").
In the event that fewer than all of the outstanding Preferred Shares of a
particular series are to be redeemed, except as described below, the Preferred
Shares of such series to be redeemed may be selected as described under
"Book-Entry-Only Issuance; The Depository Trust Company" below.
If at any time USX repays the Loans when due or prepays the Loans as
described under "Description of the Loans--Optional Prepayment", the proceeds
from such repayment of principal on the Loans to USX will be applied, subject to
the provisions in clause (iii) under "Certain Restrictions on the Company"
above, to redeem the Preferred Shares of such series at the Redemption Price;
provided that any such amounts may be reloaned to USX and not used for such
redemption, if at the time of each such loan, and as determined in the judgment
of the Manager, and its financial advisor, (a) USX is not in bankruptcy, (b) USX
is not in default on any loan pertaining to Preferred Shares of any series, (c)
USX has made timely payments on the repaid loan for the immediately preceding 18
months, (d) the Company is not in arrears on payments of dividends on the
Preferred Shares of such series, (e) USX is expected to be able to make timely
payment of principal and interest on such loan, (f) such loan is being made on
terms, and under circumstances, that are consistent with those which a lender
would require for a loan to an unrelated party, (g) such loan is being made at a
rate sufficient to provide payments equal to or greater than the amount of
dividend payments required under the Preferred Shares of such series, (h) the
senior unsecured long-term debt of USX is rated BBB- or better by Standard &
Poor's Corporation or Baa3 or better by Moody's Investors Service, Inc. or the
equivalent by any other nationally recognized statistical rating organization,
(i) such loan is being made for a term that is consistent with market
circumstances and USX's financial condition, and (j) the final maturity of such
loan is not later than the 100th anniversary of the issuance of the Preferred
Shares of the first series issued.
7
<PAGE> 19
If at any time after the issuance of Preferred Shares of a series, the
Company is or would be required to pay any Additional Amounts (as defined
herein) with respect to the Preferred Shares of such series or USX is or would
be required to withhold or deduct certain amounts as described under
"Description of the Guarantee--Additional Amounts" with respect to the Preferred
Shares of such series, then, subject to the prior consent of USX, the Company
may, at its option but subject to the provisions of clause (iii) under "Certain
Restrictions on the Company" above, upon not less than 30 nor more than 60 days'
notice to the holders of the Preferred Shares of such series, redeem the
Preferred Shares of such series in whole, or if such requirement relates to only
certain of the Preferred Shares of such series, only the Preferred Shares of
such series subject to the requirement may be redeemed at the Redemption Price
for such series, provided that, in the case of such a redemption of Preferred
Shares in part, the Company may (i) cause the global certificate representing
all of the Preferred Shares of such series to be withdrawn from The Depository
Trust Company or its successor securities depository (see "Book-Entry-Only
Issuance; The Depository Trust Company"), (ii) issue share certificates in
definitive form representing Preferred Shares of such series and (iii) redeem
the Preferred Shares subject to such requirement to withhold or deduct
Additional Amounts; and provided further that, if a partial redemption would
result in a delisting of the Preferred Shares of such series from any national
securities exchange on which they are then listed, the Company may only redeem
the Preferred Shares of such series in whole.
The Company may not redeem any Preferred Shares of any series unless all
accumulated arrears of unpaid dividends have been paid on all Preferred Shares
of all series for all monthly dividend periods terminating on or prior to the
date of redemption.
If the Company gives a notice of redemption in respect of Preferred Shares
of a particular series, then, by 12:00 noon, New York time, on the Redemption
Date, the Company will irrevocably deposit with The Depository Trust Company
funds sufficient to pay the applicable Redemption Price, and will give The
Depository Trust Company irrevocable instructions and authority to pay the
Redemption Price to the holders thereof. If notice of redemption shall have been
given and funds deposited as required, then upon the date of such deposit, all
rights of holders of such Preferred Shares of a series so called for redemption
will cease, except the right of the holders of such shares to receive the
Redemption Price, but without interest. In the event that any date on which any
payment in respect of the redemption of Preferred Shares of any series is not a
Business Day, then payment of the Redemption Price payable on such date will be
made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day. In the event that payment of the Redemption
Price in respect of Preferred Shares of any series is improperly withheld or
refused and not paid either by the Company or by USX pursuant to the Guarantee,
dividends on such shares will continue to accrue, at the then applicable rate,
from the original Redemption Date to the date that the Redemption Price is
actually paid, in which case the actual payment date will be the date fixed for
redemption for purposes of calculating the Redemption Price.
Subject to the foregoing and applicable law (including, without limitation,
U.S. federal securities laws) USX or its subsidiaries may at any time and from
time to time purchase outstanding Preferred Shares of any series by tender, in
the open market or by private agreement.
LIQUIDATION DISTRIBUTION
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of Preferred Shares of each series at the
time outstanding will be entitled to receive out of the assets of the Company
legally available for distribution to shareholders, before any distribution of
assets is made to holders of Common Shares of the Company or any other class of
shares of the Company ranking junior to the Preferred Shares of such series as
regards participation in assets of the Company, but together with the holders of
outstanding Preferred Shares of every other series and the holders of every
other series of preferred or preference stock
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of the Company outstanding, if any, ranking pari passu with the Preferred Shares
of such series as regards participation in the assets of the Company ("Company
Liquidation Parity Shares"), an amount equal, in the case of the holders of the
Preferred Shares of such series, to the aggregate of the stated liquidation
preference for Preferred Shares of such series as set forth in the Prospectus
Supplement and all accumulated and unpaid dividends (whether or not declared) to
the date of payment (the "Liquidation Distribution"). If, upon any such
liquidation, the Liquidation Distributions can be paid only in part because the
Company has insufficient assets available to pay in full the aggregate
Liquidation Distributions and the aggregate maximum liquidation distributions on
the Company Liquidation Parity Shares, then the amounts payable directly by the
Company on the Preferred Shares of such series and on such Company Liquidation
Parity Shares shall be paid on a pro rata basis, so that
(i) (x) the aggregate amount paid as the Liquidation Distribution on
the Preferred Shares of such series bears to (y) the aggregate amount paid
as Liquidation Distributions on the Company Liquidation Parity Shares the
same ratio as
(ii) (x) the aggregate Liquidation Distribution bears to (y) the
aggregate maximum Liquidation Distributions on the Company Liquidation
Parity Shares.
Pursuant to the Articles, the Company will automatically dissolve and be
liquidated (i) when the period fixed for the duration of the Company expires,
(ii) if the Manager by resolution requires the Company to be wound up and
dissolved, (iii) upon the bankruptcy, resignation, withdrawal, expulsion,
termination, cessation or dissolution of the Manager, or (iv) upon the
bankruptcy, insolvency or liquidation of USX.
