<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 26, 1997
REGISTRATION NO. 333-23291,
333-23291-01
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
<TABLE>
<S> <C>
USX CORPORATION USX CAPITAL TRUST I
(Exact name of Registrant (Exact name of Registrant as specified in its charter)
as specified in its charter)
DELAWARE DELAWARE
(State or other jurisdiction (State or other jurisdiction of incorporation or organization)
of incorporation or organization)
25-0996816 23-2886802
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
1311, 2911 AND 3312 6733
(Primary Standard Industrial (Primary Standard Industrial Classification Code Number)
Classification Code Number)
600 GRANT STREET 101 BARCLAY STREET
PITTSBURGH, PENNSYLVANIA 15219-4776 NEW YORK, NEW YORK 10286
(412) 433-1121 (212) 815-5192
(Address, including zip code, and (Address, including zip code, and telephone number,
telephone number, including area code, of including area code, of registrant's principal executive office)
registrant's principal executive office)
</TABLE>
D.D. SANDMAN, ESQ.
USX CORPORATION
GENERAL COUNSEL & SENIOR VICE PRESIDENT--HUMAN RESOURCES, AND SECRETARY
600 GRANT STREET, PITTSBURGH, PA 15219-4776
(412) 433-1121
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
RAYMOND W. WAGNER, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE, NEW YORK, NEW YORK 10017-3954
(212) 455-2000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective and all other
conditions to the exchange offer (the "Exchange Offer") described in the
enclosed prospectus have been satisfied or waived.
If the securities being registered on this form are to be offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MARCH 26, 1997
USX CORPORATION
OFFER TO EXCHANGE
6.75% CONVERTIBLE QUARTERLY INCOME PREFERRED SECURITIES (CONVERTIBLE QUIPSSM*
SECURITIES) (INITIAL LIQUIDATION AMOUNT $50 PER SECURITY) OF
USX CAPITAL TRUST I
GUARANTEED BY USX CORPORATION TO THE EXTENT SET FORTH HEREIN FOR
6.50% CUMULATIVE CONVERTIBLE PREFERRED STOCK OF USX CORPORATION
----------
THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON APRIL
28, 1997, UNLESS EXTENDED.
USX Corporation, a Delaware corporation ("USX" or the "Company"), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus (the "Prospectus") and the accompanying Letter of Transmittal (the
"Letter of Transmittal" which, together with the Prospectus, constitute the
"Exchange Offer"), to exchange 6.75% Convertible Quarterly Income Preferred
Securities (the "Trust Convertible Preferred Securities") of USX Capital Trust
I, a Delaware statutory business trust (the "Trust"), for up to 6,700,000 of
the outstanding shares of 6.50% Cumulative Convertible Preferred Stock (the
"6.50% Convertible Preferred Stock") of the Company. The Company will directly
or indirectly own all of the common securities of the Trust (the "Trust Common
Securities" and, together with the Trust Convertible Preferred Securities, the
"Trust Securities"). The Trust Securities will represent undivided beneficial
ownership interests in the assets of the Trust.
The Exchange Offer will be effected on the basis of one Trust Convertible
Preferred Security for each share of 6.50% Convertible Preferred Stock, in each
case validly tendered and accepted for exchange in the Exchange Offer. As of
the date of the Prospectus, there are 6,900,000 shares of 6.50% Convertible
Preferred Stock outstanding. Shares of 6.50% Convertible Preferred Stock not
accepted for exchange because of proration will be returned.
The Trust Convertible Preferred Securities have an initial liquidation amount
of $50.00 per security. The Trust Convertible Preferred Securities will be
convertible at any time prior to the close of business on March 31, 2037 (or
earlier under certain circumstances as set forth herein), at the option of the
holder thereof, into shares of USX-U.S. Steel Group Common Stock, par value
$1.00 per share (the "Steel Stock"), of the Company at a conversion price of
$46.25 per share of Steel Stock (equivalent to a conversion ratio of 1.081
shares of Steel Stock for each Trust Convertible Preferred Security), subject
to adjustment in certain circumstances. On March 25, 1997, the last reported
sales price of the Steel Stock on the New York Stock Exchange Composite Tape
(the "Composite Tape") was $27.75.
Immediately prior to the exchange of Trust Convertible Preferred Securities
for the shares of 6.50% Convertible Preferred Stock validly tendered and
accepted for exchange in the Exchange Offer, the Company will deposit in the
Trust as trust assets its 6.75% Convertible Junior Subordinated Debentures
maturing March 31, 2037 (the "Convertible Debentures"), having an aggregate
principal amount equal to the aggregate initial liquidation amount of the Trust
Securities to be issued by the Trust. Upon the occurrence and continuation of a
Tax Event (as defined herein), among other things, the Company will have the
right, if certain conditions are met, to shorten the stated maturity of the
Convertible Debentures to a date not less than five years from the date of
issuance. See "Description of the Trust Convertible Preferred Securities--Trust
Special Event Distribution or Redemption; Shortening of Stated Maturity."
(Continued on next page)
----------
SEE "RISK FACTORS" STARTING ON PAGE 23 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH THE EXCHANGE OFFER.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY 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.
----------
Goldman, Sachs & Co. and Merrill Lynch & Co. have been retained to act as
Dealer Managers to solicit exchanges of shares of 6.50% Convertible Preferred
Stock for Trust Convertible Preferred Securities. See "The Exchange Offer--
Dealer Managers; Soliciting Dealers." The Bank of New York has been retained to
act as Exchange Agent in connection with the Exchange Offer. Morrow & Co., Inc.
has been retained to act as Information Agent to assist in connection with the
Exchange Offer.
- ----------
*QUIPS is a servicemark of Goldman, Sachs & Co.
----------
The Dealer Managers for the Exchange Offer:
GOLDMAN, SACHS & CO. MERRILL LYNCH & CO.
----------
The date of this Prospectus is March , 1997
<PAGE>
Upon the terms and subject to the conditions of the Exchange Offer, the
Company will accept for exchange up to 6,700,000 shares of 6.50% Convertible
Preferred Stock validly tendered and not withdrawn prior to 12:00 midnight,
New York City time, on April 28, 1997, or, if extended by the Company, in its
sole discretion, the latest date and time to which extended (the "Expiration
Date"). The Exchange Offer will expire on the Expiration Date. Tenders of
shares of 6.50% Convertible Preferred Stock may be withdrawn at any time prior
to the Expiration Date and, unless accepted for exchange by the Company, may
be withdrawn at any time after 40 business days after the date of this
Prospectus.
NONE OF THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD"), THE COMPANY,
THE TRUSTEES (AS DEFINED HEREIN) OR THE TRUST MAKES ANY RECOMMENDATION TO
HOLDERS OF 6.50% CONVERTIBLE PREFERRED STOCK AS TO WHETHER TO TENDER OR
REFRAIN FROM TENDERING IN THE EXCHANGE OFFER. HOLDERS OF 6.50% CONVERTIBLE
PREFERRED STOCK ARE URGED TO CONSULT THEIR FINANCIAL AND TAX ADVISORS IN
MAKING THEIR DECISIONS ON WHAT ACTION TO TAKE IN LIGHT OF THEIR OWN PARTICULAR
CIRCUMSTANCES.
IN ORDER TO PARTICIPATE IN THE EXCHANGE OFFER, HOLDERS OF 6.50% CONVERTIBLE
PREFERRED STOCK MUST SUBMIT A LETTER OF TRANSMITTAL AND COMPLY WITH THE OTHER
PROCEDURES FOR TENDERING IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED HEREIN
AND IN THE LETTER OF TRANSMITTAL PRIOR TO THE EXPIRATION DATE. SEE "THE
EXCHANGE OFFER--PROCEDURES FOR TENDERING" AND "--LETTER OF TRANSMITTAL."
LETTERS OF TRANSMITTAL, 6.50% CONVERTIBLE PREFERRED STOCK AND ANY OTHER
REQUIRED DOCUMENTS SHOULD BE SENT ONLY TO THE EXCHANGE AGENT AND NOT TO THE
COMPANY, THE TRUST, THE DEALER MANAGERS OR THE INFORMATION AGENT.
For a description of the other terms of the Exchange Offer, see "The
Exchange Offer--Terms of the Exchange Offer," "--Expiration Date; Extensions;
Amendments; Termination," "--Withdrawal of Tenders", and "--Acceptance of
Shares and Proration."
Consummation of the Exchange Offer is subject to (i) the condition that,
immediately after the acceptance for exchange of shares of 6.50% Convertible
Preferred Stock, there would be at least 400 record or beneficial holders with
an aggregate of at least 1,000,000 Trust Convertible Preferred Securities in
order to satisfy New York Stock Exchange ("NYSE") minimum listing requirements
(the "Minimum NYSE Distribution Condition"); (ii) receipt of at least
3,450,000 validly tendered shares of 6.50% Convertible Preferred Stock; and
(iii) the condition (the "OID Condition") that the Company reasonably expects
on the Expiration Date, based upon the terms of the Trust Convertible
Preferred Securities and the recent trading values of the 6.50% Convertible
Preferred Stock and the Steel Stock, that the Convertible Debentures will not
be issued with reportable original issue discount ("OID"). If the fair market
value of the Convertible Debentures (as measured by the fair market value of
the Trust Convertible Preferred Securities) at the date of issuance does not
exceed $45.125, the Convertible Debentures would be treated as having been
issued with reportable OID.
The Company expressly reserves the right, in its sole discretion, subject to
applicable law, to (i) terminate the Exchange Offer, and not accept for
exchange any shares of 6.50% Convertible Preferred Stock and promptly return
all shares of 6.50% Convertible Preferred Stock at any time for any reason,
including (without limitation) if fewer than 3,450,000 of such shares are
tendered, (ii) waive any condition to the Exchange Offer (other than the
Minimum NYSE Distribution Condition and the OID Condition) and accept up to
6,700,000 shares of 6.50% Convertible Preferred Stock previously tendered
pursuant to the Exchange Offer, (iii) extend the Expiration Date and retain
all shares of 6.50% Convertible Preferred Stock tendered pursuant to such
Exchange Offer until the Expiration Date, subject, however, to all withdrawal
rights of Holders (see "The Exchange Offer--Withdrawal of Tenders") or (iv)
amend or modify the terms of the Exchange Offer in any manner. Any amendment
2
<PAGE>
applicable to the Exchange Offer will apply to all shares of 6.50% Convertible
Preferred Stock tendered pursuant to the Exchange Offer. The minimum period
during which the Exchange Offer must remain open following a material change
in the terms of the Exchange Offer or a waiver by the Company of a material
condition of the Exchange Offer, other than a change in the percentage of the
6.50% Convertible Preferred Stock being sought or in the consideration
offered, will depend upon the facts and circumstances, including the relative
materiality of the change or waiver. See "The Exchange Offer--Expiration Date;
Extensions; Amendments; Termination."
The Company will own, directly or indirectly, all of the Trust Common
Securities. The Trust exists for the sole purposes of (a) issuing its Trust
Securities in exchange for Convertible Debentures having an aggregate
principal amount equal to the aggregate initial liquidation amount of such
Trust Securities and (b) engaging in such other activities as are necessary or
incidental thereto. The Trust Convertible Preferred Securities and the Trust
Common Securities will rank on a parity with each other and payment thereon
shall be pro rata; provided that (i) if a Declaration Event of Default (as
defined herein) occurs and is continuing, the rights of holders of Trust
Common Securities to receive payment of periodic distributions and payments
upon liquidation, redemption, or otherwise will be subordinated to the rights
of holders of the Trust Convertible Preferred Securities and (ii) holders of
Trust Common Securities have the exclusive right (subject to the terms of the
Declaration (as defined herein)) to appoint, replace, or remove Trustees and
to increase or decrease the number of Trustees. See "USX Capital Trust I,"
"Description of the Trust Convertible Preferred Securities" and "Description
of the Convertible Debentures."
Cash distributions on the Trust Convertible Preferred Securities will
accumulate from and including March 31, 1997 at an annual rate of 6.75% (the
"distribution rate") of the initial liquidation amount of $50.00 per Trust
Convertible Preferred Security, and will be payable quarterly in arrears on
the last calendar day of March, June, September and December of each year,
commencing on June 30, 1997 ("distributions"). Cash distributions not paid on
the regular scheduled distribution date therefor will bear interest thereon at
the distribution rate, compounded quarterly, to the extent permitted by
applicable law. The term "distributions" as used herein includes such cash
distributions and any such interest payable unless otherwise stated. The
distribution rate and the distribution and other payment dates for the Trust
Convertible Preferred Securities will correspond to the interest rate and the
interest and other payment dates on the Convertible Debentures deposited in
the Trust as trust assets. As a result, if principal or interest is not paid
on the Convertible Debentures, including as a result of the Company's election
to extend the interest payment period on the Convertible Debentures as
described below, the Trust will not make payments on the Trust Securities. The
Convertible Debentures provide that, so long as the Company shall not be in
default in the payment of interest on the Convertible Debentures, the Company
shall have the right to defer payments of interest on the Convertible
Debentures by extending the interest payment period from time to time. Such
deferral right, if exercised, would result in a corresponding deferral of
quarterly distributions on the Trust Convertible Preferred Securities (though
such deferred distributions would bear interest thereon at the distribution
rate, compounded quarterly). Such deferral rights could result in multiple
extension periods of varying lengths but are limited to an aggregate of 20
consecutive quarters (each, an "Extension Period"), and no such Extension
Period may extend beyond the maturity of the Convertible Debentures. During
any such Extension Period, the Company may not declare or pay dividends on, or
redeem, purchase, acquire, or make any distribution, payment or liquidation
payment with respect to, any shares of its capital stock or debt securities
that rank on a parity with or junior to the Convertible Debentures (with
certain limited exceptions); see "Risk Factors--Risks Relating to the Trust
Convertible Preferred Securities--Option to Extend Interest Payment Period"
and "Description of the Convertible Debentures--Interest" and "--Option to
Extend Interest Payment Period."
The obligations of the Company under the Convertible Debentures will be
unsecured obligations of the Company and will be subordinate in right of
payment, to the extent set forth herein, to all Senior
3
<PAGE>
Indebtedness (as defined herein) of the Company, but senior to all capital
stock of the Company now outstanding or hereafter issued by the Company,
including the 6.50% Convertible Preferred Stock, and to any guarantee now or
hereafter entered into by the Company in respect of capital stock of its
affiliates, including the Guarantee (as defined herein). As of December 31,
1996, the Company's Senior Indebtedness included, among other items, $4.3
billion of indebtedness (including indebtedness of consolidated subsidiaries
guaranteed by the Company). The Trust's funds available for distribution to
the holders of the Trust Convertible Preferred Securities will be limited to
payments received from the Company on the Convertible Debentures. The
Convertible Debentures will be structurally subordinated to all obligations of
the Company's subsidiaries. See "Description of the Trust Convertible
Preferred Securities--Distributions."
The payment of distributions, payments on the liquidation of the Trust and
payments on the redemption of the Trust Convertible Preferred Securities, out
of moneys held by the Trust as set forth below, will be guaranteed by the
Company on a subordinated basis as and to the extent described herein (the
"Guarantee"). The Guarantee will be a full and unconditional guarantee from
the time of exchange of the Trust Convertible Preferred Securities, but the
Guarantee will cover distributions and other payments on the Trust Convertible
Preferred Securities only if and to the extent that the Company has made a
payment of interest or principal on the Convertible Debentures deposited in
the Trust as trust assets. The Company's obligations under the Guarantee will
be unsecured and will rank (i) subordinate and junior in right of payment to
all other liabilities of the Company, (ii) on a parity with the most senior
preferred or preference stock now or hereafter issued by the Company
(including the 6.50% Convertible Preferred Stock) and with any guarantee now
or hereafter entered into by the Company in respect of any preferred or
preference stock of any affiliate of the Company, and (iii) senior to the
Steel Stock and each of the other classes of the Company's common stock. The
Guarantee will be structurally subordinated to all obligations of the
Company's subsidiaries. See "Description of the Guarantee."
For a description of the redemption rights with respect to the Trust
Convertible Preferred Securities, the possible dissolution of the Trust and
distribution of Convertible Debentures held by the Trust to holders of the
Trust Securities and the liquidation amount on the Trust Convertible Preferred
Securities, see "Risk Factors--Risks Relating to the Trust Convertible
Preferred Securities--Trust Special Event Distribution or Redemption;
Shortening of Stated Maturity," "Description of the Trust Convertible
Preferred Securities--Mandatory Redemption," "--Trust Special Event
Distribution or Redemption; Shortening of Stated Maturity," "--Redemption
Procedures for Redemption by the Trust" and "--Liquidation Distribution Upon
Dissolution" and "Description of the Convertible Debentures."
The Steel Stock is intended to reflect the performance of the steel and
other businesses which constitute the U.S. Steel Group of USX. The Steel Stock
is one of three classes of common stock of USX, the others being USX-Marathon
Group Common Stock and USX-Delhi Group Common Stock. Dividends on the Steel
Stock will be payable when, as and if declared by the Board out of the lesser
of (i) the Available Steel Dividend Amount (as defined herein) and (ii) all
funds of USX legally available therefor. The Board intends to declare and pay
dividends on the Steel Stock based on the financial condition and results of
operations of the U.S. Steel Group. The voting power of one share of Steel
Stock relative to one share of each of the other classes of USX common stock
will fluctuate based upon the relative market values thereof. Upon
liquidation, the rights of the holders of the Steel Stock and each of the
other classes of USX common stock will be based on their relative market
capitalizations. Under certain conditions, the Steel Stock may be exchanged or
redeemed, at the Company's option. See "Risk Factors--Risks Relating to the
Common Stock of the Company," "Price Range of Steel Stock, Dividends and
Dividend Policy" and "Description of Capital Stock and Amended and Restated
Rights Plan."
Application has been made to list the Trust Convertible Preferred Securities
on the NYSE under the symbol X PrT. If Convertible Debentures are distributed
to the holders of Trust Convertible
4
<PAGE>
Preferred Securities in exchange therefor upon the liquidation of the Trust,
the Company will use its reasonable efforts to list the Convertible Debentures
on the NYSE or such other stock exchanges or automated quotation systems, if
any, on which the Trust Convertible Preferred Securities are then listed or
traded.
The shares of 6.50% Convertible Preferred Stock are listed and principally
traded on the NYSE under the symbol X.PA. On March 13, 1997, the last full day
of trading prior to the filing of the Registration Statement of which this
Prospectus forms a part, the last reported sales price of the 6.50%
Convertible Preferred Stock on the Composite Tape was $44.625 per share. On
March 25, 1997, the closing sales price of the 6.50% Convertible Preferred
Stock on the Composite Tape was $44.50 per share. To the extent that shares of
6.50% Convertible Preferred Stock are tendered and accepted in the Exchange
Offer, the terms on which untendered 6.50% Convertible Preferred Stock could
subsequently be sold may be adversely affected. See "The Exchange Offer--
Listing and Trading of Trust Convertible Preferred Securities and 6.50%
Convertible Preferred Stock."
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
TRUST, THE TRUSTEES, THE COMPANY OR THE DEALER MANAGERS. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY EXCHANGE CONTEMPLATED HEREBY SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE TRUST OR THE COMPANY SINCE THE RESPECTIVE DATES AS OF WHICH
INFORMATION IS GIVEN HEREIN. THE EXCHANGE OFFER IS NOT BEING MADE TO (NOR WILL
TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF 6.50% CONVERTIBLE
PREFERRED STOCK IN ANY JURISDICTION IN WHICH THE MAKING OF THE EXCHANGE OFFER
OR THE ACCEPTANCE OF TENDERS THEREIN WOULD NOT BE IN COMPLIANCE WITH THE LAWS
OF SUCH JURISDICTION. HOWEVER, THE TRUST AND THE COMPANY MAY, AT THEIR
DISCRETION, TAKE SUCH ACTION AS THEY MAY DEEM NECESSARY FOR THE COMPANY TO
MAKE THE EXCHANGE OFFER IN ANY SUCH JURISDICTION AND EXTEND THE EXCHANGE OFFER
TO HOLDERS OF 6.50% CONVERTIBLE PREFERRED STOCK IN SUCH JURISDICTION. IN ANY
JURISDICTION WHERE THE SECURITIES LAWS OR BLUE SKY LAWS OF WHICH REQUIRE THE
EXCHANGE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE EXCHANGE OFFER
IS BEING MADE ON BEHALF OF THE COMPANY BY THE DEALER MANAGERS OR ONE OR MORE
REGISTERED BROKERS OR DEALERS WHICH ARE LICENSED UNDER THE LAWS OF SUCH
JURISDICTION.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements incorporated by reference or made in this Prospectus under
the caption "U.S. Steel Group" in the "Prospectus Summary," constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and are subject to the safe harbor created by
that Act. These statements typically contain words such as "anticipates,"
"believes," "estimates," "expects" or similar words indicating that future
outcomes are uncertain. These statements in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996 are accompanied by cautionary
language identifying important factors, though not necessarily all such
factors, that could cause future outcomes to differ materially from those set
forth in the forward-looking statements.
5
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TABLE OF CONTENTS
<TABLE>
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PAGE
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Available Information...................................................... 6
Incorporation of Certain Documents by Reference............................ 7
Prospectus Summary......................................................... 8
Risk Factors............................................................... 23
Price Range of Steel Stock, Dividends and Dividend Policy.................. 32
Price Range of 6.50% Convertible Preferred Stock........................... 33
Capitalization............................................................. 34
U.S. Steel Group Selected Financial Information............................ 35
USX Corporation Selected Consolidated Financial Information................ 38
The Exchange Offer......................................................... 40
USX Capital Trust I........................................................ 50
Description of the Trust Convertible Preferred Securities.................. 51
Description of the Guarantee............................................... 68
Description of the Convertible Debentures.................................. 71
Effect of Obligations Under The Convertible Debentures and the Guarantee... 81
Description of Capital Stock and Amended and Restated Rights Plan.......... 82
Management and Accounting Policies......................................... 96
Description of the 6.50% Convertible Preferred Stock....................... 97
Book-Entry System--The Depository Trust Company............................ 105
Certain Federal Income Tax Considerations.................................. 107
ERISA Considerations....................................................... 116
Legal Matters.............................................................. 116
Experts.................................................................... 116
Index of Certain Terms..................................................... 117
</TABLE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements, and other information concerning the Company can be inspected and
copied at prescribed rates at the public reference facilities maintained by
the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the public reference facilities at Seven World Trade Center, New
York, New York 10048, and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Documents filed by the Company can also be
inspected at the offices of the NYSE, the Chicago Stock Exchange, and the
Pacific Stock Exchange. The Commission maintains a Web site at
http://www.sec.gov containing reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission, including the Company.
This Prospectus constitutes a part of a combined registration statement on
Form S-4 (together with all amendments and exhibits, the "Registration
Statement") filed by the Company and the Trust with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus
does not contain all of the information included in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. Statements contained herein concerning the
provisions of any document do not purport to be complete and, in each
instance, are qualified in all respects by reference to the copy of such
document filed as an exhibit to the Registration Statement or otherwise filed
with the Commission. Each such statement is subject to and qualified in its
entirety by such reference. Reference is made to such Registration
6
<PAGE>
Statement and to the exhibits relating thereto for further information with
respect to the Company, the Trust and the securities offered hereby.
No separate financial statements of the Trust have been included herein. The
Company does not consider that such financial statements would be material to
holders of the Trust Convertible Preferred Securities because (i) all of the
voting securities of the Trust will be owned, directly or indirectly, by the
Company, a reporting company under the Exchange Act, (ii) the Trust has no
independent operations but exists for the sole purpose of issuing securities
representing undivided beneficial interests in the assets of the Trust in
order to refinance outstanding shares of the 6.50% Convertible Preferred
Stock, and (iii) the Company's obligations described herein, the guarantee by
the Company of the Trust's obligations under the Trust Convertible Preferred
Securities, and the Convertible Debentures to be held by the Trust and the
related indenture, taken together, constitute a full and unconditional
guarantee of payments due on the Trust Convertible Preferred Securities. See
"Description of the Convertible Debentures" and "Description of the
Guarantee."
The Trust is not currently subject to the information reporting requirements
of the Exchange Act. The Trust will become subject to such requirements upon
the effectiveness of the Registration Statement, although it intends to seek
and expects to receive exemption therefrom.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by USX with the Commission (File
No. 1-5153) are incorporated herein by reference:
1.Annual Report on Form 10K for the year ended December 31, 1996.
2. Registration Statement on Form 8-A dated April 11, 1991 with respect to
the description of USX-U.S. Steel Group Common Stock.
3. Form 8 Amendment to Registration Statement on Form 8-A dated October 5,
1992 with respect to the Amended and Restated Rights Agreement.
All reports and other documents filed by the Company 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 of the securities
offered hereby 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 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 and superseded, to constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH
PERSON, INCLUDING ANY BENEFICIAL OWNER OF SHARES OF 6.50% CONVERTIBLE
PREFERRED STOCK, TO WHOM THIS PROSPECTUS IS DELIVERED, UPON THE WRITTEN OR
ORAL REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL OF THE FOREGOING DOCUMENTS
INCORPORATED HEREIN BY REFERENCE, OTHER THAN EXHIBITS TO SUCH DOCUMENTS
(UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH
DOCUMENTS). THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM THE OFFICE OF THE
CORPORATE SECRETARY, USX CORPORATION, 600 GRANT STREET, PITTSBURGH,
PENNSYLVANIA 15219-4776 (TELEPHONE: 412-433-4801). IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE NOT LATER THAN FIVE
BUSINESS DAYS PRIOR TO THE EXPIRATION DATE.
7
<PAGE>
PROSPECTUS SUMMARY
The following summary does not purport to be complete and is qualified in its
entirety by the detailed information contained elsewhere in this Prospectus or
by documents incorporated by reference into this Prospectus. For an index of
certain defined terms used in this Prospectus, see "Index of Certain Terms."
THE COMPANY
The Company is a diversified company which is principally engaged in the
steel business through its U.S. Steel Group, in the energy business through its
Marathon Group and in the gas gathering and processing business through its
Delhi Group. The U.S. Steel Group, the Marathon Group and the Delhi Group are
each referred to herein as a "Group."
The Company has three classes of common stock: Steel Stock, USX-Marathon
Group Common Stock ("Marathon Stock") and USX-Delhi Group Common Stock ("Delhi
Stock"). The Steel Stock, the Marathon Stock and the Delhi Stock are together
referred to as "Common 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. Holders of Steel Stock, Marathon Stock and
Delhi Stock are holders of common stock of the Company and continue to be
subject to all of the risks associated with an investment in the Company and
all of its businesses and liabilities.
The U.S. Steel Group includes U.S. Steel, the largest integrated steel
producer in the United States, and certain steel-related and other businesses
described below under "U.S. Steel Group." U.S. Steel Group revenues as a
percentage of total Company consolidated revenues were 27% in 1996 and 31% in
each of 1995 and 1994.
The Marathon Group is comprised of Marathon Oil Company ("Marathon") and
certain other subsidiaries of the Company which are 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 revenues as a percentage of total Company consolidated revenues
were 68% in 1996 and 66% in each of 1995 and 1994.
The Delhi Group consists of Delhi Gas Pipeline Corporation and certain other
subsidiaries of the Company which are engaged in the purchasing, gathering,
processing, treating, transporting and marketing of natural gas. Delhi Group
revenues as a percentage of total Company consolidated revenues were 5% in 1996
and 3% in each of 1995 and 1994.
The Company was incorporated in 1901 and is a Delaware corporation. Its
executive offices are located at 600 Grant St., Pittsburgh, PA 15219-4776 (tel:
(412) 433-1121). The terms "USX" and the "Company" when used herein refer to
USX Corporation or USX Corporation and its subsidiaries as required by the
context.
U.S. STEEL GROUP
The U.S. Steel Group includes U.S. Steel, the largest integrated steel
producer in the United States (referred to hereinafter as "U.S. Steel"), which
is primarily engaged in the production and sale 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, and leasing and financing
activities.
8
<PAGE>
The domestic steel industry is cyclical and highly competitive and is
affected by excess world capacity which has restricted price increases during
periods of economic growth and led to price decreases during economic
contraction. In addition, the domestic steel industry, including U.S. Steel,
faces competition from producers of materials such as aluminum, cement,
composites, glass, plastics and wood in many markets.
Beginning in the early 1980's, U.S. Steel responded to competition resulting
from excess steel industry capability by eliminating less efficient facilities,
modernizing those that remain and entering into joint ventures, all with the
objective of focusing production on higher value-added products, where superior
quality and special characteristics are of critical importance. These products
include bake hardenable steels and coated sheets for the automobile and
appliance industries, laminated sheets for the manufacture of motors and
electrical equipment, improved tin mill products for the container industry and
oil country tubular goods. In addition, U.S. Steel continues to pursue lower
manufacturing cost objectives through continuing cost improvement programs.
These initiatives include, but are not limited to, reduced production cycle
time, improved yields, continued customer orientation and improved process
control.
Since 1982, U.S. Steel has invested approximately $4.0 billion in capital
facilities for its steel operations. U.S. Steel believes that these
expenditures have made its remaining steel operations among the most modern,
efficient and competitive in the world.
In addition to the modernization of its production facilities, USX has
entered into a number of joint ventures with domestic and foreign partners to
take advantage of market or manufacturing opportunities in the sheet, tin
plate, tubular, bar and plate consuming industries.
THE TRUST
The Trust is a statutory business trust that was formed under the Delaware
Business Trust Act (the "Delaware Trust Act") on March 13, 1997. The Trust
exists for the sole purpose of (a) issuing its Trust Securities in exchange for
Convertible Debentures having an aggregate principal amount equal to the
aggregate initial liquidation amount of such Trust Securities and (b) engaging
in such other activities as are necessary and incidental thereto.
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The purpose of the Exchange Offer is to refinance the 6.50% Convertible
Preferred Stock with the Trust Convertible Preferred Securities. Dividends
payable on the 6.50% Convertible Preferred Stock are not deductible for United
States federal income tax purposes. This refinancing will benefit the Company
by permitting the Company to deduct interest payable on the Convertible
Debentures for federal income tax purposes. See "The Exchange Offer--Purpose of
the Exchange Offer."
THE EXCHANGE OFFER; SECURITIES OFFERED
Upon the terms and subject to the conditions of the Exchange Offer, the
Company hereby offers to exchange Trust Convertible Preferred Securities
representing preferred undivided beneficial ownership interests in the assets
of the Trust for up to 6,700,000 shares of 6.50% Convertible Preferred Stock
(97.1% of the 6,900,000 outstanding shares of 6.50% Convertible Preferred
Stock)
9
<PAGE>
of the Company. Shares not accepted because of proration will be returned to
the tendering holders at the Company's expense as promptly as practicable
following the Expiration Date. The Exchange Offer will be effected on the basis
of one Trust Convertible Preferred Security for each share of 6.50% Convertible
Preferred Stock validly tendered and accepted for exchange in the Exchange
Offer. See "The Exchange Offer--Terms of the Exchange Offer."
Immediately prior to the exchange of Trust Convertible Preferred Securities
for the shares of 6.50% Convertible Preferred Stock validly tendered and
accepted for exchange in the Exchange Offer, the Company will deposit in the
Trust as trust assets Convertible Debentures having an aggregate principal
amount equal to the aggregate initial liquidation amount of the Trust
Securities to be issued by the Trust.
The Convertible Debentures, having an interest rate of 6.75% and a stated
maturity of March 31, 2037 (unless, in certain circumstances upon the
occurrence of a Tax Event, the stated maturity is shortened to a date not less
than five years from the date of issuance) will be the sole assets of the
Trust. The Trust Convertible Preferred Securities will be guaranteed by the
Company to the extent set forth in the Guarantee and described herein. The
Trust Convertible Preferred Securities will be convertible, at the option of
the holder thereof, into shares of Steel Stock at a conversion price of $46.25
per share of Steel Stock (equivalent to a conversion ratio of 1.081 shares of
Steel Stock for each Trust Convertible Preferred Security). The right to
convert the Convertible Debentures will terminate as set forth under
"Description of the Convertible Debentures--Conversion of the Convertible
Debentures." See "Description of the Trust Convertible Preferred Securities--
Trust Special Event Distribution or Redemption; Shortening of Stated Maturity."
EXPIRATION DATE; WITHDRAWALS
Upon the terms and subject to the conditions of the Exchange Offer, the
Company will accept for exchange up to 6,700,000 shares of 6.50% Convertible
Preferred Stock validly tendered and not withdrawn prior to the Expiration
Date, or if extended by the Company, at its sole discretion, the latest date
and time to which extended. The Exchange Offer will expire on the Expiration
Date. Tenders of shares of 6.50% Convertible Preferred Stock pursuant to the
Exchange Offer may be withdrawn at any time prior to the Expiration Date and,
unless accepted for exchange by the Company, may be withdrawn at any time after
40 business days after the date of this Prospectus. See "The Exchange Offer--
Withdrawal of Tenders" and "--Expiration Date; Extensions; Amendments;
Termination."
EXTENSIONS, AMENDMENTS AND TERMINATION
The Company expressly reserves the right to (i) extend, amend or modify the
terms of the Exchange Offer in any manner and (ii) withdraw or terminate the
Exchange Offer and not accept for exchange any shares of 6.50% Convertible
Preferred Stock, at any time for any reason, including (without limitation) (a)
if fewer than 3,450,000 shares of 6.50% Convertible Preferred Stock are
tendered (which condition may be waived by the Company), (b) if the Minimum
NYSE Distribution Condition is not satisfied or (c) if the OID Condition is not
satisfied. The Minimum NYSE Distribution Condition and the OID Condition may
not be waived by the Company. See "The Exchange Offer--Expiration Date;
Extensions; Amendments; Termination."
PROCEDURES FOR TENDERING
Each Holder of 6.50% Convertible Preferred Stock wishing to accept the
Exchange Offer must (i) properly complete and sign the Letter of Transmittal or
a facsimile thereof (all references in this Prospectus to the Letter of
Transmittal shall be deemed to include a facsimile thereof) in accordance
10
<PAGE>
with the instructions contained herein and therein, together with any required
signature guarantees, and deliver the same to The Bank of New York, as Exchange
Agent, at either of its addresses set forth in "The Exchange Offer--Exchange
Agent and Information Agent" and certificates for the shares of 6.50%
Convertible Preferred Stock held by such Holder must be received by the
Exchange Agent at either of such addresses prior to the Expiration Date, (ii)
transfer such shares of 6.50% Convertible Preferred Stock pursuant to the
procedures for book-entry transfer described herein, with a confirmation of
such book-entry transfer received by the Exchange Agent, prior to the
Expiration Date, or (iii) comply with the guaranteed delivery procedures
described herein. See "The Exchange Offer--General" and "--Procedures for
Tendering."
SPECIAL PROCEDURES FOR BENEFICIAL OWNERS
Any beneficial owner whose shares of 6.50% Convertible Preferred Stock are
registered in the name of a broker, dealer, commercial bank, trust company, or
other nominee and who wishes to tender should contact such registered Holder
promptly and instruct such registered Holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes to tender on its own behalf,
such owner must, prior to completing and executing a Letter of Transmittal and
delivering its shares of 6.50% Convertible Preferred Stock, either make
appropriate arrangements to register the ownership of such shares in such
owner's name or obtain a properly completed stock power from the registered
Holder. The transfer of registered ownership may take considerable time and may
not be able to be completed prior to the Expiration Date. See "The Exchange
Offer--Procedures for Tendering--Signature Guarantees."
GUARANTEED DELIVERY PROCEDURES
If a Holder desires to accept the Exchange Offer and time will not permit a
Letter of Transmittal or shares of 6.50% Convertible Preferred Stock to reach
the Exchange Agent before the Expiration Date or the procedure for book-entry
transfer cannot be completed on a timely basis, a tender may be effected in
accordance with the guaranteed delivery procedures set forth in "The Exchange
Offer--Procedures for Tendering--Guaranteed Delivery."
ACCEPTANCE OF SHARES; PRORATION
If more than 6,700,000 shares of 6.50% Convertible Preferred Stock have been
validly tendered and not withdrawn prior to the Expiration Date, the Company
will accept for exchange shares of 6.50% Convertible Preferred Stock from each
tendering Holder on a pro rata basis, subject to adjustment to avoid the
acceptance for exchange of fractional shares, upon the terms and subject to the
conditions of the Exchange Offer, including the reservation by the Company of
the right to withdraw or terminate the Exchange Offer and certain other rights.
For the purposes of prorating tendered securities, the Company will accept all
securities tendered by persons who own, beneficially or of record, an aggregate
of not more than a specified number which is fewer than 100 shares of such
security and who tender all their securities, before prorating securities
tendered by others. See "The Exchange Offer--Acceptance of Shares and
Proration."
If the Company decides, in its sole discretion, to increase or decrease the
number of shares of 6.50% Convertible Preferred Stock sought in the Exchange
Offer or to increase or decrease the consideration offered to holders of shares
of 6.50% Convertible Preferred Stock, and if the Exchange Offer is scheduled to
expire less than ten business days from and including the date that notice of
such increase or decrease is first published, sent or given in the manner
specified in "The Exchange Offer--Terms of the Exchange Offer" and "--
Expiration Date; Extensions; Amendments; Termination," then
11
<PAGE>
the Exchange Offer will remain open for a minimum of ten business days from and
including the date of such notice.
All shares of 6.50% Convertible Preferred Stock not accepted for exchange
pursuant to the Exchange Offer, including shares not accepted because of
proration, will be returned to the tendering Holders at the Company's expense
as promptly as practicable following the Expiration Date.
DELIVERY OF THE TRUST CONVERTIBLE PREFERRED SECURITIES
Subject to the terms and conditions of the Exchange Offer, the delivery of
the Trust Convertible Preferred Securities to be issued pursuant to the
Exchange Offer will occur as promptly as practicable following the Expiration
Date. See "The Exchange Offer--Terms of the Exchange Offer" and "--Expiration
Date; Extensions; Amendments; Termination."
If proration of tendered shares of 6.50% Convertible Preferred Stock is
required, because of the difficulty in determining the number of shares of
6.50% Convertible Preferred Stock validly tendered (including shares tendered
by the guaranteed delivery procedures described in "The Exchange Offer--
Procedures for Tendering"), the Company does not expect that it will be able to
announce the final proration factor or to commence the exchange for any shares
of 6.50% Convertible Preferred Stock pursuant to the Exchange Offer until
approximately seven business days after the Expiration Date. Preliminary
results of the proration will be announced by press release as promptly as
practicable after the Expiration Date. Holders of shares of 6.50% Convertible
Preferred Stock may obtain such preliminary information from the Dealer Manager
or the Information Agent and may also be able to obtain such information from
their brokers.
Until the final proration factors are known, the Company will not (i) issue
any Trust Convertible Preferred Securities in exchange for any shares of 6.50%
Convertible Preferred Stock accepted for exchange pursuant to the Exchange
Offer, (ii) return shares of 6.50% Convertible Preferred Stock delivered to the
Exchange Agent but not tendered or (iii) return shares of 6.50% Convertible
Preferred Stock tendered but not accepted for exchange because of proration.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The exchange of shares of 6.50% Convertible Preferred Stock for Trust
Convertible Preferred Securities pursuant to the Exchange Offer will be a
taxable event. A holder who owns, directly or constructively, no other stock of
the Company or otherwise satisfies one of the tests of section 302 of the
Internal Revenue Code of 1986, as amended (the "Code"), will recognize capital
gain or loss in an amount equal to the difference between the fair market value
of the Trust Convertible Preferred Securities received in the exchange and the
exchanging holder's tax basis in the shares of 6.50% Convertible Preferred
Stock surrendered. However, other holders could be subject to dividend
treatment. See "Certain Federal Income Tax Considerations--Exchange of 6.50%
Convertible Preferred Stock for Trust Convertible Preferred Securities."
The Trust Convertible Preferred Securities represent an ownership interest in
the Convertible Debentures held by the Trust. Therefore, certain tax attributes
of the Convertible Debentures (such as OID, if any) are deemed to apply to the
Trust Convertible Preferred Securities. If the fair market value of the
Convertible Debentures (as measured by the fair market value of the Trust
Convertible Preferred Securities) at the date of issuance does not exceed
$45.125, the Convertible Debentures would be treated as having been issued with
reportable OID. Consummation of the Exchange Offer is conditioned upon the
Company's reasonable expectation on the Expiration Date, based on the terms of
the Trust Convertible Preferred Securities and the recent trading values of the
6.50% Convertible Preferred Stock and the Steel Stock, that the Convertible
Debentures will not be issued with reportable
12
<PAGE>
OID. Although the Company cannot assure that the Convertible Debentures will be
issued without reportable OID, it is the Company's intent to consummate the
Exchange Offer only if the Company reasonably expects, on the Expiration Date,
to issue the Convertible Debentures without reportable OID. If the Convertible
Debentures are treated as having been issued with reportable OID, a holder of
Trust Convertible Preferred Securities would be required to include the amount
of OID in gross income in advance of the receipt of cash attributed to such
income.
In addition, if an Extension Period deferring interest on the Convertible
Debentures occurs, all holders will be required to include accrued and unpaid
interest on the Convertible Debentures in gross income as OID, although the
holders did not receive a cash distribution from the Trust related to such
interest. The OID is added to the holder's adjusted tax basis in the holder's
pro rata share of the underlying Convertible Debentures. A holder who disposes
of his Trust Convertible Preferred Securities will not receive from the Company
any cash related to the interest income the holder accrued and included in its
taxable income under the OID rules (because that cash will be paid to a holder
of record at the end of the Extension Period). See "Certain Federal Income Tax
Considerations--Interest Income and Original Issue Discount."
UNTENDERED SHARES
Holders of 6.50% Convertible Preferred Stock who do not tender their shares
of 6.50% Convertible Preferred Stock in the Exchange Offer or whose shares of
6.50% Convertible Preferred Stock are not accepted for exchange will continue
to hold such 6.50% Convertible Preferred Stock and will be entitled to all the
rights and preferences, and will be subject to all of the limitations,
applicable thereto. See "The Exchange Offer--Listing and Trading of Trust
Convertible Preferred Securities and 6.50% Convertible Preferred Stock." The
Company may exercise its optional redemption rights on any shares of 6.50%
Convertible Preferred Stock which are not tendered and exchanged in the
Exchange Offer. The optional redemption price for a share of the 6.50%
Convertible Preferred Stock immediately after the Expiration Date will be
$51.95, plus accumulated and unpaid dividends, if any, up to but excluding the
date fixed for redemption. To the extent that shares of 6.50% Convertible
Preferred Stock are tendered and exchanged in the Exchange Offer, a Holder's
ability to sell untendered shares of 6.50% Convertible Preferred Stock could be
adversely affected. See "Risk Factors--Risks Relating to the Trust Convertible
Preferred Securities--Reduced Trading Market for 6.50% Convertible Preferred
Stock."
EXCHANGE AGENT AND INFORMATION AGENT
The Bank of New York has been appointed as Exchange Agent in connection with
the Exchange Offer. Questions and requests for assistance, requests for
additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notices of Guaranteed Delivery should be directed to Morrow & Co.,
Inc., which has been retained by the Company to act as Information Agent for
the Exchange Offer. The addresses and telephone numbers of the Exchange Agent
and Information Agent are set forth in "The Exchange Offer--Exchange Agent and
Information Agent."
DEALER MANAGERS; SOLICITING DEALERS
Goldman, Sachs & Co. and Merrill Lynch & Co. have been retained to act as
Dealer Managers to solicit exchanges of shares of 6.50% Convertible Preferred
Stock for Trust Convertible Preferred Securities. Exchanges of 6.50%
Convertible Preferred Stock may also be solicited by Soliciting Dealers (as
defined herein) from beneficial owners of fewer than 5,000 shares. Questions
with respect to the Exchange Offer may be directed to Goldman, Sachs & Co. at
(800) 323-5678 and Merrill Lynch & Co. at (800) 436-1019. See "The Exchange
Offer--Dealer Managers; Soliciting Dealers."
13
<PAGE>
COMPARISON OF TRUST CONVERTIBLE PREFERRED SECURITIES AND 6.50% CONVERTIBLE
PREFERRED STOCK
The following is a brief summary of certain terms of the Trust Convertible
Preferred Securities and the 6.50% Convertible Preferred Stock. For a more
complete description of the Trust Convertible Preferred Securities, see
"Description of the Trust Convertible Preferred Securities." For a more
complete description of the Convertible Debentures which will be deposited in
the Trust as trust assets and will represent the sole source for the payment of
distributions and other payments on the Trust Convertible Preferred Securities,
see "Description of the Convertible Debentures." For a more complete
description of the 6.50% Convertible Preferred Stock, see "Description of the
6.50% Convertible Preferred Stock."
<TABLE>
<CAPTION>
TRUST CONVERTIBLE 6.50% CONVERTIBLE
PREFERRED SECURITIES PREFERRED STOCK
------------------------------- -------------------------------
<C> <S> <C>
Issuer................ The Trust. Payment of The Company.
distributions and on
liquidation or redemption is
guaranteed by the Company on a
subordinated basis, to the
extent described herein.
Distribution on
Liquidation.......... $50.00 per Trust Convertible $50.00 per share of 6.50%
Preferred Security, together Convertible Preferred Stock,
with accrued and unpaid together with accrued and
distributions. unpaid dividends.
Distribution/Dividend
Rate................. 6.75% per annum cash distribu- 6.50% per annum cash dividend
tion payable quarterly on the payable quarterly on the last
last calendar day of March, calendar day of March, June,
June, September and December of September, and December of each
each year, commencing June 30, year, out of funds legally
1997, but only if, and to the available therefor, when, as
extent that, interest payments and if declared by the Board.
are made by the Company in re- Dividends are cumulative.
spect of the Convertible Deben-
tures held by the Trust. So
long as the Company is not in
default in the payment of in-
terest on the Convertible De-
bentures, the Company shall
have the right to defer pay-
ments of interest on the Con-
vertible Debentures for the du-
ration of an Extension Period.
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
TRUST CONVERTIBLE 6.50% CONVERTIBLE
PREFERRED SECURITIES PREFERRED STOCK
------------------------------- -------------------------------
<C> <S> <C>
During any Extension Period In the event that the
(which will not exceed 20 con- equivalent of six quarterly
secutive calendar quarters) on dividends (whether consecutive
the Convertible Debentures, or not) are accrued but not
distribution payments on the paid, the holders of 6.50%
Trust Convertible Preferred Se- Convertible Preferred Stock
curities will not be made but will have certain voting
will continue to accumulate and rights. See "Voting
will bear interest at the dis- Rights/Enforcement" below.
tribution rate, compounded
quarterly, to the extent per-
mitted by applicable law. In
addition, during any Extension
Period the Company, subject to
limited exceptions, may not,
among other things, declare or
pay any dividends on or make
any distributions with respect
to any of its capital stock.
If a deferral of an interest If a deferral of a dividend
payment occurs, the holders of payment occurs, the holders of
the Trust Convertible Preferred 6.50% Convertible Preferred
Securities would accrue income Stock would not be required to
as OID for United States fed- include such amount in income
eral income tax purposes. for United States federal
income tax purposes until the
dividend is actually declared
and paid.
Conversion............ Convertible at the option of Convertible at the option of
the holder, in whole or in the holder, in whole or in
part, into whole shares of part, into whole shares of
Steel Stock at a conversion Steel Stock at a conversion
price of $46.25 per share of price of $46.125 per share of
Steel Stock (equivalent to a Steel Stock (equivalent to a
conversion ratio of 1.081 conversion ratio of 1.084
shares of Steel Stock for each shares of Steel Stock for each
Trust Convertible Preferred share of 6.50% Convertible
Security), subject to Preferred Stock), subject to
adjustments upon certain adjustments upon certain
events. events.
The right to convert Trust The right to convert shares of
Convertible Preferred 6.50% Convertible Preferred
Securities will terminate prior Stock called for redemption
to the close of business (i) on will terminate at the close of
March 31, 2037 (unless the business on the related
stated maturity of the redemption date, subject to
Convertible Debentures is certain exceptions.
shortened following a Tax
Event, in which case, on the
advanced maturity date) and
(ii) in the case of Trust
Convertible Preferred
Securities called for
redemption, on the related
redemption date, subject to
certain exceptions.
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
TRUST CONVERTIBLE 6.50% CONVERTIBLE
PREFERRED SECURITIES PREFERRED STOCK
------------------------------- -------------------------------
<C> <S> <C>
Mandatory Redemption.. At March 31, 2037, subject to Perpetual, subject to certain
certain exceptions stated exceptions stated below.
below.
If a U.S. Steel Group Special If a U.S. Steel Group Special
Event (as defined herein) or a Event or a Marathon Group
Marathon Group Special Event Special Event occurs, the
(as defined herein) occurs, the Company must redeem all of the
Company must redeem the shares of 6.50% Convertible
Convertible Debentures, in Preferred Stock, provided that
whole, at 100% of the principal funds are legally available
amount thereof, together with therefor, in whole, for $50.00
interest accrued and unpaid to per share, together with
the redemption date. accrued and unpaid dividends to
the redemption date.
Upon any redemption or other
repayment of the Convertible
Debentures, the proceeds
thereof must immediately be
applied to redeem the Trust
Convertible Preferred
Securities and the Trust Common
Securities having an aggregate
liquidation amount equal to the
aggregate principal amount of
the Convertible Debentures so
repaid.
Holders of Trust Convertible Holders of 6.50% Convertible
Preferred Securities have no Preferred Stock have no right
right to require the Company to to require the Company to
redeem the Convertible redeem the 6.50% Convertible
Debentures or to require the Preferred Stock.
Trust to redeem Trust
Convertible Preferred
Securities.
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
TRUST CONVERTIBLE 6.50% CONVERTIBLE
PREFERRED SECURITIES PREFERRED STOCK
------------------------------- --------------------------------
<S> <C> <C>
Optional Redemption... The Convertible Debentures will The 6.50% Convertible Preferred
be redeemable at the option of Stock is redeemable at the
the Company, in whole or in option of the Company, in whole
part, upon not less than 30 or in part, upon not less than
days' notice nor more than 60 30 days' notice nor more than
days' notice, initially at a 60 days' notice, at a
redemption price through March redemption price per share
31, 1998 equal to 103.90% of through March 31, 1998
the aggregate principal amount equivalent to 103.90%
of the Convertible Debentures (expressed as a percentage of
to be redeemed and declining the $50.00 initial liquidation
annually on each April 1 preference thereof) and
thereafter at the same rate as declining annually on each
the 6.50% Convertible Preferred April 1 thereafter to par on
Stock to par on April 1, 2003, April 1, 2003, together with
together with accrued and accrued and unpaid dividends
unpaid interest thereon to the thereon to the redemption date.
redemption date.
The Company will not exercise
its option to redeem the The Company will not exercise
Convertible Debentures if the its option to redeem the 6.50%
Company is advised in advance Convertible Preferred Stock if
by either Moody's Investors the Company is advised in
Service, Inc. ("Moody's") or advance by either Moody's or
Standard & Poor's Corporation S&P that to do so would result
("S&P") that to do so would in an immediate lowering of the
result in an immediate lowering Company's credit rating on its
of the Company's credit rating senior unsecured debt from its
on its senior unsecured debt then existing level, unless the
from its then existing level, Company shall have received
unless the Company shall have from the issuance of its common
received from the issuance of stock, since the date which is
its common stock, since the two years prior to the
date which is two years prior redemption date, net proceeds
to the redemption date, net in an aggregate amount at least
proceeds in an aggregate amount equal to the aggregate initial
at least equal to the aggregate liquidation preference of the
principal amount of the 6.50% Convertible Preferred
Convertible Debentures to be Stock to be redeemed.
redeemed.
In addition, upon the
occurrence of a Trust Special
Event (as defined herein),
including a Tax Event, the
Trust could be dissolved (with
the consent of the Company)
except in the limited
circumstances described below,
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
TRUST CONVERTIBLE 6.50% CONVERTIBLE
PREFERRED SECURITIES PREFERRED STOCK
------------------------------- -------------------------------
<C> <S> <C>
with the result that the
Convertible Debentures would be
distributed
to the holders of the Trust
Securities in connection with
the liquidation of the Trust,
or the stated maturity of the
Convertible Debentures could be
shortened
at the option of the Company
to a date not less than five
years from the date of
issuance. In certain
circumstances, the Company
would have the right to redeem
the Convertible Debentures, in
whole or in part, at 100% of
the principal amount thereof,
together with interest accrued
and unpaid to the redemption
date, in lieu of a distribution
of the Convertible Debentures
by the Trust or a shortening of
the stated maturity of the
Convertible Debentures.
Subordination......... Subordinated to all Senior Subordinated to claims of
Indebtedness of the Company but creditors, including holders of
senior to all capital stock, the Company's outstanding debt
including the 6.50% Convertible securities and the Convertible
Preferred Stock, now or Debentures, and structurally
hereafter issued by the subordinated to all existing
Company, and to any guarantee and future obligations of the
now or hereafter entered into Company's subsidiaries. The
by the Company in respect of 6.50% Convertible Preferred
capital stock of its Stock ranks senior to all
affiliates, including the classes of
Guarantee. Common Stock and any shares of
Junior Preferred Stock (as
The Convertible Debentures (and defined herein) as to payment
the Company's obligations under of dividends and upon
the Guarantee) also will be liquidation.
subordinated to all existing
and future obligations of the
Company's subsidiaries, except
to the extent that the Company
is a creditor of the
subsidiaries and is recognized
as such. In addition, the
Guarantee will rank junior to
the Convertible Debentures.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
TRUST CONVERTIBLE 6.50% CONVERTIBLE
PREFERRED SECURITIES PREFERRED STOCK
------------------------------- -------------------------------
<C> <S> <C>
As of December 31, 1996, Senior As of December 31, 1996, Senior
Indebtedness included, among Indebtedness included, among
other items, $4.3 billion of other items, $4.3 billion of
indebtedness (including indebtedness (including
indebtedness of consolidated indebtedness of consolidated
subsidiaries guaranteed by the subsidiaries guaranteed by the
Company). Company).
Guarantee............. The Company will fully and None.
unconditionally guarantee, on a
subordinated basis and to the
extent set forth herein, the
payment in full of (i)
distributions on the Trust
Convertible Preferred
Securities to the extent the
Trust has funds available
therefor, (ii) the amount
payable upon redemption of the
Trust Convertible Preferred
Securities to the extent the
Trust has funds available
therefor, and (iii) generally,
the liquidation amount of the
Trust Convertible Preferred
Securities to the extent the
Trust has assets available for
distribution to holders of
Trust Convertible Preferred
Securities.
The Company's obligations under
the Guarantee will be unsecured
and will rank (i) subordinate
and junior in right of payment
to all other liabilities of the
Company, (ii) on a parity with
the most senior preferred or
preference stock now or
hereafter issued by the Company
and with any guarantee now or
hereafter entered into by the
Company in respect of any
preferred or preference stock
of any affiliate of the
Company, and (iii) senior to
the Steel Stock and each of the
other classes of the Company's
Common Stock.
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
TRUST CONVERTIBLE 6.50% CONVERTIBLE
PREFERRED SECURITIES PREFERRED STOCK
------------------------------- -------------------------------
<C> <S> <C>
Voting Rights/
Enforcement.......... Generally, holders of the Trust The 6.50% Convertible Preferred
Convertible Preferred Stock is non-voting except that
Securities will not have any (i) if, on the date used to
voting rights. However, if an determine stockholders of
Indenture Event of Default (as record for any meeting of
defined herein) occurs and is stockholders for election of
continuing, the holders of 25% directors, six full quarterly
of the aggregate liquidation dividends (whether consecutive
amount of the Trust Convertible or not) payable on the
Preferred Securities may direct Preferred Stock (as defined
the Institutional Trustee (as herein) of the Company of any
defined herein) to declare the series (including the 6.50%
principal of and interest on Convertible Preferred Stock)
the Convertible Debentures are accrued and unpaid, the
immediately due and payable. If holders of Preferred Stock of
(i) the Institutional Trustee all series will have the right
fails to enforce its rights at such meeting, voting as a
under the Convertible single class without regard to
Debentures or (ii) the Company series, to elect two additional
defaults under the Guarantee, a directors, (ii) the approval of
record holder of the Trust the holders of at least 66 2/3%
Convertible Preferred of the outstanding shares of
Securities may institute a 6.50% Convertible Preferred
legal proceeding directly Stock and all other Preferred
against the Company to enforce Stock ranking on a parity with
the Institutional Trustee's the 6.50% Convertible Preferred
rights without first Stock, voting separately as a
instituting any legal class, will be required to
proceeding against the authorize the issuance of any
Institutional Trustee. class or series of preferred
stock ranking senior to the
Furthermore, if a Declaration 6.50% Convertible Preferred
Event of Default (as defined Stock as to dividends or
herein) has occurred and is liquidation rights, and (iii)
continuing and such event is the approval of at least 66
attributable to the failure of 2/3% of the outstanding shares
the Company to pay interest or of 6.50% Convertible Preferred
principal on the Convertible Stock, voting as a separate
Debentures, a record holder of series or, in certain
Trust Convertible Preferred circumstances, together with
Securities may institute a all other series of Preferred
proceeding directly against the Stock as a class, will be
Company for enforcement of required for certain amendments
payment to such holder of the to the Company's Certificate of
principal of or interest on the Incorporation affecting
Convertible Debentures having a adversely the powers,
principal amount equal to the preferences or rights of
aggregate liquidation amount of Holders of the 6.50%
the Trust Convertible Preferred Convertible Preferred Stock.
Securities of such holder.
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
TRUST CONVERTIBLE 6.50% CONVERTIBLE
PREFERRED SECURITIES PREFERRED STOCK
------------------------------- -------------------------------
<C> <S> <C>
Listing and Trading... Application has been made to The 6.50% Convertible Preferred
list the Trust Convertible Stock is listed on the NYSE
Preferred Securities on the under the symbol X.PA. The
NYSE under the symbol X PrT. Exchange Offer is for up to
In order to satisfy the NYSE 6,700,000 shares of 6.50%
listing requirements, Convertible Preferred Stock
acceptance of shares of 6.50% (97.1% of the 6,900,000 shares
Convertible Preferred Stock is outstanding) rather than for
subject to the Minimum NYSE all of the outstanding shares
Distribution of 6.50% Convertible Preferred
Condition, which condition may Stock in order to avoid a
not be waived by the Company. delisting of the 6.50%
Convertible Preferred Stock
from the NYSE following
consummation of the Exchange
Offer.
The Trust Convertible Preferred To the extent shares of 6.50%
Securities constitute a new Convertible Preferred Stock are
issue of securities of the tendered and accepted in the
Trust with no established Exchange Offer, the liquidity
trading market. The liquidity and trading market for shares
of the Trust Convertible of 6.50% Convertible Preferred
Preferred Securities will be Stock outstanding following the
affected by the number of Exchange Offer, and the terms
shares of 6.50% Convertible upon which such shares could be
Preferred Stock tendered and sold, could be adversely
accepted for exchange in the affected.
Exchange Offer. Although the
Dealer Managers have indicated
to the Company and the Trust
that they intend to make a
market in the Trust Convertible
Preferred Securities, as
permitted by applicable laws
and regulations prior to the
commencement of trading on the
NYSE, they are not obligated to
do so and may discontinue any
such market-making at any time
without notice. There can be no
assurance that an active market
for the Trust Convertible
Preferred Securities will
develop or, if developed, will
be sustained in the future.
Dividends Received
Deduction............ Distributions on the Trust Dividends on the 6.50%
Convertible Preferred Convertible Preferred Stock are
Securities will not be eligible eligible for the dividends
for the dividends received received deduction for
deduction for corporate corporate holders.
holders.
</TABLE>
21
<PAGE>
ACCOUNTING TREATMENT
The financial statements of the Trust will be reflected in the Company's
consolidated financial statements and the financial statements of the U.S.
Steel Group with the Trust Convertible Preferred Securities shown as "USX
obligated mandatorily redeemable convertible preferred securities of a
subsidiary trust holding solely convertible debentures", and appropriate
disclosure about the Trust Convertible Preferred Securities, the Guarantee, and
the Convertible Debentures will be included in the notes to the Company's
consolidated financial statements. See "Capitalization." For financial
reporting purposes, the Company will record distributions payable on the Trust
Convertible Preferred Securities as "Interest and other financial costs" in the
Company's consolidated statement of operations and the U.S. Steel Group's
statement of operations.
22
<PAGE>
RISK FACTORS
Prospective exchanging Holders of 6.50% Convertible Preferred Stock should
carefully consider, in addition to the other information set forth elsewhere
in this Prospectus, the following:
RISKS RELATING TO THE TRUST CONVERTIBLE PREFERRED SECURITIES
EXCHANGE OFFER AS TAXABLE EVENT
The exchange of shares of 6.50% Convertible Preferred Stock for Trust
Convertible Preferred Securities pursuant to the Exchange Offer will be a
taxable event. A holder who owns, directly or constructively, no other stock
of the Company or otherwise satisfies one of the tests of section 302 of the
Code, will recognize capital gain or loss in an amount equal to the difference
between the fair market value of the Trust Convertible Preferred Securities
received in the exchange and the exchanging holder's tax basis in the shares
of 6.50% Convertible Preferred Stock surrendered. However, other holders could
be subject to dividend treatment. See "Certain Federal Income Tax
Considerations." All Holders of 6.50% Convertible Preferred Stock are advised
to consult their own tax advisors regarding the federal, state, local, and
foreign tax consequences of an exchange of shares of 6.50% Convertible
Preferred Stock.
CORPORATE HOLDERS OF TRUST CONVERTIBLE PREFERRED SECURITIES NOT ENTITLED TO
DIVIDENDS RECEIVED DEDUCTION
While dividends with respect to the 6.50% Convertible Preferred Stock are
eligible for the dividends received deduction for corporate holders, each
corporate holder of the Trust Convertible Preferred Securities will be
considered the owner of an undivided interest in the Convertible Debentures
and will be required to include distributions on the Trust Convertible
Preferred Securities in gross income without a deduction for dividends
received.
POSSIBLE ORIGINAL ISSUE DISCOUNT
The Trust Convertible Preferred Securities represent an ownership interest
in the Convertible Debentures held by the Trust. Therefore, certain tax
attributes of the Convertible Debentures (such as OID, if any) are deemed to
apply to the Trust Convertible Preferred Securities. If the fair market value
of the Convertible Debentures (as measured by the fair market value of the
Trust Convertible Preferred Securities) at the date of issuance does not
exceed $45.125, the Convertible Debentures would be treated as having been
issued with OID. If the Convertible Debentures are treated as having been
issued with OID, a holder of Trust Convertible Preferred Securities would be
required to include the amount of OID in gross income in advance of the
receipt of cash attributable to such income. See "Certain Federal Income Tax
Considerations--Interest Income and Original Issue Discount." Although the
Company cannot assure that the Convertible Debentures will be issued without
reportable OID, it is the intent of the Company to consummate the Exchange
Offer only if, on the Expiration Date, the Company reasonably expects to issue
the Convertible Debentures without reportable OID.
TRUST SPECIAL EVENT DISTRIBUTION OR REDEMPTION; SHORTENING OF STATED MATURITY
Upon the occurrence of a Trust Special Event (as defined herein) including a
Tax Event, the Trust could be dissolved (with the consent of the Company)
except in the limited circumstance described below, with the result that,
after the satisfaction of liabilities to creditors, the Convertible Debentures
would be distributed to the holders of the Trust Securities in connection with
the liquidation of the Trust, or the stated maturity of the Convertible
Debentures could be shortened at the option of the Company. In certain
circumstances, the Company would have the right to redeem the Convertible
Debentures, in whole or in part, without premium, in lieu of a distribution of
the Convertible Debentures by the Trust, in which event the Trust would redeem
the Trust Securities on a pro rata basis to the same extent as
23
<PAGE>
the Convertible Debentures are redeemed by the Company. See "Description of
the Trust Convertible Preferred Securities--Trust Special Event Distribution
or Redemption; Shortening of Stated Maturity" and "Certain Federal Income Tax
Considerations--Receipt of Convertible Debentures or Cash Upon Liquidation of
the Trust."
There can be no assurance as to the market prices for the Trust Convertible
Preferred Securities or the Convertible Debentures that may be distributed in
exchange for Trust Convertible Preferred Securities if a dissolution or
liquidation of the Trust were to occur or if the stated maturity of the
Convertible Debentures is shortened. Accordingly, the Trust Convertible
Preferred Securities that an investor may receive in the Exchange Offer or the
Convertible Debentures that a holder of Trust Convertible Preferred Securities
may receive on dissolution and liquidation of the Trust may trade at a
discount to the value of the 6.50% Convertible Preferred Stock on the
Expiration Date of the Exchange Offer. Because holders of Trust Convertible
Preferred Securities may receive Convertible Debentures upon the occurrence of
a Trust Special Event, prospective purchasers of Trust Convertible Preferred
Securities are also making an investment decision with regard to the
Convertible Debentures and should carefully review all the information
regarding the Convertible Debentures contained herein. See "Description of the
Trust Convertible Preferred Securities--Trust Special Event Distribution or
Redemption; Shortening of Stated Maturity" and "Description of the Convertible
Debentures--General."
PROPOSED TAX LEGISLATION
Legislation was proposed by the United States Department of the Treasury on
February 6, 1997, as part of President Clinton's Fiscal 1998 Budget Proposal
(the "Proposed Legislation") that contained a provision which generally would
deny the interest deduction for interest paid or accrued on an instrument
issued by a corporation that (i) has a maximum term of more than 15 years and
(ii) is not shown as indebtedness on the separate balance sheet of the issuer
or, where the instrument is issued to a related party (other than a
corporation), where the holder or some other related party issues a related
instrument that is not shown as indebtedness on the issuer's consolidated
balance sheet. This provision is proposed to be effective generally for
instruments issued on or after the date of first Congressional committee
action on the Proposed Legislation. If this provision were to apply to the
Convertible Debentures, the Company would not be able to deduct the interest
on the Convertible Debentures. It is expected that if the Proposed Legislation
were enacted, such legislation would not apply to the Convertible Debentures
because they would be issued prior to the date of first Congressional
committee action. However, there can be no assurance that the Proposed
Legislation or future legislative proposals or final legislation will not
adversely affect the ability of the Company to deduct interest on the
Convertible Debentures or otherwise affect the tax treatment of the
transactions described herein. If enacted, such a change could give rise to a
Tax Event pursuant to which there could be a distribution of the Convertible
Debentures to holders of the Trust Convertible Preferred Securities, a
maturity advancement (as defined herein) or, in certain circumstances,
redemption of the Convertible Debentures (and thus the Trust Convertible
Preferred Securities) by the Company. See "--Trust Special Event Distribution
or Redemption--Shortening of Stated Maturity."
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as the Company shall not be in default in the payment of interest on
the Convertible Debentures, the Company will have the right at any time, and
from time to time, under the Indenture (as such term is defined in
"Description of the Convertible Debentures" herein) to defer payments of
interest on the Convertible Debentures by extending the interest payment
period at any time, for a period not exceeding 20 consecutive quarters and not
extending beyond the maturity of the Convertible Debentures. As a consequence
of such an extension, quarterly distributions on the Trust Convertible
Preferred Securities would be deferred (but despite such deferral would
continue to accumulate with interest thereon at the rate specified by the
Convertible Debentures, compounded quarterly) by the
24
<PAGE>
Trust during any such extended interest payment period. Prior to the
termination of any such Extension Period, the Company may further extend the
interest payment period; provided that such Extension Period, together with
all such previous and further extensions thereof, may not exceed 20
consecutive quarters or extend beyond the maturity of the Convertible
Debentures. Upon the termination of any Extension Period and the payment of
all amounts then due, the Company may commence a new Extension Period, subject
to the above requirements. If the Company exercises this right to defer
interest payments, then, subject to limited exceptions, it may not declare or
pay any dividend on, make any distributions with respect to, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of its
capital stock. See "Description of the Trust Convertible Preferred
Securities--Distributions" and "Description of the Convertible Debentures--
Option to Extend Interest Payment Period."
Should the Company exercise its right to defer payments of interest by
extending the interest payment period, each holder of Trust Convertible
Preferred Securities will be required to accrue income (OID) in respect of the
deferred and compounded interest allocable to its Trust Convertible Preferred
Securities for United States federal income tax purposes, which will be
allocated but not distributed, to holders of record of Trust Convertible
Preferred Securities. As a result, each such holder of Trust Convertible
Preferred Securities will recognize income for United States federal income
tax purposes in advance of the receipt of cash and will not receive the cash
from the Trust related to such income if such holder disposes of its Trust
Convertible Preferred Securities prior to the record date for the date on
which distributions of such amounts are made. The Company has no current
intention of exercising its right to defer payments of interest by extending
the interest payment period on the Convertible Debentures. However, should the
Company determine to exercise such right in the future, the market price of
the Trust Convertible Preferred Securities is likely to be affected. A holder
that disposes of its Trust Convertible Preferred Securities during an
Extension Period, therefore, might not receive the same return on its
investment as a holder that continues to hold its Trust Convertible Preferred
Securities. In addition, as a result of the existence of the Company's right
to defer interest payments, the market price of the Trust Convertible
Preferred Securities (which represent an undivided beneficial ownership
interest in the Convertible Debentures) may be more volatile than other
securities that do not grant the issuer such rights. See "Certain Federal
Income Tax Considerations--Interest Income and Original Issue Discount."
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND CONVERTIBLE
DEBENTURES
The Company's obligations under the Guarantee will be unsecured and will
rank subordinate in right of payment to all other liabilities of the Company
and on a parity with the most senior preferred or preference stock now or
hereafter issued by the Company (including the 6.50% Convertible Preferred
Stock) and with any guarantee now or hereafter entered into by the Company in
respect of any preferred or preference stock of any affiliate of the Company.
The obligations of the Company under the Convertible Debentures will be
unsecured and will rank on a parity with the indebtedness under the Loan
Agreement, dated as of March 3, 1994, between the Company and USX Capital LLC,
and subordinate and junior in right of payment to all present and future
Senior Indebtedness of the Company. Senior Indebtedness includes (i) all
indebtedness of the Company for money borrowed or in connection with the
acquisition of properties or assets and (ii) any indebtedness of others of the
kinds described in clause (i) for which the Company is liable as guarantor or
otherwise. Both the Guarantee and the Convertible Debentures will be
structurally subordinated to all obligations of the Company's subsidiaries. No
payment of principal of (including redemption), premium, if any, or interest
on the Convertible Debentures may be made (i) if any Senior Indebtedness of
the Company is not paid when due and any applicable grace period with respect
to such default has ended and such default not having been cured or waived or
ceasing to exist or (ii) if the maturity of any Senior Indebtedness has been
accelerated because of a default.
As of December 31, 1996, the Company's Senior Indebtedness included, among
other items, $4.3 billion of indebtedness (including indebtedness of
consolidated subsidiaries) guaranteed by the
25
<PAGE>
Company. There are no terms in the Trust Convertible Preferred Securities, the
Convertible Debentures, or the Guarantee that limit the Company's or its
subsidiaries' ability to incur additional indebtedness, including indebtedness
that ranks senior to the Convertible Debentures and the Guarantee. See
"Description of the Guarantee--Status of the Guarantee" and "Description of
the Convertible Debentures--Subordination."
RIGHTS UNDER THE GUARANTEE
The Guarantee will be qualified as an indenture under the Trust Indenture
Act. The Institutional Trustee will act as indenture trustee under the
Guarantee for the purposes of compliance with the provisions of the Trust
Indenture Act (the "Guarantee Trustee"). The Guarantee Trustee will hold the
Guarantee for the benefit of the holders of the Trust Securities.
The Guarantee guarantees to the holders of the Trust Convertible Preferred
Securities the payment of (i) any accumulated and unpaid distributions
required to be paid on the Trust Convertible Preferred Securities, to the
extent the Trust has funds available therefor, (ii) the redemption price and
all accumulated and unpaid distributions with respect to Trust Convertible
Preferred Securities called for redemption by the Trust, to the extent the
Trust has funds available therefor and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Trust (other than in connection
with the distribution of Convertible Debentures to the holders of Trust
Convertible Preferred Securities or a redemption of all the Trust Convertible
Preferred Securities), the lesser of (a) the aggregate of the liquidation
amount and all accumulated and unpaid distributions on the Trust Convertible
Preferred Securities to the date of the payment to the extent the Trust has
funds available therefor or (b) the amount of assets of the Trust remaining
available for distribution to holders of the Trust Convertible Preferred
Securities in liquidation of the Trust.
The holders of a majority in liquidation amount of the Trust Convertible
Preferred Securities will have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Guarantee Trustee
or to exercise any trust or power conferred upon the Guarantee Trustee under
the Guarantee. If the Guarantee Trustee fails to enforce such Guarantee, any
holder of Trust Convertible Preferred Securities may institute a legal
proceeding directly against the Company to enforce such holder's right to
receive payment under the Guarantee without first instituting a legal
proceeding against the Trust, the Guarantee Trustee or any other person or
entity. If the Company were to default on its obligation to pay amounts
payable on the Convertible Debentures, the Trust would lack available funds
for the payment of distributions or amounts payable on redemption of the Trust
Convertible Preferred Securities or otherwise, and, in such event, holders of
the Trust Convertible Preferred Securities would not be able to rely upon the
Guarantee for payment of such amounts. See "Description of the Guarantee."
However, a holder of the Trust Convertible Preferred Securities could instead
rely on the enforcement (i) by the Institutional Trustee of its rights as
registered holder of the Convertible Debentures against the Company pursuant
to the terms of the Convertible Debentures or (ii) by such holder of its right
of direct action against the Company to enforce payments on Convertible
Debentures. See "Description of the Convertible Debentures-- Indenture Events
of Default." The Declaration provides that each holder of Trust Convertible
Preferred Securities, by acceptance thereof, agrees to the provisions of the
Guarantee, including the subordination provisions thereof, and the Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST CONVERTIBLE PREFERRED
SECURITIES
If (i) the Trust fails to pay distributions in full on the Trust Convertible
Preferred Securities (other than pursuant to a deferral of interest during an
Extension Period) or (ii) a Declaration Event of Default occurs and is
continuing, then the holders of Trust Convertible Preferred Securities could
rely upon, and under certain circumstances, could cause, the enforcement by
the Institutional Trustee of its rights
26
<PAGE>
as a holder of the Convertible Debentures against the Company. In addition,
the holders of a majority in liquidation amount of the Trust Convertible
Preferred Securities will have the right to direct the time, method, and place
of conducting any proceeding for any remedy available to the Institutional
Trustee or to direct the exercise of any trust or power conferred upon the
Institutional Trustee under the Declaration, including the right to direct the
Institutional Trustee to exercise the remedies available to it as a holder of
the Convertible Debentures. If the Institutional Trustee fails to enforce its
rights under the Convertible Debentures, a holder of Trust Convertible
Preferred Securities may institute a legal proceeding directly against the
Company to enforce the Institutional Trustee's rights under the Convertible
Debentures without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing
and such event is attributable to the failure of the Company to pay interest
or principal on the Convertible Debentures on the date such interest or
principal is otherwise payable (or in the case of redemption, on the
redemption date), then the registered holder of Trust Convertible Preferred
Securities may directly institute a proceeding for enforcement of payment to
such holder of the principal of or interest on the Convertible Debentures
having a principal amount equal to the aggregate liquidation amount of the
Trust Convertible Preferred Securities of such holder (a "Direct Action") on
or after the respective due date specified in the Convertible Debentures. In
connection with such Direct Action, the Company, as the holder of the Trust
Common Securities, will be subrogated to the rights of such holder of Trust
Convertible Preferred Securities under the Declaration to the extent of any
payment made by the Company to such holder of Trust Convertible Preferred
Securities in such Direct Action. The holders of Trust Convertible Preferred
Securities will not be able to exercise directly any other remedy available to
the holders of the Convertible Debentures. See "Description of the Trust
Convertible Preferred Securities--Declaration Events of Default" and
"Description of the Convertible Debentures--Indenture Events of Default."
LIMITED VOTING RIGHTS
Holders of Trust Convertible Preferred Securities will have limited voting
rights and will not be entitled to vote to appoint, remove or replace, or to
increase or decrease the number of, the Trustees, which voting rights are
vested exclusively in the holder of the Trust Common Securities. See
"Description of the Trust Convertible Preferred Securities--Voting Rights."
TRADING PRICE
The Trust Convertible Preferred Securities may trade at a price that does
not fully reflect the value of accrued and unpaid interest with respect to the
underlying Convertible Debentures. Should the Company exercise its right to
defer payments of interest, a holder who disposes of his Trust Convertible
Preferred Securities between record dates for payments of distributions
thereon will be required to include accrued and unpaid interest on the
Convertible Debentures through the date of disposition in income as ordinary
income (i.e., OID), and to add such amount to his adjusted tax basis in his
pro rata share of the underlying Convertible Debentures deemed disposed of.