VOTING RIGHTS
If (i) the Company fails to pay dividends in full on the Preferred Shares
of any series for 18 consecutive monthly dividend periods; (ii) an Event of
Default (as defined in the Loan Agreement relating to the Loans) occurs and is
continuing on the Loans; or (iii) USX is in default on any of its payment or
other obligations under the Guarantee (as described under "Description of the
Guarantee--Certain Covenants of USX"), then the holders of a majority in
liquidation preference of the outstanding Preferred Shares of such series,
together with the holders of any other Preferred Shares of the Company having
the right to vote for the appointment of a trustee in such event, acting as a
single class, will be entitled to appoint and authorize a trustee to enforce the
Company's rights under the Loans, against USX and to enforce the obligations
undertaken by USX under the Guarantee (as defined below) and declare and pay
dividends on the Preferred Shares of all series. For purposes of determining
whether the Company has failed to pay dividends in full for 18 consecutive
monthly dividend periods, dividends shall be deemed to remain in arrears,
notwithstanding any payments in respect thereof, until full cumulative dividends
have been or contemporaneously are declared and paid with respect to all monthly
dividend periods terminating on or prior to the date of payment of such full
cumulative dividends. Not later than 30 days after such right to appoint a
trustee arises, the Manager will convene a general meeting for the above
purpose. If the Manager fails to convene such meeting within such 30-day period,
the holders of 10% in liquidation preference of the outstanding Preferred Shares
of such series and such other Preferred Shares will be entitled to convene such
meeting. The provisions of the Articles relating to the convening and conduct of
the general meetings of shareholders will apply with respect to any such
meeting. Any trustee so appointed shall vacate office immediately, subject to
the terms of such other Preferred Shares, if the Company (or USX pursuant to the
Guarantee) shall have paid in full all accumulated and unpaid dividends on the
Preferred Shares of all series or such default or breach by USX, as the case may
be, shall have been cured.
If any resolution is proposed for adoption by the shareholders of the
Company providing for, or the Manager otherwise proposes to effect, (x) any
variation or abrogation of the rights, preferences and privileges of the
Preferred Shares of any series, whether by way of amendment to the
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<PAGE> 21
Company's Articles, the Resolutions or otherwise (including, without limitation,
the authorization or issuance of any shares of the Company ranking, as to
participation in the profits or assets of the Company, senior to the Preferred
Shares), or (y) the liquidation, dissolution or winding up of the Company, then
the holders of outstanding Preferred Shares of all series (and, in the case of a
resolution described in clause (x) above which would adversely affect the
rights, preferences or privileges of any Company Dividend Parity Shares or any
Company Liquidation Parity Shares, such Company Dividend Parity Shares or such
Company Liquidation Parity Shares, as the case may be, or, in the case of any
resolution described in clause (y) above, all Company Liquidation Parity Shares)
will be entitled to vote on such resolution or action of the Manager (but not on
any other resolution or action), and such resolution or action shall not be
effective except with the approval of the holders of 66 2/3% in liquidation
preference of such outstanding shares; provided, however, that no such approval
shall be required under clauses (x) and (y) if the liquidation, dissolution or
winding up of the Company is proposed or initiated upon the initiation of
proceedings, or after proceedings have been initiated, for the liquidation,
dissolution or winding up of USX.
The rights attached to the Preferred Shares of any series will be deemed
not to be varied by the creation or issue of, and no vote will be required for
the creation of any further shares of the Company ranking junior to or pari
passu with the Preferred Shares of any series with regard to participation in
the profits or assets of the Company. Holders of Preferred Shares of any series
have no preemptive rights.
Any required approval of holders of Preferred Shares may be given at a
separate meeting of such holders convened for such purpose, at a general meeting
of shareholders of the Company or pursuant to written consent. The Company will
cause a notice of any meeting at which holders of the Preferred Shares of a
series are entitled to vote, or of any matter upon which action by written
consent of such holders is to be taken, to be mailed to each holder of record of
Preferred Shares of such series. Each such notice will include a statement
setting forth (i) the date of such meeting or the date by which such action is
to be taken, (ii) a description of any resolution proposed for adoption at such
meeting on which such holders are entitled to vote or of such matter upon which
written consent is sought and (iii) instructions for the delivery of proxies or
consents.
No vote or consent of the holders of the Preferred Shares of any series
will be required for the Company to redeem and cancel Preferred Shares of any
series in accordance with the Articles and the Resolutions.
Notwithstanding that holders of Preferred Shares of any series are entitled
to vote or consent under any of the circumstances described above, any of the
Preferred Shares of any series that are owned by USX or any entity owned more
than 50% by USX, either directly or indirectly, shall not be entitled to vote or
consent and shall, for the purposes of such vote or consent, be treated as if
they were not outstanding.
ADDITIONAL AMOUNTS
All payments in respect of the Preferred Shares of all series by the
Company will be made without withholding or deduction for or on account of any
present or future taxes, duties, assessments or governmental charges of whatever
nature imposed or levied upon or as a result of such payment by or on behalf of
the Turks and Caicos Islands or any authority therein or thereof having power to
tax, unless the withholding or deduction of such taxes, duties, assessments or
governmental charges is required by law. In that event, the Company will pay as
a dividend such additional amounts as may be necessary in order that the net
amounts received by the holders of the Preferred Shares after such withholding
or deduction will equal the amount which would have been receivable in respect
of such Preferred Shares in the absence of such withholding or deduction
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("Additional Amounts"), except that no such Additional Amounts will be payable
to a holder of Preferred Shares (or a third party on his behalf) with respect to
Preferred Shares:
(a) if such holder is liable for such taxes, duties, assessments or
governmental charges in respect of such Preferred Shares by reason of such
holder's having some connection with the Turks and Caicos Islands other
than being a holder of such Preferred Shares; or
(b) if the Company has notified such holder of the obligation to
withhold taxes and requested but not received from such holder a
declaration of non-residence or other claim for exemption, and such
withholding or deduction would not have been required had such declaration
or claim been received.
BOOK-ENTRY-ONLY ISSUANCE; THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depository for
the Preferred Shares. The Preferred Shares will be issued only as
fully-registered securities registered in the name of Cede & Co. (DTC's
nominee). One or more fully-registered global Preferred Share certificates will
be issued for each series of Preferred Shares, in the aggregate liquidation
preference of such issue, and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its participants ("Participants") deposit
with DTC. DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations ("Direct Participants").
DTC is owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others
such as securities brokers and dealers, banks, and trust companies that clear
through or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants"). The Rules applicable to DTC
and its Participants are on file with the Securities and Exchange Commission.
Purchases of Preferred Shares under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Shares on DTC's records. The ownership interest of each actual purchaser of each
Preferred Share ("Beneficial Owner") is in turn recorded on the Direct and
Indirect Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchase, but Beneficial Owners are expected to
receive written confirmations providing details of their transactions, as well
as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Preferred Shares.
Transfers of ownership interests in the Preferred Shares are to be accomplished
by entries made on the books of Participants acting on behalf of Beneficial
Owners. Beneficial Owners will not receive certificates representing their
ownership interests in Preferred Shares, except in the event that use of the
book-entry system for the Preferred Shares is discontinued.
To facilitate subsequent transfers, all Preferred Shares deposited by
Participants with DTC are registered in the name of Cede & Co. The deposit of
Preferred Shares with DTC and their registration in the name of Cede & Co.
effect no change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Preferred Shares; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Preferred Shares are
credited, which may or may not be the Beneficial Owners. The Participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
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Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Preferred Shares of any series are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each Direct Participant in such
series to be redeemed.
Although voting with respect to the Preferred Shares is limited, in those
cases where a vote is required, neither DTC nor Cede & Co. will consent or vote
with respect to Preferred Shares. Under its usual procedures, DTC mails an
Omnibus Proxy to the Company as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Preferred Shares are credited on the record
date (identified in a listing attached to the Omnibus Proxy).
Dividend payments on the Preferred Shares will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payable date
in accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payments on such payable date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices and will be the responsibility of such
Participant and not of DTC, the Company or USX, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
dividends to DTC is the responsibility of the Company, disbursement of such
payments to Direct Participants shall be the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners shall be the
responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with
respect to the Preferred Shares of any series at any time by giving reasonable
notice to the Company. Under such circumstances, in the event that a successor
securities depository is not obtained, Preferred Share certificates for such
series are required to be printed and delivered. Additionally, in the event that
the Company were to redeem only a portion of the Preferred Shares of any series
because the Company or USX is or would be required to withhold or deduct
Additional Amounts in regard to such Preferred Shares to be redeemed, the
Company may cause the global certificate or certificates representing all of the
Preferred Shares of such series to be withdrawn from DTC (or its successor
securities depository) and may issue share certificates in definitive form
representing the Preferred Shares. Thereafter, the Preferred Shares subject to
such requirement to withhold or deduct Additional Amounts would be redeemed.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but the
Company takes no responsibility for the accuracy thereof.
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
Mellon Bank will act as registrar, transfer agent and paying agent for the
Preferred Shares.
Registration of transfers of Preferred Shares of any series will be
effected without charge by or on behalf of the Company, but upon payment (with
the giving of such indemnity as the Company or USX may require) in respect of
any tax or other governmental charges which may be imposed in relation to it.
The Company will not be required to register or cause to be registered the
transfer of Preferred Shares of a particular series after such Preferred Shares
have been called for redemption.
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<PAGE> 24
MISCELLANEOUS
The Company is not subject to any mandatory redemption or sinking fund
provisions with respect to the Preferred Shares of any series.
USX and the Company will enter into an agreement (the "Expense Agreement")
pursuant to which USX will agree to guarantee the payment of any liabilities
incurred by the Company (other than obligations to holders of Preferred Shares,
which will be separately guaranteed to the extent set forth in the Guarantee;
see "Description of the Guarantee"). The Expense Agreement will expressly
provide that it is for the benefit of, and is enforceable by, third parties to
whom the Company owes such obligations. A copy of the form of Expense Agreement
has been filed as an exhibit to the Registration Statement of which this
Prospectus forms a part.
USX and the Manager will enter into an agreement (the "Keep Well
Agreement") pursuant to which USX will agree to cause the Manager to at all
times have at least $1.00 more than its cash obligations. The Keep Well
Agreement will expressly provide that it is for the benefit of, and is
enforceable by, holders of Preferred Shares. A copy of the form of Keep Well
Agreement has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part.
DESCRIPTION OF THE GUARANTEE
Set forth below is condensed information concerning the guarantee (the
"Guarantee") which will be executed and delivered by USX for the benefit of the
holders from time to time of Preferred Shares. This summary contains all
material information concerning the Guarantee but does not purport to be
complete. References to provisions of the Guarantee are qualified in their
entirety by reference to the text of the Guarantee, a form of which has been
filed as an exhibit to the Registration Statement of which this Prospectus forms
a part.
GENERAL
The Guarantor will irrevocably and unconditionally agree, to the extent set
forth herein, to pay in full, to the holders of the Preferred Shares of any
series, the Guarantee Payments (as defined below) (except to the extent paid by
the Company), as and when due, regardless of any defense, right of set-off or
counterclaim which the Company may have or assert. The following payments to the
extent not paid by the Company (the "Guarantee Payments") will be subject to the
Guarantee (without duplication): (i) any accumulated and unpaid dividends which
have been theretofore declared on the Preferred Shares of such series out of
moneys legally available therefor, (ii) the redemption price (including all
accumulated and unpaid dividends) payable out of funds legally available
therefor with respect to Preferred Shares of such series called for redemption
by the Company, (iii) upon a liquidation of the Company, the lesser of (a) the
aggregate of the liquidation preference and all accumulated and unpaid dividends
(whether or not declared) to the date of payment and (b) the amount of assets of
the Company available for distribution to Preferred Shareholders of such series
in liquidation of the Company and (iv) any Additional Amounts payable by the
Company in respect of the Preferred Shares of such series. USX's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by USX to the holders of Preferred Shares of any series or by causing
the Company to pay such amounts to such holders.
CERTAIN COVENANTS OF USX
In the Guarantee, USX will covenant that, so long as any Preferred Shares
of any series remain outstanding, it shall not declare or pay any dividend on,
or redeem, purchase, acquire or make a liquidation payment with respect to, any
of USX's capital stock or make any guarantee payments with respect to the
foregoing (other than payments under the Guarantee), if at such time USX shall
be in default with respect to its payment or other obligations under the
Guarantee, the Expense
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Agreement or the Keep Well Agreement or there shall have occurred any event
that, with the giving of notice or the lapse of time or both, would constitute
an Event of Default under the Loan Agreement.
In the Guarantee, USX will also covenant that, so long as Preferred Shares
of any series remain outstanding, it will (i) maintain direct or indirect 100%
ownership of the Common Shares and any other shares of the Company other than
the Preferred Shares of any series, (ii) cause at least 21% of the total value
of the Company and at least 21% of all interests in the capital, income, gain,
loss, deduction and credit of the Company to be represented by Common Shares,
(iii) not voluntarily dissolve, wind-up or liquidate the Company or the Manager,
(iv) cause USX Capital Management Company to remain the Manager of the Company
and timely perform all of its duties as Manager of the Company (including the
duty to declare and pay dividends on the Preferred Shares as described under
"Description of Preferred Shares--Dividends"), (v) use reasonable efforts to
cause the Company to remain a limited life company and otherwise continue to be
treated as a partnership for United States federal income tax purposes, and (vi)
to at all times own directly or indirectly all of the capital stock of the
Manager.
ADDITIONAL AMOUNTS
All Guarantee Payments will be made without withholding or deduction for or
on account of any present or future taxes, duties, assessments or governmental
charges of whatever nature imposed or levied upon or as a result of such payment
by or on behalf of the United States, any State thereof or any other
jurisdiction through which or from which such payment is made, or any authority
therein or thereof having power to tax, unless the withholding or deduction of
such taxes, duties, assessments or governmental charges is required by law. In
that event, USX will pay such additional amounts as may be necessary in order
that the net amounts received by the holders of the Preferred Shares after such
withholding or deduction will equal the amount which would have been receivable
in respect of the Preferred Shares in the absence of such withholding or
deduction (the "Additional Amounts"), except that no such Additional Amounts
will be payable to a holder of the Preferred Shares (or a third party on his
behalf) with respect to any of the Preferred Shares:
(a) if such holder is liable for such taxes, duties, assessments or
governmental charges in respect of the Preferred Shares by reason of such
holder's having some connection with the United States, any State thereof
or any other jurisdiction through which or from which such payment is made,
other than being a holder of the Preferred Shares, or
(b) if the Company or USX has notified such holder of the obligation
to withhold taxes and requested but not received from such holder a
declaration of non-residence or other similar claim for exemption, and such
withholding or deduction would not have been required had such declaration
or similar claim been received.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders (in which case no vote will be required), the Guarantee may be
amended only with the prior approval of the holders of not less than 66 2/3% in
liquidation preference of all Preferred Shares of all series then outstanding.
The manner of obtaining any such approval of holders of the Preferred Shares
will be as set forth under "Description of Preferred Shares--Voting Rights." All
guarantees and agreements contained in the Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of the Guarantor and shall
inure to the benefit of the holders of the Preferred Shares.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of such Preferred Shares of all series or
upon full payment of the amounts
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payable upon liquidation of the Company. The Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any holder
of Preferred Shares of any series must restore payment of any sums paid under
the Preferred Shares of such series or the Guarantee.