The OID from a holder's pro rata share is then added to his or her adjusted
basis in the Trust Convertible Preferred Securities. To the extent the selling
price is less than the holder's adjusted tax basis, a holder will recognize a
capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax
purposes. See "Certain Federal Income Tax Considerations--Interest Income and
Original Issue Discount" and "--Sale or Redemption of Trust Convertible
Preferred Securities."
LACK OF ESTABLISHED TRADING MARKET FOR TRUST CONVERTIBLE PREFERRED SECURITIES
The Trust Convertible Preferred Securities constitute a new issue of
securities of the Trust with no established trading market. The liquidity of
the Trust Convertible Preferred Securities will be
27
<PAGE>
affected by the number of shares of 6.50% Convertible Preferred Stock accepted
on the Exchange Offer. While application will be made to list the Trust
Convertible Preferred Securities on the NYSE and acceptance of validly
tendered shares of 6.50% Convertible Preferred Stock is subject to the Minimum
NYSE Distribution Condition (which may not be waived), there can be no
assurance that an active market for the Trust Convertible Preferred Securities
will develop or be sustained in the future. Although the Dealer Managers have
indicated to the Company and the Trust that they intend to make a market in
the Trust Convertible Preferred Securities, as permitted by applicable laws
and regulations prior to the commencement of trading on the NYSE, they are not
obligated to do so and may discontinue any such market-making at any time
without notice. Accordingly, no assurance can be given as to the liquidity of,
or trading markets for, the Trust Convertible Preferred Securities. See "The
Exchange Offer--Listing and Trading of Trust Convertible Preferred Securities
and 6.50% Convertible Preferred Stock."
REDUCED TRADING MARKET FOR 6.50% CONVERTIBLE PREFERRED STOCK
To the extent shares of 6.50% Convertible Preferred Stock are tendered and
accepted in the Exchange Offer, and/or the number of Holders of 6.50%
Convertible Preferred Stock is reduced to below certain levels, the liquidity
and trading market for shares of 6.50% Convertible Preferred Stock outstanding
following the Exchange Offer, and the terms upon which such shares could be
sold, could be adversely affected. In addition, if the Exchange Offer is
substantially subscribed, there would be a significant risk that round lot
holdings of shares of 6.50% Convertible Preferred Stock outstanding following
the Exchange Offer would be limited. Further, following the Expiration Date,
and in accordance with and subject to applicable law, the Company may from
time to time acquire shares of 6.50% Convertible Preferred Stock in the open
market, by tender offer, subsequent exchange offer or otherwise. The Company's
decision to make such acquisitions is dependent on many factors, including
market conditions at the time of any contemplated acquisition. Accordingly,
the Company cannot predict whether and to what extent it will acquire any
additional shares of 6.50% Convertible Preferred Stock and the consideration
to be paid therefor.
The Exchange Offer is for up to 6,700,000 shares of 6.50% Convertible
Preferred Stock (or 97.1% of the 6,900,000 shares outstanding) rather than for
all of the outstanding shares of 6.50% Convertible Preferred Stock in order to
avoid a delisting of the 6.50% Convertible Preferred Stock from the NYSE
following consummation of the Exchange Offer. See "The Exchange Offer--Listing
and Trading of Trust Convertible Preferred Securities and 6.50% Convertible
Preferred Stock." Although the Company does not anticipate that the NYSE will
delist the 6.50% Convertible Preferred Stock as a result of the Exchange
Offer, acquisitions by the Company of 6.50% Convertible Preferred Stock after
the Exchange Offer will make it more likely that the NYSE will delist the
6.50% Convertible Preferred Stock than if the Exchange Offer had not occurred.
RISKS RELATING TO THE COMMON STOCK OF THE COMPANY
STOCKHOLDERS OF ONE COMPANY; FINANCIAL IMPACTS FROM ONE GROUP COULD AFFECT
THE OTHER GROUPS
Although the financial statements of the U.S. Steel Group, the Marathon
Group and the Delhi Group separately report the assets, liabilities (including
contingent liabilities) and stockholders' equity of the Company attributed to
each such Group, such attribution of assets, liabilities (including contingent
liabilities) and stockholders' equity among the U.S. Steel Group, the Marathon
Group and the Delhi Group for the purpose of preparing their respective
financial statements does not affect legal title to such assets or
responsibility for such liabilities. Holders of Steel Stock, Marathon Stock
and Delhi Stock are holders of common stock of the Company, and continue to be
subject to all of the risks associated with an investment in the Company and
all of its businesses and liabilities. Financial
28
<PAGE>
impacts arising from one Group that affect the overall cost of the Company's
capital could affect the results of operations and financial condition of the
other Groups. In addition, net losses of any Group, as well as dividends and
distributions on any class of the Company's common stock or series of
Preferred Stock and repurchases of any class of the Company's common stock or
series of preferred stock, will reduce the funds of the Company legally
available for payment of dividends on the Steel Stock. Accordingly, the USX
consolidated financial information should be read in connection with the Group
financial information. The Company prepares consolidated financial statements,
as well as financial statements of each Group. Holders of the respective
classes of Common Stock are provided consolidated financial statements and the
financial statements of their respective group.
NO RIGHTS OR ADDITIONAL DUTIES WITH RESPECT TO THE GROUPS;
POTENTIAL CONFLICTS
Holders of Steel Stock, Marathon Stock and Delhi Stock have only the rights
of stockholders of the Company, and, except as described under "Description of
Capital Stock and Amended and Restated Rights Plan--Steel Stock--Exchange and
Redemption" and "--Voting," holders of Common Stock are not provided any
rights specifically related to any Group. In addition, principles of Delaware
law established in cases involving differing treatment of classes of capital
stock or groups of holders of the same class of capital stock provide that a
board of directors owes an equal duty to all stockholders regardless of class
or series and does not have separate or additional duties to any group of
stockholders.
The existence of separate classes of Common Stock may give rise to occasions
when the interests of holders of Steel Stock, Marathon Stock and Delhi Stock
may diverge or appear to diverge. Examples include the optional exchange of
Steel Stock for Marathon Stock at the 10% premium or of Delhi Stock for
Marathon Stock or Steel Stock at the 15% premium, as the case may be; the
determination of the record date of any such exchange or for the redemption of
any Steel Stock or Delhi Stock; the establishment of the date for public
announcement of the liquidation of the Company; and the commitment of capital
among the U.S. Steel Group, the Marathon Group and the Delhi Group.
Because the Board owes an equal duty to all stockholders regardless of
class, the Board is the appropriate body to deal with these matters. In order
to assist the Board in this regard, the Company has formulated policies to
serve as guidelines for the resolution of matters involving a conflict or a
potential conflict, including policies dealing with the payment of dividends,
limiting capital investment in the U.S. Steel Group over the long term to its
internally generated cash flow, and allocating of corporate expenses and other
matters. The Board has been advised concerning the applicable law relating to
the discharge of its fiduciary duties to the common stockholders in the
context of the separate classes of Common Stock and has delegated to the Audit
Committee of the Board the responsibility to review matters which relate to
this subject and report to the Board. While the classes of Common Stock may
give rise to an increased potential for conflicts of interest, established
rules of Delaware law would apply to the resolution of any such conflicts.
Under Delaware law, a good faith determination made by a disinterested and
adequately informed Board with respect to any such matter would be a defense
to any claim of liability made on behalf of the holders of any class of Common
Stock. The Company is aware of no precedent concerning the manner in which
such rules of Delaware law would be applied in the context of its capital
structure.
LIMITED SEPARATE VOTING RIGHTS
Holders of shares of Steel Stock, Marathon Stock and Delhi Stock vote
together as a single class on all matters as to which all the Company's common
stockholders are entitled to vote. Holders of Steel Stock, Marathon Stock or
Delhi Stock will have no rights to vote on matters as a separate Group except
as described under "Description of Capital Stock Amended and Restated Rights
Plan--Steel Stock--Voting" and in certain limited circumstances as currently
provided under Delaware law.
29
<PAGE>
Separate meetings for the holders of each class of Common Stock will not be
held. Accordingly, subject to such exceptions, holders of shares of Steel
Stock, Marathon Stock or Delhi Stock, cannot bring a proposal to a vote of the
holders of Steel Stock, Marathon Stock or Delhi Stock only, but are required
to bring any proposal to a vote of all holders of capital stock of the Company
entitled to vote generally voting together as a single class.
The interests of the holders of the Steel Stock, Marathon Stock and Delhi
Stock may diverge or appear to diverge with respect to certain matters as to
which such holders are entitled to vote. If, when a stockholder vote is taken
on any matter as to which a separate vote by any class would not be required
under the Certificate of Incorporation or Delaware law, the holders of one or
more classes of Common Stock would have more than the number of votes required
to approve any such matter, the holders of that class or classes would be in a
position to control the outcome of the vote on such matter. The Certificate of
Incorporation provides that neither the increase nor the decrease of the
authorized number of shares of any class of Common Stock requires a separate
vote of any such class. Thus, it is possible that the holders of a majority of
any class or two classes of Common Stock could constitute a majority of the
voting power of all classes of Common Stock and approve the increase or
decrease of the authorized amount of another class or classes of Common Stock
without the approval of the holders of such other class or classes of Common
Stock.
On all matters where the holders of Common Stock vote together as a single
class, a share of Marathon Stock will have one vote and each share of Steel
Stock and Delhi Stock will have a fluctuating vote per share based on relative
time-weighted average ratios of their Market Values. For purposes of the USX
Annual Stockholders meeting to be held on April 29, 1997, the per share voting
rights of Marathon Stock, Steel Stock and Delhi Stock are one vote, 1.181
votes and .589 vote per share, respectively. Accordingly, the holders of
Marathon Stock, Steel Stock and Delhi Stock have approximately 73.1%, 25.5%
and 1.4%, respectively, of the total voting power of the Company for that
meeting.
MANAGEMENT AND ACCOUNTING POLICIES SUBJECT TO CHANGE
Since 1991 the Company has applied certain management and accounting
policies adopted by the Board and described herein, which policies may be
modified or rescinded in the sole discretion of the Board without approval of
stockholders, although the Board has no present intention to do so. The Board
may also adopt additional policies depending upon the circumstances. Any
determination of the Board to modify or rescind such policies, or to adopt
additional policies, including any such decision that would have disparate
impacts upon holders of Steel Stock, or Marathon Stock or Delhi Stock, would
be made by the Board in good faith and in the honest belief that such decision
is in the best interests of all stockholders of the Company. In addition,
generally accepted accounting principles require that any change in accounting
policy be preferable (in accordance with such principles) to the policy
previously established.
LIMITATIONS ON POTENTIAL UNSOLICITED ACQUISITIONS
If the U.S. Steel Group, the Marathon Group and the Delhi Group were
separate companies, any person interested in acquiring one of them without
negotiation with management could seek to obtain control of it by means of a
tender offer or proxy contest. Because each Group is not a separate company,
any person interested in acquiring only one Group without negotiation with the
Company management would be required to seek control of the voting power
representing all of the outstanding capital stock of the Company entitled to
vote on such acquisition. See "Limited Separate Voting Rights" above.
Because of fluctuations in the relative Market Values of shares of the three
classes of Common Stock, the voting power of a particular stockholder may be
increased or decreased from that held at
30
<PAGE>
the time the stockholder acquired the stock or from that held at the time of
the previous vote. The fluctuating voting powers of the three classes of
Common Stock may influence a purchaser interested in acquiring and maintaining
control of the Company to acquire equivalent holdings in all classes of Common
Stock.
DIVIDENDS AND EARNINGS PER SHARE
The Board intends to declare and pay dividends on the Steel Stock, Marathon
Stock and Delhi Stock based on the financial condition and results of
operations of the respective Group, although it has no obligation under
Delaware law to do so. Subject to any prior rights of the holders of Preferred
Stock: (a) dividends on Steel Stock will be payable out of the lesser of (i)
the Available Steel Dividend Amount and (ii) legally available funds; (b)
dividends on Marathon Stock will be payable out of legally available funds of
the Company (as defined under Delaware law); and (c) dividends on Delhi Stock
will be payable when, as and if declared by the Board out of the lesser of (i)
the Available Delhi Dividend Amount and (ii) legally available funds. In
making its dividend decisions, the Board will rely on the financial statements
of each Group. In determining its dividend policy, the Board will consider,
among other things, the long-term earnings and cash flow capabilities of each
Group, as well as the dividend policies of similar publicly traded companies.
The method of calculating earnings per share for the Steel Stock, the
Marathon Stock and the Delhi Stock reflects the Board's intent that the
separately reported earnings and surplus of the Steel Group, the Marathon
Group and the Delhi Group, as determined consistent with the Certificate of
Incorporation, are available for payment of dividends to the respective
classes of stock, although legally available funds and liquidation preferences
of these classes of stock do not necessarily correspond with these amounts.
Dividends on all classes of Preferred Stock and the Company common stock are
limited to legally available funds of the Company, which are determined on the
basis of the entire Corporation. Distributions on the Steel Stock, the
Marathon Stock and the Delhi Stock would be precluded by a failure to pay
dividends on any series of Preferred Stock. Net losses of any Group as well as
dividends and distributions on any class of common stock or series of
Preferred Stock and repurchases of any class of common stock or series of
Preferred Stock, will reduce the funds of the Company legally available for
payment of dividends on all classes of common stock.
Under Delaware law, a corporation may declare and pay dividends on its
capital stock either (1) out of its surplus or (2) in case there is no
surplus, out of its net profits for the year in which the dividend is declared
and/or the proceeding fiscal year. "Surplus" is the amount by which the total
assets of the corporation exceed total liabilities and capital. Capital for
the Company is the sum of (a) the aggregate par value of the outstanding
shares of Common Stock (equal to $1 per share), and (b) the aggregate stated
capital of the outstanding shares of 6.50% Convertible Preferred Stock ($1 per
share). If the capital of a corporation is diminished by depreciation in the
value of its properties, or by losses, or otherwise, to an amount less than
the aggregate amount of capital represented by the outstanding stock of all
classes having a preference upon the distribution of assets, dividends may not
be paid out of net profits (that is pursuant to clause (2) above) until the
deficiency in capital shall have been repaired. For purposes of determining
surplus, the assets and liabilities of a corporation are to be valued on the
basis of market value.
POTENTIAL EFFECTS OF EXCHANGE AND REDEMPTION OF COMMON STOCK
Under various conditions, the Steel Stock may be exchanged, at the Company's
option, for shares of Marathon Stock, or if there are no shares of Marathon
Stock outstanding, Delhi Stock at a 10% premium. Any exchange of Steel Stock
for Marathon Stock or Delhi Stock would preclude holders of Steel Stock from
retaining their investment in a security reflecting the Company's steel and
other businesses that constitute the U.S. Steel Group. See "Description of
Capital Stock and Amended and
31
<PAGE>
Restated Rights Plan--Steel Stock--Exchange and Redemption." The Company
cannot predict the impact on the market price of the Steel Stock or its
ability to effect any such exchange.
Under various conditions, the Delhi Stock may be exchanged, at the Company's
option, for shares of Marathon Stock, or if there are no shares of Marathon
Stock outstanding, Steel Stock at a 10% premium. In addition, the Board may at
any time exchange each outstanding share of Delhi Stock for a number of shares
of Marathon Stock or, if there are no shares of Marathon Stock outstanding and
shares of Steel Stock are outstanding, of Steel Stock at a 15% premium. See
"Description of Capital Stock and Amended and Restated Rights Plan--Delhi
Stock--Exchange and Redemption." Any exchange of Delhi Stock for Steel Stock
would dilute the interests of holders of Steel Stock. The Company cannot
predict the impact on the market price of the Delhi Stock or its ability to
effect any such exchange.
PRICE RANGE OF STEEL STOCK, DIVIDENDS AND DIVIDEND POLICY
The Steel Stock is listed on the NYSE and the Chicago and Pacific Stock
Exchanges. The following table sets forth the range of high and low sales
prices of the Steel Stock on the Composite Tape for the stated periods.
<TABLE>
<CAPTION>
HIGH LOW
------- ------
<S> <C> <C>
1995
First Quarter................................................. $39 1/8 $30
Second Quarter................................................ 34 3/4 29 1/4
Third Quarter................................................. 39 30 5/8
Fourth Quarter................................................ 33 5/8 29 1/8
1996
First Quarter................................................. 37 7/8 30
Second Quarter................................................ 35 7/8 27 3/4
Third Quarter................................................. 29 5/8 24 1/8
Fourth Quarter................................................ 32 26 1/2
1997
First Quarter (through March 25)............................... 33 3/8 27 3/8
------- ------
</TABLE>
On March 25, 1997, the reported last sale price of the Steel Stock on the
Composite Tape was $27 3/4 per share.
Since May 6, 1991, the Board has declared a dividend each quarter on the
Steel Stock of $.25 per share. The Board reserves the right to change the
dividend rate at any time and from time to time. The Board intends to declare
and pay dividends on the Steel Stock based on the financial condition and
results of operations of the U.S. Steel Group, although it has no obligation
under Delaware law to do so. Dividends on the Steel Stock will be payable
when, as and if declared by the Board out of the lesser of (i) the Available
Steel Dividend Amount (as defined herein) and (ii) legally available funds of
USX (as defined under Delaware law). In making its dividend decisions, the
Board will rely on the financial statements of the U.S. Steel Group. In
determining its dividend policy, the Board will consider, among other things,
the long-term earnings and cash flow capabilities of the U.S. Steel Group, as
well as the dividend policies of publicly traded steel companies. See "U.S.
Steel Group--Selected Financial Information-footnote (a)," "Risk Factors--
Risks Relating to the Common Stock of the Company--Dividends and Earnings Per
Share" and "Description of Capital Stock and Amended and Restated Rights
Plan--Steel Stock--Dividends."
32
<PAGE>
PRICE RANGE OF 6.50% CONVERTIBLE PREFERRED STOCK
The 6.50% Convertible Preferred Stock is listed on the NYSE. The following
table sets forth the range of high and low sales prices of the 6.50%
Convertible Preferred Stock on the Composite Tape for the stated periods.
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
1995
First Quarter................................................. $49 7/8 $43 1/4
Second Quarter................................................ 48 1/2 43 7/8
Third Quarter................................................. 50 1/8 46 1/8
Fourth Quarter................................................ 49 3/4 45 3/4
1996
First Quarter................................................. 51 1/4 47 1/8
Second Quarter................................................ 49 43 5/8
Third Quarter................................................. 45 1/8 41 3/8
Fourth Quarter................................................ 45 3/4 41 1/2
1997
First Quarter (through March 25).............................. 47 1/2 44 1/8
------- -------
</TABLE>
On March 25, 1997, the reported last sale price of the 6.50% Convertible
Preferred Stock on the Composite Tape was $44 1/2 per share.
33
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the U.S. Steel Group
and the consolidated capitalization of the Company (i) at December 31, 1996,
and (ii) as adjusted to give effect to the issuance of Trust Convertible
Preferred Securities in the Exchange Offer on the assumption that 6,700,000 of
the outstanding shares of the 6.50% Convertible Preferred Stock are validly
tendered and accepted for exchange.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-------------------------------------
U.S. STEEL GROUP USX CONSOLIDATED
------------------ ------------------
ACTUAL AS ADJUSTED ACTUAL AS ADJUSTED
------ ----------- ------ -----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Short-term obligations (including notes
payable and current maturities of long-
term debt)............................. $ 91 $ 91 $ 434 $ 434
Long-term debt due after one year....... 1,014 1,014 3,859 3,859
Preferred stock of subsidiary........... 64 64 250 250
USX obligated mandatorily redeemable
convertible preferred securities of a
subsidiary trust holding solely
convertible debentures ("Trust
Convertible Preferred
Securities")(a)(b)..................... -- 335 -- 335
Stockholders' equity.................... 1,566 1,231 5,022 4,687
------ ------ ------ ------
Total capitalization.................... $2,735 $2,735 $9,565 $9,565
====== ====== ====== ======
</TABLE>
- --------
(a) To the extent that 6,700,000 shares of the 6.50% Convertible Preferred
Stock are not validly tendered and accepted for exchange in the Exchange
Offer, the amount attributed to Trust Convertible Preferred Securities
would decrease and the amounts under the "As Adjusted" column attributed
to the 6.50% Convertible Preferred Stock included in "Stockholders'
equity" would increase.
(b) The amounts shown assume issuance of the Trust Convertible Preferred
Securities at an aggregate fair value equivalent to the aggregate initial
liquidation amount of $335 million. The difference between the aggregate
fair value of the Trust Convertible Preferred Securities and the carrying
value of the 6.50% Convertible Preferred Stock is charged to Additional
paid-in capital included in "Stockholders' equity." To the extent that the
actual aggregate fair value of the Trust Convertible Preferred Securities
differs from the aggregate initial liquidation amount, the balance of the
carrying value of the Trust Convertible Preferred Securities and
Additional paid-in capital will change accordingly.
34
<PAGE>
U.S. STEEL GROUP
SELECTED FINANCIAL INFORMATION
The following selected financial information has been derived from the
financial statements of the U.S. Steel Group for each of the five years in the
period ended December 31, 1996. The information set forth below should be read
in connection with the U.S. Steel Group financial statements and notes thereto
and accompanying "Management's Discussion and Analysis" contained in the USX
Annual Report on Form 10-K for the year ended December 31, 1996, incorporated
herein by reference. Specific reference is made to footnotes (a) and (b)
regarding basis of presentation and corporate activities. The financial
information of the U.S. Steel Group supplements the consolidated financial
information of USX and, taken together with the financial information of the
Marathon Group and the Delhi Group, includes all accounts which comprise the
corresponding consolidated financial information of USX.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- ---------
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................... $ 6,547 $ 6,475 $ 6,077 $ 5,797 $ 4,939
Operating income (loss).... 360 500 324 36 (221)
Operating costs include:
Depreciation, depletion
and amortization......... 292 318 314 314 288
Pension credits........... (159) (132) (120) (202) (231)
Restructuring charges..... -- -- -- 42 10
Other income (loss)........ 123 82 64 25 (15)
Other income (loss)
includes:
Gain on affiliate stock
offering................. 53 -- -- -- --
Gain on disposal of
investments.............. 1 2 1 31 3
Income (loss) from
affiliates--equity method
......................... 66 80 59 (11) (27)
Income (loss) before
extraordinary loss and
cumulative effect of
changes in accounting
principles................ 275 303 201 (169) (271)
Net income (loss) before
preferred dividends....... $ 273 $ 301 $ 201 $ (238) $ (1,606)
Dividends on preferred
stock..................... (22) (24) (25) (21) (3)
-------- -------- -------- -------- ---------
Net income (loss)
applicable to Steel Stock. $ 251 $ 277 $ 176 $ (259) $ (1,609)
======== ======== ======== ======== =========
BALANCE SHEET DATA (AT
PERIOD END):
Working capital............ $ 129 $ (75) $ 513 $ (61) $ 58
Capital expenditures--for
year...................... 337 324 248 198 298
Total assets............... 6,580 6,521 6,480 6,629 6,251
Capitalization:
Notes payable............. $ 18 $ 8 $ -- $ -- $ 15
Total long-term debt...... 1,087 1,016 1,453 1,562 2,259
Preferred stock of
subsidiary and other
minority interest........ 64 64 64 5 16
Preferred stock........... 7 7 32 32 25
Common stockholders'
equity................... 1,559 1,337 913 585 222
-------- -------- -------- -------- ---------
Total capitalization...... $ 2,735 $ 2,432 $ 2,462 $ 2,184 $ 2,537
======== ======== ======== ======== =========
PER SHARE DATA--STEEL STOCK:
Income (loss) before
extraordinary loss and
cumulative effect of
changes in accounting
principles:
primary................... $ 3.00 $ 3.53 $ 2.35 $ (2.96) $ (4.92)
fully diluted............. 2.97 3.43 2.33 (2.96) (4.92)
Net income (loss):
primary................... 2.98 3.51 2.35 (4.04) (28.85)
fully diluted............. 2.95 3.41 2.33 (4.04) (28.85)
Dividends paid per share... 1.00 1.00 1.00 1.00 1.00
Book value per share (at
period end)............... 18.37 16.10 12.01 8.32 3.72
</TABLE>
The footnotes appearing on the following two pages are an integral part of
this information.
35
<PAGE>
- --------
(a) BASIS OF PRESENTATION--The financial statements of the U.S. Steel Group
include the financial position, results of operations and cash flows for
all businesses of USX other than the businesses, assets and liabilities
included in the Marathon Group or the Delhi Group, and a portion of the
corporate assets and liabilities and related transactions which are not
separately identified with ongoing operating units of USX. The U.S. Steel
Group financial statements are prepared using the amounts included in the
USX consolidated financial statements.
Although the financial statements of the U.S. Steel Group, the Marathon
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 of assets, liabilities
(including contingent liabilities) and stockholders' equity among the U.S.
Steel Group, the Marathon Group and the Delhi Group for the purpose of
preparing their respective financial statements does not affect legal title
to such assets or responsibility for such liabilities. Holders of Steel
Stock, Marathon Stock and Delhi Stock are holders of common stock of USX,
and continue to be subject to all the risks associated with an investment
in USX and all of its businesses and liabilities. Financial impacts arising
from one Group that affect the overall cost of USX's capital could affect
the results of operations and financial condition of other groups. In
addition, net losses of any Group, as well as dividends and distributions
on any class of USX Common Stock or series of preferred stock and
repurchases of any class of USX Common Stock or series of preferred stock
at prices in excess of par or stated value, will reduce the funds of USX
legally available for payment of dividends on all classes of Common Stock.
Accordingly, the USX consolidated financial information should be read in
connection with the U.S. Steel Group financial information.
(b) FINANCIAL ACTIVITIES--As a matter of policy, USX manages most financial
activities on a centralized, consolidated basis. Such financial activities
include the investment of surplus cash; the issuance, repayment and
repurchase of short-term and long-term debt; the issuance, repurchase and
redemption of preferred stock; and the issuance and repurchase of common
stock. Transactions related primarily to invested cash, short-term and
long-term debt (including convertible debt), related net interest and
other financial costs, and preferred stock and related dividends are
attributed to the U.S. Steel Group, the Marathon Group and the Delhi Group
based upon the cash flows of each group for the periods presented and the
initial capital structure of each group. Most financing transactions are
attributed to and reflected in the financial statements of all three
groups. However, transactions such as leases, certain collateralized
financings, certain indexed debt instruments, financial activities of
consolidated entities which are less than wholly owned by USX and
transactions related to securities convertible solely into any one class
of common stock are or will be specifically attributed to and reflected in
their entirety in the financial statements of the group to which they
relate.
CORPORATE GENERAL AND ADMINISTRATIVE COSTS--Corporate general and
administrative costs are allocated to the U.S. Steel Group, the Marathon
Group and the Delhi Group based upon utilization or other methods
management believes to be reasonable and which consider certain measures of
business activities, such as employment, investments and sales. The costs
allocated to the U.S. Steel Group primarily consist of employment costs
including pension effects, professional services, facilities and other
related costs associated with corporate activities.
INCOME TAXES--All members of the USX affiliated group are included in the
consolidated United States federal income tax return filed by USX.
Accordingly, the provision for federal income taxes and the related
payments or refunds of tax are determined on a consolidated basis. The
consolidated provision and the related tax payments or refunds have been
reflected in the U.S. Steel Group, the Marathon Group and the Delhi Group
financial statements in accordance with USX's tax allocation policy. In
general, such policy provides that the consolidated tax provision and
related tax payments or refunds are allocated among the U.S. Steel Group,
the Marathon Group and the Delhi Group, for group financial statement
purposes, based principally upon the
36
<PAGE>
financial income, taxable income, credits, preferences and other amounts
directly related to the respective groups.
For tax provision and settlement purposes, tax benefits resulting from
attributes (principally net operating losses and various tax credits),
which cannot be utilized by one of the three groups on a separate return
basis but which can be utilized on a consolidated basis in that year or in
a carryback year, are allocated to the group that generated the attributes.
To the extent that one of the three groups is allocated a consolidated tax
attribute which, as a result of expiration or otherwise, is not ultimately
utilized on the consolidated tax return, the prior years' allocation of
such attribute is adjusted such that the effect of the expiration is borne
by the group that generated the attribute. Also, if a tax attribute cannot
be utilized on a consolidated basis in the year generated or in a carryback
year, the prior years' allocation of such consolidated tax effects is
adjusted in a subsequent year to the extent necessary to allocate the tax
benefits to the group that would have realized the tax benefits on a
separate return basis. As a result, the allocated group amounts of taxes
payable or refundable are not necessarily comparable to those that would
have resulted if the groups had filed separate tax returns.
37
<PAGE>
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, 1996. 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 Annual Report on Form 10-K for the year ended December 31, 1996,
incorporated herein by reference.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues......................... $23,844 $20,964 $19,530 $18,290 $17,849
Operating income ................ 1,625 631 1,044 273 91
Operating costs include:
Depreciation, depletion and
amortization................... 1,012 1,160 1,065 1,077 1,091
Inventory market valuation
charges (credits).............. (209) (70) (160) 241 (62)
Pension credits................. (160) (142) (116) (211) (260)
Restructuring charges (credits). -- (6) 37 42 125
Impairment of long-lived assets. -- 675 -- -- --
Other income (loss).............. 164 101 78 40 (23)
Other income (loss) includes:
Gain on affiliate stock
offering....................... 53 -- -- -- --
Gain on disposal of investments. 21 3 5 36 3
Income (loss) from affiliates--
equity method.................. 85 89 64 (1) (14)
Income (loss) before income
taxes, extraordinary loss and
cumulative effect of changes in
accounting principles........... 1,368 269 685 (239) (189)
Income (loss) before
extraordinary loss and
cumulative effect of changes in
accounting principles........... 952 221 501 (167) (160)
Net income (loss) before
preferred dividends............. $ 943 $ 214 $ 501 $ (259) $(1,826)
Dividends on preferred stock..... (22) (28) (31) (27) (9)
------- ------- ------- ------- -------
Net income (loss) applicable to
common stocks................... $ 921 $ 186 $ 470 $ (286) $(1,835)
======= ======= ======= ======= =======
BALANCE SHEET DATA (AT PERIOD
END):
Working capital.................. $ (117) $ (280) $ 470 $ (172) $ (370)
Capital expenditures--for year... 1,168 1,016 1,033 1,151 1,505
Total assets..................... 16,980 16,743 17,517 17,414 17,252
Capitalization:
Notes payable................... $ 81 $ 40 $ 1 $ 1 $ 47
Total long-term debt............ 4,212 4,937 5,599 5,970 6,302
Preferred stock of subsidiary
and other minority interest.... 250 250 250 5 16
Preferred stock................. 7 7 112 112 105
Common stockholders' equity..... 5,015 4,321 4,190 3,752 3,604
------- ------- ------- ------- -------
Total capitalization........... $ 9,565 $ 9,555 $10,152 $ 9,840 $10,074
======= ======= ======= ======= =======
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- -----------
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C>
COMMON SHARE DATA--STEEL
STOCK:
Income (loss) before
extraordinary loss and
cumulative effect of
changes in accounting
principles applicable
to Steel Stock........ $ 253 $ 279 $ 176 $ (190) $ (274)
Per share--primary.... 3.00 3.53 2.35 (2.96) (4.92)
--fully diluted.... 2.97 3.43 2.33 (2.96) (4.92)
Net income (loss)
applicable to Steel
Stock................. 251 277 176 (259) (1,609)
Per share--primary.... 2.98 3.51 2.35 (4.04) (28.85)
--fully diluted.... 2.95 3.41 2.33 (4.04) (28.85)
Dividends paid per
share................. 1.00 1.00 1.00 1.00 1.00
Book value per share
(at period end)....... 18.37 16.10 12.01 8.32 3.72
COMMON SHARE DATA--MARA-
THON STOCK:
Income (loss) before
extraordinary loss and
cumulative effect of
changes in accounting
principles applicable
to Marathon Stock..... $ 671 $ (87) $ 315 $ (12) $ 103
Per share--primary.... 2.33 (.31) 1.10 (.04) .37
--fully diluted.... 2.31 (.31) 1.10 (.04) .37
Net income (loss)
applicable to Marathon
Stock................. 664 (92) 315 (35) (228)
Per share--primary.... 2.31 (.33) 1.10 (.12) (.80)
--fully diluted.... 2.29 (.33) 1.10 (.12) (.80)
Dividends paid per
share................. .70 .68 .68 .68 1.22
Book value per share
(at period end)....... 11.62 9.99 11.01 10.58 11.37
COMMON SHARE DATA--DELHI
STOCK OUTSTANDING SINCE
OCTOBER 2, 1992:
Net income (loss)
applicable to
outstanding Delhi
Stock................. $ 5.9 $ 1.1 $ (20.9) $ 7.8 $ 2.0
Per share--primary and
fully diluted........ .62 .12 (2.22) .86 .22
Dividends paid per
share................. .20 .20 .20 .20 .05
Book value per share
(at period end)....... 12.30 11.88 12.09 14.50 13.83
RATIOS (UNAUDITED):
Ratio of earnings to
fixed charges......... 3.81 1.63 2.08 (a) (a)
Ratio of earnings to
combined fixed charges
and preferred stock
dividends............. 3.55 1.50 1.92 (b) (b)
</TABLE>
- --------
(a) Earnings did not cover fixed charges by $281 million for 1993 and by $197
million for 1992.
(b) Earnings did not cover fixed charges and preferred stock dividends by $325
million for 1993 and by $211 million for 1992.
39
<PAGE>
THE EXCHANGE OFFER
GENERAL
Participation in the Exchange Offer is voluntary and Holders should
carefully consider whether to accept. None of the Board, the Company, the
Trustees nor the Trust make any recommendation to Holders as to whether to
tender or refrain from tendering in the Exchange Offer. Holders of 6.50%
Convertible Preferred Stock are urged to consult their financial and tax
advisors in making their own decisions on what action to take in light of
their own particular circumstances.
Unless the context requires otherwise, the term "Holder" with respect to
this Exchange Offer Section means (i) any person in whose name any shares of
6.50% Convertible Preferred Stock are registered on the books of the Company,
(ii) any other person who has obtained a properly completed stock power from
the registered holder, or (iii) any person whose shares of 6.50% Convertible
Preferred Stock are held of record by The Depository Trust Company ("DTC") who
desires to deliver such shares by book-entry transfer at DTC.
PURPOSE OF THE EXCHANGE OFFER
The purpose of the Exchange Offer is to refinance the 6.50% Convertible
Preferred Stock with the Trust Convertible Preferred Securities. This
refinancing will benefit the Company by permitting the Company to deduct
interest payable on the Convertible Debentures for United States federal
income tax purposes, while dividends payable on the 6.50% Convertible
Preferred Stock are not deductible. The extent of this benefit, however,
cannot be predicted because it depends upon the number of shares of 6.50%
Convertible Preferred Stock exchanged pursuant to the Exchange Offer, the
Company's federal income tax position in any year and the period of time the
Trust Convertible Preferred Securities remain outstanding. Neither the Trust's
ability to defer distribution payments on the Trust Convertible Preferred
Securities nor the more limited voting rights on the part of holders of the
Trust Convertible Preferred Securities is a purpose of the Company in making
the Exchange Offer.
The Company may exercise its optional redemption rights on any shares of
6.50% Convertible Preferred Stock that remain outstanding after the
consummation of the Exchange Offer. The optional redemption price for a share
of the 6.50% Convertible Preferred Stock immediately after the Expiration Date
of the Exchange Offer will be $51.950, plus accrued and unpaid dividends, if
any, up to but excluding the redemption date.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions of the Exchange Offer, the
Company will exchange Trust Convertible Preferred Securities representing
undivided beneficial ownership interests in the assets of the Trust for up to
6,700,000 of the outstanding shares of 6.50% Convertible Preferred Stock
(97.1% of the 6,900,000 outstanding shares of 6.50% Convertible Preferred
Stock) of the Company. The Exchange Offer will be effected on the basis of one
Trust Convertible Security for each share of 6.50% Convertible Preferred Stock
validly tendered and accepted for exchange in the Exchange Offer. Consummation
of the Exchange Offer is conditioned on, without limitation, (i) the
satisfaction of the Minimum NYSE Distribution Condition, which requires that,
immediately after the acceptance for exchange of shares of 6.50% Convertible
Preferred Stock in the Exchange Offer, there will be at least 400 record or
beneficial holders with an aggregate of at least 1,000,000 Trust Convertible
Preferred Securities; (ii) receipt of at least 3,450,000 validly tendered
shares of 6.50% Convertible Preferred Stock (which condition may be waived by
the Company); and (iii) the satisfaction of the OID Condition. The OID
Condition requires that the Company reasonably expect, on the Expiration Date,
based upon the terms of the Trust Convertible Preferred Securities and the
recent trading values of the 6.50% Convertible Preferred Stock, that the
Convertible Debentures will not be issued with reportable OID. The Minimum
NYSE Distribution Condition and the OID Condition may not be waived by the
Company. See "--Expiration Date; Extensions; Amendments; Termination."
40
<PAGE>
Upon the terms and subject to the conditions of the Exchange Offer, the
Company will accept for exchange up to 6,700,000 shares of 6.50% Convertible
Preferred Stock validly tendered and not withdrawn as promptly as practicable
after the Expiration Date unless the Exchange Offer has been withdrawn or
terminated. The Company will not accept shares of 6.50% Convertible Preferred
Stock for exchange prior to the Expiration Date. The Company expressly
reserves the right, in its sole discretion, to delay acceptance for exchange
of shares of 6.50% Convertible Preferred Stock tendered under the Exchange
Offer or the exchange of Trust Convertible Preferred Securities for the shares
of 6.50% Convertible Preferred Stock accepted for exchange (subject to Rules
13e-4 and 14e-1 under the Exchange Act, which require that the Company
consummate the Exchange Offer or return the shares of 6.50% Convertible
Preferred Stock deposited by or on behalf of the Holders thereof promptly
after the termination or withdrawal of the Exchange Offer), or to withdraw or
terminate the Exchange Offer and not accept any shares of 6.50% Convertible
Preferred Stock at any time for any reason. In all cases, except to the extent
waived by the Company, delivery of the Trust Convertible Preferred Securities
in exchange for the shares of 6.50% Convertible Preferred Stock accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of such shares (or confirmation of book-entry transfer
thereof), a properly completed and duly executed Letter of Transmittal, and
any other documents required thereby.
As of March 25, 1997, there were 6,900,000 shares of 6.50% Convertible
Preferred Stock outstanding. This Prospectus, together with the Letter of
Transmittal, is being sent to all registered Holders as of such date.
The Company shall be deemed to have accepted validly tendered shares of
6.50% Convertible Preferred Stock (or defectively tendered shares of 6.50%
Convertible Preferred Stock with respect to which the Company has waived such
defect) when, as and if the Company has given oral or written notice thereof
to the Exchange Agent. The Exchange Agent will act as agent for the tendering
Holders for the purpose of receiving the Trust Convertible Preferred
Securities from the Company and remitting such Trust Convertible Preferred
Securities to tendering Holders. Upon the terms and subject to the conditions
of the Exchange Offer, delivery of Trust Convertible Preferred Securities in
exchange for shares of 6.50% Convertible Preferred Stock will be made as
promptly as practicable after the Expiration Date.
If proration of tendered shares of 6.50% Convertible Preferred Stock is
required, because of the difficulty in determining the number of shares of
6.50% Convertible Preferred Stock validly tendered (including shares tendered
by the guaranteed delivery procedures described in "--Procedures for
Tendering"), the Company does not expect that it would be able to announce the
final proration factor or to commence the exchange for any shares of 6.50%
Convertible Preferred Stock pursuant to the Exchange Offer until approximately
seven business days after the Expiration Date. Preliminary results of the
proration will be announced by press release as promptly as practicable after
the Expiration Date. Holders of 6.50% Convertible Preferred Stock may obtain
such preliminary information from the Dealer Managers, the Information Agent
or the Exchange Agent and may also be able to obtain such information from
their brokers.
Until the final proration factors are known, the Company will not issue any
Trust Convertible Preferred Securities in exchange for any shares of 6.50%
Convertible Preferred Stock accepted for exchange pursuant to the Exchange
Offer or return shares of 6.50% Convertible Preferred Stock tendered but not
accepted for exchange because of proration.
If any tendered shares of 6.50% Convertible Preferred Stock are not accepted
for exchange because of an invalid tender, proration, the occurrence of
certain other events set forth herein, or otherwise, unless otherwise
requested by the Holder under "Special Delivery Instructions" in the Letter of
Transmittal, such shares will be returned, without expense, to the tendering
Holder thereof (or in the
41
<PAGE>
case of shares of 6.50% Convertible Preferred Stock tendered by book-entry
transfer into the Exchange Agent's account at DTC, such shares will be
credited to an account maintained at DTC designated by the participant therein
who so delivered such shares), as promptly as practicable after the Expiration
Date or the withdrawal or termination of the Exchange Offer.
Holders of 6.50% Convertible Preferred Stock will not have any appraisal or
dissenters' rights under the Delaware General Corporation Law in connection
with the Exchange Offer. The Company intends to conduct the Exchange Offer in
accordance with the applicable requirements of the Exchange Act and the rules
and regulations of the Commission thereunder.
Holders who tender shares of 6.50% Convertible Preferred Stock in the
Exchange Offer will not be required to pay brokerage commissions or fees or,
subject to the instructions in the Letter of Transmittal, transfer taxes with
respect to the exchange of shares of 6.50% Convertible Preferred Stock
pursuant to the Exchange Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The Exchange Offer will expire on the Expiration Date. The Company reserves
the right to extend the Exchange Offer in its sole discretion at any time and
from time to time by giving oral or written notice to the Exchange Agent and
by timely public announcement communicated, unless otherwise required by
applicable law or regulation, by issuing a press release. During any extension
of the Exchange Offer, all shares of 6.50% Convertible Preferred Stock
previously tendered pursuant to the Exchange Offer and not withdrawn will
remain subject to the Exchange Offer.
The Company expressly reserves the right to (i) amend or modify the terms of
the Exchange Offer in any manner and (ii) withdraw or terminate the Exchange
Offer and not accept for exchange any shares of 6.50% Convertible Preferred
Stock, at any time for any reason, including (without limitation) if fewer
than 3,450,000 shares of 6.50% Convertible Preferred Stock are tendered (which
condition may be waived by the Company), if the Minimum Distribution Condition
is not satisfied or if the OID Condition is not satisfied. The Minimum
Distribution Condition and the OID Condition may not be waived by the Company.
If the Company makes a material change in the terms of the Exchange Offer or
if it waives a material condition of the Exchange Offer, the Company will
extend the Exchange Offer. The minimum period for which the Exchange Offer
will be extended following a material change or waiver, other than a change in
the percentage of the 6.50% Convertible Preferred Stock being sought for
exchange or in the consideration offered, will depend upon the facts and
circumstances, including the relative materiality of the change or waiver.
With respect to a change in the percentage of the 6.50% Convertible Preferred
Stock being sought or in the consideration offered, the Exchange Offer will be
extended for a minimum of ten business days following public announcement of
such change. Any withdrawal or termination of the Exchange Offer will be
followed as promptly as practicable by public announcement thereof. In the
event the Trust withdraws or terminates the Exchange Offer, it will give
immediate notice to the Exchange Agent, and all shares of 6.50% Convertible
Preferred Stock theretofore tendered pursuant to the Exchange Offer will be
returned promptly to the tendering Holders thereof. See "--Withdrawal of
Tenders."
ACCUMULATED DISTRIBUTIONS ON TRUST CONVERTIBLE PREFERRED SECURITIES AND
ACCRUED DIVIDENDS ON 6.50% CONVERTIBLE PREFERRED STOCK
The Trust Convertible Preferred Securities will accumulate distributions at
an annual rate of 6.75% from and including March 31, 1997. Dividends accrued
on the 6.50% Convertible Preferred Stock after March 31, 1997 will not be paid
in cash on shares of 6.50% Convertible Preferred Stock accepted for exchange
in the Exchange Offer or accounted for in determining the number of shares of
Trust Convertible Preferred Securities to be exchanged for each share of 6.50%
Convertible Preferred Stock.
42
<PAGE>
PROCEDURES FOR TENDERING
The tender of shares of 6.50% Convertible Preferred Stock by a Holder
thereof pursuant to one of the procedures set forth below will constitute an
agreement between such Holder and the Company in accordance with the terms and
subject to the conditions set forth herein and in the Letter of Transmittal.
Each Holder of 6.50% Convertible Preferred Stock wishing to accept the
Exchange Offer must (i) properly complete and sign the Letter of Transmittal
or a facsimile thereof (all references in this Prospectus to the Letter of
Transmittal shall be deemed to include a facsimile thereof) in accordance with
the instructions contained herein and therein, together with any required
signature guarantees, and deliver the same to the Exchange Agent, at either of
its addresses set forth in "--Exchange Agent and Information Agent" and
certificates for the shares of 6.50% Convertible Preferred Stock held by such
Holder must be received by the Exchange Agent at either of such addresses
prior to the Expiration Date, (ii) transfer such shares of 6.50% Convertible
Preferred Stock pursuant to the procedures for book-entry transfer described
below, with a confirmation of such book-entry transfer received by the
Exchange Agent prior to the Expiration Date, or (iii) comply with the
guaranteed delivery procedures described below.
LETTERS OF TRANSMITTAL, 6.50% CONVERTIBLE PREFERRED STOCK AND ANY OTHER
REQUIRED DOCUMENTS SHOULD BE SENT ONLY TO THE EXCHANGE AGENT AND NOT TO THE
COMPANY, THE TRUST, THE DEALER MANAGERS OR THE INFORMATION AGENT.
Signature Guarantees. If tendered shares of 6.50% Convertible Preferred
Stock are registered in the name of the signer of the Letter of Transmittal
and the Trust Convertible Preferred Securities to be issued in exchange
therefor are to be issued (and any untendered shares of 6.50% Convertible
Preferred Stock are to be reissued) in the name of the registered Holder
(which term, for the purposes described herein, shall include any participant
in DTC whose name appears on a security listing as the owner of the 6.50%
Convertible Preferred Stock), the signature of such signer need not be
guaranteed. If the tendered shares of 6.50% Convertible Preferred Stock are
registered in the name of someone other than the signer of the Letter of
Transmittal, such tendered shares must be endorsed or accompanied by written
instruments of transfer in form satisfactory to the Company and duly executed
by the registered Holder, and the signature on the endorsement or instrument
of transfer must be guaranteed by a financial institution (including most
banks, savings and loan associations, and brokerage houses) that is a
participant in the Security Transfer Agents Medallion Program or The New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (any of the foregoing hereinafter referred to as an
"Eligible Institution"). If the Trust Convertible Preferred Securities and/or
6.50% Convertible Preferred Stock not exchanged are to be delivered to an
address other than that of the registered Holder appearing on the register for
the 6.50% Convertible Preferred Stock, the signature in the Letter of
Transmittal must be guaranteed by an Eligible Institution. Any beneficial
owner whose shares of 6.50% Convertible Preferred Stock are registered in the
name of a broker, dealer, commercial bank, trust company, or other nominee and
who wishes to tender should contact such registered Holder promptly and
instruct such registered Holder to tender on such beneficial owner's behalf.
If such beneficial owner wishes to tender on its own behalf, such owner must,
prior to completing and executing a Letter of Transmittal and delivering its
shares of 6.50% Convertible Preferred Stock, either make appropriate
arrangements to register the ownership of such shares in such owner's name or
obtain a properly completed stock power from the registered Holder. The
transfer of registered ownership may take considerable time and may not be
able to be completed prior to the Expiration Date.
THE METHOD OF DELIVERY OF 6.50% CONVERTIBLE PREFERRED STOCK AND ALL OTHER
DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER. IF SENT BY MAIL, IT IS
RECOMMENDED THAT REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED,
43
<PAGE>
PRIOR INSURANCE OBTAINED AND THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF
THE EXPIRATION DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT ON OR BEFORE THE
EXPIRATION DATE.
Book-Entry Transfer. The Company understands that the Exchange Agent will
make a request promptly after the date of this Prospectus to establish
accounts with respect to the 6.50% Convertible Preferred Stock at DTC for the
purpose of facilitating the Exchange Offer, and subject to the establishment
thereof, any financial institution that is a participant in DTC's system may
make book-entry delivery of 6.50% Convertible Preferred Stock by causing DTC
to transfer such 6.50% Convertible Preferred Stock into the Exchange Agent's
account with respect to the 6.50% Convertible Preferred Stock in accordance
with DTC's Automated Tender Offer Program ("ATOP") procedures for such
bookentry transfers. However, the exchange for shares of 6.50% Convertible
Preferred Stock so tendered will only be made after timely confirmation (a
"Book-Entry Confirmation") of such book-entry transfer of shares of 6.50%
Convertible Preferred Stock into the Exchange Agent's account, and timely
receipt by the Exchange Agent of an Agent's Message (as such term is defined
in the next sentence) and any other documents required by the Letter of
Transmittal. The term "Agent's Message" means a message, transmitted by DTC
and received by the Exchange Agent and forming a part of a Book-Entry
Confirmation, which states that DTC has received an express acknowledgement
from a participant tendering shares of 6.50% Convertible Preferred Stock that
is the subject of such Book-Entry Confirmation that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal, and
that the Trust may enforce such agreement against such participant. See "Book-
Entry System--The Depository Trust Company."
Guaranteed Delivery. If a Holder desires to accept the Exchange Offer and
time will not permit a Letter of Transmittal or shares of 6.50% Convertible
Preferred Stock to reach the Exchange Agent before the Expiration Date or the
procedure for book-entry transfer cannot be completed on a timely basis, a
tender may be effected if the Exchange Agent has received at its office, prior
to the Expiration Date, a letter, a telegram, or facsimile transmission from
an Eligible Institution setting forth the name and address of the tendering
Holder, the name(s) in which the 6.50% Convertible Preferred Stock is
registered and, if the 6.50% Convertible Preferred Stock is held in
certificated form, the certificate number of the 6.50% Convertible Preferred
Stock to be tendered, and stating that the tender is being made thereby and
guaranteeing that within three trading days after the date of execution of
such letter, telegram or facsimile transmission by the Eligible Institution,
the 6.50% Convertible Preferred Stock, in proper form for transfer together
with a properly completed and duly executed Letter of Transmittal (and any
other required documents), or a confirmation of book-entry transfer of such
6.50% Convertible Preferred Stock into the Exchange Agent's account at DTC,
will be delivered by such Eligible Institution. Unless the shares of 6.50%
Convertible Preferred Stock being tendered by the above-described method are
deposited with the Exchange Agent within the time period set forth above
(accompanied or preceded by a properly completed Letter of Transmittal and any
other required documents) or a confirmation of book-entry transfer of such
6.50% Convertible Preferred Stock into the Exchange Agent's account at DTC in
accordance with DTC's ATOP procedures is received, the Company may, at its
option, reject the tender. Copies of a Notice of Guaranteed Delivery which may
be used by Eligible Institutions for the purposes described in this paragraph
are available from the Exchange Agent and the Information Agent.
Miscellaneous. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance for exchange of any tender of
shares of 6.50% Convertible Preferred Stock will be determined by the Company,
whose determination will be final and binding. The Company reserves the
absolute right to reject any or all tenders not in proper form or the
acceptance for exchange of which may, in the opinion of the Company's counsel,
be unlawful. The Company also reserves the absolute right to waive any defect
or irregularity in the tender of any shares of 6.50% Convertible Preferred
Stock, and the Company's interpretation of the terms and conditions of the
Exchange Offer
44
<PAGE>
(including the instructions in the Letter of Transmittal) will be final and
binding. None of the Company, the Exchange Agent, the Dealer Managers, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification.
Tenders of shares of 6.50% Convertible Preferred Stock involving any
irregularities will not be deemed to have been made until such irregularities
have been cured or waived. Shares of 6.50% Convertible Preferred Stock
received by the Exchange Agent that are not validly tendered and as to which
the irregularities have not been cured or waived will be returned by the
Exchange Agent to the tendering Holder (or in the case of shares of 6.50%
Convertible Preferred Stock tendered by book-entry transfer into the Exchange
Agent's account at DTC, such shares will be credited to an account maintained
at DTC designated by the participant therein who so delivered such shares),
unless otherwise requested by the Holder in the Letter of Transmittal, as
promptly as practicable after the Expiration Date or the withdrawal or
termination of the Exchange Offer.
LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer.
The party tendering shares of 6.50% Convertible Preferred Stock for exchange
(the "Transferor") exchanges, assigns and transfers such shares to the Company
and irrevocably constitutes and appoints the Exchange Agent as the
Transferor's agent and attorney-in-fact to cause such shares to be assigned,
transferred, and exchanged. The Transferor represents and warrants that it has
full power and authority to tender, exchange, assign and transfer the shares
of 6.50% Convertible Preferred Stock and to acquire Trust Convertible
Preferred Securities issuable upon the exchange of such tendered shares, and
that, when the same are accepted for exchange, the Company will acquire good
and unencumbered title to the tendered shares of 6.50% Convertible Preferred
Stock, free and clear of all liens, restrictions, charges, and encumbrances
and not subject to any adverse claim. The Transferor also warrants that it
will, upon request, execute and deliver any additional documents deemed by the
Company to be necessary or desirable to complete the exchange, assignment and
transfer of tendered shares of 6.50% Convertible Preferred Stock or transfer
ownership of such shares on the account books maintained by DTC. All authority
conferred by the Transferor will survive the death, bankruptcy, or incapacity
of the Transferor, and every obligation of the Transferor shall be binding
upon the heirs, legal representatives, successors, assigns, executors, and
administrators of such Transferor.
WITHDRAWAL OF TENDERS
Tenders of shares of 6.50% Convertible Preferred Stock pursuant to the
Exchange Offer may be withdrawn at any time prior to the Expiration Date and,
unless accepted for exchange by the Company, may be withdrawn at any time
after 40 business days after the date of this Prospectus.
To be effective, a written notice of withdrawal delivered by mail, hand
delivery, or facsimile transmission must be timely received by the Exchange
Agent at the address set forth in the Letter of Transmittal. The method of
notification is at the risk and election of the Holder. Any such notice of
withdrawal must specify (i) the Holder named in the Letter of Transmittal as
having tendered shares of 6.50% Convertible Preferred Stock to be withdrawn,
(ii) if shares of 6.50% Convertible Preferred Stock are held in certificated
form, the certificate numbers of such shares to be withdrawn, (iii) that such
Holder is withdrawing his election to have such shares exchanged, and (iv) the
name of the registered Holder of such shares, and must be signed by the Holder
in the same manner as the original signature on the Letter of Transmittal
(including any required signature guarantees) or be accompanied by
45
<PAGE>
evidence satisfactory to the Company that the person withdrawing the tender
has succeeded to the beneficial ownership of the shares of 6.50% Convertible
Preferred Stock being withdrawn. The Exchange Agent will return the properly
withdrawn shares of 6.50% Convertible Preferred Stock promptly following
receipt of notice of withdrawal. If shares of 6.50% Convertible Preferred
Stock have been tendered pursuant to the procedure for book-entry transfer,
any notice of withdrawal must specify the name and number of the account at
DTC to be credited with the withdrawn shares of 6.50% Convertible Preferred
Stock and otherwise comply with DTC's procedures. All questions as to the
validity of notice of withdrawal, including time of receipt, will be
determined by the Company, and such determination will be final and binding on
all parties. Withdrawals of tenders of shares of 6.50% Convertible Preferred
Stock may not be rescinded and any shares of 6.50% Convertible Preferred Stock
withdrawn will thereafter be deemed not validly tendered for purposes of the
Exchange Offer. Properly withdrawn shares of 6.50% Convertible Preferred
Stock, however, may be retendered by following the procedures therefor
described elsewhere herein at any time prior to the Expiration Date. See "--
Procedures for Tendering."
ACCEPTANCE OF SHARES AND PRORATION
Upon the terms and subject to the conditions of the Exchange Offer, if
6,700,000 or fewer shares of 6.50% Convertible Preferred Stock (or, if
increased as provided herein, such higher number as the Company may elect to
purchase pursuant to the Exchange Offer) have been validly tendered and not
withdrawn prior to the Expiration Date, the Company may accept for exchange
all such shares of 6.50% Convertible Preferred Stock. Upon the terms and
subject to the conditions of the Exchange Offer, if more than 6,700,000 shares
of 6.50% Convertible Preferred Stock (or, if decreased as provided herein,
such lesser number as the Company may elect to purchase pursuant to the
Exchange Offer) have been validly tendered and not withdrawn prior to the
Expiration Date, the Company may accept for exchange shares of 6.50%
Convertible Preferred Stock from each tendering Holder on a pro rata basis,
subject to adjustment to avoid the acceptance for exchange of fractional
shares.
For purposes of prorating tendered Securities, the Company will accept all
securities tendered by persons who own, beneficially or of record, an
aggregate of not more than a specified number which is fewer than 100 shares
of such security (an "Odd-Lot Owner") and who tender all their securities,
before prorating securities tendered by others. To qualify for this
preference, an Odd-Lot Owner must properly exchange all shares of 6.50%
Convertible Preferred Stock beneficially owned by such owner. The preference
is not available to holders of 100 or more shares, even if those holders have
separate stock certificates for fewer than 100 shares. Any Odd-Lot Owner
wishing to exchange, free from proration, all shares of 6.50% Convertible
Preferred Stock beneficially owned must complete the section entitled "Odd -
Lots" in the Letter of Transmittal and, if applicable, on the Notice of
Guaranteed Delivery.
If the Company decides, in its sole discretion, to increase or decrease the
number of shares of 6.50% Convertible Preferred Stock sought in the Exchange
Offer or to increase or decrease the consideration offered to holders of
shares of 6.50% Convertible Preferred Stock, and if the Exchange Offer is
scheduled to expire less than ten business days from and including the date
that notice of such increase or decrease is first published, sent or given in
the manner specified in "--Expiration Date; Extensions; Amendments;
Termination," then the Exchange Offer will be extended for a minimum of ten
business days from and including the date of such notice.
All shares of 6.50% Convertible Preferred Stock not accepted pursuant to the
Exchange Offer, including shares not accepted because of proration, will be
returned to the tendering Holders at the Company's expense as promptly as
practicable following the Expiration Date.
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EXCHANGE AGENT AND INFORMATION AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Deliveries to the Exchange Agent should be as follows:
THE EXCHANGE AGENT:
THE BANK OF NEW YORK
By Hand or Overnight Courier:
The Bank of New York
101 Barclay Street
Tender & Exchange Department
Receive and Delivery Window
New York, New York 10286
By Mail:
(Registered or Certified Mail Recommended)
The Bank of New York
Tender & Exchange Department
P.O. Box 11248
Church Street Station
New York, New York 10286-1248
By Facsimile Transmission
(For Eligible Institutions Only):
(212) 815-6213
Confirm Receipt of Notice of Guaranteed Delivery
by Telephone:
(800) 507-9357
Morrow & Co., Inc. has been retained to act as Information Agent. Questions
and requests for assistance regarding the Exchange Offer, requests for
additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notice of Guaranteed Delivery may be directed to the Information
Agent at the telephone numbers and location listed below.
INFORMATION AGENT:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, NY 10022
(212) 754-8000
Toll Free (800) 566-9061
Banks and Brokerage Firms
Please call:
(800) 662-5200
The Company will pay the Exchange Agent and Information Agent reasonable and
customary fees for their services and will reimburse them for all their
reasonable out-of-pocket expenses in connection therewith.
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DEALER MANAGERS; SOLICITING DEALERS
Goldman, Sachs & Co. and Merrill Lynch & Co., as Dealer Managers, have
agreed to solicit exchanges of shares of 6.50% Convertible Preferred Stock.
The Company will pay the Dealer Managers a fee of $.3125 per share of 6.50%
Convertible Preferred Stock validly tendered and accepted for exchange
pursuant to the Exchange Offer. The Company has agreed to reimburse the Dealer
Managers for their reasonable out-of-pocket expenses in connection with the
Exchange Offer (including the reasonable legal fees and expenses of their
counsel). The Dealer Managers engage in transactions with, and from time to
time have performed services for, the Company.
Subject to certain conditions, the Company will pay to a Soliciting Dealer
(including a Dealer Manager) a solicitation fee of $1.00 per share of 6.50%
Convertible Preferred Stock validly tendered and accepted for exchange
pursuant to the Exchange Offer, to the extent that the tender of such share
was solicited by such Soliciting Dealer from a beneficial owner of 5,000 or
fewer shares of 6.50% Convertible Preferred Stock. As used in this Prospectus,
"Soliciting Dealer" includes (i) any broker or dealer in securities, including
a Dealer Manager in its capacity as a broker or dealer, who is a member of any
national securities exchange or of the National Association of Securities
Dealers, Inc. (the "NASD"), (ii) any foreign broker or dealer not eligible for
membership in the NASD who agrees to conform to the NASD's Rules of Fair
Practice in soliciting tenders outside the United States to the same extent as
though it were an NASD member, or (iii) any bank or trust company, any one of
whom has solicited and obtained a tender pursuant to the Exchange Offer. No
solicitation fee shall be payable to a Soliciting Dealer with respect to an
exchange of shares of 6.50% Convertible Preferred Stock by a holder unless the
Letter of Transmittal accompanying such tender designates such Soliciting
Dealer as such in the box captioned "Solicited Tenders."
If tendered shares of 6.50% Convertible Preferred Stock are being delivered
by book-entry transfer made to an account maintained by the Exchange Agent
with DTC, the Soliciting Dealer must return a Notice of Solicited Tenders
(included in the materials provided to brokers and dealers) to the Exchange
Agent within three trading days after the Expiration Date in order to receive
a solicitation fee. No solicitation fee shall be payable to a Soliciting
Dealer in respect of shares of 6.50% Convertible Preferred Stock (i)
beneficially owned by such Soliciting Dealer or (ii) registered in the name of
such Soliciting Dealer unless such shares of 6.50% Convertible Preferred Stock
are held by such Soliciting Dealer as nominee and such shares of 6.50%
Convertible Preferred Stock are being exchanged for the benefit of one or more
beneficial owners identified on the Letter of Transmittal or the Notice of
Solicited Tenders. No solicitation fee shall be payable to the Soliciting
Dealer with respect to the tender of shares of 6.50% Convertible Preferred
Stock by the holder of record, for the benefit of the beneficial owner, unless
the beneficial owner has designated such Soliciting Dealer. No solicitation
fee shall be payable to a Soliciting Dealer if such Soliciting Dealer is
required for any reason to transfer any portion of such fee to a tendering
holder (other than itself).
Other than as described above, the Company will not pay any solicitation
fees to any broker, dealer, bank, trust company or other person for any shares
of 6.50% Convertible Preferred Stock exchanged in connection with the Exchange
Offer. The Company will reimburse such persons for customary handling and
mailing expenses incurred in connection with the Exchange Offer. No broker,
dealer, bank, trust company or fiduciary shall be deemed to be the agent of
the Company, the Exchange Agent, the Information Agent or the Dealer Managers
for purposes of the Exchange Offer.
Additional solicitation may be made by telecopier, by telephone or in person
by officers and regular employees of the Company and its affiliates. No
additional compensation will be paid to any such officers and employees who
engage in soliciting tenders.
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LISTING AND TRADING OF TRUST CONVERTIBLE PREFERRED SECURITIES AND 6.50%
CONVERTIBLE PREFERRED STOCK
The Trust Convertible Preferred Securities constitute a new issue of
securities of the Trust with no established trading market. The liquidity of
the Trust Convertible Preferred Securities will be affected by the number of
shares of 6.50% Convertible Preferred Stock accepted for exchange in the
Exchange Offer. While application will be made to list the Trust Convertible
Preferred Securities on the NYSE, there can be no assurance that an active
market for the Trust Convertible Preferred Securities will develop or be
sustained in the future on the NYSE. Although the Dealer Managers have
indicated to the Trust that they intend to make a market in the Trust
Convertible Preferred Securities following the Expiration Date as permitted by
applicable laws and regulations prior to the commencement of trading on the
NYSE, they are not obligated to do so and may discontinue any such market-
making at any time without notice. Accordingly, no assurance can be given as
to the liquidity of, or trading markets for, the Trust Convertible Preferred
Securities.
To the extent that a certain number of shares of 6.50% Convertible Preferred
Stock are tendered and accepted in the Exchange Offer and/or the number of
holders of 6.50% Convertible Preferred Stock is reduced to below certain
levels, the liquidity and trading market for untendered 6.50% Convertible
Preferred Stock could be adversely affected. In addition, if the Exchange
Offer is substantially subscribed or oversubscribed, there would be a
significant risk that round lot holdings of 6.50% Convertible Preferred Stock
outstanding following the Exchange Offer would be limited.
Under the rules of the NYSE, preferred securities such as the 6.50%
Convertible Preferred Stock are subject to delisting if (i) the aggregate
value of publicly-held shares is less than $2 million and (ii) the number of
publicly-held shares is less than 100,000. Because at least 200,000 shares of
6.50% Convertible Preferred Stock will remain outstanding after the
consummation of the Exchange Offer, the number of outstanding shares of 6.50%
Convertible Preferred Stock will exceed the delisting criteria set forth in
clause (ii) above. In addition, based on the market price of 6.50% Convertible
Preferred Stock on the Composite Tape, ($44.625 on March 13, 1997, the last
reported sales price of the 6.50% Convertible Preferred Stock on the last full
trading day immediately prior to the Company's first public announcement of
the Exchange Offer), the aggregate value of the minimum number of shares of
6.50% Convertible Preferred Stock which will be outstanding after the
consummation of the Exchange Offer should exceed the delisting criteria set
forth in clause (i) above. See "Risk Factors--Risks Relating to the Trust
Convertible Preferred Securities--Lack of Established Trading Market for Trust
Convertible Preferred Securities" and "--Reduced Trading Market for 6.50%
Convertible Preferred Stock."
TRANSACTIONS AND ARRANGEMENTS CONCERNING THE 6.50% CONVERTIBLE PREFERRED STOCK
IN CONNECTION WITH THE EXCHANGE OFFER
Except as described herein, there are no contracts, arrangements,
understandings or relationships in connection with the Exchange Offer between
the Company or any of its directors or executive officers, the Trust or any of
the Trustees, and any person with respect to any securities of the Company or
the Trust, including the Trust Convertible Preferred Securities, the
Convertible Debentures, the 6.50% Convertible Preferred Stock and the Steel
Stock issuable upon conversion thereof.
FEES AND EXPENSES; TRANSFER TAXES
The expenses of soliciting tenders of shares of 6.50% Convertible Preferred
Stock will be borne by the Company. For compensation to be paid to the Dealer
Managers and the Soliciting Dealers, see "--Dealer Managers; Soliciting
Dealers." The total cash expenditures to be incurred by the Company in
connection with the Exchange Offer, other than fees payable to the Dealer
Managers and Soliciting
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Dealers, but including the expenses of the Dealer Managers and the Trust,
printing, accounting, and legal fees and the fees and expenses of the Exchange
Agent, the Information Agent, the trustees under the Indenture, the Guarantee
and the Trust, are estimated to be approximately $600,000.
The Company will pay all transfer taxes, if any, applicable to the transfer
and exchange of shares of 6.50% Convertible Preferred Stock accepted in the
Exchange Offer. Holders are responsible for any transfer taxes arising because
certificates representing the Trust Convertible Preferred Securities, or
shares of the 6.50% Convertible Preferred Stock not tendered or accepted for
exchange, are to be delivered to, or registered in the name of, any person
other than the registered Holder of such tendered shares, or if a transfer tax
is to be imposed for any reason other than exchange of shares of 6.50%
Convertible Preferred Stock pursuant to the Exchange Offer. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
the Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering Holder.
USX CAPITAL TRUST I
The Trust is a statutory business trust formed under Delaware law pursuant
to (i) a declaration of trust, dated as of March 13, 1997, executed by the
Company, as sponsor, and the trustees of the Trust (the "Trustees") and (ii)
the filing of a certificate of trust with the Secretary of State of Delaware
on March 13, 1997. Such declaration will be amended and restated in its
entirety (as so amended and restated, the "Declaration") substantially in the
form filed as an exhibit to the Registration Statement of which this
Prospectus is a part. The Declaration will be qualified as an indenture under
the Trust Indenture Act. The Company will initially acquire all of the Trust
Securities and will offer the Trust Convertible Preferred Securities to the
Holders of 6.50% Convertible Preferred Stock in the Exchange Offer.
Immediately after consummation of the Exchange Offer, former holders of 6.50%
Convertible Preferred Stock will own all of the issued and outstanding Trust
Convertible Preferred Securities and the Company will own all of the issued
and outstanding Trust Common Securities. The Trust Common Securities will have
an aggregate initial liquidation amount equal to no less than 3% of the total
capital of the Trust. The Trust exists for the sole purposes and functions of
(a) issuing its Trust Securities in exchange for Convertible Debentures having
an aggregate initial principal amount equal to the aggregate initial
liquidation amount of the Trust Securities and (b) engaging in only those
other activities as are necessary or incidental thereto. The Company, as
borrower, will pay all costs and expenses related to the Trust and the
offering of the Trust Securities.
Pursuant to the Declaration, the number of Trustees will initially be five.
Three of the Trustees (the "Regular Trustees") must be persons who are
employees or officers of the Company. The fourth Trustee must be an entity
permitted by the Commission to act as an institutional trustee under the Trust
Indenture Act, unaffiliated with the Company and with a combined capital and
surplus of at least $50 million, which will serve as indenture trustee under
the Declaration for the purpose of compliance with the Trust Indenture Act
(the "Institutional Trustee"). Initially, The Bank of New York, a banking
corporation, will be the Institutional Trustee until it resigns or is removed
by the Company. The fifth Trustee must be a resident of Delaware or an entity
that maintains its principal place of business in the state of Delaware (the
"Delaware Trustee"). Initially, The Bank of New York (Delaware), an affiliate
of the Institutional Trustee, will be the Delaware Trustee until it resigns or
is removed by the Company. The Company, as the holder of the Trust Common
Securities, will have the right to appoint or remove any Trustee and to
increase or decrease the number of Trustees (but not below two Trustees).
The Institutional Trustee will hold title to the Convertible Debentures for
the benefit of the holders of the Trust Securities and will have the power to
exercise all rights, powers, and privileges as the holder of the Convertible
Debentures under the Indenture. In addition, the Institutional Trustee will
maintain exclusive control of a segregated non-interest bearing trust account
(the "Institutional Trustee
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Account") into which it will deposit all payments of funds received in respect
of the Convertible Debentures for the benefit of the holders of the Trust
Securities. Funds in the Institutional Trustee Account will be held uninvested
until distributed in accordance with the terms of the Declaration. The
Institutional Trustee will make payments of distributions and payments on
liquidation, redemption and otherwise to the holders of the Trust Securities
out of funds from the Institutional Trustee Account. Trust and Trustee
expenses are not paid from funds in the Institutional Trustee Account, but are
paid by the Company pursuant to the Indenture. See "Description of the
Convertible Debentures--Miscellaneous."
For the purpose of compliance with the Trust Indenture Act, The Bank of New
York will also act as the Guarantee Trustee and as Debenture Trustee (as
defined herein) under the Indenture (as defined herein). The Bank of New York
is currently the trustee under an indenture under which debt securities issued
by the Company in an aggregate principal amount of approximately $42 million
are currently outstanding. It is also a participating lender under the
Company's $2.35 billion revolving credit agreement, under which no amounts
were outstanding as of December 31, 1996, and under seven other loans to the
Company and affiliates under which an aggregate of $57 million was outstanding
as of that date. The debt securities and the guarantee by the Company under
the indentures and the loans described above are Senior Indebtedness. The Bank
of New York also performs certain miscellaneous banking functions and may
enter into other banking and financial service relationships with the Company
in the future.
The foregoing summary of the material terms and provisions of the
Declaration is subject to, and qualified in its entirety by reference to, the
Declaration, a copy of which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part, the Delaware Trust Act and the
Trust Indenture Act.
The business address of the Trust is c/o The Bank of New York, 101 Barclay
Street, New York, NY 10286, and its telephone number at that address is (212)
815-5192.
DESCRIPTION OF THE TRUST CONVERTIBLE PREFERRED SECURITIES
The Trust Convertible Preferred Securities will be issued pursuant to the
terms of the Declaration. The Declaration will be qualified as an indenture
under the Trust Indenture Act. The Institutional Trustee, The Bank of New
York, will act as indenture trustee for the Trust Convertible Preferred
Securities under the Declaration for purposes of compliance with the Trust
Indenture Act. The terms of the Trust Convertible Preferred Securities and the
rights of the holders thereof, will include those stated in the Declaration,
those made part of the Declaration by the Trust Indenture Act, and those set
forth in the Delaware Trust Act. The following summary of the material terms
and provisions of the Trust Convertible Preferred Securities and the rights of
the holders thereof, is subject to, and qualified in its entirety by reference
to, the Declaration, a copy of which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, the Trust
Indenture Act and the Delaware Trust Act.
GENERAL
The Declaration authorizes the Regular Trustees to issue, on behalf of the
Trust, the Trust Securities, which represent undivided beneficial ownership
interests in the assets of the Trust. All of the Trust Common Securities will
be owned, directly or indirectly, by the Company. The Trust Common Securities
will rank on a parity, and payments will be made thereon on a pro rata basis,
with the Trust Convertible Preferred Securities, except that upon the
occurrence and during the continuance of a Declaration Event of Default (as
defined herein), the rights of the holders of the Trust Common
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Securities to receive payment of periodic distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of
the holders of the Trust Convertible Preferred Securities. The Declaration
does not permit the issuance by the Trust of any securities, or other
interests in the assets of the Trust, other than the Trust Securities or the
incurrence of any indebtedness by the Trust. Pursuant to the Declaration, the
Institutional Trustee will hold the Convertible Debentures for the benefit of
the holders of the Trust Securities. The payment of distributions out of money
held by the Trust, and payments upon redemption of the Trust Convertible
Preferred Securities or liquidation of the Trust, will be guaranteed by the
Company to the extent described under "Description of the Guarantee." The
Guarantee will be held by The Bank of New York, the Guarantee Trustee, for the
benefit of the holders of the Trust Convertible Preferred Securities. The
Guarantee will not cover payment of distributions when the Trust does not have
sufficient available funds to pay such distributions. In such event, the
remedy of a holder of Trust Convertible Preferred Securities would be to vote
to direct the Institutional Trustee to enforce the Institutional Trustee's
rights under the Convertible Debentures except in the limited circumstances in
which the holder may take Direct Action (as defined herein). See "--
Declaration Events of Default" and "--Voting Rights."
DISTRIBUTIONS
Distributions on the Trust Convertible Preferred Securities will be fixed at
a rate per annum of 6.75% of the initial liquidation amount of the securities.
Distributions not paid on the regularly scheduled payment date therefor will,
to the extent permitted by law, accumulate interest thereon at the
distribution rate, compounded quarterly. The term "distribution" as used
herein includes any such interest payable unless otherwise stated. The amount
of distributions payable for any full quarterly distribution period will be
computed on the basis of a 360-day year of twelve 30-day months. The amount of
distributions payable for any period shorter than a full quarterly
distribution period for which distributions are computed, will be computed on
the basis of a 30-day month and, for periods of less than a month, the actual
number of days elapsed per 30-day month.
Distributions on the Trust Convertible Preferred Securities will be
cumulative, will accumulate from and including March 31, 1997, and will be
payable quarterly in arrears on the last calendar day of March, June,
September and December of each year, commencing June 30, 1997, when, as and if
funds are available for payment. Distributions will be made by the
Institutional Trustee, except as otherwise described below.
So long as the Company is not in default in the payment of interest on the
Convertible Debentures, the Company will have the right under the Indenture at
any time, and from time to time, to defer payments of interest by extending
the interest payment period on the Convertible Debentures, during which
Extension Period no interest will be due and payable on the Convertible
Debentures. As a consequence of such deferral, quarterly distributions on the
Trust Convertible Preferred Securities will also be deferred, although such
deferred distributions would accumulate with interest thereon, to the extent
permitted by law, at the distribution rate, compounded quarterly, during any
such Extension Period. If the Company exercises this right, then during such
Extension Period (a) the Company shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of capital stock in connection with any
employee benefit plan or program, director plan or program, dividend
reinvestment, stock repurchase or other similar plans available to
stockholders of the Company, or any option, warrant, right or exercisable,
exchangeable or convertible security outstanding as of the Expiration Date,
(ii) as a result of a reclassification of the Company's capital stock pursuant
to the exchange or conversion provisions of the Company's capital stock or the
exchange or conversion of one class or series of the Company's capital stock
for another class or series of the Company's capital stock or the capital
securities of a subsidiary (including a trust such as
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the Trust), or (iii) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or security being converted or exchanged), and (b) the
Company shall not make any payment of interest, principal or premium, if any,
on, or repay, repurchase or redeem or make any guarantee payment (other than
pursuant to the Guarantee) with respect to, any debt securities issued by the
Company that rank on a parity with or junior to the Convertible Debentures.