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Guarantor and
will rank (i) subordinate and junior in right of payment to all other
liabilities of the Guarantor and (ii) senior to the most senior preferred or
preference stock of any series now or hereafter issued by the Guarantor and
senior to any guarantee now or hereafter entered into by the Guarantor in
respect of any preferred or preference stock of any affiliate of the Guarantor.
The Guarantee will constitute a guarantee of payment and not of collection.
A holder of Preferred Shares may enforce the Guarantee directly against the
Guarantor, and the Guarantor will waive any right or remedy to require that any
action be brought against the Company or any other person or entity before
proceeding against the Guarantor. The Guarantee will not be discharged except by
payment of the Guarantee Payments in full to the extent not paid by the Company
and by complete performance of all obligations under the Guarantee.
GOVERNING LAW
The Guarantee will be governed and construed in accordance with the laws of
the State of New York.
DESCRIPTION OF THE LOANS
Set forth below is condensed information concerning the loans (the "Loans")
which will be made by the Company to USX of the proceeds of the issuance of (i)
the Preferred Shares of each series and (ii) the Company's Common Shares and
related capital contributions ("Common Share Payments"). This summary contains
all material information concerning the loan agreement (the "Loan Agreement")
but does not purport to be complete. References to provisions of the Loan
Agreement are qualified in their entirety by reference to the text of the Loan
Agreement, a form of which has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. USX's obligation under the Loan
Agreement will also be for the benefit of the holders from time to time of the
Preferred Shares, and such holders will be entitled to enforce the Loan
Agreement directly against USX. All Loans will be made pursuant to a single Loan
Agreement.
GENERAL
The aggregate dollar amount of the Loans will be set forth in the
Prospectus Supplement and will be equal to the aggregate liquidation preference
of the Preferred Shares of each series, together with the related Common Share
Payments.
The entire principal amount of the Loans will become due and payable,
together with any accrued and unpaid interest thereon, including Additional
Interest (as herein defined), if any, on the earliest of (i) the date that is
the 50th anniversary of the issuance of the Preferred Shares of the first series
issued or (ii) the date upon which the Company, USX or the Manager is dissolved,
wound up or liquidated.
MANDATORY PREPAYMENT
If the Company redeems Preferred Shares of any series in accordance with
the terms thereof, the Loans pertaining to such shares will become due and
payable in a principal amount equal to the aggregate stated liquidation
preference of the Preferred Shares of such series so redeemed. Any payment
pursuant to this provision shall be made prior to 12:00 noon, New York time, on
the Redemption Date or at such other time on such earlier date as the Company
and USX shall agree.
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OPTIONAL PREPAYMENT
USX shall have the right to prepay the Loans relating to Preferred Shares
of a series, without premium or penalty,
(i) in whole or in part (together with any accrued but unpaid
interest, including Additional Interest, if any, on the portion being
prepaid) at any time following the date, if any, set forth in the
Prospectus Supplement for such series; and
(ii) in whole (together with all accrued and unpaid interest,
including Additional Interest, if any, thereon) at any time if USX is or
would be required to pay Additional Interest on the entire amount of such
Loans or in part (together with all accrued and unpaid interest, including
Additional Interest on the portion being prepaid) at any time if USX is or
would be required to pay Additional Interest with respect to only a portion
of such Loans, provided that if a partial prepayment would, through the
corresponding partial redemption required under the terms of the Preferred
Shares of such series, result in a delisting of the Preferred Shares of
such series, USX may, and may only, prepay such Loans in whole. In no
event, however, shall USX have the right to prepay such Loans, or a portion
thereof, under this clause (ii) based on (a) a technical obligation to pay
Additional Interest because of a withholding obligation to the extent USX
would not incur any significant penalties, interest or tax under the
Internal Revenue Code or other applicable law if USX did not withhold, or
(b) a de minimis obligation to pay Additional Interest. For purposes of the
foregoing, in the event that USX is advised by independent legal counsel
that more than an insubstantial risk exists that USX will incur penalties,
interest or tax under the Internal Revenue Code or other applicable law if
it does not withhold, USX shall have the right to repay such Loans, or a
portion thereof, under this clause (ii) unless the obligation to pay
Additional Interest if USX does so withhold is a de minimis obligation.
INTEREST
The Loans relating to the Preferred Shares of a series shall bear interest
at the annual rate set forth in the Prospectus Supplement for such series,
accruing from the date they are made until maturity. Such interest shall be
payable on the last day of each calendar month of each year, commencing on the
dates set forth in the Prospectus Supplement relating to such series. In the
event that any date on which interest is payable on such Loans is not a Business
Day, then payment of the interest payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date; provided that USX shall have the right at any time or times during
the term of such Loans, so long as USX is not in default in the payment of
interest on any Loans, to extend the interest payment period to up to 18 months,
at the end of which period USX shall pay all interest which has accrued and not
been paid (together with interest thereon at the rate specified for the Loans to
the extent permitted by applicable law); provided further that, during any such
extended interest period neither USX, nor any majority-owned subsidiary of USX,
shall declare or pay any dividend on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock or make any
guarantee payments with respect to the foregoing (other than (i) payments under
the Guarantee or (ii) dividends or guarantee payments to USX); and provided
further that any such extended interest period may only be selected with respect
to a Loan if an extended interest period of identical length is simultaneously
selected for all Loans. Prior to the termination of any such extended interest
payment period USX may further extend the interest payment period, provided that
such extended interest payment period, together with all such further extensions
thereof, may not exceed 18 months. USX shall give the Company notice of its
selection of such extended interest payment period one Business Day prior to the
earlier of (i) the date the Company declares the related dividend or (ii) the
date the Company is required to give notice of the record or payment date of
such related dividend to the New York Stock Exchange or other applicable
self-regulatory
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organization or to holders of the Preferred Shares, but in any event not less
than two Business Days prior to such record date. USX shall cause the Company to
give such notice of USX's selection of such extended interest payment period to
the holders of the Preferred Shares.
ADDITIONAL INTEREST
In addition, if at any time following the date of the Loan Agreement (a)
the Company shall be required to pay any Additional Amounts in respect of the
Preferred Shares of any series, pursuant to the terms thereof, (b) USX shall be
required to withhold or deduct any amounts, for or on account of any taxes,
duties or governmental charges of whatever nature imposed by the United States
of America (or any political subdivision thereof or therein), from the interest
payments to be made by USX on the Loans relating to such series or (c) the
Company shall be required to pay, with respect to its income derived from the
interest payments on such Loans, any amounts, for or on account of any taxes,
duties or governmental charges of whatever nature imposed by the Turks and
Caicos Islands (or any political subdivision thereof or therein), or any other
taxing authority, then, in any such case, USX will pay as interest such
additional amounts ("Additional Interest") as may be necessary in order that the
net amounts received and retained by the Company after paying such Additional
Amounts, or after such withholding or deduction or the payment of such taxes,
duties, assessments or governmental charges, as the case may be, shall result in
the Company's having such funds as it would have had in the absence of the
obligation to pay such Additional Amounts, or such withholding or deduction or
the payment of such taxes, duties, assessments or governmental charges, as the
case may be. The obligation to pay Additional Interest under (b) above shall be
reduced proportionately to the extent that (x) USX or the Company has notified
holders of Preferred Shares of such series of the obligation to withhold taxes
and requested but not received from such holders declarations of nonresidence or
other similar claim for exemption and (y) such withholding or deduction would
not have been required had such declaration or similar claim been received.
METHOD AND DATE OF PAYMENT
Each payment by USX of principal and interest (including Additional
Interest, if any) on the Loans shall be made to the Company in lawful money of
the United States, at such place and to such account as may be designated by the
Company.
SET-OFF
Notwithstanding anything to the contrary in the Loan Agreement, USX shall
have the right to set-off any payment it is otherwise required to make
thereunder with and to the extent USX has theretofore made, or is concurrently
on the date of such payment making, a payment under the Guarantee.
SUBORDINATION
The Loan Agreement will provide that USX and the Company covenant and agree
(and each holder of Preferred Shares by acceptance thereof agrees) that each of
the Loans is subordinate and junior in right of payment to all Senior
Indebtedness as provided in the Loan Agreement. The term "Senior Indebtedness"
shall mean the principal, premium, if any, and interest on (i) all indebtedness
of USX, whether outstanding on the date of the Loan Agreement or thereafter
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, (ii) any indebtedness of
others of the kinds described in the preceding clause (i) for the payment of
which USX is responsible or liable (directly or indirectly, contingently or
otherwise) as guarantor or otherwise and (iii) amendments, renewals, extensions
and refundings of any such indebtedness, unless in any instrument or instruments
evidencing or securing such indebtedness or pursuant to which the same is
outstanding, or in any such amendment, renewal, extension or refunding, it is
17
<PAGE> 29
expressly provided that such indebtedness is not superior in right of payment to
the Loans. The Senior Indebtedness shall continue to be Senior Indebtedness and
entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of the Senior Indebtedness or
extension or renewal of the Senior Indebtedness.
In the event that (i) USX shall default in the payment of any principal, or
premium, if any, or interest on any Senior Indebtedness when the same becomes
due and payable, whether at maturity or at a date fixed for prepayment or
declaration or otherwise or (ii) an event of default occurs with respect to any
Senior Indebtedness permitting the holders thereof to accelerate the maturity
thereof and written notice describing such event of default and requesting
commencement of payment blockage on transactions as hereinafter described is
given to USX by the holders of Senior Indebtedness, then unless and until such
default in payment and event of default shall have been cured or waived or shall
have ceased to exist, no direct or indirect payment (in cash, property,
securities, by set-off or otherwise) shall be made or agreed to be made on
account of the Loans or interest thereon or in respect of any repayment,
redemption, retirement, purchase or other acquisition of the Loans.
In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, read-justment, composition or other similar proceeding relating
to USX, its creditors or its property, (ii) any proceeding for the liquidation,
dissolution or other winding up of USX, voluntary or involuntary, whether or not
involving insolvency or bankruptcy proceedings, (iii) any assignment by USX for
the benefit of its creditors, or (iv) any other marshalling of the assets of
USX, all Senior Indebtedness shall first be paid in full before any payment or
distribution, whether in cash, securities or other property, shall be made by
USX on account of the Loans. Any payment or distribution, whether in cash,
securities or other property (other than securities of USX or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinate, at least to the extent provided in the
subordination provisions of the Loan Agreement with respect to the indebtedness
evidenced by the Loans, to the payment of all Senior Indebtedness at the time
outstanding and to any securities issued in respect thereof under any such plan
of reorganization or readjustment), which would otherwise (but for the
subordination provisions) be payable or deliverable in respect of the Loans
shall be paid or delivered directly to the holders of Senior Indebtedness in
accordance with the priorities then existing among such holders until all Senior
Indebtedness shall have been paid in full. No present or future holder of any
Senior Indebtedness shall be prejudiced in the right to enforce subordination of
the indebtedness constituting the Loans by any act or failure to act on the part
of USX.
Senior Indebtedness shall not be deemed to have been paid in full unless
the holders thereof shall have received cash, securities or other property equal
to the amount of such Senior Indebtedness then outstanding. Upon the payment in
full of all Senior Indebtedness, the Company shall be subrogated to all the
rights of any holders of Senior Indebtedness to receive any further payments or
distributions applicable to the Senior Indebtedness until the Loans shall have
been paid in full, and such payments or distributions received by the Company,
by reason of such subrogation, of cash, securities or other property which
otherwise would be paid or distributed to the holders of Senior Indebtedness,
shall, as between USX and its creditors other than the holders of Senior
Indebtedness, on the one hand, and the Company, on the other, be deemed to be a
payment by USX on account of Senior Indebtedness, and not on an account of the
Loans.
CERTAIN COVENANTS OF USX
USX will covenant that it will not declare or pay any dividend on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock, or make any guarantee payments with respect to the foregoing
(other than payments under the Guarantee) if at such time (i) there shall have
occurred any event that, with the giving of notice or the lapse of time or both,
would constitute an Event of Default under the Loan Agreement or (ii) USX shall
be in default with respect to its payment or other obligations under the
Guarantee, the Expense Agreement or the
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<PAGE> 30
Keep Well Agreement. USX will also covenant (i) to maintain direct or indirect
100% ownership of the Common Shares and any other shares of the Company other
than any series of the Preferred Shares, (ii) to cause at least 21% of the total
value of the Company and at least 21% of all interests in the capital, income,
gain, loss, deduction and credit of the Company to be represented by Common
Shares, (iii) not to voluntarily dissolve, wind-up, or liquidate the Company or
the Manager, (iv) to cause USX Capital Management Company to remain the Manager
of the Company and to timely perform all of its duties as Manager of the Company
(including the duty to declare and pay dividends on the Preferred Shares as
described under "Description of Preferred Shares--Dividends"), (v) to use its
reasonable efforts to cause the Company to remain a limited life company and
otherwise continue to be treated as a partnership for United States federal
income tax purposes, and (vi) to at all times own directly or indirectly all of
the capital stock of the Manager.
The Company may not waive compliance or waive any default in compliance by
USX of any covenant or other term in the Loan Agreement without the approval of
the same percentage of Preferred Shareholders, obtained in the same manner, as
would be required for an amendment of the Loan Agreement to the same effect.
EVENTS OF DEFAULT
If one or more of the following events (each an "Event of Default") shall
occur and be continuing:
(a) default in the payment of any interest under the Loan Agreement,
including any Additional Interest, when due for 10 days (whether by virtue
of the provisions described above under "Subordination" or otherwise);
provided that a valid extension of the interest payment period by USX shall
not constitute a default in the payment of interest for this purpose; or
(b) default in the payment of any principal under the Loan Agreement
when due (whether by virtue of the provisions described above under
"Subordination" or otherwise); or
(c) the dissolution, winding up or liquidation of the Company; or
(d) the bankruptcy, insolvency or liquidation of USX; or
(e) the bankruptcy, insolvency or liquidation of the Manager; or
(f) breach of any covenants contained in the Loan Agreement continued
for 30 days after notice to USX from any Preferred Shareholder;
then provided that the holders of a majority in liquidation preference of the
outstanding Preferred Shares of such series are entitled to appoint a trustee
(as described under "Description of Preferred Shares--Voting Rights"), the
Company will have the right to declare the principal of and the interest on the
Loans (including any Additional Interest and any interest subject to an
extension election) and any other amounts payable under the Loan Agreement to be
forthwith due and payable and to enforce its other rights as a creditor with
respect to the Loans. No Loans may be so accelerated by the Company unless all
Loans are so accelerated. Under the terms of the Preferred Shares, the holders
of outstanding Preferred Shares will have the rights referred to under
"Description of Preferred Shares--Voting Rights", including the right to appoint
a trustee, which trustee shall be authorized to exercise the Company's right to
accelerate the principal amount of the Loans and to enforce the Company's other
creditor rights under the Loans.