Prior to the termination of any such Extension Period, the Company may further
extend the Extension Period; provided that such Extension Period, together
with all such previous and further extensions, may not exceed 20 consecutive
quarters or extend beyond the maturity of the Convertible Debentures. Upon the
termination of any Extension Period and the payment of all interest accrued
and unpaid on the Convertible Debentures, the Company may commence a new
Extension Period, subject to the above requirements. See "Description of the
Convertible Debentures--Additional Interest" and "--Option to Extend Interest
Payment Period." If distributions are deferred, the accumulated distributions
(including accrued interest thereon) will be paid to holders of the Trust
Convertible Preferred Securities as they appear on the books and records of
the Trust on the first record date following the termination of the Extension
Period. The Company has no present intention of exercising its rights to defer
payments by extending the interest payment period on the Convertible
Debentures.
Distributions on the Trust Convertible Preferred Securities must be paid on
the dates on which they are payable only to the extent that the Trust has
funds available for the payment of such distributions. The Trust's funds
available for distribution to the holders of the Trust Convertible Preferred
Securities will be limited to payments received from the Company on the
Convertible Debentures. See "Description of the Convertible Debentures." The
payment of distributions out of moneys held by the Trust will be guaranteed by
the Company to the extent set forth under "Description of the Guarantee."
Distributions on the Trust Convertible Preferred Securities will be payable
to the holders thereof as they appear on the books and records of the Trust on
the relevant record dates, which, as long as the Trust Convertible Preferred
Securities remain in book-entry only form, will be one Business Day (as
defined below) prior to the relevant distribution payment dates, unless
otherwise provided in the Declaration or unless a different regular record
date is established or provided for the corresponding interest payment date on
the Convertible Debentures. Such distributions will be paid through the
Institutional Trustee who will hold amounts received in respect of the
Convertible Debentures for the benefit of the holders of the Trust Securities.
Subject to any applicable laws and regulations and the provisions of the
Declaration and the Indenture, distributions will be paid by check mailed to
the address of the person entitled thereto as it appears in the register;
provided, however, that payments to DTC will be made by wire transfer of
immediately available funds to the account of DTC or its nominee. See "Book-
Entry System--The Depository Trust Company." If the Trust Convertible
Preferred Securities do not continue to remain in book-entry only form, the
Regular Trustees shall have the right to select record dates, which shall
conform to the rules of any securities exchange or other organization on which
the Trust Convertible Preferred Securities are listed or quoted and shall be
at least one Business Day prior to the relevant payment dates. If any date on
which distributions are payable on the Trust Convertible Preferred Securities
is not a Business Day, then payment of the distributions payable on such date
will be made on the next succeeding day that 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 payment date. A "Business Day", except
with respect to the 6.50% Convertible Preferred Stock, means any day other
than a Saturday, Sunday, or any other day on which banking institutions in New
York City or Pittsburgh, Pennsylvania are permitted or required by any
applicable law to close.
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CONVERSION RIGHTS
GENERAL
Trust Convertible Preferred Securities will be convertible, in whole or in
part (but only for whole Trust Convertible Preferred Securities), at any time,
at the option of the holders thereof, into shares of Steel Stock at an initial
conversion price equal to $46.25 per share of Steel Stock (equivalent to a
conversion ratio of 1.081 shares of Steel Stock for each Trust Preferred
Convertible Security), subject to adjustment as described below (the
"Conversion Price").
The right to convert Trust Convertible Preferred Securities will terminate
prior to the close of business (i) on March 31, 2037, (unless the stated
maturity of the Convertible Debentures is shortened as described under "--
Trust Special Event Distribution or Redemption; Shortening of Maturity," in
which case on the advanced maturity date) or (ii) in the case of Trust
Preferred Convertible Securities called for redemption, on the related
redemption date, unless the Company gives a notice of redemption of the Trust
Convertible Preferred Securities in connection with a dividend on or a
redemption of Steel Stock resulting from the Disposition of all or
substantially all of the properties and assets of the U.S. Steel Group, as set
forth under "Mandatory Redemption--U.S. Steel Group Special Events; Marathon
Group Special Events", in which case, such right will terminate on the 31st
day prior to the date selected by the Board for the payment of such dividend
or such redemption. For information as to notices of redemption, see "--
Redemption Procedures for Redemption by the Trust."
The terms of the Trust Convertible Preferred Securities provide that a
holder of Trust Convertible Preferred Securities wishing to exercise its
conversion right shall deliver an irrevocable conversion request (and, if such
Trust Convertible Preferred Securities are certificated, the Trust Convertible
Preferred Securities certificate(s), duly endorsed or assigned to the Trust in
blank) to the Institutional Trustee, as conversion agent (the "Conversion
Agent"), directing the Conversion Agent, on behalf of such holder, to exchange
such Trust Convertible Preferred Securities for a portion of the Convertible
Debentures and immediately convert such Convertible Debentures into Steel
Stock at the Conversion Price. Holders may obtain copies of the required form
of the conversion request from the Conversion Agent. So long as a book-entry
system for the Trust Convertible Preferred Securities is in effect, however,
procedures for converting the Trust Convertible Preferred Securities into
shares of Steel Stock will differ, as described under "Book-Entry System--The
Depository Trust Company." Each conversion will be deemed to have been
effected immediately prior to the close of business on the date on which the
conversion request is received by the Trust and the conversion shall be at the
Conversion Price in effect at such time and on such date.
Fractional shares of Steel Stock or other common stock of the Company are
not to be issued upon conversion, but, in lieu thereof, the Company will pay a
cash adjustment based on the current market price thereof on the trading day
prior to the conversion date.
RIGHT TO RECEIVE DISTRIBUTIONS; DIVIDENDS ON STEEL STOCK
Except as provided below, accumulated but unpaid distributions will not be
paid in cash on the Trust Convertible Preferred Securities that are converted
nor will such accumulated distributions be converted into additional shares of
Steel Stock, but such accumulated distributions will be deemed to be paid in
full and then returned by the holder to the Company as partial consideration
for the Steel Stock received upon conversion. Holders of Trust Convertible
Preferred Securities at the close of business on a distribution record date
will be entitled to receive the distribution payable on such Trust Convertible
Preferred Securities (except that holders of Trust Convertible Preferred
Securities called for redemption on a redemption date between such record date
and the distribution payment date shall not be entitled to receive such
distribution on such distribution payment date) on the corresponding
distribution payment date notwithstanding the conversion of such Trust
Convertible Preferred
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Securities following such distribution record date and prior to such
distribution payment date. However, Trust Convertible Preferred Securities
surrendered for conversion during the period between the close of business on
any distribution record date and the opening of business on the corresponding
distribution payment date (except Trust Convertible Preferred Securities
called for redemption on a redemption date during such period) must be
accompanied by payment of an amount equal to the distribution payable on such
Trust Convertible Preferred Securities on such distribution payment date. A
holder of Trust Convertible Preferred Securities on a distribution record date
who (or whose transferee) tenders any such Trust Convertible Preferred
Securities for conversion into shares of Steel Stock on the corresponding
distribution payment date will receive the distribution payable by the Company
on such Trust Convertible Preferred Securities on such date, and the
converting holder need not include payment of the amount of such distribution
upon surrender of Trust Convertible Preferred Securities for conversion. The
Company will make no payment or allowance for dividends on the shares of Steel
Stock issued on conversion.
The Company will not redeem any Trust Convertible Preferred Securities
unless all accumulated and unpaid distributions have been paid on all
outstanding Trust Convertible Preferred Securities for all quarterly
distribution payment periods terminating on or prior to the date of
redemption. Since the Company is required to pay all accumulated and unpaid
distributions, other than for the current quarter, prior to redeeming the
Trust Convertible Preferred Securities, holders choosing to convert their
Trust Convertible Preferred Securities in order to avoid such redemption will,
at most, forego actual receipt of a cash distribution payment only for the
current quarter.
CONVERSION PRICE ADJUSTMENTS
The Conversion Price for the Convertible Debentures (and thus the Conversion
Price of the Trust Convertible Preferred Securities) will be subject to
adjustment upon certain events, including:
(i) dividends, and other distributions, payable in Steel Stock on any
class of capital stock of the Company and combinations and subdivisions of
Steel Stock;
(ii) the issuance of certain rights or warrants entitling the holder
thereof to subscribe for or purchase Steel Stock at less than the Current
Market Price per share of Steel Stock (calculated as set forth in the
Indenture); provided that if such rights or warrants are only exercisable
upon the occurrence of certain triggering events, then the Conversion Price
of the Convertible Debentures (and thus the Conversion Price of the Trust
Convertible Preferred Securities) will not be adjusted until such
triggering events occur;
(iii) distributions to all holders of Steel Stock of any shares of
capital stock (other than any common stock of the Company), evidences of
indebtedness or cash or other assets of the Company (including securities,
but excluding, among other things, those dividends, distributions, rights
and warrants referred to above; dividends consisting exclusively of cash
and securities received pursuant to a merger or consolidation described
below);
(iv) distributions consisting exclusively of cash (excluding any regular
quarterly cash dividends, any cash distributions referred to in (iii) above
and any cash distributed in a merger or consolidation referred to below) to
all holders of Steel Stock, if the aggregate amount of all such cash
distributions, together with (A) all other all-cash distributions (to which
such Conversion Price adjustment would otherwise apply) made within the
preceding 12 months not triggering a Conversion Price adjustment and (B)
all Excess Purchase Payments (as defined below) in respect of each tender
offer or exchange offer for, or other negotiated purchase of, Steel Stock
concluded by the Company or any of its subsidiaries within the preceding 12
months not triggering a Conversion Price adjustment, exceeds an amount
equal to 12 1/2% of the product of the Current Market Price per share of
Steel Stock (calculated as set forth in the Indenture) times the number of
shares of Steel Stock outstanding on the date fixed for determination of
holders of Steel Stock entitled to receive such distribution; and
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(v) payment of an Excess Purchase Payment, if the aggregate amount of
such Excess Purchase Payment, together with (A) the aggregate amount of any
all-cash distributions (excluding any regular quarterly cash dividends, any
cash distributions referred to in (iii) above and any cash distributed in a
merger or consolidation referred to below) made within the preceding 12
months not triggering a Conversion Price adjustment and (B) all Excess
Purchase Payments in respect of each tender or exchange offer or other
negotiated purchase for Steel Stock concluded by the Company or any of its
subsidiaries within the preceding 12 months not triggering a Conversion
Price adjustment, exceeds an amount equal to 12 1/2% of the product of the
Current Market Price per share of Steel Stock (calculated as set forth in
the Declaration) times the number of shares of Steel Stock outstanding on
the expiration date of such tender offer or exchange offer or other
negotiated purchase. For purposes of these Conversion Price adjustments,
the term "Excess Purchase Payment" means the excess, if any, of (A) the
aggregate of the cash and the value of all other consideration paid by the
Company or any of its subsidiaries with respect to the shares of Steel
Stock acquired in a tender or exchange offer or such other purchase by the
Company over (B) the Current Market Price per share of Steel Stock times
the number of shares of Steel Stock acquired in the tender or exchange
offer or such other purchase (calculated as set forth in the Indenture).
The Company from time to time may reduce the Conversion Price of the
Convertible Debentures (and thus the Conversion Price of the Trust Convertible
Preferred Securities) by any amount for any period of at least 20 Business
Days (or such other period as may then be required by applicable law), in
which case the Company shall give at least 15 days' notice of such reduction
to each holder of Trust Convertible Preferred Securities and each holder of
Convertible Debentures, if the Board has made a determination that such
reduction would be in the best interests of the Company, which determination
shall be conclusive. The Company may, at its option, make such reductions in
the Conversion Price, in addition to those set forth above, as the Board
determines to be necessary in order that any event treated for federal income
tax purposes as a dividend of stock or stock rights will not be taxable to
recipients thereof. The Company will comply with applicable law, including
Rule 13e-4 under the Exchange Act, in connection with any such adjustment to
the conversion price. See "Certain Federal Income Tax Consequences--Conversion
Price Adjustment."
No adjustments will be made in the Conversion Price of the Convertible
Debentures (and thus the Conversion Price of the Trust Convertible Preferred
Securities) if distributions on or other transactions occur with respect to
the Marathon Stock or the Delhi Stock, except as provided in the next
paragraph.
After any date on which all outstanding shares of Steel Stock are exchanged
for shares of Marathon Stock or Delhi Stock as set forth under "Description of
Capital Stock and Amended and Restated Rights Plan--Steel Stock--Exchange and
Redemption," each Trust Convertible Preferred Security will thereafter be
convertible into the number of shares of Marathon Stock or Delhi Stock, as the
case may be, receivable upon such exchange by a holder of that number of
shares or fraction thereof of Steel Stock into which one Trust Convertible
Preferred Security was convertible immediately prior to such exchange. From
and after any such adjustment to the Trust Convertible Preferred Securities,
Conversion Price adjustments as nearly equivalent as may be practicable to the
adjustments upon certain events in respect of Steel Stock described above for
Steel Stock shall be made upon such events in respect of shares of Marathon
Stock or Delhi Stock, as the case may be.
In case the Company shall be a party to any transaction (including, without
limitation, a merger or consolidation of the Company, but excluding
transactions described in the prior paragraph), in each case as a result of
which shares of Steel Stock will be converted into the right to receive stock,
securities or other property (including cash or any combination thereof), each
Convertible Debenture (and thus each Trust Convertible Preferred Security), if
outstanding after the consummation of the transaction, will be convertible
thereafter into the kind and amount of shares of stock and other
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securities and property (including cash) (or any combination thereof)
receivable upon the consummation of such transaction by a holder of that
number of shares of Steel Stock or fraction thereof into which one Trust
Convertible Preferred Security was convertible immediately prior to such
transaction (assuming such holder of Steel Stock failed to exercise any rights
of election and received per share the kind and amount received per share by a
plurality of non-electing shares). The Company may not become a party to any
such transaction unless the terms thereof are consistent with the foregoing.
If the Company, by dividend or otherwise, distributes to all holders of
Steel Stock or other class of common stock into which the Convertible
Debentures (and thus the Trust Convertible Preferred Securities) are then
convertible shares of common stock other than Steel Stock or any class of
common stock into which Convertible Debentures (and thus the Trust Convertible
Preferred Securities) are then convertible (other than pursuant to the second
preceding paragraph), each Convertible Debenture (and thus each Trust
Convertible Preferred Security) will be convertible, in addition to the number
of shares of Steel Stock and/or such other common stock into which such share
is then convertible, into the number of shares of such other common stock
receivable upon payment of such distribution by a holder of that number of
shares or fraction thereof of Steel Stock or such other common stock into
which one Convertible Debenture (and thus one Trust Convertible Preferred
Security) was convertible immediately prior to the record date fixed for the
determination of stockholders entitled to receive such distribution. On the
payment date of such distribution, a Conversion Price in respect of such
common stock will be established in accordance with the Indenture and,
thereafter, Conversion Price adjustments as nearly as equivalent in type as
may be practicable to the adjustments described above which are to be made in
respect of Steel Stock shall be made in respect of shares of such common
stock.
No adjustment of the Conversion Price in respect of the Steel Stock or any
other conversion price in respect of any other common stock of the Company
will be required to be made in any case until cumulative adjustments amount to
1% or more thereof. Any adjustments not so required to be made will be carried
forward and taken into account in subsequent adjustments.
Notice to Holders
In order to give holders of Trust Convertible Preferred Securities an
opportunity to determine whether to convert Trust Convertible Preferred
Securities into shares of Steel Stock, the Company is required to give notice
of its intention (A) to pay a dividend on, redeem shares of, or make a tender
or exchange offer for, Steel Stock that would constitute a U.S. Steel Group
Special Event, or exchange shares of Steel Stock for Marathon Stock or Delhi
Stock following a Disposition of all or substantially all of the properties
and assets of the U.S. Steel Group or (B) to exchange Steel Stock for shares
of the U.S. Steel Group Subsidiary, not less than 45 days prior to the date
selected by the Board for the payment of such dividend on or such redemption
of Steel Stock resulting from the Disposition of all or substantially all of
the properties and assets of the U.S. Steel Group and not less than 30 days
prior to the exchange date for such exchange, the consummation of such tender
or exchange offer or the payment date of any other such dividend. In addition,
from and after any exchange of Steel Stock for Marathon Stock, as described
above, the Company is required to give a comparable notice of its intention to
take similar actions with respect to Marathon Stock that would constitute a
Marathon Group Special Event.
MANDATORY REDEMPTION
Upon the repayment of the Convertible Debentures, whether at maturity or
upon redemption, the proceeds from such repayment must be applied
substantially simultaneously to redeem Trust Securities having an aggregate
initial liquidation amount equal to the aggregate principal amount of the
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Convertible Debentures so repaid. The Convertible Debentures will mature on
March 31, 2037 (unless the stated maturity of the Convertible Debentures is
shortened following a Tax Event, in which case on the advanced maturity date).
The Convertible Debentures may be redeemed at any time, including in certain
circumstances upon the occurrence of a Trust Special Event, and must be
redeemed, in whole, by the Company upon the occurrence of a U.S. Steel Group
Special Event or a Marathon Group Special Event. The Company will issue a
press release announcing any such redemption. See "--U.S. Steel Group Special
Events; Marathon Group Special Events", "--Trust Special Event Distribution or
Redemption; Shortening of Stated Maturity" and "Description of the Convertible
Debentures--Redemption at the Option of the Company."
In the event the Company redeems fewer than all of the Convertible
Debentures and, therefore, fewer than all of the outstanding Trust Securities
are to be redeemed, the Trust Convertible Preferred Securities and Trust
Common Securities will be redeemed pro rata, which means that so long as the
Trust Convertible Preferred Securities are in book-entry form the redemption
proceeds will be distributed in accordance with the procedures of the
Depository (as defined herein). See "Book-Entry System--The Depository Trust
Company." The Company may not redeem any Convertible Debentures (and therefore
cause a mandatory redemption of Trust Convertible Preferred Securities) unless
all accumulated and unpaid distributions have been paid on all outstanding
Trust Convertible Preferred Securities for all quarterly distribution payment
periods terminating on or prior to the last distribution payment date before
the date of redemption. Any redemption of Trust Convertible Preferred
Securities, other than as described below under "--U.S. Steel Group Special
Events; Marathon Group Special Events" or under "--Trust Special Event
Distribution or Redemption; Shortening of Stated Maturity," will be made at
the following prices (expressed as percentages of the principal amount of the
Convertible Debentures) (each, a "Redemption Price") together with accrued and
unpaid interest to, but excluding, the redemption date, if redeemed during the
12-month period beginning April 1 of the following years:
<TABLE>
<CAPTION>
REDEMPTION PRICE
(AS A PERCENTAGE OF INITIAL DOLLAR EQUIVALENT
YEAR LIQUIDATION AMOUNT) PER SECURITY
---- --------------------------- -----------------
<S> <C> <C>
1997 103.90% $51.950
1998 103.25 51.625
1999 102.60 51.300
2000 101.95 50.975
2001 101.30 50.650
2002 100.65 50.325
2003 and thereafter 100.00 50.000
</TABLE>
The Company will not exercise its option to redeem the Convertible
Debentures (and thus the Trust Convertible Preferred Securities), if the
Company is advised in advance by either Moody's or S&P that to do so would
result in an immediate lowering of the Company's credit rating on its senior
unsecured debt from its then existing level, unless the Company shall have
received from the issuance of common stock, since the date which is two years
prior to the redemption date, net proceeds in an aggregate amount at least
equal to the aggregate principal amount of the Convertible Debentures proposed
to be redeemed.
U.S. STEEL GROUP SPECIAL EVENTS; MARATHON GROUP SPECIAL EVENTS
If (i) (A) the Company exchanges all of the outstanding shares of Steel
Stock for all of the outstanding shares of common stock of a wholly owned
subsidiary of the Company to which all of the assets and liabilities of the
U.S. Steel Group have been transferred or (B) in the event of a Disposition of
all or substantially all of the properties and assets of the U.S. Steel Group,
the Company either pays a dividend on the Steel Stock in, or redeems a number
of shares of Steel Stock for, an amount equal
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to the Net Proceeds of such Disposition, as described in "Description of
Capital Stock and Amended and Restated Rights Plan--Steel Stock--Exchange and
Redemption" or (ii) the Company pays a dividend on, or the Company or any of
its subsidiaries consummates a tender or exchange offer for, shares of Steel
Stock, and the aggregate amount of such dividend or the consideration paid in
such tender offer or exchange offer is an amount equal to all or substantially
all of the properties and assets of the U.S. Steel Group (as such term is
defined under such caption, except that the calculation thereof shall be made
without giving effect to any borrowing made by the Company or any of its
subsidiaries in connection with such dividend, tender offer or exchange offer)
(the events described in (i) and (ii) collectively the "U.S. Steel Group
Special Events"), the Company must redeem the Convertible Debentures, in
whole, at a price equal to 100% of the aggregate principal amount thereof,
together with an amount equal to accrued and unpaid interest to the redemption
date. Following such redemption, Trust Convertible Preferred Securities with
an aggregate initial liquidation amount equal to the aggregate principal
amount of the Convertible Debentures so redeemed shall be redeemed by the
Trust, on a pro rata basis, at a redemption price equal to 100% of the initial
liquidation amount to be redeemed, together with accumulated but unpaid
distributions thereon to but excluding such redemption date. The redemption
date with respect to a redemption of the Trust Convertible Preferred
Securities resulting from any U.S. Steel Group Special Event will be the
applicable exchange date, dividend payment date or redemption date for the
Steel Stock or the consummation date of such tender offer or exchange offer,
and such redemption of Convertible Debentures (and thus the Trust Convertible
Preferred Securities) will be conditioned upon the actual exchange of Steel
Stock, payment with respect to the Steel Stock of such dividend or redemption
amount or the consummation of such tender offer or exchange offer, as the case
may be.
In addition, if, following a Disposition of all or substantially all of the
properties and assets of the U.S. Steel Group, the Company exchanges all of
the outstanding shares of Steel Stock for Marathon Stock and, subsequent to
such exchange, any event similar to any of the events described in clauses (i)
(A) and (ii) of the preceding paragraph occurs in respect of the Marathon
Stock, at which time there is another class of the Company's common stock
outstanding other than Marathon Stock (each, a "Marathon Group Special
Event"), the Company must redeem the Convertible Debentures, in whole, at a
price equal to 100% of the aggregate principal amount thereof, together with
an amount equal to accrued and unpaid interest to the redemption date.
Following such redemption, Trust Convertible Preferred Securities with an
aggregate initial liquidation amount equal to the aggregate principal amount
of the Convertible Debentures so redeemed shall be redeemed by the Trust, on a
pro rata basis, at a redemption price equal to 100% of the liquidation amount
to be redeemed, together with accumulated but unpaid distributions thereon to
but excluding such redemption date. The date on which such redemption of Trust
Convertible Preferred Securities will occur, and the conditions in respect
thereof, will be determined in the manner described in the preceding paragraph
with respect to any redemption resulting from any similar U.S. Steel Group
Special Event.
TRUST SPECIAL EVENT DISTRIBUTION OR REDEMPTION; SHORTENING OF STATED MATURITY
If, at any time, a Tax Event or an Investment Company Event (each, a "Trust
Special Event") shall occur and be continuing, the Trust may, with the consent
of the Company, except in the limited circumstances described below, be
dissolved with the result that, after the satisfaction of liabilities to
creditors (if any), Convertible Debentures with an aggregate principal amount
equal to the aggregate liquidation amount of, with an interest rate identical
to the distribution rate of, and accrued and unpaid interest equal to
accumulated and unpaid distributions on, the Trust Securities, would, subject
to the rights of creditors under applicable law, be distributed to the holders
of the Trust Securities in liquidation of such holders' interests in the Trust
on a pro rata basis within 90 days following the occurrence of the Trust
Special Event; provided, however, that such dissolution and distribution shall
be conditioned on (i) the Regular Trustees' receipt of an opinion of an
independent tax counsel experienced in such matters (a "No Recognition
Opinion"), which opinion may rely on published
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revenue rulings of the Internal Revenue Service ("IRS"), to the effect that
the holders of the Trust Securities will not recognize any gain or loss for
United States federal income tax purposes as a result of such dissolution and
distribution of Convertible Debentures, (ii) the Company or the Trust being
unable to avoid such Trust Special Event within such 90-day period by taking
some ministerial action (such as filing a form or making an election or
pursuing some other similar reasonable measure) that will have no adverse
effect on the Trust, the Company or the holders of the Trust Securities or
does not subject any of them to more than de minimis regulatory requirements
and (iii) the Company's prior written consent to such dissolution and
distribution. Assuming that (i) and (ii) of the above proviso are satisfied,
if the Company declines to consent to the dissolution and distribution, the
Company may incur an obligation to pay Additional Interest (as defined
herein). See "Description of the Convertible Debentures--Additional Interest."
"Tax Event" means that the Regular Trustees shall have received an opinion
of an independent tax counsel experienced in such matters (a "Dissolution Tax
Opinion") to the effect that on or after the Expiration Date, as a result of
(a) any amendment to, clarification of or change (including any announced
proposed change) in the laws, or any regulations thereunder, of the United
States or any political subdivision or taxing authority thereof or therein,
(b) any official administrative pronouncement, ruling, regulatory procedure,
notice or announcement, including any notice or announcement of intent to
adopt such procedures or regulations (an "Administrative Action") or any
judicial decision or (c) any amendment to, clarification of, or change in the
official position or the interpretation of such Administrative Action or
judicial decision that differs from the theretofore generally accepted
position, there is more than an insubstantial risk that (i) the Trust is or,
within 90 days of the date thereof, will be subject to United States federal
income tax with respect to interest accrued or received on the Convertible
Debentures, (ii) the Trust is or, within 90 days of the date thereof, will be
subject to more than a de minimis amount of taxes, duties or other
governmental charges, or (iii) interest payable in cash by the Company to the
Trust on the Convertible Debentures (other than interest attributable to the
Trust Common Securities) is not, or, within 90 days of the date thereof, will
not be, deductible, in whole or in part, by the Company for United States
federal income tax purposes; provided, however, that such an opinion shall not
be deemed to be a "Dissolution Tax Opinion" if the occurrence of any of the
events described in (a), (b) or (c) above requires the Company, for United
States federal income tax purposes, to defer taking a deduction for any OID
that accrues with respect to the Convertible Debentures until the interest
payment related to such OID is paid by the Company in cash, provided, the
occurrence of any of the events described in (a), (b) or (c) above does not
create more than an insubstantial risk that the Company will be prevented from
taking a deduction for OID accruing with respect to the Convertible Debentures
at a date that is no later than the date the interest payment related to such
OID is actually paid by the Company in cash.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of an independent counsel experienced in such matters (a
"Change in 1940 Act Opinion") to the effect that, as a result of the
occurrence of a change in law or regulation or a written change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority on or after the Expiration
Date, there is more than an insubstantial risk that the Trust is or will be
considered an "investment company" which is required to be registered under
the Investment Company Act of 1940, as amended (the "1940 Act").
Furthermore, if in the event of a Trust Special Event (i) after receipt of a
Dissolution Tax Opinion by the Regular Trustees, the Company has received an
opinion (a "Redemption Tax Opinion") of an independent tax counsel experienced
in such matters that, as a result of a Tax Event, there is more that an
insubstantial risk that the Company would be precluded from deducting the
interest on the Convertible Debentures for United States federal income tax
purposes even after the Convertible Debentures were distributed to the holders
of Trust Securities in liquidation of such holders' interests in the Trust as
described above, or (ii) after receipt by the Regular Trustees of a
Dissolution Tax
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Opinion or a Change in 1940 Act Opinion, the Regular Trustees shall have been
informed by independent tax counsel experienced in such matters that it
cannot, for substantive reasons, deliver a No Recognition Opinion to the
Trust, (a) the Company shall have the right to shorten the stated maturity of
the Convertible Debentures to the minimum extent required, but in any event to
a date not less than five years from the date of issuance (the action referred
to in this clause (a) being referred to herein as a "maturity advancement"),
such that, in the opinion of counsel to Company experienced in such matters,
after advancing the stated maturity, interest paid on the Convertible
Debentures will be deductible for federal income tax purposes, or (b) if in
the opinion of counsel to the Company who rendered the Redemption Tax Opinion,
there would in all cases, after effecting a maturity advancement, be more than
an insubstantial risk that the Company would continue to be precluded from
deducting interest on the Convertible Debentures, the Company shall have the
right, upon not less than 30 nor more than 60 days notice, to redeem the
Convertible Debentures, in whole or in part, at 100% of the principal amount
thereof, plus accrued and unpaid interest thereon, for cash within 90 days
following the occurrence of such Trust Special Event. Following such
redemption, Trust Securities with an aggregate initial liquidation amount
equal to the aggregate principal amount of the Convertible Debentures so
redeemed shall be redeemed by the Trust, on a pro rata basis, at a redemption
price equal to 100% of the liquidation amount thereof, together with
accumulated and unpaid distributions thereon to, but excluding, such
redemption date; provided, however, that if at the time there is available to
the Company or the Trust the opportunity to eliminate, which elimination shall
be complete within the 90-day period, such Trust Special Event by taking some
ministerial action that has no adverse effect on the Trust, the Company or the
holders of the Trust Securities, or does not subject any of them to more than
de minimis regulatory requirements, the Company or the Trust will pursue such
measure in lieu of redemption.
On and after the date fixed by the Regular Trustees for any distribution of
Convertible Debentures upon dissolution of the Trust, (i) the Trust
Convertible Preferred Securities will no longer be deemed to be outstanding,
(ii) the Depository (as defined herein) or its nominee, as the record holder
of the Trust Convertible Preferred Securities, will receive a registered
global certificate or certificates representing the Convertible Debentures to
be delivered upon such distribution, and (iii) any certificate representing
Trust Convertible Preferred Securities not held by the Depository or its
nominee will be deemed to represent beneficial interests in Convertible
Debentures having an aggregate principal amount equal to the aggregate initial
liquidation amount of, with an interest rate identical to the distribution
rate of, and accrued and unpaid interest (including Compound Interest (as
defined herein)) equal to accumulated and unpaid distributions on such Trust
Convertible Preferred Securities until such certificates are presented to the
Company or its agent for transfer or reissuance.
REDEMPTION PROCEDURES FOR REDEMPTION BY THE TRUST
The Trust may not redeem any of the outstanding Trust Convertible Preferred
Securities unless all accumulated and unpaid distributions have been paid on
all outstanding Trust Convertible Preferred Securities for all quarterly
distribution periods terminating on or prior to the date of redemption. If the
Trust gives a notice of redemption in respect of Trust Convertible Preferred
Securities, then, by 12:00 noon, New York City time, on the redemption date,
provided that the Company has paid the Institutional Trustee, the
Institutional Trustee will irrevocably deposit with the Depository or its
nominee funds sufficient to pay the applicable redemption price, plus
accumulated but unpaid distributions thereon, and will give the Depository
irrevocable instructions and authority to pay such amounts to the holders of
the Trust Convertible Preferred Securities. See "Book-Entry System--The
Depository Trust Company." If notice of redemption shall have been given and
funds deposited as required, then immediately prior to the close of business
on the date of such deposit, distributions will cease to accrue and all rights
of holders of such Trust Convertible Preferred Securities so called for
redemption will cease, except the right of the holders of such Trust
Convertible Preferred Securities to receive the redemption price, plus
accumulated but unpaid distributions thereon but without further accrued
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interest on such redemption price. The distributions payable upon redemption
(unless the date of redemption is a distribution payment date) will be payable
to the person to whom the redemption price is payable. In the event that any
date fixed for redemption of Trust Convertible Preferred Securities is not a
Business Day, then payment of the redemption price, plus accumulated but
unpaid distributions thereon, payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other
payments 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 each case with the same force and effect as if made
on such date fixed for redemption. In the event that payment of the redemption
price, plus accumulated but unpaid distributions thereon, in respect of Trust
Convertible Preferred Securities is improperly withheld or refused and not
paid either by the Institutional Trustee, or, if paid to the Institutional
Trustee, by the Company pursuant to the Guarantee, distributions on such Trust
Convertible Preferred Securities will continue to accumulate at the
distribution rate from the original redemption date to the actual date of
payment, in which case the actual payment date will be considered the date
fixed for redemption for purposes of calculating the redemption price and the
accumulated but unpaid distributions thereon.
In the event that fewer than all of the outstanding Trust Securities are to
be redeemed, the Trust Securities will be redeemed pro rata. So long as the
Trust Convertible Securities are in book-entry form, the distribution of
proceeds will be made in accordance with the procedures applied by the
Depository. See "Book-Entry System--The Depository Trust Company."
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), the Company or any of its subsidiaries
may at any time, and from time to time, purchase outstanding Trust Convertible
Preferred Securities by tender, in the open market or otherwise.
Notice of redemption will be given not less than 30 nor more than 60 days
prior to the redemption date, other than notice of any redemption of the Trust
Convertible Preferred Securities as a result of any dividend on or redemption
of Steel Stock resulting from a Disposition of all or substantially all of the
properties and assets of the U.S. Steel Group or any tender offer or exchange
offer for the Steel Stock that would constitute a U.S. Steel Group Special
Event. Notice of redemption in connection with a dividend on, or a redemption
of, the Steel Stock resulting from such Disposition will be given not less
than 45 days prior to the date selected by the Board for the payment of such
dividend or such redemption and notice of redemption as a result of any such
tender offer or exchange offer will be given on the date of public
announcement thereof (but in any event not less than 30 days prior to such
redemption) by the Company. Similar notice will be given with respect to any
redemption occurring after a Marathon Group Special Event. Prior to giving a
notice of redemption resulting from a U.S. Steel Group Special Event or a
Marathon Group Special Event, the Company is required to pay all accrued and
unpaid interest (including Compound Interest, if any) on the Convertible
Debentures through the Interest Payment Date (as defined herein) next
preceding the date of such notice. Substantially simultaneously, the Trust
will pay all accumulated and unpaid distributions on the outstanding Trust
Convertible Preferred Securities through the distribution payment date next
preceding the date of such notice. Any such notice will be given to each
holder of record of the Trust Convertible Preferred Securities. If the Trust
Convertible Preferred Securities are not in book-entry form, notice of
redemption shall be given by mail.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary dissolution, winding-up and
liquidation of the Trust (a "Liquidation"), the then holders of the Trust
Convertible Preferred Securities will be entitled to receive out of the assets
of the Trust, after satisfaction of liabilities to creditors, if any, an
amount equal to the aggregate initial liquidation amount of the Trust
Convertible Preferred Securities, plus accumulated and
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unpaid distributions thereon to the date of payment (the "Liquidation
Distribution"), unless, in connection with such Liquidation, Convertible
Debentures in an aggregate principal amount equal to the aggregate liquidation
amount of, with an interest rate identical to the distribution rate of, and
accrued and unpaid interest equal to accumulated and unpaid distributions on,
the Trust Convertible Preferred Securities have been distributed on a pro rata
basis to the holders of the Trust Securities in exchange for such Trust
Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid only
in part because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution for all Trust Securities, then the amounts
payable directly by the Trust on the Trust Securities shall be paid on a pro
rata basis. The holders of the Trust Common Securities will be entitled to
receive distributions upon any such dissolution pro rata with the holders of
the Trust Convertible Preferred Securities, except that if a Declaration Event
of Default has occurred and is continuing, the Trust Convertible Preferred
Securities shall have a preference over the Trust Common Securities with
regard to such distributions.
Pursuant to the Declaration, the Trust shall dissolve (i) on March 31, 2037,
the expiration of the term of the Trust, (ii) upon the bankruptcy of the
Company as the holder of the Trust Common Securities, (iii) upon the filing of
a certificate of dissolution or its equivalent with respect to the Company as
the holder of the Trust Common Securities, upon the consent of the holders of
at least a majority in liquidation amount of the Trust Securities voting
together as a single class to file a certificate of cancellation with respect
to the Trust, or the revocation of the charter of the Company as the holder of
the Trust Common Securities and the expiration of 90 days after the date of
revocation without a reinstatement thereof, (iv) upon the distribution of
Convertible Debentures upon the occurrence and continuation of a Trust Special
Event, (v) upon the entry of a decree of a judicial dissolution of the Company
as holder of the Trust Common Securities or the Trust, (vi) upon the
redemption of all the Trust Securities and the payment to the holders of the
Trust Securities in accordance with their terms and (vii) upon the
distribution of the Steel Stock or any other class of common stock of the
Company to all holders of Trust Convertible Preferred Securities upon
conversion of all outstanding Trust Convertible Preferred Securities.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the
Trust Securities (a "Declaration Event of Default"). See "Description of
Convertible Debentures--Indenture Events of Default."
Upon the occurrence and continuance of a Declaration Event of Default, the
Institutional Trustee as the sole holder of the Convertible Debentures will
have the right under the Indenture to declare the principal amount of the
Convertible Debentures due and payable. The Company and the Trust are each
required to file annually with the Institutional Trustee an officer's
certificate as to its compliance with all conditions and covenants under the
Declaration.
If the Institutional Trustee fails to enforce its rights under the
Convertible Debentures, any holder of Trust Convertible Preferred Securities
may institute a legal proceeding against the Company to enforce the
Institutional Trustee's rights under the Convertible Debentures.
Notwithstanding the foregoing, if a Declaration Event of Default has occurred
and is continuing and such event is attributable to the failure of the Company
to pay interest or principal on the Convertible Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, the
redemption date), then the registered holder of Trust Convertible Preferred
Securities may institute a Direct Action for payment on or after the
respective due date specified in the Convertible Debentures. In connection
with such Direct Action, the rights of the Company, as holders of the Trust
Common Securities, will be subrogated to the rights of such holder of Trust
Convertible Preferred Securities under the Declaration
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to the extent of any payment made by the Company to such holder of Trust
Convertible Preferred Securities in such Direct Action. Except as provided in
the preceding sentences, the holders of Trust Convertible Preferred Securities
will not be able to exercise directly any other remedy available to the
holders of the Convertible Debentures.
Pursuant to the Declaration, the holder of the Trust Common Securities will
be deemed to have waived any Declaration Event of Default with respect to the
Trust Common Securities until all Declaration Events of Default with respect
to the Trust Convertible Preferred Securities have been cured, waived or
otherwise eliminated. Until such Declaration Events of Default with respect to
the Trust Convertible Preferred Securities have been so cured, waived or
otherwise eliminated, the Institutional Trustee will be deemed to be acting
solely on behalf of the holders of the Trust Convertible Preferred Securities
and only the holders of the Trust Convertible Preferred Securities will have
the right to direct the Institutional Trustee in accordance with the terms of
the Trust Convertible Preferred Securities.
VOTING RIGHTS
Except as described herein, under the Delaware Trust Act, the Trust
Indenture Act and under "Description of the Guarantee--Modification of the
Guarantee; Assignment", and as otherwise required by law and the Declaration,
the holders of the Trust Convertible Preferred Securities will have no voting
rights.
Subject to the requirement of the Institutional Trustee obtaining a tax
opinion as set forth in the last sentence of the next paragraph, the holders
of a majority in aggregate liquidation amount of the Trust Convertible
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Institutional
Trustee, or direct the exercise of any trust or power conferred upon the
Institutional Trustee under the Declaration, including the right to direct the
Institutional Trustee, as holder of the Convertible Debentures, to (i)
exercise the remedies available under the Indenture with respect to the
Convertible Debentures, (ii) waive any past Indenture Event of Default that is
waivable under the Indenture, or (iii) exercise any right to rescind or annul
a declaration that the principal of all the Convertible Debentures shall be
due and payable; provided, however, that if an Indenture Event of Default has
occurred and is continuing, then the holders of 25% of the aggregate
liquidation amount of the Trust Convertible Preferred Securities may direct
the Institutional Trustee to declare the principal of and interest on the
Convertible Debentures immediately due and payable; provided, further, that,
where a consent or action under the Indenture would require the consent or act
of holders of more than a majority in aggregate principal amount of the
Convertible Debentures (a "Super Majority"), only the holders of at least such
Super Majority in aggregate liquidation amount of the Trust Convertible
Preferred Securities may direct the Institutional Trustee to give such consent
or take such action.
The Institutional Trustee shall notify all holders of the Trust Convertible
Preferred Securities of any notice of default received from the Debenture
Trustee with respect to the Convertible Debentures. Such notice shall state
that such Indenture Event of Default also constitutes a Declaration Event of
Default. Except with respect to the directing the time, method and place of
conducting a proceeding for a remedy, the Institutional Trustee shall not take
any of the actions described in clauses (i), (ii) or (iii) above unless the
Institutional Trustee has obtained an opinion of tax counsel to the effect
that, as a result of such action, the Trust will not be classified as other
than a grantor trust for United States federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Convertible Debentures, is required under the Indenture with respect to any
amendment, modification or termination of the Indenture or the Convertible
Debentures, the Institutional Trustee shall request the direction of the
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holders of the Trust Securities with respect to such amendment, modification
or termination and shall vote with respect to such amendment, modification or
termination as directed by a majority in liquidation amount of the Trust
Securities voting together as a single class; provided, however, that where a
consent under the Indenture would require the consent of the holders of a
Super Majority in aggregate principal amount of the Convertible Debentures,
the Institutional Trustee may only give such consent at the direction of the
holders of at least the same Super Majority percentage in liquidation amount
of the Trust Securities as is required under the Indenture of aggregate
principal amount of the Convertible Debentures outstanding. The Institutional
Trustee shall not take any such action in accordance with the directions of
the holders of the Trust Securities unless the Institutional Trustee has
obtained an opinion of tax counsel to the effect that for the purposes of
United States federal income taxes the Trust will not be classified as other
than a grantor trust on account of such action.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any approval or direction of holders of Trust Convertible Preferred
Securities may be given at a separate meeting of holders of Trust Convertible
Preferred Securities convened for such purpose, at a meeting of all of the
holders of Trust Securities or pursuant to written consent. The Regular
Trustees will cause a notice of any meeting at which holders of Trust
Convertible Preferred Securities 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 Trust Convertible Preferred Securities. Each such
notice will include a statement setting forth the following information: (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 Trust Convertible Preferred Securities will
be required for the Trust to redeem, participate in the exchange and/or cancel
Trust Convertible Preferred Securities or to distribute Convertible
Debentures, each in accordance with the Declaration and the terms of the Trust
Convertible Preferred Securities.
Notwithstanding that holders of Trust Convertible Preferred Securities are
entitled to vote or consent under any of the circumstances described above,
any of the Trust Convertible Preferred Securities that are owned at such time
by the Company or any entity directly or indirectly controlling or controlled
by, or under direct or indirect common control with, the Company, shall not be
entitled to vote or consent and shall, for purposes of such vote or consent,
be treated as if such Trust Convertible Preferred Securities were not
outstanding.
The procedures by which holders of Trust Convertible Preferred Securities
may exercise their voting rights are described below. See "--Book-Entry Only
Issuances" and "Book-Entry System--The Depository Trust Company."
Holders of the Trust Convertible Preferred Securities will have no rights to
appoint or remove the Trustees, who may be appointed, removed or replaced
solely by the Company as the indirect or direct holder of all of the Trust
Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by the Regular
Trustees (and in certain circumstances the Institutional Trustee or the
Delaware Trustee), provided that, if any proposed amendment provides for, or
the Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Trust
Securities, whether by way of amendment to the Declaration or otherwise or
(ii) the dissolution, winding up or termination of the Trust, then the holders
of the Trust Securities voting together as a single class will be entitled to
vote
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on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of at least a majority in liquidation
amount of the Trust Securities affected thereby; provided that if any
amendment or proposal referred to in clause (i) above would adversely affect
only the Trust Convertible Preferred Securities or only the Trust Common
Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a majority in liquidation amount of such class of
Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the Institutional Trustee in contravention of the Trust Indenture Act or (iii)
cause the Trust to be deemed an "investment company" which is required to be
registered under the 1940 Act.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any corporation or other body, except as
described below. The Trust may, with the consent of the Regular Trustees or,
if there are more than two, a majority of the Regular Trustees and without the
consent of the holders of the Trust Securities, the Delaware Trustee or the
Institutional Trustee, consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any state, provided
that (i) such successor entity either (x) expressly assumes all of the
obligations of the Trust under the Trust Securities or (y) substitutes for the
Trust Convertible Preferred Securities other securities having substantially
the same terms as the Trust Securities (the "Successor Securities"), so long
as the Successor Securities rank the same as the Trust Convertible Preferred
Securities rank with respect to distributions and payments upon liquidation,
redemption, and otherwise, (ii) the Company expressly acknowledges a trustee
of such successor entity possessing the same powers and duties as the
Institutional Trustee as the holder of the Convertible Debentures, (iii) the
Company uses its reasonable efforts to cause the Trust Convertible Preferred
Securities or any Successor Securities to be listed or quoted on any national
securities exchange or with another organization on which the Trust
Convertible Preferred Securities are then listed or quoted, (iv) such merger,
consolidation, amalgamation or replacement does not cause the Trust
Convertible Preferred Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization, (v)
such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the holders of the Trust
Securities (including any Successor Securities) in any material respect (other
than with respect to any dilution of the holders' interest in the new entity),
(vi) such successor entity has a purpose identical to that of the Trust, (vii)
prior to such merger, consolidation, amalgamation or replacement, the Company
has received an opinion of an independent counsel to the Trust experienced in
such matters to the effect that, (A) such merger, consolidation, amalgamation
or replacement does not adversely affect the legal rights, preferences and
privileges of the holders of the Trust Securities (including any Successor
Securities) in any material respect (other than with respect to any dilution
of the holders' interest in the new entity), (B) following such merger,
consolidation, amalgamation or replacement, neither the Trust nor such
successor entity will be required to register as an investment company under
the 1940 Act, and (C) following such merger, consolidation, amalgamation or
replacement, the Trust or such successor entity will continue to be, or will
be, classified as a grantor trust for United States federal income tax
purposes, and (viii) the Company guarantees the obligations of such successor
entity under the Successor Securities at least to the extent provided by the
Guarantee and the Trust Common Securities Guarantee (as defined below).
Notwithstanding the foregoing, the Trust shall not, except with the consent of
holders of 100% in liquidation amount of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by any other entity or permit
any other entity to consolidate, amalgamate, merge with or into, or replace it
if such consolidation, amalgamation, merger or replacement would cause the
Trust or the
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successor entity to be classified as other than a grantor trust for United
States federal income tax purposes.
BOOK-ENTRY ONLY ISSUANCES
DTC will act as securities depositary for the Trust Convertible Preferred
Securities. The Trust Convertible Preferred Securities will be issued only as
fully registered securities registered in the name of Cede & Co., DTC's
nominee ("Cede"). One or more fully registered global Trust Convertible
Preferred Securities certificates, representing the total aggregate number of
Trust Convertible Preferred Securities, will be issued and will be deposited
with DTC. Although voting with respect to the Trust Convertible Preferred
Securities is limited, in those cases where a vote is required, neither DTC
nor Cede will itself consent or vote with respect to Trust Convertible
Preferred Securities. Under its usual procedures, DTC would solicit votes on
behalf of the Trust through an Omnibus Proxy. Except as provided herein, a
Beneficial Owner in a global Trust Convertible Preferred Security certificate
will not be entitled to receive physical delivery of Trust Convertible
Preferred Securities. Accordingly, each Beneficial Owner must rely on the
procedures of DTC to exercise any rights under the Trust Convertible Preferred
Securities. A more detailed description of the DTC book-entry system is set
forth in "Book-Entry System--The Depository Trust Company."
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with respect
to the Trust Securities and after the curing of any defaults that may have
occurred, undertakes to perform only such duties as are specifically set forth
in the Declaration. In case a default has occurred (that has not been cured or
waived pursuant to the Declaration) of which the Institutional Trustee has
actual knowledge, the Institutional Trustee shall exercise the same degree of
care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provisions, the Institutional Trustee is under no
obligation to exercise any of the powers vested in it by the Declaration at
the request of any holder of Trust Convertible Preferred Securities, unless
such holder provides security and indemnity, reasonably satisfactory to the
Institutional Trustee, against the costs, expenses and liabilities which might
be incurred hereby. The holders of Trust Convertible Preferred Securities will
not be required to offer such indemnity in the event such holders, by
exercising their voting rights, direct the Institutional Trustee to take any
action it is empowered to take under the Declaration following a Declaration
Event of Default. The Institutional Trustee also serves as trustee under the
Guarantee and the Indenture.
See "USX Capital Trust I" regarding The Bank of New York's service as
trustee under indentures under which securities have been issued or guaranteed
by the Company.
CONVERSION AGENT AND PAYING AGENT
The Institutional Trustee is appointed under the terms of the Trust
Securities to act as the initial Conversion Agent. In addition, in the event
that the Trust Convertible Preferred Securities do not remain in book-entry
only form, the following provisions would apply:
The Institutional Trustee will act as paying agent and may designate an
additional or substitute paying agent at any time. Registration of transfers
of Trust Convertible Preferred Securities will be effected without charge by
or on behalf of the Trust, but upon payment (with the giving of such indemnity
as the Trust or the Company may require) in respect of any tax or other
government charges that may be imposed in relation to it. The Trust will not
be required to register or cause to be registered the transfer of Trust
Convertible Preferred Securities after such Trust Convertible Preferred
Securities have been called for redemption.
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GOVERNING LAW
The Declaration and the Trust Convertible Preferred Securities will be
governed by, and construed in accordance with, the internal laws of the State
of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to take any action so that
the Trust will not be required to register as an "investment company" under
the 1940 Act or characterized as other than a grantor trust for United States
federal income tax purposes, and to cooperate with the Company so that the
Convertible Debentures will be treated as indebtedness of the Company for
United States federal income tax purposes. In this connection, the Regular
Trustees are authorized to take any action, not inconsistent with the
Declaration and applicable law, that the Regular Trustees determine in their
discretion to be necessary or desirable to achieve such end, as long as such
action does not adversely affect the interests of the holders of the Trust
Convertible Preferred Securities.
Holders of the Trust Convertible Preferred Securities have no preemptive
rights.
DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the Guarantee which
will be executed and delivered by the Company for the benefit of the holders
of Trust Convertible Preferred Securities. The Guarantee will be qualified as
an indenture under the Trust Indenture Act. The Bank of New York will act as
the Guarantee Trustee. The terms of the Guarantee will be those set forth in
such Guarantee and those made part of such Guarantee by the Trust Indenture
Act. The summary is subject in all respects to the provisions of, and is
qualified in its entirety by reference to, the form of Guarantee, which is
filed as an exhibit to the Registration Statement of which this Prospectus
forms a part, and the Trust Indenture Act. The Guarantee will be held by the
Guarantee Trustee for the benefit of the holders of the Trust Securities.
GENERAL
Pursuant to the Guarantee, the Company will agree, to the extent set forth
therein, to pay in full to the holders of the Trust Convertible Preferred
Securities the Guarantee Payments (as defined herein) (except to the extent
paid by the Trust), as and when due, regardless of any defense, right of
setoff, or counterclaim which the Trust may have or assert. The following
payments with respect to Trust Convertible Preferred Securities issued by the
Trust to the extent not paid by the Trust (the "Guarantee Payments"), will be
subject to the Guarantee thereon (without duplication): (i) any accumulated
and unpaid distributions which are required to be paid on such Trust
Convertible Preferred Securities to the extent the Trust shall have funds
available therefor; (ii) the redemption price and all accumulated and unpaid
distributions to the date of redemption to the extent the Trust has funds
available therefor with respect to any Trust Convertible Preferred Securities
called for redemption by the Trust, and (iii) upon a voluntary or involuntary
dissolution, winding-up, or termination of the Trust (other than in connection
with the conversion of all of the Trust Securities into Steel Stock, or any
other class of common stock of the Company, or the distribution of the
Convertible Debentures to the holders of Trust Convertible Preferred
Securities as provided in the Declaration), the lesser of (a) the aggregate of
the liquidation amount and all accumulated and unpaid distributions on such
Trust Convertible Preferred Securities to the date of payment, to the extent
the Trust has funds available therefor or (b) the amount of assets of the
Trust remaining available for distribution to holders of such Trust
Convertible Preferred Securities in liquidation of the Trust. The Company's
obligation to make a Guarantee Payment may be satisfied by direct payment of
the required amounts by the Company to the holders of Trust Convertible
Preferred Securities or by causing the Trust to pay such amounts to such
holders.
The Guarantee will not apply to any payment of distributions on the Trust
Convertible Preferred Securities except to the extent the Trust shall have
funds available therefor. If the Company does not
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make interest payments on the Convertible Debentures purchased by the Trust,
the Trust will not pay distributions on the Trust Convertible Preferred
Securities issued by the Trust and will not have funds available therefor. See
"Description of the Convertible Debentures--Certain Covenants of the Company."
The Guarantee, when taken together with the Company's obligations under the
Convertible Debentures, the Indenture and the Declaration, including its
obligations to pay costs, expenses, debts and liabilities of the Trust (other
than with respect to the Trust Securities), will provide a full and
unconditional guarantee on a subordinated basis by the Company of payments due
on the Trust Convertible Preferred Securities.
The Company has also agreed to guarantee fully and unconditionally the
obligations of the Trust with respect to the Trust Common Securities (the
"Trust Common Securities Guarantee") to the same extent as the Guarantee,
except that upon an Indenture Event of Default, rights of holders of Trust
Common Securities to receive payment of periodic distributions and payments on
liquidation, redemption, or otherwise will be subordinated to the rights of
the holders of Trust Convertible Preferred Securities.
CERTAIN COVENANTS OF THE COMPANY
In the Guarantee, the Company will covenant that, so long as any Trust
Convertible Preferred Securities remain outstanding, if there shall have
occurred any event that would constitute an event of default under the
Guarantee or the Declaration, then (a) the Company shall not declare or pay
any dividend on, make any distributions with respect to, or redeem, purchase,
acquire or, make a liquidation payment with respect to, any of its capital
stock (other than (i) purchases or acquisitions of shares of capital stock in
connection with any employee benefit plan or program, director plan or
program, dividend reinvestment, stock repurchase or other similar plans
available to stockholders of the Company, or any option, warrant, right or
exercisable, exchangeable or convertible security outstanding as of the
Expiration Date, (ii) as a result of a reclassification of the Company's
capital stock or the exchange or conversion of one class or series of the
Company's capital stock for another class or series of the Company's capital
stock or the capital securities of a subsidiary (including a trust such as the
Trust), or (iii) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or security being converted or exchanged) and (b) the
Company shall not make any payment of interest, principal or premium, if any,
on, or repay, repurchase, or redeem any debt securities (including guarantees)
issued by the Company that rank on a parity with or junior to the Convertible
Debentures and (c) the Company shall not make any guarantee payments with
respect to the foregoing (other than pursuant to the Guarantee).
MODIFICATION OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Trust Convertible Preferred Securities (in which case no consent
of holders of Trust Convertible Preferred Securities will be required), the
Guarantee may be amended only with the prior approval of the holders of at
least a majority in liquidation amount of the outstanding Trust Convertible
Preferred Securities. All guarantees and agreements contained in a Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
the Company and shall inure to the benefit of the holders of the Trust
Convertible Preferred Securities then outstanding.
TERMINATION
The Guarantee will terminate upon (a) full payment of the redemption price
of all Trust Convertible Preferred Securities, (b) the distribution of Steel
Stock, or any other class of common stock of the Company, or upon distribution
of the Convertible Debentures held by the Trust to the holders of the Trust
Convertible Preferred Securities or (c) full payment of the amounts payable in
accordance with the Declaration upon liquidation of the Trust. Notwithstanding
the foregoing, the Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of Trust Convertible
Preferred Securities must restore payment of any sums paid under Trust
Convertible
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Preferred Securities or the Guarantee. The subordination provisions of the
Convertible Debentures provide that in the event payment is made on the
Convertible Debentures or the Guarantee in contravention of such provisions,
such payments shall be paid over the holders of Senior Indebtedness.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of a majority in liquidation amount of the Trust Convertible Preferred
Securities have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Guarantee Trustee in respect of
the Guarantee or exercising any trust or power conferred upon the Guarantee
Trustee under the Guarantee. If the Guarantee Trustee fails to enforce such
Guarantee, any holder of Trust Convertible Preferred Securities may institute
a legal proceeding directly against the Company to enforce the Guarantee
Trustee's rights under the Guarantee, without first instituting a legal
proceeding against the Trust, the Guarantee Trustee, or any other person or
entity. Notwithstanding the foregoing, if the Company has failed to make a
payment required under the Guarantee, a holder of the Trust Convertible
Preferred Securities may directly institute a proceeding against the Company
for enforcement of the Guarantee for such payment. The Company waives any
right or remedy to require that any action be brought first against the Trust
or any other person or entity before proceeding directly against the Company
under the circumstances described in the two preceding sentences.
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank (i) subordinate and junior in right of payment to all other
liabilities of the Company, (ii) on a parity with the most senior preferred or
preference stock now or hereafter issued by the Company, including the 6.50%
Convertible Preferred Stock, and with any guarantee now or hereafter entered
into by the Company in respect of any preferred or preference stock of any
affiliate of the Company; and (iii) senior to the Steel Stock or any other
class of common stock of the Company. The terms of the Trust Convertible
Preferred Securities provide that each holder of Trust Convertible Preferred
Securities by acceptance thereof agrees to the subordination provisions and
other terms of the Guarantee relating thereto.
The Guarantee creates a guarantee of payment and not of collection (that is,
the holder of Trust Convertible Preferred Securities may institute a legal
proceeding directly against the Company to enforce its rights under the
Guarantee without instituting a legal proceeding against the Trust, the
Guarantee Trustee, or any other person or entity).
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, before the occurrence of any event of default with
respect to the Guarantee and after curing all events of default with respect
to the Guarantee that may have occurred, shall undertake to perform only such
duties as are specifically set forth in the Guarantee. After an event of
default with respect to the Guarantee has occurred, the Guarantee Trustee
shall exercise the rights and powers vested in it by the Guarantee, and shall
use the same degree of care and skill in its exercise thereof as a prudent
individual would exercise or use under the circumstances in the conduct of his
or her own affairs. Subject to such provisions, the Guarantee Trustee is under
no obligation to exercise any of the powers vested in it by the Guarantee at
the request of any holder of Trust Convertible Preferred Securities, unless
such holder shall have provided to the Guarantee Trustee such security and
indemnity, reasonably satisfactory to the Guarantee, against the costs,
expenses, and liabilities that might be incurred thereby.
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DESCRIPTION OF THE CONVERTIBLE DEBENTURES
Set forth below is a description of the terms of the Convertible Debentures.
The following description is subject to, and is qualified in its entirety by
reference to, the Supplemental Indenture (the "Supplemental Indenture") and
the Multiple Series Indenture (the "Base Indenture" and, together with the
Supplemental Indenture, the "Indenture"), each to be entered into by and
between the Company and The Bank of New York, as Trustee (the "Debenture
Trustee"), the forms of which are filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. Certain capitalized terms
used herein are defined in the Indenture.
Under certain circumstances involving the dissolution of the Trust,
including following the occurrence of a Trust Special Event, Convertible
Debentures may be distributed to the holders of the Trust Securities in
liquidation of the Trust. See "Description of the Trust Convertible Preferred
Securities--Trust Special Event Distribution or Redemption; Shortening of
Stated Maturity."
If the Convertible Debentures are distributed to the holders of the Trust
Convertible Preferred Securities, the Company will use its reasonable efforts
to have the Convertible Debentures listed or quoted on such national
securities exchange or similar organization on which the Trust Convertible
Preferred Securities are then listed or quoted, if any.
GENERAL
The Convertible Debentures will be issued as an unsecured series of debt
under the Indenture. The Convertible Debentures will be limited in aggregate
principal amount to the initial liquidation preference of all shares of 6.50%
Convertible Preferred Stock tendered and accepted for exchange in the Exchange
Offer. Additional series of debt may be issued under the Indenture.
The Convertible Debentures are not subject to a sinking fund provision. The
Convertible Debentures are convertible into shares of Steel Stock at the
option of the holders of the Convertible Debentures at an initial conversion
price of $46.25 per share of Steel Stock (equivalent to a conversion ratio of
1.081 shares of Steel Stock for each Convertible Debenture) subject to the
conversion price adjustments described under "Description of the Trust
Convertible Preferred Securities--Conversion Rights--Conversion Price
Adjustments." The entire principal amount of the Convertible Debentures will
mature and become due and payable, together with any accrued and unpaid
interest thereon, including Compound Interest and Additional Interest, if any,
on March 31, 2037 (unless the stated maturity of the Convertible Debentures is
shortened as described under "Description of Trust Convertible Preferred
Securities--Trust Special Event Distribution or Redemption; Shortening of
Stated Maturity," in which case on the advanced maturity date). The right to
convert the Convertible Debentures will terminate as set forth under "--
Conversion of the Convertible Debentures."
If Convertible Debentures are distributed to holders of Trust Convertible
Preferred Securities in liquidation of such holders' interests in the Trust,
such Convertible Debentures will initially be issued as a Global Security (as
defined herein). See "--Book-Entry and Settlement." As described herein, under
certain limited circumstances, Convertible Debentures may be issued in
certificated form in exchange for a Global Security. See "Book-Entry System--
The Depository Trust Company." In the event that Convertible Debentures are
issued in certificated form, such Convertible Debentures will be in
denominations of $50.00 and integral multiples thereof and may be transferred
or exchanged at the offices described below. Payments on Convertible
Debentures issued as a Global Security will be made to DTC, a successor
depositary or, in the event that no depositary is used, to a Paying Agent for
the Convertible Debentures. In the event Convertible Debentures are issued in
certificated form, principal, premium, if any, and interest will be payable,
the transfer of the Convertible Debentures will be registrable and Convertible
Debentures will be exchangeable for Convertible Debentures of other
denominations of a like aggregate principal amount at the corporate trust
office of the Institutional Trustee in New York, New York; provided that
payment of interest may be made at the option of the Company by check mailed
to the address of the holder entitled thereto. Notwithstanding the foregoing,
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so long as the holder of the Convertible Debentures is the Institutional
Trustee, the payment of principal, premium, if any, and interest on the
Convertible Debentures held by the Institutional Trustee will be made at such
place and to such account as may be designated by the Institutional Trustee.
SUBORDINATION
The Convertible Debentures are on a parity with indebtedness under the Loan
Agreement dated as of March 3, 1994 between the Company and USX Capital LLC
(the "LLC Loan Agreement") and subordinated and junior in right of payment to
all Senior Indebtedness of the Company but senior to all capital stock of the
Company now outstanding or hereafter issued by the Company, to the extent set
forth in the Indenture.
In the event that (i) the Company 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 the Company 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 Convertible
Debentures or any interest thereon or in respect of any repayment, redemption,
retirement, purchase or other acquisition of the Convertible Debentures.
In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Company, its creditors or its property, (ii) any proceeding for the
liquidation, dissolution or other winding up of the Company, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Company for the benefit of its creditors, or (iv)
any other marshalling of the assets of the Company, 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 the Company on account of
the Convertible Debentures. Any payment or distribution, whether in cash,
securities or other property (other than securities of the Company 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 Indenture with respect to the indebtedness
evidenced by the Convertible Debentures, 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 Convertible Debentures 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 Convertible Debentures
by any act or failure to act on the part of the Company.
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 rights of the holders of the
Convertible Debentures 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 Convertible Debentures shall
have been paid in full, and such payments or distributions received by the
holders of the Convertible Debentures, 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 the Company and its
creditors (other than the holders of Senior Indebtedness), on the one hand,
and the holders of the Convertible Debentures, on the other, be deemed to be a
payment by the Company on account of Senior Indebtedness, and not on account
of the Convertible Debentures.
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The term "Senior Indebtedness" means, with respect to the Company, the
principal, premium, if any, and interest on (i) all indebtedness of the
Company, whether outstanding on the date hereof or hereafter 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 the
Company 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 expressly provided that such indebtedness is not superior in
right of payment to the Convertible Debentures; provided, however, that Senior
Indebtedness shall not include indebtedness under the LLC Loan Agreement,
which shall rank on a parity with the Convertible Debentures. 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.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued or incurred by the Company and does not limit obligations
at subsidiaries of the Company which obligations are structurally senior to
the Convertible Debentures.
CERTAIN COVENANTS OF THE COMPANY
Except as otherwise provided in the Indenture, for so long as the
Convertible Debentures are issued to the Trust or the Institutional Trustee
and the Trust Securities remain outstanding, the Company will covenant (i) to
directly or indirectly maintain 100% ownership of the Trust Common Securities;
provided, however, that any permitted successor of the Company under the
Indenture may succeed to the Company's ownership of such Trust Common
Securities, (ii) to use its reasonable efforts to cause the Trust (a) to
remain a statutory business trust, except in connection with the distribution
of the Convertible Debentures, the redemption of all Trust Securities, or
certain mergers, consolidations or amalgamations, each as permitted by the
Declaration, and (b) to continue to be classified as a grantor trust for
United States federal income tax purposes and (iii) to use its reasonable
efforts to cause each holder of Trust Securities to be treated as owning an
undivided beneficial ownership interest in the Convertible Debentures.
REDEMPTION AT THE OPTION OF THE COMPANY
Except as described below with respect to accrued and unpaid interest, the
Company will have the right to redeem the Convertible Debentures, in whole or
in part, for cash, from time to time, upon not less than 30 nor more than 60
days notice, at the following Redemption Prices (expressed as percentages of
the principal amount of the Convertible Debentures), together with accrued and
unpaid interest thereon, including Compound Interest (as defined herein) to,
but excluding, the redemption date, if redeemed during the 12-month period
beginning April 1 of the following years:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
---- ----------------
<S> <C>
1997 103.90%
1998 103.25
1999 102.60
2000 101.95
2001 101.30
2002 100.65
2003 and thereafter 100.00
</TABLE>
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The Company will not exercise its option to redeem the Convertible
Debentures if the Company is advised in advance by either Moody's or S&P that
to do so would result in an immediate lowering of the Company's credit rating
on its senior unsecured debt from its then existing level, unless the Company
shall have received from the issuance of its common stock, since the date
which is two years prior to the redemption date, net proceeds in an aggregate
amount at least equal to the aggregate principal amount of the Convertible
Debentures to be redeemed.
Notwithstanding the foregoing, the Company may not redeem any Convertible
Debentures unless all accrued and unpaid interest has been paid on all
outstanding Convertible Debentures for all quarterly interest payment periods
terminating on or prior to the last interest payment date before the date of
redemption. If Convertible Debentures are redeemed on the last calendar day of
any March, June, September or December, accrued and unpaid interest shall be
payable to holders of record on the record date for such interest payment.
The Company shall also have the right to redeem the Convertible Debentures
at any time in certain circumstances upon the occurrence of a Trust Special
Event as described under "Description of the Trust Convertible Preferred
Securities--Trust Special Event Distribution or Redemption; Shortening of
Stated Maturity" at 100% of the principal amount thereof, together with any
accrued and unpaid interest thereon (including Compound Interest), to, but
excluding, the redemption date.
The Company is required to redeem Convertible Debentures upon the occurrence
of a U.S. Steel Group Special Event or a Marathon Group Special Event at 100%
of the principal amount thereof, together with any accrued and unpaid interest
thereon, including Compound Interest, to, but excluding, the redemption date.
See "Description of the Trust Convertible Preferred Securities--Mandatory
Redemption--U.S. Steel Group Special Events; Marathon Group Special Events."
The Company will give holders of the Convertible Debentures notice thereof
prior to such redemption on the dates specified under "Description of the
Trust Convertible Preferred Securities--Redemption Procedures for Redemption
by the Trust."
So long as the Trust Convertible Preferred Securities are outstanding, the
Declaration requires that the proceeds from the redemption of any of the
Convertible Debentures be used to redeem Trust Convertible Preferred
Securities.
INTEREST
Each Convertible Debenture shall bear interest at the rate of 6.75% per
annum from and including March 31, 1997. Interest is payable quarterly in
arrears on the last calendar day of March, June, September and December of
each year (each, an "Interest Payment Date"), commencing on June 30, 1997, to
the person in whose name such Convertible Debenture is registered, subject to
certain exceptions, at the close of business on the business day next
preceding such Interest Payment Date. In the event the Trust Convertible
Preferred Securities shall not continue to remain in book-entry only form and
the Convertible Debentures are not in the form of a Global Security, the
Company shall have the right to select record dates, which shall be at least
one Business Day before an Interest Payment Date.
The amount of interest payable for any full quarterly interest period will
be computed on the basis of a 360-day year of twelve 30-day months. The amount
of interest payable for any period shorter than a full quarterly interest
period for which interest is computed, will be computed on the basis of 30-day
months and, for periods of less than a month, the actual number of days
elapsed per 30-day month. In the event that any date on which interest is
payable on the Convertible Debentures is not a business day, then payment of
the interest payable on such date will be made on the next succeeding day that
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, then such payment shall be made on
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the immediately preceding business day, in each case with the same force and
effect as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as the Company is not in default in the payment of interest on the
Convertible Debentures, the Company will have the right, at any time, and from
time to time, during the term of the Convertible Debentures, to defer payments
of interest by extending the interest payment period for a period not
exceeding 20 consecutive quarters, during which Extension Period no interest
will be due and payable. At the end of the Extension Period, the Company shall
pay all interest then accrued and unpaid (including any Additional Interest),
together with interest thereon compounded quarterly at the rate specified for
the Convertible Debentures to the extent permitted by applicable law
("Compound Interest"). Prior to the termination of any such Extension Period,
the Company may further extend such Extension Period; provided that such
Extension Period, together with all such previous and further extensions, may
not exceed 20 consecutive quarters or extend beyond the maturity of the
Convertible Debentures. Upon the termination of any Extension Period and the
payment of all amounts then due, the Company may commence a new Extension
Period, subject to the above requirements. No interest during an Extension
Period, except at the end thereof, shall be due and payable. The Company has
no present intention of exercising its right to defer payments of interest by
extending the interest payment period on the Convertible Debentures.
During any such Extension Period, (a) the Company shall not declare or pay
any dividend on, make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital
stock (other than (i) purchases or acquisitions of shares of capital stock in
connection with any employee benefit plan or program, director plan or
program, dividend reinvestment, stock repurchase or other similar plans
available to stockholders of the Company, or any option, warrant, right or
exercisable, exchangeable or convertible security outstanding as of the
Expiration Date, (ii) as a result of a reclassification of the Company's
capital stock pursuant to the exchange or conversion provisions of the
Company's capital stock or the exchange or conversion of one class or series
of the Company's capital stock for another class or series of the Company's
capital stock or the capital securities of a subsidiary (including a trust
such as the Trust), or (iii) the purchase of fractional interests in shares of
the Company's capital stock pursuant to the conversion or exchange provisions
of such capital stock or security being converted or exchanged), and (b) the
Company shall not make any payment of interest, principal or premium, if any,
on, or repay, repurchase, or redeem or make any guarantee payment (other than
pursuant to the Guarantee) with respect to any debt securities issued by the
Company that rank on a parity with or junior to the Convertible Debentures.
If the Institutional Trustee shall be the only holder of the Convertible
Debentures, the Company shall give the Regular Trustees, the Institutional
Trustee and the Debenture Trustee notice of its election of such Extension
Period one Business Day prior to the earlier of (i) the date distributions on
the Trust Convertible Preferred Securities are payable or (ii) the date the
Regular Trustees are required to give notice to any national stock exchange or
other organization on which the Trust Convertible Preferred Stock is listed or
quoted, if any, or to holders of the Trust Convertible Preferred Securities as
of the record date or the date such distribution is payable. Any one of the
Regular Trustees shall give notice of the Company's selection of such
Extension Period to the holders of the Trust Convertible Preferred Securities.
If the Institutional Trustee shall not be the holder of the Convertible
Debentures, the Company shall give the holders of the Convertible Debentures
notice of its election of such Extension Period at least ten Business Days
prior to the earlier of (i) the Interest Payment Date for the first quarter of
such Extension Period or (ii) the date upon which the Company is required to
give notice of the record or payment date of such related interest payment to
any national stock exchange or other organization on which the Convertible
Debentures are listed or quoted, if any, or to holders of the Convertible
Debentures.
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CONVERSION OF THE CONVERTIBLE DEBENTURES
The Convertible Debentures will be convertible into the Steel Stock at the
option of the holders of the Convertible Debentures at the initial conversion
price of $46.25 per share of Steel Stock, subject to the conversion price
adjustments described under "Description of the Trust Convertible Preferred
Securities--Conversion Rights--Conversion Price Adjustments." The right to
convert Convertible Debentures will terminate prior to the close of business
(i) on March 31, 2037 (unless the stated maturity of the Convertible
Debentures is shortened following a Tax Event, as described under "Description
of Trust Convertible Preferred Securities--Trust Special Event Distribution or
Redemption; Shortening of Stated Maturity", in which case on the advanced
maturity date) or (ii) in the case of Convertible Debentures called for
redemption, on the redemption date, unless the Company gives notice of
redemption of the Convertible Debentures in connection with a dividend on or a
redemption of Steel Stock resulting from the Disposition of all or
substantially all of the properties and assets of the U.S. Steel Group, as set
forth under "Description of the Trust Convertible Preferred Securities--
Mandatory Redemption--U.S. Steel Group Special Events; Marathon Group Special
Events", in which case the right to convert Convertible Debentures will
terminate on the 31st day prior to the date selected by the Board for such
dividend or redemption.
In order to give holders of Convertible Debentures an opportunity to
determine whether to convert such Convertible Debentures into shares of Steel
Stock, the Company is required to give holders of the Convertible Debentures
notice of its intention to effect a U.S. Steel Group Special Event or a
Marathon Group Special Event, or to exchange shares of Steel Stock for
Marathon Stock of Delhi Stock following a Disposition of all or substantially
all of the assets of the U.S. Steel Group, at the times specified under
"Description of the Trust Convertible Preferred Securities--Conversion
Rights--Notice to Holders."
Except as provided below, accrued but unpaid interest will not be paid in
cash on Convertible Debentures that are converted nor will such accrued
interest be converted into additional shares of Steel Stock, but such accrued
interest will be deemed to be paid in full and then returned by the holder to
the Company as partial consideration for the Steel Stock received upon
conversion. Holders of Convertible Debentures at the close of business on an
interest record date will be entitled to receive the interest payable on such
Convertible Debentures (except that holders of Convertible Debentures called
for redemption on a redemption date between such record date and the Interest
Payment Date shall not be entitled to receive such interest on such Interest
Payment Date) on the corresponding Interest Payment Date notwithstanding the
conversion of such Convertible Debentures following such interest record date
and prior to such Interest Payment Date. However, Convertible Debentures
surrendered for conversion during the period between the close of business on
any interest record date and the opening of business on the corresponding
Interest Payment Date (except Convertible Debentures called for redemption on
a redemption date during such period) must be accompanied by payment of an
amount equal to the interest payable on such Convertible Debentures on such
Interest Payment Date. A holder of Convertible Debentures on an interest
record date who (or whose transferee) tenders any such Convertible Debentures
for conversion into shares of Steel Stock on the corresponding Interest
Payment Date will receive the interest payable by the Company on such
Convertible Debentures on such date, and the converting holder need not
include payment of the amount of such interest upon surrender of Convertible
Debentures for conversion. The Company will make no payment or allowance for
dividends on the shares of Steel Stock issued upon conversion.
The Convertible Debentures held by the Trust will not be converted except
pursuant to a notice of conversion delivered to the Conversion Agent by a
holder of Trust Convertible Preferred Securities. Upon surrender of a Trust
Convertible Preferred Security to the Conversion Agent for conversion, the
Trust will distribute Convertible Debentures to the Conversion Agent on behalf
of the holder of the Trust Convertible Preferred Securities so converted,
whereupon the Conversion Agent will convert such Convertible Debentures to the
Steel Stock on behalf of such holder. The Company's delivery to
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the holders of the Convertible Debentures (through the Conversion Agent) of
the fixed number of shares of Steel Stock into which the Convertible
Debentures are convertible (together with the cash payment, if any, in lieu of
fractional shares) will be deemed to satisfy the Company's obligation to pay
the principal amount of the Convertible Debentures so converted, and the
accrued and unpaid interest thereon attributable to the period from the last
date to which interest has been paid or duly provided for. Interest may, at
the Company's option, be paid either (i) by check mailed to the address of the
person entitled thereto as it appears in the register or (ii) by transfer to
an account maintained by such person located in the United States; provided,
however, that payments to DTC will be made by wire transfer of immediately
available funds to the account of DTC or its nominee.