MISCELLANEOUS
USX will have the right at all times to assign any of its rights or
obligations under the Loan Agreement to a direct or indirect wholly owned
subsidiary of USX; provided that, in the event of any such assignment, USX will
remain jointly and severally liable for all such obligations. The Company may
not assign any of its rights under the Loan Agreement without the prior written
consent of USX. Subject to the foregoing, the Loan Agreement will be binding
upon and inure to the benefit of USX
19
<PAGE> 31
and the Company and their respective successors and assigns. The Loan Agreement
provides that it may not otherwise be assigned by USX or the Company.
The Loan Agreement will provide that USX may merge with or into another
entity, may permit another entity to merge with or into USX and may sell,
transfer or lease all or substantially all of its assets to another entity only
if (i) at such time no Event of Default has occurred and is continuing, or would
occur as a result of such merger, sale, transfer or lease, and (ii) USX is the
survivor of such merger or the survivor of such merger or entity to which USX's
assets are sold, transferred or leased is an entity organized under the laws of
the United States or any state thereof and assumes all of USX's obligations
under the Loan Agreement.
Except as to matters relating to the authorization, execution and delivery
of the Loan Agreement by the Company, which will be governed by the laws of the
Turks and Caicos Islands, the Loan Agreement will be governed by and construed
in accordance with the laws of the State of New York.
The Loan Agreement may be amended by mutual consent of the parties in the
manner the parties shall agree; provided that, so long as any of the Preferred
Shares remain outstanding, no such amendment shall be made, and no termination
of the Loan Agreement shall occur, without the prior approval of the holders of
at least 66 2/3% of the outstanding Preferred Shares unless and until the Loans
and all accrued and unpaid interest thereon (including Additional Interest, if
any) shall have been paid in full.
TAXATION
The following discussion is a summary of certain Turks and Caicos Islands
and United States federal income tax consequences of the purchase, ownership and
disposition of Preferred Shares and is based upon the advice of Misick and
Stanbrook with respect to Turks and Caicos Islands taxes, and Miller &
Chevalier, Chartered, United States tax counsel to USX, with respect to United
States federal income taxes. It deals only with Preferred Shares held as capital
assets by initial purchasers, and not with special classes of holders, such as
dealers in securities or currencies, life insurance companies, persons holding
Preferred Shares as a hedge or hedged against currency risks or as part of a
straddle, or persons whose functional currency is not the U.S. dollar. The
summary deals only with holders who purchase Preferred Shares of a series, and
is subject to additional discussion of material Turks and Caicos Islands and
United States federal income tax consequences that may appear in a Prospectus
Supplement delivered in connection with a particular series of Preferred Shares.
This summary is based on tax laws in effect in the United States and the Turks
and Caicos Islands, and administrative and judicial interpretations thereof, as
of the date hereof, all of which are subject to change (possibly on a
retroactive basis).
PROSPECTIVE PURCHASERS OF PREFERRED SHARES ARE ADVISED TO CONSULT THEIR OWN
TAX ADVISORS AS TO THE TURKS AND CAICOS ISLANDS, UNITED STATES OR OTHER TAX
CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF PREFERRED SHARES,
INCLUDING THE EFFECT OF ANY STATE, LOCAL AND FOREIGN TAX LAWS.
UNITED STATES
INCOME FROM PREFERRED SHARES
In the opinion of Miller & Chevalier, Chartered, the Company will be
treated as a partnership for federal income tax purposes. Each holder of
Preferred Shares (a "Shareholder") will be required to include in gross income
his distributive share of the Company's net income. Such income will not exceed
dividends received on a Preferred Share, except in limited circumstances as
described below under "Potential Extension of Interest Payment Period". No
portion of such income will be eligible for the dividends received deduction.
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<PAGE> 32
DISPOSITION OF PREFERRED SHARES
Gain or loss will be recognized on a sale of Preferred Shares equal to the
difference between the amount realized and the Shareholder's tax basis for the
Preferred Shares sold. Gain or loss recognized by a Shareholder on the sale or
exchange of a Preferred Share held for more than one year will be taxable as
long-term capital gain or loss.
COMPANY INFORMATION RETURNS
USX Capital Management Company, as Manager of the Company, will furnish
each Shareholder with a Schedule K-1 setting forth each Shareholder's allocable
share of income within 90 days after the close of the Company's taxable year.
Any person who holds Preferred Shares as a nominee for another person is
required to furnish to the Company (a) the name, address and taxpayer
identification number of the beneficial owners and the nominee; (b) whether the
beneficial owner is (i) a person that is not a United States person, (ii) a
foreign government, an international organization or any wholly owned agency or
instrumentality of either of the foregoing, or (iii) a tax-exempt entity; (c)
the amount and description of Preferred Shares held, acquired or transferred for
the beneficial owners; and (d) certain information including the dates of
acquisitions and transfers, means of acquisitions and transfers, and acquisition
cost for purchases, as well as the amount of net proceeds from sales. Brokers
and financial institutions are required to furnish additional information,
including whether they are a United States person, and certain information on
Preferred Shares they acquire, hold or transfer for their own account. A penalty
of $50 per occurrence (up to a maximum of $100,000 per calendar year) is imposed
under the Internal Revenue Code for failure to report such information to the
Company. The nominee is required to supply the beneficial owner of the Preferred
Shares with the information furnished to the Company.
POTENTIAL EXTENSION OF INTEREST PAYMENT PERIOD
Under the terms of any Loan which may be made from the proceeds of issuance
of Preferred Shares, USX may be permitted to extend the interest payment period
on all Loans up to 18 months. In the event that USX exercises this right, USX
may not, among other things, declare dividends on any share of its capital
stock, and therefore, the extension of a payment period is, in the view of the
Company, remote. In the event that the payment period is extended, the Company
will continue to accrue income, equal to the amount of the interest payment due
at the end of the extended payment period, over the length of the extended
payment period.
Accrued income will be allocated, but not distributed, to holders of record
on the last day of each calendar month. As a result, holders of record during an
extended interest payment period will include interest in gross income in
advance of the receipt of cash, and any such holders who dispose of Preferred
Shares prior to the record date for the payment of dividends following such
extended interest payment period will include interest in gross income but will
not receive any cash related thereto. The tax basis of a Preferred Share will be
increased by the amount of any interest that is included in income without a
receipt of cash, and will be decreased again when and if such cash is
subsequently received from the Company.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
holder who or which is (i) a nonresident alien individual or (ii) a foreign
corporation, partnership or estate or trust, in either case not subject to
United States federal income tax on a net income basis in respect of a Preferred
Share.
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<PAGE> 33
Under present United States federal income tax law:
(i) payments by the Company or any of its paying agents to any holder
of a Preferred Share who or which is a United States Alien Holder will not
be subject to United States federal withholding tax; provided that (a) the
beneficial owner of the Preferred Share does not actually or constructively
own 10% or more of the total combined voting power of all classes of stock
of USX entitled to vote, (b) the beneficial owner of the Preferred Share is
not a controlled foreign corporation that is related to USX through stock
ownership, and (c) either (A) the beneficial owner of the Preferred Share
certifies to the Company or its agent, under penalties of perjury, that it
is not a United States Holder and provides its name and address or (B) a
securities clearing organization, bank or other financial institution that
holds customers' securities in the ordinary course of its trade or business
(a "financial institution") and holds the Preferred Share certifies to the
Company or its agent under penalties of perjury that such statement has
been received from the beneficial owner by it or by a financial institution
between it and the beneficial owner and furnishes the payor with a copy
thereof; and
(ii) A United States Alien Holder of a Preferred Share will not be
subject to United States federal withholding tax on any gain realized on
the sale or exchange of a Preferred Share.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to payments of
the proceeds of the sale of Preferred Shares within the United States to
noncorporate U.S. holders, and "backup withholding" at a rate of 31% will apply
to such payments if the United States holder fails to provide an accurate
taxpayer identification number.