ADDITIONAL INTEREST
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature imposed by the United
States or any other taxing authority, then, in any such case, the Company will
pay as additional interest ("Additional Interest") on the Convertible
Debentures any and all taxes, duties, assessments or governmental charges of
whatever nature directly imposed on the Trust, in its capacity as a legal
entity or as a holder of the Convertible Debentures, by the United States, or
any other taxing authority, so that the net amounts received and retained by
such Trust and the Institutional Trustee after paying such taxes, duties,
assessments or governmental charges will be equal to the amounts such Trust
and the Institutional Trustee would have received had no such taxes, duties,
assessments or governmental charges been incurred by or imposed on such Trust.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Except as otherwise provided in the Indenture, the Company may not merge or
consolidate or sell or convey all or substantially all of its assets unless
the successor corporation (if other than the Company) is a domestic
corporation and assumes the Company's obligations under the Convertible
Debentures and the Indenture.
INDENTURE EVENTS OF DEFAULT
Any one of the following events will constitute an Indenture Event of
Default with respect to the Convertible Debentures:
(a) default in the payment of any interest on the Convertible Debentures
when due and payable, if continued for 30 days after written notice has
been given as provided in the Indenture, whether or not such payment is
prohibited by the subordination provisions of the Indenture and the
Convertible Debentures, provided, however, that a valid extension of the
interest payment period does not constitute a default in the payment of
interest;
(b) default in the payment of principal of (or premium, if any, on) the
Convertible Debentures when due and payable whether or not such payment is
prohibited by the subordination provisions of the Indenture and the
Convertible Debentures;
(c) failure to perform any other covenant of the Company in the Indenture
or the Convertible Debentures (other than a covenant included in the
Indenture solely for the benefit of any series of debt securities other
than the Convertible Debentures), if continued for 90 days after written
notice has been given as provided in the Indenture;
(d) failure of the Company to deliver the Steel Stock or shares of
another class of common stock of the Company upon a valid conversion
election by the holder or holders of the Convertible Debentures to convert
such Convertible Debentures into shares of Steel Stock or shares of such
other class of common stock;
(e) certain events in bankruptcy, insolvency or reorganization involving
the Company; or
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(f) the voluntary or involuntary dissolution, winding-up, or termination
of the Trust, except in connection with (i) the distribution of Convertible
Debentures to the holders of Trust Securities in liquidation of the Trust
or in their interest in the Trust, (ii) the redemption of the Trust
Convertible Preferred Securities and (iii) certain mergers, consolidations
or amalgamations, each as permitted by the Declaration.
If any Indenture Event of Default shall occur and be continuing, the
Institutional Trustee, as the holder of the Convertible Debentures, will have
the right under the Indenture to declare the principal of the Convertible
Debentures (including any Compound Interest and Additional Interest, if any)
and any other amounts payable under the Indenture to be forthwith due and
payable and to enforce its other rights as a creditor with respect to the
Convertible Debentures. An Indenture Event of Default also constitutes a
Declaration Event of Default. The holders of Trust Convertible Preferred
Securities in certain circumstances have the right to direct the Institutional
Trustee to exercise its rights as the holder of the Convertible Debentures. In
addition, if the Institutional Trustee fails to enforce its rights under the
Convertible Debentures any holder of Trust Convertible Preferred Securities
may institute a legal proceeding against the Company to enforce the
Institutional Trustee's rights under the Convertible Debentures. See
"Description of the Trust Convertible Preferred Securities--Declaration Events
of Default" and "--Voting Rights." Notwithstanding the foregoing, if an
Indenture Event of Default has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest or principal on the
Convertible Debentures on the date such interest or principal is otherwise
payable (or in the case of redemption, the redemption date), the Company
acknowledges that then a holder of Trust Convertible Preferred Securities may
institute a Direct Action for payment on or after the respective due date
specified in the Convertible Debentures. Notwithstanding any payments made to
such holder of Trust Convertible Preferred Securities by the Company in
connection with a Direct Action, the Company shall remain obligated to pay the
principal of or interest on the Convertible Debentures held by the Trust or
the Institutional Trustee of the Trust, and the Company shall be subrogated to
the rights of the holder of such Trust Convertible Preferred Securities with
respect to payments on the Trust Convertible Preferred Securities to the
extent of any payments made by the Company to such holder in any Direct
Action. The holders of Trust Convertible Preferred Securities will not be able
to exercise directly any other remedy available to the holders of the
Convertible Debentures.
If any Indenture Event of Default shall occur and be continuing and the
Convertible Debentures have been distributed to the holders of the Trust
Securities upon a liquidation of the Trust, the holders of not less than 25%
in aggregate liquidation amount of the Convertible Debentures will have the
right to declare the principal of the Convertible Debentures (including any
Compound Interest and Additional Interest, if any) and any other amounts
payable under the Indenture to be forthwith due and payable and to enforce
their other rights as a creditor with respect to the Convertible Debentures.
DEFEASANCE
The obligations of the Company with respect to the payment of the principal,
premium, if any, and interest on, the Convertible Debentures will terminate if
the Company irrevocably deposits or causes to be deposited with the Debenture
Trustee, under the terms of an escrow trust agreement satisfactory to the
Debenture Trustee, as a trust fund specifically pledged as security for, and
dedicated solely to, the benefit of the holders of the Convertible Debentures,
(i) money, (ii) U.S. government obligations, which through the payment of
interest and principal in respect thereof in accordance with their terms will
provide money at such time or times as payments are due and payable on the
Convertible Debentures, or (iii) a combination of (i) and (ii), sufficient to
pay and discharge each installment of principal, premium, if any, and interest
on the Convertible Debentures. The discharge of the Convertible Debentures is
subject to certain other conditions, including, without limitation, (a) no
Indenture Event of Default or event (including such deposit) which with notice
or lapse of time would
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become an Indenture Event of Default shall have occurred and be continuing on
the date of such deposit, (b) such deposit and the related intended
consequence will not result in any default or event of default under any
material indenture, agreement or other instrument binding upon the Company or
its subsidiaries or any of their properties and (c) the Company shall have
delivered to the Debenture Trustee an opinion of counsel or a ruling by the
IRS satisfactory to the Trustee to the effect that holders of the Convertible
Debentures will not recognize income, gain or loss for federal income tax
purposes if the Company makes such deposit. The conversion rights under the
Indenture will survive until the Convertible Debentures are no longer
outstanding.
MODIFICATION, WAIVER, MEETINGS AND VOTING
MODIFICATION OF INDENTURE
The Indenture will provide that the Company and the Debenture Trustee may,
without the consent of any holders of Convertible Debentures, enter into
supplemental indentures for the purposes, among other things, of adding to the
Company's covenants, adding additional Indenture Events of Default, or curing
ambiguities or inconsistencies in such Indenture, or making other changes to
the Indenture or form or terms of the Convertible Debentures, provided such
action does not have a material adverse effect on the interests of the holders
of the Convertible Debentures. In addition, modifications and amendments of
the Indenture may be made by the Company and the Debenture Trustee with the
consent of the holders of not less than a majority in aggregate principal
amount of the Convertible Debentures and all other series of debt securities
issued under the Indenture then outstanding affected, acting as one class, by
such modification or amendment; provided, however, that no such modification
or amendment may, without the consent of each holder of Convertible Debentures
outstanding that is affected thereby, (a) change the stated maturity of the
principal of, or any installment of principal of or rate of interest on the
Convertible Debentures, (b) reduce the principal, premium, if any, or interest
on any Convertible Debentures, (c) change any obligation to pay additional
amounts, (d) change the place of payment or the currency or currency unit in
which the Convertible Debentures or interest thereon is payable, (e) impair
the right to institute suit for the enforcement of any payment on or with
respect to the Convertible Debentures, (f) reduce the percentage in principal
amount of the Convertible Debentures then outstanding required for
modification or amendment of the Indenture or for any waiver of compliance
with certain provisions of the Indenture or for waiver of certain defaults,
(g) change any obligation of the Company to maintain an office or agency in
the places and for the purposes required by the Indenture, (h) make any change
that would materially adversely affect the right to convert the Convertible
Indentures or (i) modify any of the above provisions.
WAIVER OF DEFAULT
The holders of a majority in aggregate principal amount of the Convertible
Debentures then outstanding may, on behalf of the holders of all Convertible
Debentures, waive any past default under the Indenture with respect to the
Convertible Debentures except a default (a) in the payment of principal,
premium, if any, or any interest on the Convertible Debentures and (b) in
respect of a covenant or provision of the Indenture which cannot be modified
or amended without the consent of each holder of the Convertible Debentures
then outstanding.
MEETINGS AND VOTING
A meeting may be called at any time by the Debenture Trustee, and upon
request, by the Company pursuant to a resolution of the Board or the holders
of at least 25% in aggregate principal amount of the Convertible Debentures
then outstanding. Except as described above under "--Modifications of
Indenture" and "--Waiver of Default," a resolution presented at a meeting or
reconvened meeting at which a quorum of the holders of Convertible Debentures
then outstanding is
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present may be adopted by the affirmative vote of the lesser of (i) the
holders of a majority in principal amount of the Convertible Debentures then
outstanding, or (ii) the holders of 66 2/3% in principal amount of the
Convertible Debentures then outstanding represented and voting at the meeting;
provided, however, that if any consent, waiver or other action which the
Indenture expressly provides may be made, given or taken by the holders of a
specified percentage, which is less than a majority of the principal amount of
the Convertible Debentures then outstanding, such action may be adopted at a
meeting or reconvened meeting at which a quorum is present by the affirmative
vote of the lesser of (a) the holders of such specified percentage in
principal amount of the Convertible Debentures then outstanding or (b) a
majority in principal amount of Convertible Debentures then outstanding of
such series represented and voting at the meeting. Any resolution passed or
decision taken at any meeting of holders of Convertible Debentures duly held
in accordance with the Indenture will be binding on all holders of Convertible
Debentures whether or not present or represented at the meeting.
Except with respect to certain reconvened meetings, the quorum at a meeting
of the holders of Convertible Debentures will be persons holding or
representing a majority in principal amount of the Convertible Debentures then
outstanding.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Trust Convertible Preferred Securities in
connection with the involuntary or voluntary dissolution, winding-up, or
liquidation of the Trust as a result of the occurrence of a Special Event, the
Convertible Debentures will be issued in the form of one or more global
certificates registered in the name of the depository or its nominee. For
further detail, see "Book-Entry System--The Depository Trust Company."
THE DEPOSITORY
If the Convertible Debentures are distributed to holders of Trust
Convertible Preferred Securities in liquidation of such holders' interests in
the Trust, DTC will act as securities depository for the Convertible
Debentures. For a description of DTC and the specific terms of the depository
arrangements, see "Description of the Trust Convertible Preferred Securities--
Book-Entry Only Issuances."
None of the Company, the Trust, the Institutional Trustee, any paying agent
and any other agent of the Company or the Debenture Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global
Security for such Convertible Debentures or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITORY'S SERVICES
A Global Security shall be exchangeable for Convertible Debentures
registered in the names of persons other than the Depository or its nominee
only if (i) the Depository notifies the Company that it is unwilling or unable
to continue as a depository for such Global Security and no successor
depository shall have been appointed, (ii) the Depository, at any time, ceases
to be a clearing agency registered under the Exchange Act at which time the
Depository is required to be so registered to act as such depository and no
successor depository shall have been appointed, (iii) the Company, in its sole
discretion, determines that such Global Security shall be so exchangeable or
(iv) there shall have occurred an Indenture Event of Default with respect to
such Convertible Debentures. Any Global Security that is exchangeable pursuant
to the preceding sentence shall be exchangeable for Convertible Debentures
registered in such names as the Depository shall direct. It is expected that
such instructions will be based upon directions received by the Depository
from its Participants with respect to ownership of beneficial interests in
such Global Security.
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GOVERNING LAW
The Indenture and the Convertible Debentures will be governed by, and
construed in accordance with, the laws of the State of New York, unless
otherwise required by mandatory provisions of law.
MISCELLANEOUS
The Indenture will provide that the Company, as borrower, will pay all fees
and expenses related to (i) the issuance and exchange of the Trust Securities
and the Convertible Debentures, (ii) the organization, maintenance and
dissolution of the Trust, (iii) the retention of the Trustees and (iv) the
enforcement by the Institutional Trustee of the rights of the holders of the
Trust Convertible Preferred Securities.
The Company will have the right at all times to assign any of its respective
rights or obligations under the Indenture to a direct or indirect wholly owned
subsidiary of the Company; provided that, in the event of any such assignment,
the Company will remain liable for all of their respective obligations. Subject
to the foregoing, the Indenture will be binding upon and inure to the benefit
of the parties thereto and their respective successors and assigns. The
Indenture provides that it may not otherwise be assigned by the parties
thereto.
EFFECT OF OBLIGATIONS UNDER THE
CONVERTIBLE DEBENTURES AND THE GUARANTEE
As set forth in the Declaration, the sole purposes of the Trust are (a)
issuing its Trust Securities in exchange for Convertible Debentures having an
aggregate principal amount equal to the aggregate initial liquidation amount of
such Trust Securities and (b) engaging in such other activities as are
necessary or incidental thereto.
As long as payments of interest and other payments are made when due on the
Convertible Debentures, such payments will be sufficient to cover distributions
and payments due on the Trust Securities because of the following factors: (i)
the aggregate principal amount of Convertible Debentures will be equal to the
sum of the aggregate liquidation amount of the Trust Securities; (ii) the
interest rate and the interest and other payment dates on the Convertible
Debentures will match the distribution rate and distribution and other payment
dates for the Trust Convertible Preferred Securities; (iii) the Company, as
borrower, shall pay all, and the Trust shall not be obligated to pay, directly
or indirectly, costs, expenses, debt, and obligations of the Trust (other than
with respect to the Trust Securities); and (iv) the Declaration further
provides that the Trustees shall not take or cause or permit the Trust to,
among other things, engage in any activity that is not consistent with the
purposes of the Trust.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Trust Convertible Preferred Securities (to the extent
funds therefor are available) are guaranteed by the Company as and to the
extent set forth under "Description of the Guarantee." If the Company does not
make interest payments on the Convertible Debentures held by the Trust, the
Trust will not have sufficient funds to pay distributions on the Trust
Convertible Preferred Securities. The Guarantee is a full guarantee on a
subordinated basis with respect to the Trust Convertible Preferred Securities
issued by the Trust from the time of its issuance but does not apply to any
payment of distributions unless and until the Trust has sufficient funds for
the payment of such distributions. The Guarantee covers the payment of
distributions and other payments on the Trust Convertible Preferred Securities
only if and to the extent that the Company has made a payment of interest or
principal on the Convertible Debentures held by the Trust as its sole asset.
The Guarantee, when taken together with the Company's obligations under the
Convertible Debentures, the Indenture and the Declaration,
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including its obligations to pay costs, expenses, debts and liabilities of the
Trust (other than with respect to the Trust Securities), provides a full and
unconditional guarantee of amounts on the Trust Convertible Preferred
Securities.
If the Company fails to make interest or other payments on the Convertible
Debentures when due (taking account of any Extension Period), the Declaration
provides a mechanism whereby a holder of the Trust Convertible Preferred
Securities, using the procedures described in "Description of the Trust
Convertible Preferred Securities--Book-Entry Only Issuances" and "--Voting
Rights" and "Book Entry System--The Depository Trust Company" may direct the
Institutional Trustee to enforce its rights under the Convertible Debentures.
Notwithstanding the foregoing, in such circumstances a holder of Trust
Convertible Preferred Securities may institute a Direct Action for payment on
or after the respective due date specified in the Convertible Debentures. In
connection with such Direct Action, the Company will be subrogated to the
rights of such holder of Trust Convertible Preferred Securities in such Direct
Action. The Company, under the Guarantee, acknowledges that the Guarantee
Trustee shall enforce the Guarantee on behalf of the holders of the Trust
Convertible Preferred Securities. If the Company fails to make payments under
the Guarantee, the Guarantee provides a mechanism whereby the holders of the
Trust Convertible Preferred Securities may direct the Guarantee Trustee to
enforce its rights thereunder. Any holder of Trust Convertible Preferred
Securities may institute a legal proceeding directly against the Company to
enforce such holder's right to receive payment under the Guarantee without
first instituting a legal proceeding against the Trust, the Guarantee Trustee,
or any other person or entity.
DESCRIPTION OF CAPITAL STOCK AND AMENDED AND RESTATED RIGHTS PLAN
The following is a description of the terms of the capital stock of the
Company included in the Restated Certificate of Incorporation of the Company
(the "Certificate of Incorporation"). This description does not purport to be
complete and is qualified in its entirety by reference to the Certificate of
Incorporation and the Amended and Restated Rights Agreement, dated as of
October 1, 1992 (the "Restated Rights Agreement") between the Company and
Mellon Bank, N.A., as Rights Agent (the "Rights Agent"), which have been filed
as exhibits to the Registration Statement of which this Prospectus forms a
part.
GENERAL
The authorized capital stock of the Company consists of (i) 40 million
shares of preferred stock (the "Preferred Stock"), without par value, of which
6,900,000 are designated as 6.50% Convertible Preferred Stock and eight
million shares are designated as Series A Junior Preferred Stock (the "Junior
Preferred Stock"), (ii) 550 million shares of a class of common stock
designated as USX-Marathon Group Common Stock, par value $1.00 per share,
(iii) 200 million shares of a class of common stock designated as USX-U.S.
Steel Group Common Stock, par value $1.00 per share and (iv) 50 million shares
of a class of common stock designated as USX-Delhi Group Common Stock, par
value $1.00 per share. As of December 31, 1996, there were 6,900,000 shares of
6.50% Convertible Preferred Stock, 287,525,213 shares of Marathon Stock,
84,885,473 shares of Steel Stock and 9,448,269 shares of Delhi Stock issued
and outstanding. No shares of Junior Preferred Stock are outstanding. The
Marathon Stock, the Steel Stock and the Delhi Stock are together referred to
as "Common Stock."
As used herein:
"U.S. Steel Group" means, at any time, all of the businesses in which the
Company is or has been engaged, directly or indirectly, and all assets and
liabilities of the Company, other than any
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businesses, assets or liabilities of the Marathon Group or the Delhi Group
if any shares of Marathon Stock or Delhi Stock are outstanding.
"Marathon Group" means, at any time, (w) all businesses in which any of
Marathon Oil Company, Texas Oil & Gas Corp. and Carnegie Natural Gas
Company (or any of their predecessors or successors) is or has been
engaged, directly or indirectly, other than the businesses of the Delhi
Group after October 2, 1992 (the date of first issuance of Delhi Stock),
(x) all assets and liabilities of the Company to the extent attributed to
any of such businesses, whether or not such assets or liabilities are or
were assets or liabilities of such companies, (y) a proportionate interest
in the business, assets and liabilities of the Delhi Group equal to one
less the Delhi Fraction and (z) such businesses, assets and liabilities
acquired by the Company for the Marathon Group after May 6, 1991, as
determined by the Board to be included in the Marathon Group; provided that
after any dividend or distribution with respect to any shares of Delhi
Stock, or any repurchase of shares of Delhi Stock from holders of Delhi
Stock generally, the Marathon Group shall include an amount of assets or
properties of the Delhi Group equal to the aggregate amount of such kind of
assets or properties so paid in respect of shares of Delhi Stock multiplied
by a fraction, the numerator of which is equal to one less the Delhi
Fraction and the denominator of which is equal to the Delhi Fraction.
"Delhi Group" shall mean, (i) all of the businesses in which any of Delhi
Gas Pipeline Corporation ("DGPC"), The Nueces Company, Delhi Gasmark, Inc.
(previously Texas Gasmark, Inc.), Tonkawa Gas Processing Company, Delhi Gas
Marketing Corp. (previously TXO Gas Marketing Corp.), Delhi Gas Ventures
Corp. (previously TXO Gas Ventures Corp.), Red River Gas Pipeline
Corporation, Ozark Gas Pipeline Corporation, Sweetwater Pipeline
Corporation, Western Gas Transmission, Inc., and Western Gas Corporation
(or any of their predecessors or successors) is or has been engaged,
directly or indirectly, (ii) all assets and liabilities of the Company to
the extent attributed to any of such businesses, whether or not such assets
or liabilities are or were assets and liabilities of such companies and
(iii) such businesses, assets and liabilities acquired by the Company for
the Delhi Group as determined by the Board to be included in the Delhi
Group; provided that, from and after any dividend or distribution with
respect to any shares of Delhi Stock, or any repurchase of shares of Delhi
Stock from holders of Delhi Stock generally, the Delhi Group shall no
longer include an amount of assets or properties of the Delhi Group equal
to the aggregate amount of such kind of properties or assets so paid in
respect of shares of Delhi Stock multiplied by a fraction, the numerator of
which is equal to one less the Delhi Fraction and the denominator of which
is equal to the Delhi Fraction. If all of the outstanding shares of Steel
Stock are exchanged for shares of Delhi Stock as set forth under "--Steel
Stock Exchange and Redemption," all of the businesses, assets and
liabilities of the U.S. Steel Group shall be included in the Delhi Group.
"Delhi Fraction" means, on any date, a fraction the numerator of which
shall be the number of shares of Delhi Stock outstanding on such date and
the denominator of which shall be initially 14,000,000 shares; provided
that such fraction shall not be greater than one. The denominator of the
Delhi Fraction shall be adjusted to reflect subdivisions, combinations and
other reclassifications of Delhi Stock, stock dividends payable in shares
of Delhi Stock to holders thereof, the issuance of shares of Delhi Stock
the proceeds of which are attributed to the Delhi Group and repurchases by
the Company of shares of Delhi Stock. As of the date of this Prospectus,
the Delhi Fraction is 1/1.
"Disposition" shall mean the sale, transfer, assignment or other
disposition (whether by merger, consolidation, sale or contribution of
assets or stock or otherwise) of properties or assets.
"Market Value" of any class of Common Stock on any Business Day means the
average of the high and low reported sales prices regular way of a share of
such class on such Business Day
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or, in case no such reported sale takes place on such Business Day, the
average of the reported closing bid and asked prices regular way of a share
on such class on such Business Day, in either case on the NYSE Composite
Tape, or if the shares of such class are not listed or admitted to trading
on the NYSE on such Business Day, on specified alternative markets, or, if
not listed or admitted to trading on such markets, the market value as
determined by the Board, subject to adjustments necessary to reflect any
dividends (other than regular cash dividends) or distributions on, or
subdivisions or combinations of, outstanding shares of such class.
"Business Day," as used in "Description of Capital Stock and Amended and
Restated Rights Plan," means each weekday other than any day on which any
relevant class of Common Stock is not traded on any national securities
exchange or the NASDAQ Stock Market or in the over-the-counter market.
"Net Proceeds," as of any date, from any Disposition of any of the
properties and assets of the U.S. Steel Group or the Delhi Group, as the
case may be, shall mean an amount, if any, equal to the gross proceeds of
such Disposition after payment of, or reasonable provision for, (i) any
taxes payable by the Company in respect of such Disposition, (ii) any taxes
payable by the Company in respect of any dividend or redemption pursuant to
a dividend or redemption paid to holders of Steel Stock or Delhi Stock, as
the case may be, in connection with such Disposition, (iii) any transaction
costs, including, without limitation, any legal, investment banking and
accounting fees and expenses and (iv) any liabilities (contingent or
otherwise) of, or allocated to, the U.S. Steel Group or the Delhi Group, as
the case may be, including, without limitation any indemnity obligations
incurred in connection with the Disposition. For purposes of this
definition, any properties and assets of the U.S. Steel Group or the Delhi
Group, as the case may be, remaining after such Disposition shall
constitute "reasonable provision" for such amount of taxes, costs and
liabilities (contingent or otherwise) as can be supported by such
properties and assets. To the extent the proceeds of any Disposition
include any securities or other property other than cash, the Board of
Directors shall determine the value of such securities or property.
PREFERRED STOCK
The authorized Preferred Stock may be issued without the approval of the
holders of Common Stock in one or more series, from time to time, with each
such series to have such designation, powers, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, as shall be stated in a resolution
providing for the issue of any such series adopted by the Board.
STEEL STOCK
DIVIDENDS--DIVIDENDS ON THE STEEL STOCK ARE INTENDED TO BE PAID BASED UPON
THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE U.S. STEEL GROUP.
Subject to any prior rights of the holders of the Preferred Stock, dividends
may be paid on the Steel Stock as determined by the Board out of the lesser of
(i) the Available Steel Dividend Amount and (ii) funds of the Company legally
available therefor.
The "Available Steel Dividend Amount," on any date, means either:
(a) the greater of:
(i) an amount equal to (x) $2.244 billion, increased or decreased, as
appropriate, to reflect: (A) Steel Net Income from the close of business on
December 31, 1990, (B) any dividends or other distributions declared or
paid with respect to, or repurchases or issuances of, any shares of common
stock of the Company after December 31, 1990 and prior to the close of
business on May 6, 1991 attributed to the U.S. Steel Group, (C) any
dividends or other distributions declared
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or paid with respect to, or repurchases or issuances of, any shares of
Steel Stock or any shares of Preferred Stock attributed to the U.S. Steel
Group and (D) any other adjustments to stockholders' equity of the U.S.
Steel Group made in accordance with generally accepted accounting
principles, less (y) the sum of the aggregate par value of all outstanding
Steel Stock and the aggregate stated capital of all outstanding Preferred
Stock attributed to the U.S. Steel Group; and
(ii) the excess of the fair market value of the net assets of the U.S.
Steel Group over the sum of the aggregate par value of all outstanding
Steel Stock and the aggregate stated capital of all outstanding Preferred
Stock attributed to the U.S. Steel Group,
in the case of each of clauses (i) and (ii), increased by an amount equal
to any effects of the recognition of the transition obligation upon the
adoption of Statement of Financial Accounting Standards ("SFAS") No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions"
(including any amendments thereto) and any cumulative effects of the
adoption of SFAS No. 109, "Accounting For Income Taxes" (including any
amendments thereto) in the year of adoption; or
(b) in case there shall be no such amount, an amount equal to Steel Net
Income (if positive) for the fiscal year in which the dividend is declared
and/or the preceding fiscal year.
The amount of $2.244 billion in clause (a)(i) above represents the amount of
total stockholders' equity of USX as of December 31, 1990 assigned to the U.S.
Steel Group by the Board after giving consideration to the historical debt and
equity structure of the Company.
The Available Steel Dividend Amount as of December 31, 1996 was at least
$2.808 billion, as calculated under the preceding clause (a)(i).
Although net income and stockholders' equity of the U.S. Steel Group was
reduced when the Company adopted the accounting changes required by SFAS No.
106 and SFAS No. 109, such changes did not affect cash flows of the U.S. Steel
Group. As a result, in order to preclude dividends on the Steel Stock from
being limited by such noncash accounting changes, the amounts in each of
clause (a)(i) and clause (a)(ii) of the definition of "Available Steel
Dividend Amount" were adjusted to eliminate the effects of such changes, as
set forth above.
Clause (b) in the definition of "Available Steel Dividend Amount" will
permit the payment of dividends on the Steel Stock in any fiscal year to the
extent there is positive Steel Net Income in such fiscal year or in the
preceding fiscal year or to the extent of the sum of positive Steel Net
Income, if any, in both such years. Any loss in either such year would not
reduce positive Steel Net Income, if any, in the other year for purposes of
determining the applicable limitation on dividends. Such provision is
comparable to Section 170 of the Delaware General Corporation Law, which
allows the payment of dividends on common stock of any Delaware corporation in
any fiscal year to the extent of consolidated net income of the corporation
for such fiscal year and/or the preceding fiscal year.
As used herein, "Steel Net Income" means the net income or loss of the U.S.
Steel Group determined in accordance with generally accepted accounting
principles, including income and expenses of the Company attributed to the
U.S. Steel Group on a substantially consistent basis, including, without
limitation, corporate administrative costs, net interest and other financial
costs and income taxes. For information concerning the policies governing the
attribution of corporate activities to the U.S Steel Group which are being
followed by the Company in determining Steel Net Income, see "Risk Factors--
Risks Relating to the Common Stock of the Company--Management and Accounting
Policies Subject to Change."
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The Board may, in its sole discretion, declare and pay dividends exclusively
on the Steel Stock, exclusively on the Marathon Stock, exclusively on the
Delhi Stock or on such classes in equal or unequal amounts, notwithstanding
the respective amount of funds available for dividends on each class, the
respective voting and liquidation rights of each class, the amount of prior
dividends declared on each class or any other factor.
EXCHANGE AND REDEMPTION--IN THE EVENT OF A DISPOSITION OF ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF THE U.S. STEEL GROUP, USX IS REQUIRED TO
(1) PAY A DIVIDEND, (2) REDEEM STEEL STOCK OR (3) EXCHANGE STEEL STOCK FOR
MARATHON STOCK OR, IF THERE ARE NO SHARES OF MARATHON STOCK OUTSTANDING, DELHI
STOCK, SUBJECT TO CERTAIN LIMITATIONS.
If USX transfers all the assets and liabilities of the U.S. Steel Group to a
wholly owned subsidiary of the Company (the "U.S. Steel Group Subsidiary"),
the Board may, in its sole discretion and by a majority vote of the directors
then in office, provided that there are funds of the Company legally available
therefor, exchange all of the outstanding shares of the Steel Stock for all of
the outstanding stock of the U.S. Steel Group Subsidiary, on a pro rata basis.
In addition, upon the Disposition, in one transaction or a series of related
transactions, of all or substantially all of the properties and assets of the
U.S. Steel Group (other than in connection with the Disposition by the Company
of all of its properties and assets in one transaction) to any person, entity
or group (other than to the holders of all outstanding shares of Steel Stock
on a pro rata basis or to a person, entity or group in which the Company
directly or indirectly, owns a majority equity interest), the Company shall,
within 60 days following the consummation of such Disposition, either (i)
subject to the limitations on dividends on Steel Stock set forth above,
declare and pay a dividend in cash and/or in securities or other property
received as proceeds of such Disposition to the holders of the Steel Stock in
an amount equal to the Net Proceeds of such Disposition, (ii) to the extent
that there are funds of the Company legally available therefor, redeem the
number of whole shares of Steel Stock having an aggregate average Market Value
during the ten-Business Day period following consummation of such Dispositions
closest to the value of the Net Proceeds of such Disposition, for cash and/or
securities or other property received as proceeds of such Disposition in an
amount equal to the Net Proceeds or (iii) exchange each outstanding share of
Steel Stock for a number of shares of Marathon Stock or, if there are no
shares of Marathon Stock outstanding and shares of Delhi Stock are
outstanding, of Delhi Stock, equal to 110% of the average daily ratio
(calculated to the nearest five decimal places) of the Market Value of one
share of Steel Stock to the Market Value of one share of Marathon Stock or one
share of Delhi Stock, as the case may be, during such period.
If, immediately after any event, the Company directly or indirectly, owns
less than a majority equity interest in any person, entity or group in which
the Company directly, or indirectly, owned a majority equity interest
immediately prior to the occurrence of such event, a Disposition of all of the
properties and assets of the U.S. Steel Group owned by such person, entity or
group shall be deemed to have occurred. In the case of a Disposition of
properties or assets in a series of related transactions, such Disposition
shall not be deemed to have been consummated until the consummation of the
last of such transactions.
"Substantially all of the properties and assets of the U.S. Steel Group," as
of any date, means a portion of such properties and assets that represents at
least 80% of either of the then-current market value of, or the aggregate
revenues for the immediately preceding twelve fiscal quarterly periods of the
Company derived from, the properties and assets of the U.S. Steel Group as of
such date (excluding the assets and properties of any person, entity or group
in which the Company, directly or indirectly, owns less than a majority equity
interest).
After any such special dividend or redemption pursuant to clause (i) or (ii)
in the third preceding paragraph, the Board may, by a majority vote of the
directors then in office, exchange each
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outstanding share of Steel Stock for a number of shares of Marathon Stock or,
if there are no shares of Marathon Stock outstanding and shares of Delhi Stock
are outstanding, of Delhi Stock, equal to 110% of the Market Value Ratio as of
the fifth Business Day prior to the date notice of such exchange is mailed to
the holders of Steel Stock. "Market Value Ratio", as of any date, means the
highest of the following (calculated to the nearest five decimal places): (A)
the average ratio of S/X for the five-Business Day period ending on such date,
(B) the quotient of (1) the sum of (w) four times the average ratio of S/X for
the five-Business Day period ending on such date, (x) three times the average
ratio of S/X for the next preceding five-Business Day period, (y) two times
the average ratio of S/X for the next preceding five-Business Day period and
(z) the average ratio of S/X for the next preceding five-Business Day period,
divided by (2) ten and (C) if the special dividend pursuant to clause (i) of
the third preceding paragraph was declared and paid or the redemption pursuant
to clause (ii) thereof was made prior to the commencement of the most recently
completed fiscal quarter of the Company, the average ratio of S /X for such
fiscal quarter, where S is the Market Value of one share of the Steel Stock
and X is the Market Value of one share of the Marathon Stock or one share of
Delhi Stock, as the case may be. In determining whether to effect such an
exchange, the Board, in addition to other matters, would likely consider
whether the remaining properties and assets of the U.S. Steel Group constitute
a viable business. Other considerations could include the number of shares of
Steel Stock remaining outstanding following any such redemption, the per share
market price of the Steel Stock following the payment of such a dividend or
such a redemption and the cost of maintaining stockholder accounts.
General Redemption Provisions. In the event of any exchange or redemption of
a class of Common Stock, the Company shall cause to be given to each holder of
Steel Stock a notice stating (A) that shares of Steel Stock shall be exchanged
or redeemed, as the case may be, (B) the date of the exchange or redemption,
(C) in the event of a partial redemption, the number of shares of Steel Stock
or Delhi Stock, as the case may be, to be redeemed, (D) the kind and amount of
shares of capital stock or cash and/or securities or other property to be
received by such holder with respect to each share of such class of Common
Stock held by such holder, including details as to the calculation thereof,
(E) the place or places where certificates for shares of such class of Common
Stock, properly endorsed or assigned for transfer (unless the Company waives
such requirement), are to be surrendered for delivery of certificates for
shares of such capital stock or cash and/or securities or other property and
(F) that, except as provided in the second following paragraph, dividends on
such class of Common Stock will cease to be paid as of such exchange date or
redemption date. Such notice shall be sent by first-class mail, postage
prepaid, not less than 30 nor more than 60 days prior to the exchange date or
redemption date, as the case may be, and in any case to each holder of such
class of Common Stock to be exchanged or redeemed, at such holder's address as
the same appears on the stock transfer books of the Company. Neither the
failure to mail such notice to any particular holder of such class of Common
Stock nor any defect therein shall affect the sufficiency thereof with respect
to any other holder of such class of Common Stock.
If less than all of the outstanding shares of Steel Stock or Delhi Stock, as
the case may be, are to be redeemed as described above, such shares shall be
redeemed by the Company pro rata among the holders of such class of Common
Stock or by such other method as may be determined by the Board to be
equitable.
No adjustments in respect of dividends shall be made upon the exchange or
redemption of any shares of any class of Common Stock; provided, however, that
if such shares are exchanged or redeemed by the Company after the record date
for determining holders of such class of Common Stock entitled to any dividend
or distribution thereon, such dividend or distribution shall be payable to the
holders of such shares at the close of business on such record date
notwithstanding such exchange or redemption of such shares or the Company's
default in payment of the dividend or distribution due on such date.
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Before any holder of shares of any class of Common Stock shall be entitled
to receive certificates representing shares of any kind of capital stock or
cash and/or securities or other property to be received by such holder with
respect to any exchange or redemption of such class of Common Stock, such
holder shall surrender at such office as the Company shall specify
certificates for such shares of such class of Common Stock, properly endorsed
or assigned for transfer (unless the Company shall waive such requirement). As
soon as practicable after surrender of certificates for shares of such class
of Common Stock, the Company will deliver to the holder of such shares so
surrendered the certificates representing the number of whole shares of the
kind of capital stock or cash and/or securities or other property to which
such holder is entitled, together with any fractional payment referred to
below. If less than all of the shares of such class of Common Stock
represented by any one certificate are to be redeemed, the Company will issue
and deliver a new certificate for the shares of Steel Stock not redeemed.
The Company shall not be required to issue or deliver fractional shares of
any class of capital stock or any fractional securities to any holder of any
class of Common Stock upon any exchange, redemption, dividend or other
distribution. If more than one share of such class of Common Stock shall be
held at the same time by the same holder, the Company may aggregate the number
of shares of any class of capital stock that shall be issuable or the amount
of securities that shall be deliverable to such holder upon any exchange,
redemption, dividend or other distribution (including any fractions of shares
or securities). If the number of shares of any class of capital stock or the
amount of securities remaining to be issued or delivered to any holder of any
class of Common Stock is a fraction, the Company shall, if such fraction is
not issued or delivered to such holder, pay a cash adjustment in respect of
such fraction in an amount equal to the fair market value of such fraction on
the fifth Business Day prior to the date such payment is to be made. For
purposes of the preceding sentence, "fair market value" of any fraction shall
be (i) in the case of any fraction of a share of capital stock of the Company,
the product of such fraction and the Market Value of one share of such capital
stock and (ii) in the case of any other fractional security, such value as is
determined by the Board.
VOTING--SHARES OF STEEL STOCK WILL, WHEN VOTING TOGETHER WITH ALL OTHER
CLASSES OF COMMON STOCK, HAVE A NUMBER OF VOTES PER SHARE BASED UPON TIME-
WEIGHTED AVERAGE RATIOS OF THE MARKET VALUE OF A SHARE OF STEEL STOCK TO THE
MARKET VALUE OF A SHARE OF MARATHON STOCK.
Except as set forth below and under "--Marathon Stock--Voting" and "--Delhi
Stock--Voting," holders of all classes of Common Stock vote together as a
single class on all matters as to which all holders of Common Stock are
entitled to vote. On all matters to be voted on by the holders of all classes
of Common Stock together as a single class, (i) each share of outstanding
Marathon Stock has one vote and (ii) each share of Steel Stock and Delhi Stock
has a number of votes equal to the quotient (calculated to the nearest three
decimal places), as of the fifth Business Day prior to the applicable record
date, of (A) the sum of (1) four times the average ratio of X/Y for the five-
Business Day period ending on such fifth Business Day, (2) three times the
average ratio of X/Y for the next preceding five-Business Day period, (3) two
times the average ratio of X/Y for the next preceding five-Business Day period
and (4) the average ratio of X/Y for the next preceding five Business Day
period, divided by (B) ten, where X is the Market Value of the Steel Stock or
the Delhi Stock, as the case may be, and Y is the Market Value of the Marathon
Stock, or if there are no shares of Marathon Stock outstanding on such record
date or other applicable date or on any of the 25 Business Days prior thereto,
the sum of the Market Values of the Steel Stock and of the Delhi Stock. If
shares of only one class of Common Stock are outstanding, each share of that
class shall have one vote.