Payments of the proceeds from the sale by a United States Alien Holder of
Preferred Shares made to or through a foreign office of a broker will not be
subject to information reporting or backup withholding, except that, if the
broker is a United States person, a controlled foreign corporation for United
States tax purposes or a foreign person 50% or more of whose gross income is
effectively connected with a United States trade or business for a specified
three-year period, information reporting may apply to such payments. Payments of
the proceeds from the sale of Preferred Shares to or through the United States
office of a broker is subject to information reporting and backup withholding
unless the holder or beneficial owner certifies as to its non-United States
status or otherwise establishes an exemption from information reporting and
backup withholding.
TURKS AND CAICOS ISLANDS
The following discussion represents the opinion of Misick and Stanbrook
insofar as it relates to matters of law and legal conclusions.
Payment of dividends on the Preferred Shares will not be subject to any
withholding under the tax laws of the Turks and Caicos Islands.
There are no taxes in the Turks and Caicos Islands on income, profits,
capital gains or turnover, nor are there any inheritance, estate, or gift taxes
or duties in the Turks and Caicos Islands. The Company is exempted from the
payment of stamp duty on the issuance of any shares, debentures or other
obligations of the Company. No stamp duty is payable on the transfer or
redemption of shares in the Company. The Company has been issued a certificate
by the Governor of the Turks and Caicos Islands stating that the Company is
exempt, for a period of twenty years from the date of its organization, December
20, 1993, from the payment of any taxes or duties which may be imposed in the
future on profits, income, capital gains, assets or appreciations and any such
tax or duty or tax in the nature of estate duty or inheritance tax payable on
the shares, debentures or other obligations of the Company.
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<PAGE> 34
PLAN OF DISTRIBUTION
The Company may sell Preferred Shares (i) through underwriters, including
Goldman, Sachs & Co., (ii) through dealers, (iii) through agents or (iv)
directly to purchasers. The Prospectus Supplement relating to the Preferred
Shares of a particular series will set forth the terms of such offering,
including the names of any underwriters, dealers or agents involved in the sale
of such Preferred Shares, the number of Preferred Shares of such series to be
purchased by any underwriters and any applicable commissions or discounts. The
net estimated proceeds to the Company from such series of Preferred Shares will
also be set forth in the Prospectus Supplement.
If underwriters are used in the sale, the Preferred Shares being sold will
be acquired by the underwriters for their own account and may be resold 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. Unless otherwise set forth in the Prospectus Supplement relating to the
Preferred Shares of a particular series, the obligations of the underwriters to
purchase such Preferred Shares will be subject to certain conditions precedent
and the underwriters will be obliged to purchase all of such Preferred Shares if
any of such Preferred Shares are purchased. Any initial public offering price
and any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
If dealers are used in the sale, unless otherwise indicated in the
Prospectus Supplement relating to the Preferred Shares of a particular series,
the Company will sell such Preferred Shares to such dealers as principals. Such
dealers may then resell such Preferred Shares to the public at varying prices to
be determined by them at the time of resale.
Preferred Shares of a particular series may also be sold through agents
designated by the Company from time to time or directly by the Company. Any
agent involved in the offering and sale of any such Preferred Shares will be
named, and any commissions payable by the Company to such agent will be set
forth, in the Prospectus Supplement relating to the Preferred Shares of such
series. Unless otherwise indicated in such Prospectus Supplement, any such Agent
will act on a best efforts basis for the period of its appointment.
Underwriters, dealers and agents may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which the underwriters, dealers or agents may be
required to make in respect thereof. Underwriters, dealers and agents may be
customers of, engage in transactions with, or perform services for, the Company
in the ordinary course of business.
VALIDITY OF SECURITIES
The validity of the Preferred Shares of each series will be passed upon by
Misick and Stanbrook, Turks and Caicos Islands counsel to the Company. The
validity of the Backup Undertakings relating to the Preferred Shares of such
series, consisting of the Guarantee, the Loan Agreement, the Expense Agreement
and the Keep Well Agreement, will be passed upon on behalf of the Company and
USX by Dan D. Sandman, Esq., General Counsel and Secretary of USX. The validity
of such Backup Undertakings of USX relating to such Preferred Shares will be
passed upon on behalf of the Underwriters by Sullivan & Cromwell, United States
counsel to the Underwriters. Mr. Sandman, in his capacity as General Counsel and
Secretary of USX, is paid a salary by USX and participates in various employee
benefit plans offered to officers of USX generally. As to all matters of Turks
and Caicos Islands law, Mr. Sandman will rely upon the opinion of Misick and
Stanbrook, and as to all matters of New York law, he will rely upon the opinion
of Sullivan & Cromwell.
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EXPERTS
The consolidated financial statements of USX, the financial statements of
the Marathon Group, the financial statements of the U.S. Steel Group and the
financial statements of the Delhi Group as of December 31, 1993 and 1992 and for
each of the three years in the period ended December 31, 1993, incorporated in
this Prospectus by reference to USX's Form 8-K dated February 14, 1994, have
been so incorporated in reliance on the reports (the report pertaining to the
U.S. Steel Group financial statements contains an explanatory paragraph
referring to the U.S. Steel Group's involvement in certain contingencies) of
Price Waterhouse, independent accountants, given on the authority of said firm
as experts in auditing and accounting.
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<PAGE> 36
- ------------------------------------------------------
- ------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES DESCRIBED IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS OR AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
USX Corporation...................... S-2
USX Capital LLC...................... S-3
Certain Investment Considerations.... S-4
Use of Proceeds...................... S-5
Capitalization....................... S-5
USX Corporation Selected Consolidated
Financial Information.............. S-6
Certain Terms of the Series A
Preferred Shares................... S-7
Certain Terms of the Loans........... S-8
Underwriting......................... S-8
Validity of Securities............... S-10
PROSPECTUS
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 3
USX Corporation...................... 3
USX Corporation Ratio of Earnings to
Combined Fixed Charges and
Preferred Stock Dividends.......... 4
USX Capital LLC...................... 4
Use of Proceeds...................... 5
Description of Preferred Shares...... 5
Description of the Guarantee......... 13
Description of the Loans............. 15
Taxation............................. 20
Plan of Distribution................. 23
Validity of Securities............... 24
Experts.............................. 24
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
8,000,000 SHARES
USX CAPITAL LLC
GUARANTEED TO THE EXTENT SET FORTH
HEREIN BY
USX CORPORATION
% CUMULATIVE
MONTHLY INCOME PREFERRED SHARES,
SERIES A
------------------
PROSPECTUS SUPPLEMENT
------------------
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
A.G. EDWARDS & SONS, INC.
KIDDER, PEABODY & CO.
INCORPORATED
LEHMAN BROTHERS
MORGAN STANLEY & CO.
INCORPORATED
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SALOMON BROTHERS INC
SMITH BARNEY SHEARSON INC.
REPRESENTATIVES OF THE UNDERWRITERS
FEBRUARY , 1994
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 37
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
Securities being registered, other than underwriting compensation, are:
<TABLE>
<S> <C>
Registration Fee for Registration Statement...................... $ 86,208
Accounting Fees and Expenses..................................... 50,000
Blue Sky Fees and Expenses....................................... 18,000
Printing and Engraving Fees...................................... 85,000
Rating Agency Fees............................................... 112,500
Stock Exchange Listing Fees...................................... 102,100
Miscellaneous.................................................... 46,192
--------
Total.................................................. $500,000
--------
--------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article V of USX's By-Laws provides that USX shall indemnify to the fullest
extent permitted by law any person who 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 he is or was a
director, officer, employee or agent of USX or was serving at the request of USX
as an officer, director, employee or agent of another corporation, partnership,
joint venture, enterprise, or nonprofit entity.
USX is empowered by Section 145 of the Delaware General Corporation Law,
subject to the procedures and limitations stated therein, 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 USX) by reason of the fact that such person is or was an officer,
employee, agent or director of USX, or is or was serving at the request of USX
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of USX, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. USX
may indemnify any such person against expenses (including attorneys' fees) in an
action by or in the right of USX under the same conditions, except that no
indemnification is permitted without judicial approval if such person is
adjudged to be liable to USX. To the extent such person is successful on the
merits or otherwise in the defense of any action referred to above, USX must
indemnify him against the expenses which he actually and reasonably incurred in
connection therewith.
Policies of insurance are maintained by USX under which directors and
officers of USX 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.
USX's Certificate of Incorporation provides that no director shall be
personally liable to USX or its stockholders for monetary damages for any breach
of fiduciary duty by such director as a director, except (i) for breach of the
director's duty of loyalty to USX or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of
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<PAGE> 38
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.
ITEM 16. LIST OF EXHIBITS.
See Index to Exhibits.
ITEM 17. UNDERTAKINGS.
Each of the Registrants hereby undertakes:
(1) To file, during any period in which offers or sales are being made
of the Securities registered hereby, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement;
provided, however, that the undertakings set forth in paragraphs (1)(i) and
(1)(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with the Registrant or the Guarantor pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the Securities offered
therein, and the offering of such Securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the Securities being registered which remain unsold at the
termination of the offering.
(4) That, for the purposes of determining any liability under the
Securities Act of 1933, each filing of USX's Annual Report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed to
be a new Registration Statement relating to the Securities offered therein,
and the offering of such Securities at that time shall be deemed to be the
initial bona fide offering thereof.
(5) That (a) for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant and the Guarantor
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.
(b) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE> 39
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant or the Guarantor pursuant to the provisions specified in the first
paragraph of Item 15 of this Registration Statement or otherwise, the
Registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in said
Act and is therefore unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrants of expenses incurred or paid by a director, officer or controlling
person of the Registrants 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 Registrants will, unless in
the opinion of their 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 policy as expressed in the Act, and will
be governed by the final adjudication of such issue.
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<PAGE> 40
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, USX 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 AMENDMENT TO THE
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF PITTSBURGH, COMMONWEALTH OF PENNSYLVANIA, ON
FEBRUARY 22, 1994.
USX CORPORATION
(Registrant)
/S/ LEWIS B. JONES
By....................................................
Lewis B. Jones, Vice President & Comptroller
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, USX CAPITAL LLC
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT TO THE
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF TEXAS, ON THE 22ND DAY OF
FEBRUARY, 1994.
USX CAPITAL LLC
(Registrant)
By USX CAPITAL MANAGEMENT COMPANY
as Manager
/S/ JERRY HOWARD
By................................................
Jerry Howard, Treasurer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS AMENDMENT TO THE
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES WITH USX CORPORATION AND THE MANAGER INDICATED ON FEBRUARY 22, 1994.
USX CORPORATION
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ---------------------------------------------
<S> <C>
* Chairman of the Board of Directors,
........................................... Chief Executive Officer and Director
C. A. CORRY (Principal Executive Officer)
* Executive Vice President--
........................................... Accounting & Finance
R. M. HERNANDEZ & Chief Financial Officer
and Director
(Principal Financial Officer)
/S/ LEWIS B. JONES Vice President & Comptroller
........................................... (Principal Accounting Officer)
LEWIS B. JONES
* Director
...........................................
NEIL A. ARMSTRONG
* Director
...........................................
VICTOR G. BEGHINI
</TABLE>
II-4
<PAGE> 41
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ---------------------------------------------
<S> <C>
* Director
...........................................
JEANETTE GRASSELLI BROWN
* Director
...........................................
JOHN H. FILER
* Director
...........................................
JAMES A. D. GEIER
* Director
...........................................
CHARLES R. LEE
* Director
...........................................
PAUL E. LEGO
* Director
...........................................
JOHN F. MCGILLICUDDY
* Director
...........................................
JOHN M. RICHMAN
Director
...........................................
DAVID M. RODERICK
* Director
...........................................
THOMAS J. USHER
* Director
...........................................
DAVID R. WHITWAM
* Director
...........................................
DOUGLAS C. YEARLEY
/S/ LEWIS B. JONES
*By ......................................
LEWIS B. JONES, ATTORNEY-IN-FACT
</TABLE>
USX CAPITAL MANAGEMENT COMPANY
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ---------------------------------------------
<S> <C>
* President
...........................................
J. D. LOW
* Vice President
...........................................
K. L. MATHENY
* Secretary
...........................................
W. F. SCHWIND, JR.
/S/ JERRY HOWARD Treasurer
...........................................
JERRY HOWARD
/S/ LEWIS B. JONES
*By ......................................
LEWIS B. JONES, ATTORNEY-IN-FACT
</TABLE>
II-5
<PAGE> 42
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS PAGE
- --------- -----------
<C> <C> <S> <C>
1 -- Form of Underwriting Agreement....................................
3.1 -- Memorandum of Association of USX Capital LLC......................
3.2 -- Articles of Association of USX Capital LLC........................
4.1 -- Form of Payment and Guarantee Agreement by USX Corporation........
4.2 -- Form of Loan Agreement between USX Capital LLC and USX
Corporation.......................................................
4.3 -- Form of Agreement as to Expenses and Liabilities between USX
Corporation and USX Capital LLC...................................
4.4 -- Form of Keep Well Agreement between USX Corporation and USX
Capital Management Company........................................
5.1 -- Opinion of Misick and Stanbrook, Turks and Caicos Islands
counsel...........................................................
5.2 -- Opinion of Dan D. Sandman, Esq., General Counsel and Secretary of
USX Corporation...................................................
8.1 -- Opinion of Misick and Stanbrook, Turks and Caicos Islands counsel
to the Company and USX Corporation, as to tax matters (included in
Exhibit 5.1)......................................................
8.2 -- Opinion of Miller & Chevalier, Chartered, United States tax
counsel to USX, as to tax matters.................................
12 -- Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends.........................................
23.1 -- Consent of Price Waterhouse.......................................
23.2 -- Consent of Misick and Stanbrook (included in Exhibit 5.1).........
23.3 -- Consent of Dan D. Sandman, Esq., General Counsel and Secretary of
USX Corporation (included in Exhibit 5.2).........................
23.4 -- Consent of Miller & Chevalier, Chartered, United States tax
counsel to USX (included in Exhibit 8.2)..........................
24.1 -- Powers of Attorney................................................
</TABLE>
All exhibits have been previously filed.