For purposes of the Company's 1997 Annual Stockholders' Meeting to be held
on April 29, 1997, the per share voting rights of Marathon Stock, Steel Stock
and Delhi Stock are one vote, 1.181 votes and .589 vote per share,
respectively. Accordingly, the holders of Marathon Stock, Steel Stock and
Delhi Stock have approximately 73.1%, 25.5% and 1.4%, respectively, of the
total voting power of the Company for that meeting.
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In addition, as is the case with the use of the proceeds from the
Disposition of any properties or assets of the Marathon Group or the Delhi
Group, unless the vote or consent of a greater number of shares shall then be
required by law, the approval of the holders of at least 66 2/3% of the
outstanding Steel Stock, voting as a separate class, shall be necessary for:
(i) the declaration or payment of any dividend on, or the making of any
other payment or distribution on or with respect to, any shares of any
other class of Common Stock, if such dividend, payment or distribution is
to be made with (A) proceeds from the Disposition of any of the properties
and assets of the U.S. Steel Group or (B) any portion of an equity interest
in a person, entity or group that owns any of the properties and assets of
the U.S. Steel Group; or
(ii) the use, or reservation for use, of any proceeds from the
Disposition of any of the properties and assets of the U.S. Steel Group, or
any of the properties and assets acquired with such proceeds, in any
business of the Company other than a business of the U.S. Steel Group.
Notwithstanding the foregoing, however, such vote shall not be required if
such proceeds are loaned at a rate or rates representative of actual
borrowings and short-term investments by the Company.
The vote or consent of the holders of a majority of all of the outstanding
shares of any class of Common Stock, voting as a separate class, is currently
required under Delaware law for any amendment to the Certificate of
Incorporation that would increase or decrease the par value of the shares of
such class or alter or change the powers or special rights of the shares of
such class so as to affect them adversely. The Certificate of Incorporation
provides that neither the increase nor decrease of the authorized number of
shares of any class of Common Stock shall require a separate vote of any
class. Thus, it is possible that the holders of a majority of one or more
classes of Common Stock could constitute a majority of the voting power of all
classes and approve the increase or decrease of the authorized amount of any
other class of Common Stock without the approval of the holders of such other
class of Common Stock.
The Certificate of Incorporation also provides that unless the vote or
consent of a greater number of shares shall then be required by law, the
approval of the holders of a majority of the outstanding shares of any class
of Common Stock, voting as a separate class, shall be necessary for
authorizing, effecting or validating the merger or consolidation of the
Company into or with any other corporation if such merger or consolidation
would adversely affect the powers or special rights of such class of Common
Stock, either directly or indirectly.
LIQUIDATION--IN THE EVENT OF THE LIQUIDATION OF THE COMPANY, HOLDERS OF EACH
CLASS OF COMMON STOCK WILL BE ENTITLED TO RECEIVE A PORTION OF THE FUNDS
DISTRIBUTABLE TO HOLDERS OF COMMON STOCK BASED ON THE RELATIVE TIME-WEIGHTED
AVERAGE AGGREGATE MARKET CAPITALIZATION OF EACH SUCH CLASS OF COMMON STOCK TO
THE AGGREGATE MARKET CAPITALIZATION OF ALL CLASSES OF COMMON STOCK.
The Certificate of Incorporation provides that, in the event of a
dissolution, liquidation or winding-up of the Company, whether voluntary or
involuntary, after payment of creditors and after the holders of Preferred
Stock receive the full preferential amounts to which they are entitled, the
holders of outstanding shares of each class of Common Stock will share the
funds remaining for distribution to the holders of Common Stock. The holders
of the outstanding Common Stock will each be entitled to receive a fraction of
such funds equal to the quotient of (i) the sum of (A) four times the average
ratio of x/y for the five-Business Day period ending on the Business Day prior
to the date of the public announcement of (1) a voluntary dissolution,
liquidation or winding-up by the Company or (2) the institution of any
proceeding for the involuntary dissolution, liquidation or winding-up of the
Company (B) three times the average ratio of x/y for the next preceding five-
Business Day period, (C) two times the average ratio of x/y for the next
preceding five-Business Day period and (D) the average ratio of x/y for the
next preceding five-Business Day period, divided by (ii) ten, where x is the
Market
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Capitalization of such class of Common Stock and y is the aggregate Market
Capitalization of all classes of Common Stock. For purposes of the preceding
sentence, "Market Capitalization" of any class of Common Stock on any day
shall mean the product of (i) the Market Value of such class of Common Stock
on such day and (ii) the number of shares of such class of Common Stock
outstanding on such day.
MARATHON STOCK
DIVIDENDS--DIVIDENDS ON THE MARATHON STOCK ARE INTENDED TO BE PAID BASED ON
THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE MARATHON GROUP.
Subject to any prior rights of the holders of the Preferred Stock, dividends
may be paid on the Marathon Stock as determined by the Board out of funds of
the Company legally available therefor.
The Board may, in its sole discretion, declare and pay dividends exclusively
on the Marathon Stock, exclusively on the Steel Stock, exclusively on the
Delhi Stock or on such classes in equal or unequal amounts, notwithstanding
the respective amount of funds available for dividends on each class, the
respective voting and liquidation rights of each class, the amount or prior
dividends declared on each class or any other factor.
EXCHANGE AND REDEMPTION--MARATHON STOCK MAY BE EXCHANGED FOR SHARES OF A
SUBSIDIARY OF THE COMPANY TO WHICH THE COMPANY WOULD HAVE TRANSFERRED ALL OF
THE ASSETS AND LIABILITIES OF THE MARATHON GROUP.
If the Company transfers all of the assets and liabilities of the Marathon
Group to a wholly owned subsidiary of the Company (the "Marathon Group
Subsidiary"), the Board may, in its sole discretion and by a majority vote of
the directors then in office, provided that there are funds of the Company
legally available therefor, exchange all of the outstanding shares of Marathon
Stock for all of the outstanding stock of the Marathon Group Subsidiary, on a
pro rata basis on the same terms and conditions as on the Steel Stock.
VOTING--SHARES OF MARATHON STOCK SHALL HAVE ONE VOTE PER SHARE. SHARES OF
STEEL STOCK AND DELHI STOCK WILL, WHEN VOTING TOGETHER WITH ALL OTHER CLASSES
OF COMMON STOCK, HAVE A NUMBER OF VOTES PER SHARE BASED UPON THE TIME WEIGHTED
AVERAGE RATIOS OF THE MARKET VALUE OF A SHARE OF STEEL STOCK OR DELHI STOCK,
AS THE CASE MAY BE, TO THE MARKET VALUE OF A SHARE OF MARATHON STOCK.
The holders of shares of the Marathon Stock have the voting rights described
above under "--Steel Stock--Voting."
In addition, as is the case with the use of the proceeds from the
Disposition of any properties or assets of the U.S. Steel Group and the Delhi
Group, unless the vote or consent of a greater number of shares shall then be
required by law, the approval of the holders of at least 66 2/3% of the
outstanding shares of Marathon Stock, voting as a separate class, is necessary
for:
(i) the declaration or payment of any dividend on, or the making of any
other payment or distribution with respect to, any shares of any other
class of Common Stock, if such dividend, payment or distribution is to be
made with (A) proceeds from the Disposition of any of the properties and
assets of the Marathon Group or (B) any portion of an equity interest in a
person, entity or group that owns any of the properties and assets of the
Marathon Group; or
(ii) the use, or reservation for use, of any proceeds from the
Disposition of any of the properties and assets of the Marathon Group, or
any of the properties and assets acquired with such proceeds, in any
business of the Company other than a business of the Marathon Group.
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Notwithstanding the foregoing, however, such vote shall not be required if
such proceeds are loaned at a rate or rates representative of actual
borrowings and short-term investments by the Company.
LIQUIDATION--IN THE EVENT OF THE LIQUIDATION OF USX, HOLDERS OF EACH CLASS
OF COMMON STOCK WILL BE ENTITLED TO RECEIVE A PORTION OF THE FUNDS
DISTRIBUTABLE TO HOLDERS OF ALL CLASSES OF COMMON STOCK BASED UPON THE TIME-
WEIGHTED AVERAGE AGGREGATE MARKET CAPITALIZATION OF EACH SUCH CLASS OF COMMON
STOCK TO THE AGGREGATE MARKET CAPITALIZATION OF ALL CLASSES OF COMMON STOCK.
In the event of a dissolution, liquidation or winding-up of the Company, the
holders of shares of the Marathon Stock are entitled to receive funds in the
amounts described above under "--Steel Stock--Liquidation."
DELHI STOCK
DIVIDENDS--DIVIDENDS ON THE DELHI STOCK ARE INTENDED TO BE PAID BASED UPON
THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE DELHI GROUP.
Subject to any prior rights of the holders of the Preferred Stock, dividends
may be paid on the Delhi Stock as determined by the Board out of the lesser of
(i) the Available Delhi Dividend Amount and (ii) funds of the Company legally
available therefor. The "Available Delhi Dividend Amount," on any date, means
the product of the Delhi Fraction and either:
(a) the greater of:
(i) an amount equal to (X) $172.9 million, increased or decreased, as
appropriate, to reflect, from June 30, 1992, (A) Delhi Net Income, (B) any
dividends or other distributions declared or paid with respect to, or
repurchases or issuances of, any shares of Marathon Stock prior to the
close of business on the date Delhi Stock is first issued attributed to the
Delhi Group, (C ) any dividends or other distributions declared or paid
with respect to, or repurchases or issuances of, any shares of Delhi Stock
or any shares of Preferred Stock attributed to the Delhi Group, (D) assets
or properties of the Delhi Group that are no longer included as part of the
Delhi Group as a result of any such dividend, distribution or repurchase
pursuant to the proviso to the definition of "Delhi Group" set forth above
and (E) any other adjustments to stockholders' equity of the Delhi Group
made in accordance with generally accepted accounting principles less (Y)
the sum of the aggregate stated capital of all outstanding Preferred Stock
attributed to the Delhi Group and the quotient of the aggregate par value
of all outstanding Delhi Stock divided by the Delhi Fraction; and
(ii) the excess of the fair market value of the net assets of the Delhi
Group over the sum of the aggregate stated capital of all outstanding
Preferred Stock attributed to the Delhi Group, and the quotient of the
aggregate par value of all outstanding Delhi Stock divided by the Delhi
Fraction; or
(b) in case there shall be no such amount, an amount equal to Delhi Net
Income (if positive) for the fiscal year in which the dividend is declared
and/or the preceding fiscal year.
The amount of $172.9 million in clause (a) (i) above represents the amount
of the stockholders' equity of USX as of June 30, 1992 attributable to the
Delhi Group based upon a capital structure determined by the Board pursuant to
the Certificate of Incorporation.
The Available Delhi Dividend Amount as of December 31, 1996 was at least
$106.7 million as calculated under the preceding clause (a)(i).
"Delhi Net Income" means the net income or loss of the Delhi Group
determined in accordance with generally accepted accounting principles,
including income and expenses of USX attributed to the
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Delhi Group on a substantially consistent basis, including, without
limitation, corporate administrative costs, net interest and other financial
costs and income taxes. The policies governing the attribution of corporate
activities to the Delhi Group which are being followed by USX in determining
Delhi Net Income are comparable to those that will be used by USX in
determining Steel Net Income. See "Management and Accounting Policies."
Clause (b) in the definition of "Available Delhi Dividend Amount" will
permit the payment of dividends on the Delhi Stock in any fiscal year to the
extent there is positive Delhi Net Income in such fiscal year or in the
preceding fiscal year or to the extent of the sum of positive Delhi Net
Income, if any, in both such years. Any loss in either such year would not
reduce positive Delhi Net Income, if any, in the other year for purposes of
determining the applicable limitation on dividends. Such provision is
comparable to Section 170 of the Delaware General Corporation Law, which is
applicable to the Delhi Stock, and which allows the payment of dividends on
common stock of any Delaware corporation in any fiscal year to the extent of
consolidated net income of the corporation for such fiscal year and/or the
preceding fiscal year.
The Board may, in its sole discretion, declare and pay dividends exclusively
on the Marathon Stock, exclusively on the Steel Stock, exclusively on the
Delhi Stock or on such classes in equal or unequal amounts, notwithstanding
the respective amount of funds available for dividends on each class, the
respective voting and liquidation rights of each class, the amount or prior
dividends declared on each class or any other factor.
EXCHANGE AND REDEMPTION--IN THE EVENT OF A DISPOSITION OF ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF THE DELHI GROUP, USX IS REQUIRED TO (1) PAY
A DIVIDEND, (2) REDEEM DELHI STOCK OR (3) EXCHANGE DELHI STOCK FOR MARATHON
STOCK OR, IF THERE ARE NO SHARES OF MARATHON STOCK OUTSTANDING, STEEL STOCK,
SUBJECT TO CERTAIN LIMITATIONS. ALSO, THE BOARD MAY REQUIRE THAT THE DELHI
STOCK BE EXCHANGED FOR MARATHON STOCK, OR IF THERE ARE NO SHARES OF MARATHON
STOCK OUTSTANDING, STEEL STOCK, IN CERTAIN CIRCUMSTANCES.
If USX transfers all of the assets and liabilities of the Delhi Group to a
wholly owned subsidiary of USX (the "Delhi Group Subsidiary"), the Delhi Stock
may be exchanged, at the sole discretion of the Board, by a majority vote of
the directors then in office, provided that there are funds of the Company
legally available therefor, for a number of shares of common stock of the
Delhi Group Subsidiary equal to the product of the Delhi Fraction and the
number of all outstanding shares of the Delhi Group Subsidiary, on a pro rata
basis. The Company would retain the balance of the outstanding shares of
common stock of the Delhi Group Subsidiary if the Delhi Fraction were less
than one, which balance would be attributed to the Marathon Group.
In addition, upon the Disposition, in one transaction or a series of related
transactions, of all or substantially all of the properties and assets of the
Delhi Group (other than in connection with the Disposition by the Company of
all of its properties or assets in one transaction) to any person, entity or
group (other than to the holders of all outstanding shares of Delhi Stock on a
pro rata basis or to any person, entity or group in which the Company directly
or indirectly, owns a majority equity interest), the Company shall, within 60
days following the consummation of such Disposition, either (i) subject to the
limitations of dividends on Delhi Stock set forth under "Dividends" above,
declare and pay a dividend in cash and/or in securities or other property
received as proceeds of such Disposition to the holders of Delhi Stock in an
amount equal to the product of the Delhi Fraction and the Net Proceeds of such
Disposition, (ii) to the extent that there are funds of the Company legally
available therefor, redeem the number of whole shares of Delhi Stock having an
aggregate average Market Value, during a specified period, closest to the
value of the product of the Delhi Fraction and the Net Proceeds of such
Disposition, for cash and/or securities or other property received as proceeds
of such Disposition in an amount equal to such product or (iii) exchange each
outstanding share of Delhi Stock for a number of shares of Marathon Stock, or
if there are no shares of Marathon Stock outstanding and
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shares of Steel Stock are outstanding, of Steel Stock, equal to 110% of the
average daily ratio (calculated to the nearest five decimal places) of the
Market Value of one share of Delhi Stock to the Market Value of one share of
Marathon Stock or one share of Steel Stock, as the case may be, during a
specified period. The term "substantially all of the properties and assets of
the Delhi Group" has substantially the same meanings with respect to the Delhi
Stock as such term has with respect to the Steel Stock as set forth under "--
Steel Stock--Exchange and Redemption."
If, immediately after any event, the Company, directly or indirectly, owns
less than a majority equity interest in any person, entity or group in which
the Company, directly or indirectly, owned a majority equity interest
immediately prior to the occurrence of such event, a Disposition of all of the
properties and assets of the Delhi Group owned by such person, entity or group
shall be deemed to have occurred. In the case of a Disposition of properties
or assets in a series of related transactions, such Disposition shall not be
deemed to have been consummated until the consummation of the last of such
transactions.
After any such special dividend or redemption pursuant to clause (i) or (ii)
in the second preceding paragraph, the Board may, by a majority vote of the
directors then in office, exchange each outstanding share of Delhi Stock for a
number of shares of Marathon Stock or, if there are no shares of Marathon
Stock outstanding and shares of Steel Stock are outstanding, of Steel Stock,
equal to 110% of the Market Value Ratio as of the fifth Business Day prior to
the date notice of such exchange is mailed to the holders of Delhi Stock. In
determining whether to effect such an exchange, the Board, in addition to
other matters, would likely consider whether the remaining properties and
assets of the Delhi Group constitute a viable business. Other considerations
could include the number of shares of Delhi Stock remaining outstanding
following any such redemption, the per share market price of the Delhi Stock
following the payment of such a dividend or such a redemption and the cost of
maintaining stockholder accounts.
In addition, the Board may, by a majority vote of the directors then in
office, at any time exchange each outstanding share of Delhi Stock for a
number of shares of Marathon Stock or, if there are no shares of Marathon
Stock outstanding and shares of Steel Stock are outstanding, of Steel Stock,
equal to 115% of the Market Value Ratio as of the fifth Business Day prior to
the date such notice is mailed to the holders of Delhi Stock.
For purposes of the two preceding paragraphs, "Market Value Ratio", as of
any date, means the highest of the following (calculated to the nearest five
decimal places): (A) the average ratio of D/X for the five-Business Day period
ending on such date, (B) the quotient of (1) the sum of (w) four times the
average ratio of D/X for the five-Business Day period ending on such date, (x)
three times the average ratio of D/X for the next preceding five-Business Day
period, (y) two times the average ratio of D/X for the next preceding five-
Business Day period and (z) the average ratio of D/X for the next preceding
five-Business Day period, divided by (2) ten and (C) if the special dividend
pursuant to clause (i) of the second preceding paragraph was declared and paid
or the redemption pursuant to clause (ii) thereof was made prior to the
commencement of the most recently completed fiscal quarter of USX, the average
ratio of D/X for such fiscal quarter, where D is the Market Value of one share
of Delhi Stock and X is the Market Value of one share of Marathon Stock or one
share of Steel Stock, as the case may be.
An exchange or redemption of Delhi Stock for Marathon Stock or Steel Stock,
as the case may be, would be made on the same general terms and conditions as
described above under "--Steel Stock--Exchange and Redemption--General
Redemption Provisions."
VOTING--SHARES OF DELHI STOCK WILL, WHEN VOTING TOGETHER WITH ALL OTHER
CLASSES OF COMMON STOCK, HAVE A NUMBER OF VOTES PER SHARE BASED UPON TIME-
WEIGHTED AVERAGE RATIOS OF THE MARKET VALUE OF A SHARE OF DELHI STOCK TO THE
MARKET VALUE OF A SHARE OF MARATHON STOCK.
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The holders of shares of the Delhi Stock have the voting rights described
above under "--Steel Stock--Voting."
In addition, as is the case with the use of the proceeds from the
Disposition of any properties or assets of the Steel Group or the Marathon
Group, unless the vote or consent of a greater number of shares shall then be
required by law, the approval of the holders of at least 66 2/3% of the
outstanding shares of Delhi Stock, voting as a separate class, is necessary
for:
(i) the declaration or payment of any dividend on, or the making of any
other payment or distribution with respect to any shares of any other class
of common stock, if such dividend, payment or distribution is to be made
with (A) proceeds from the Disposition of any of the properties and assets
of the Delhi Group or (B) any portion of an equity interest in a person,
entity or group that owns any of the properties and assets of the Delhi
Group; or
(ii) the use, or reservation for use, of any proceeds from the
Disposition of any of the properties or assets of the Delhi Group, or any
of the properties and assets acquired with such proceeds, in any business
of the Company other than the Delhi Group.
Notwithstanding the foregoing, however, such vote shall not be required if
such proceeds are loaned at a rate or rates representative of actual
borrowings and short-term investments by the Company.
LIQUIDATION--IN THE EVENT OF THE LIQUIDATION OF USX, HOLDERS OF DELHI STOCK
WILL BE ENTITLED TO RECEIVE A PORTION OF THE FUNDS DISTRIBUTABLE TO HOLDERS OF
COMMON STOCK BASED ON THE RELATIVE TIME-WEIGHTED AVERAGE AGGREGATE MARKET
CAPITALIZATION OF THE DELHI STOCK TO THE AGGREGATE MARKET CAPITALIZATION OF
ALL CLASSES OF COMMON STOCK.
In the event of a dissolution, liquidation or winding-up of the Company, the
holders of shares of the Delhi Stock are entitled to receive funds in the
amounts described above under "--Steel Stock--Liquidation."
DETERMINATIONS BY BOARD
Any determinations made by the Board under the foregoing provisions will be
final and binding on all stockholders of the Company.
OTHER RIGHTS
The holders of Common Stock do not have any preemptive rights or any rights
to convert their shares into any other securities of the Company.
STOCK TRANSFER AGENT AND REGISTRAR
USX maintains its own stock transfer department at the following address:
USX Corporation, Shareholder Services Department, 600 Grant Street, Room 611,
Pittsburgh, PA 15219-4776. Certificates representing shares can also be
presented for registration of transfer at ChaseMellon Shareholder Services,
120 Broadway, New York, NY 10271.
ChaseMellon, Commerce Court, 4 Station Square, Pittsburgh, PA 15219 is the
Registrar for all the Common Stock.
AMENDED AND RESTATED RIGHTS PLAN
The following is a brief description of the terms of the Stockholders Rights
Plan set forth in the Restated Rights Agreement.
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Under the Restated Rights Agreement, the right (each a "Right") to purchase
from the Company a unit consisting of one one-hundredth of a share (a "Unit")
of Junior Preferred Stock, at a purchase price of $120 in cash per Unit,
subject to adjustment, is attached to each share of Marathon Stock, Steel
Stock and Delhi Stock (sometimes hereinafter referred to together as the
"Voting Stock"). A Right attached to a share of Marathon Stock is hereinafter
referred to as a "Marathon Right," a Right attached to a share of Steel Stock
is hereinafter referred to as a "Steel Right" and a Right attached to a share
of Delhi Stock is hereinafter referred to as a "Delhi Right."
The Rights will separate from the Voting Stock and a Rights distribution
date will occur upon the earlier of (i) 15 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired (except pursuant to a Qualifying Offer
(defined in the Restated Rights Agreement as an all-cash tender offer for all
outstanding shares of Voting Stock meeting certain prescribed requirements)),
or obtained the right to acquire, beneficial ownership of Voting Stock
representing 15% or more of the total voting power of all outstanding shares
of Voting Stock (the "Stock Acquisition Date"), or (ii) 15 days (or upon such
later date as may be determined by the Board) following the commencement of a
tender offer or exchange offer (other than a Qualifying Offer) that would
result in a person or a group beneficially owning Voting Stock representing
15% or more of the total voting power of all outstanding shares of Voting
Stock. For purposes of the Restated Rights Agreement, total voting power of
Voting Stock shall be determined based upon the most recent calculation
announced by USX. See "--Steel Stock--Voting," "--Marathon Stock--Voting" and
"--Delhi Stock--Voting." If a person inadvertently becomes the beneficial
owner of Voting Stock representing 15% or more of the total voting power of
the Voting Stock due to the recalculation by the Company of the relative
voting power of Marathon Stock, Steel Stock and Delhi Stock, such person will
not be an Acquiring Person unless and until such person acquires any
additional shares of Voting Stock.
In the event that a person or group becomes the beneficial owner of Voting
Stock representing 15% or more of the total voting power of all outstanding
shares of Voting Stock (except pursuant to a Qualifying Offer), the Rights
"flip-in" and entitle each holder of a Right (other than the Acquiring Person
and certain related parties) to receive, upon exercise, Marathon Stock, Steel
Stock or Delhi Stock, as the case may be (or in certain circumstances, cash,
property, or other securities of the Company), having a value equal to two
times the exercise price of the Marathon Right, Steel Right or Delhi Right,
respectively. However, Rights are not exercisable until such time as the
Rights are no longer redeemable by the Company as set forth below.
In the event that, any time following the Stock Acquisition Date, (i) the
Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation (other than a merger that
follows a Qualifying Offer) or its Voting Stock is changed or exchanged, or
(ii) 50% or more of the Company's assets, earning power or cash flow is sold
or transferred, the Rights "flip-over" and entitle each holder of a Right
(other than an Acquiring Person and certain related parties) to receive, upon
exercise, common stock of the acquiring company having a value equal to two
times the exercise price of the Right.
At any time until 15 days following the Stock Acquisition Date (subject to
extension), the Company may redeem the Rights in whole, but not in part, at a
price of $.01 per whole Right payable in stock or cash or any other form of
consideration deemed appropriate by the Board (the "Redemption Price").
Immediately upon the action of the Board ordering redemption of the Rights,
the Rights will terminate and the only right of the holders of the Rights will
be to receive the Redemption Price.
The Board may, at its option, at any time after any person becomes an
Acquiring Person, exchange all or part of the outstanding and exercisable
Marathon Rights, Steel Rights and Delhi Rights (other than Rights held by the
Acquiring Person and certain related parties) for shares of Marathon Stock,
Steel Stock and Delhi Stock, respectively, at an exchange ratio of one share
of Marathon Stock
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for each Marathon Right, one share of Steel Stock for each Steel Right and one
share of Delhi Stock for each Delhi Right (subject to certain anti-dilution
adjustments). However, the Board may not effect such an exchange at any time
any person or group owns Voting Stock representing 50% or more of the total
voting power of the Voting Stock then outstanding.
As long as the Rights are attached to shares of Voting Stock, the Company
will issue Marathon Rights on each share of Marathon Stock, Steel Rights on
each share of Steel Stock and Delhi Rights on each share of Delhi Stock issued
prior to the Rights distribution date so that all such shares will have
attached Rights.
MANAGEMENT AND ACCOUNTING POLICIES
MANAGEMENT POLICIES
The Board has adopted certain policies with respect to the U.S. Steel Group,
the Marathon Group and the Delhi Group including, without limitation, the
intention to: (i) limit capital expenditures of the U.S. Steel Group over the
long term to an amount equal to the internally generated cash flow of the U.S.
Steel Group, including funds generated by sales of assets of the U.S. Steel
Group, (ii) sell assets and provide services among the groups only on an
arm's-length basis and (iii) treat funds generated by the sale of Steel Stock,
Marathon Stock and Delhi Stock, and securities convertible into such stock, as
assets of the respective Group and apply such funds to acquire assets or
reduce liabilities of the U.S. Steel Group, the Marathon Group or the Delhi
Group, respectively, as the case may be.
The above policies may be modified or rescinded in the sole discretion of
the Board without approval of the stockholders, although the Board has no
present intention to do so. The Board may also adopt additional policies
depending upon the circumstances. Any determination of the Board to modify or
rescind such policies, or to adopt additional policies, including any such
decision that would have disparate impacts upon holders of the separate
classes of Common Stock, would be made by the Board in good faith and in the
honest belief that such decision is in the best interest of all stockholders
of the Company.
ACCOUNTING MATTERS AND POLICIES
The Company prepares the U.S. Steel Group, the Marathon Group and the Delhi
Group financial statements in accordance with generally accepted accounting
principles, and these financial statements, taken together, comprise all of
the accounts included in the corresponding consolidated financial statements
of the Company. The financial statements of the U.S. Steel Group, the Marathon
Group and the Delhi Group principally reflect the financial position and
results of operations of the businesses included therein. Consistent with the
Certificate of Incorporation and related policies, such group financial
statements also include portions of the Company's corporate assets and
liabilities (including contingent liabilities). Principal corporate activities
attributed to the groups and reflected in their financial statements include
financial activities, corporate general and administrative costs, common stock
transactions and income taxes.
The above policies may be modified or rescinded in the sole discretion of
the Board without approval of the stockholders, although the Board has no
present intention to do so. The Board may also adopt additional policies
depending upon the circumstances. Any determination of the Board to modify or
rescind such policies, or to adopt additional policies, including any such
decision that would have disparate impacts upon holders of the separate
classes of Common Stock, would be made by the Board in good faith and in the
honest belief that such decision is in the best interest of all stockholders
of the Company. In addition, generally accepted accounting principles require
that any change in an accounting policy be preferable (in accordance with such
principles) to the previous policy.
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DESCRIPTION OF THE 6.50% CONVERTIBLE PREFERRED STOCK
GENERAL
The following is a description of the terms of the 6.50% Convertible
Preferred Stock. This description does not purport to be complete and is
qualified in its entirety by reference to the Certificate of Incorporation,
which has been filed as an exhibit to the Registration Statement of which this
Prospectus forms a part.
USX is the transfer agent, dividend disbursing agent and conversion agent
for the 6.50% Convertible Preferred Stock through its Shareholder Services
Department at the following address: USX Corporation, Shareholder Services
Department, 600 Grant Street, Room 611, Pittsburgh, PA 15219-4776.
Certificates representing shares can also be presented for registration of
transfer at ChaseMellon Shareholder Services, 120 Broadway, New York, NY
10271. ChaseMellon, Commerce Court, 4 Station Square, Pittsburgh, PA 15219 is
the Registrar for the 6.50% Convertible Preferred Stock.
RANKING
The 6.50% Convertible Preferred Stock ranks senior to all classes of common
stock of the Company and any shares of Junior Preferred Stock issued pursuant
to the Restated Rights Agreement as to payment of dividends and upon
dissolution, liquidation or winding-up.
While any shares of 6.50% Convertible Preferred Stock are outstanding, the
Company may not authorize, effect or validate the issuance of any shares of
any class of stock of the Company that ranks prior to the 6.50% Convertible
Preferred Stock, either as to dividends or upon liquidation, or reclassify any
of the outstanding stock of the Company into any such prior shares, or issue
any obligation or security convertible into or evidencing the right to
purchase any such prior shares, without the consent of the holders of 66 2/3%
of the outstanding shares of 6.50% Convertible Preferred Stock and all other
series of Preferred Stock ranking on a parity with the 6.50% Convertible
Preferred Stock, either as to dividends or upon liquidation, voting together
as a single class without regard to series. However, the Company may increase
the authorized number of shares of Preferred Stock or create or authorize
shares of any other series of Preferred Stock ranking on a parity with the
6.50% Convertible Preferred Stock as to dividends and upon liquidation without
the consent of any holder of the 6.50% Convertible Preferred Stock. See "--
Voting Rights" below. Stock of any class of the Company shall be deemed to
rank on a parity with the 6.50% Convertible Preferred Stock, either as to
dividends or upon liquidation, whether or not the dividend rates, dividend
payment dates or redemption or liquidation prices per share or sinking fund
provisions, if any, are different from those of the 6.50% Convertible
Preferred Stock, if the holders of such stock are entitled to the receipt of
dividends or of amounts distributable upon dissolution, liquidation or
winding-up of the Company in proportion to their respective dividend rates or
liquidation prices, without preference or priority.
DIVIDENDS
Holders of shares of 6.50% Convertible Preferred Stock are entitled to
receive, when, as and if declared by the Board, out of funds legally available
therefor, cumulative cash dividends at the annual rate of 6.50% per annum on
the initial liquidation preference of $50 per share, or $3.25 per share of
6.50% Convertible Preferred Stock per annum. Dividends on the 6.50%
Convertible Preferred Stock are payable quarterly on the last calendar day of
March, June, September and December of each year, commencing June 30, 1993
(and, in the case of any accrued dividends not paid on an applicable dividend
payment date, at such additional times and for such interim periods, if any,
as determined by the Board), at such annual rate. Each such dividend will be
payable to holders of record as they appear on the stock records of the
Company at the close of business on such record dates, not exceeding 30
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days preceding the payment dates thereof, as shall be fixed by the Board.
Dividends are cumulative whether or not in any dividend period or periods
there shall be funds of the Company legally available for the payment of such
dividends. Dividends payable on the 6.50% Convertible Preferred Stock for any
period shorter or longer than a full quarterly dividend are computed on the
basis of a 360-day year consisting of twelve 30-day months. Dividends payable
on the 6.50% Convertible Preferred Stock for each full quarterly dividend
period are computed by dividing the annual dividend rate by four.
Except as provided in the next sentence, no dividends will be declared or
paid or set apart for payment on the Preferred Stock of any series ranking, as
to dividends, on a parity with or junior to the 6.50% Convertible Preferred
Stock for any period unless full cumulative dividends have been or
contemporaneously are declared and paid on the 6.50% Convertible Preferred
Stock for all past dividend periods. When dividends are not paid in full, as
aforesaid, upon the shares of 6.50% Convertible Preferred Stock and any other
Preferred Stock ranking on a parity as to dividends with the 6.50% Convertible
Preferred Stock, all dividends declared upon the 6.50% Convertible Preferred
Stock and any other Preferred Stock ranking on a parity as to dividends with
the 6.50% Convertible Preferred Stock will be declared ratably in proportion
to accrued and unpaid dividends on the 6.50% Convertible Preferred Stock and
such other Preferred Stock. Holders of 6.50% Convertible Preferred Stock are
not entitled to any dividends, whether payable in cash, property or stock, in
excess of full cumulative dividends. No interest, or sum of money in lieu of
interest, will be payable in respect of any dividend payment or payments on
the 6.50% Convertible Preferred Stock which may be in arrears.
No dividend (other than a dividend in Common Stock or in any other stock of
the Company ranking junior to the 6.50% Convertible Preferred Stock as to
dividends and upon liquidation) will be declared, paid or set aside for
payment or other distribution declared or made upon the Common Stock or upon
any other stock of USX ranking junior to or on a parity with the 6.50%
Convertible Preferred Stock as to dividends or upon liquidation, nor shall any
Common Stock nor any other stock of the Company ranking prior to or on a
parity with the 6.50% Convertible Preferred Stock as to dividends or upon
liquidation be redeemed, purchased or otherwise acquired for any consideration
(or any moneys paid to or made available for a sinking fund for the redemption
of any shares of any such stock) by the Company (except by conversion into or
exchange for stock of the Company ranking junior to the 6.50% Convertible
Preferred Stock as to dividends and upon liquidation) unless, in each case,
the full cumulative dividends on all outstanding shares of the 6.50%
Convertible Preferred Stock shall have been paid or contemporaneously are
declared and paid for all past dividend periods.
OPTIONAL REDEMPTION
On April 1, 1996, the 6.50% Convertible Preferred Stock became redeemable at
the option of the Company, in whole at any time or in part from time to time,
for cash at the following redemption prices per share, if redeemed during the
twelve-month period beginning April 1 of the year indicated below, together
with, in each case, an amount equal to all dividends accrued and unpaid up to
the redemption date, upon giving notice as provided below:
<TABLE>
<CAPTION>
REDEMPTION PRICE
(AS A PERCENTAGE OF INITIAL DOLLAR EQUIVALENT
YEAR LIQUIDATION PREFERENCE) PER SHARE
---- --------------------------- -----------------
<S> <C> <C>
1996 104.55% $52.275
1997 103.90 51.950
1998 103.25 51.625
1999 102.60 51.300
2000 101.95 50.975
2001 101.30 50.650
2002 100.65 50.325
2003 and thereafter 100.00 50.000
</TABLE>
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If fewer than all of the outstanding shares of the 6.50% Convertible
Preferred Stock are to be redeemed, the shares to be redeemed will be
determined pro rata or by lot or in such other manner as prescribed by the
Board.
The Company will not exercise its option to redeem the 6.50% Convertible
Preferred Stock if the Company is advised in advance by either Moody's or S&P
that to do so would result in an immediate lowering of the Company's credit
rating on its senior unsecured debt from its then existing level, unless the
Company shall have received from the issuance of common stock, since the date
which is two years prior to the redemption date, net proceeds in an aggregate
amount at least equal to the aggregate initial liquidation preference of the
6.50% Convertible Preferred Stock to be redeemed.
MANDATORY REDEMPTION IF A U.S. STEEL GROUP SPECIAL EVENT
OR A MARATHON GROUP SPECIAL EVENT OCCURS
If a U.S. Steel Group Special Event occurs, the Company is required to
redeem the shares of 6.50% Convertible Preferred Stock, provided that funds
are legally available therefor, in whole, for $50.00 per share, plus an amount
equal to dividends accrued and unpaid to the redemption date. The redemption
date with respect to a redemption of the 6.50% Convertible Preferred Stock
resulting from any U.S. Steel Group Special Event will be the applicable
exchange date, dividend payment date or redemption date for the Steel Stock,
or the consummation date of the tender offer or exchange offer, that is the
basis for such U.S. Steel Group Special Event. Such redemption of 6.50%
Convertible Preferred Stock will be conditioned upon the actual exchange of
Steel Stock, payment with respect to the Steel Stock of such dividend or
redemption amount or the consummation of such tender offer or exchange offer,
as the case may be.
In addition, if a Marathon Group Special Event occurs, the Company must
redeem the shares of 6.50% Convertible Preferred Stock, provided that funds
are legally available therefor, in whole, for $50.00 per share, plus an amount
equal to dividends accrued and unpaid to the redemption date. The date on
which such redemption will occur, and the conditions in respect thereof, will
be determined in the manner described in the preceding paragraph with respect
to any redemption resulting from any similar U.S. Steel Group Special Event.
GENERAL REDEMPTION PROCEDURES
Notice of redemption will be given by mail, not less than 30 nor more than
60 days prior to the redemption date, other than notice of any redemption of
the 6.50% Convertible Preferred Stock as a result of any dividend on or
redemption of Steel Stock resulting from a Disposition of all or substantially
all of the properties and assets of the U.S. Steel Group or any tender offer
or exchange offer for the Steel Stock. Notice of redemption in connection with
a dividend on, or a redemption of, the Steel Stock resulting from such
Disposition will be given by mail not less than 45 days prior to the date
selected by the Board for the payment of such dividend or such redemption and
notice of redemption as a result of any such tender offer or exchange offer
will be given by mail on the date of public announcement thereof (but in any
event not less than 30 days prior to such redemption) by the Company. Similar
notice will be given with respect to any redemption occurring after an
exchange of Steel Stock for Marathon Stock, as described in the preceding
paragraph. Any such notice will be given to each holder of record of the 6.50%
Convertible Preferred Stock.
In the event that full cumulative dividends on the 6.50% Convertible
Preferred Stock have not been paid or contemporaneously are declared and paid
for all past dividend periods, no shares of 6.50% Convertible Preferred Stock
may be redeemed unless all shares of the 6.50% Convertible Preferred Stock are
simultaneously redeemed and the Company may not purchase or acquire shares of
6.50% Convertible Preferred Stock otherwise than pursuant to a purchase or
exchange offer made on the same terms to all holders of 6.50% Convertible
Preferred Stock.
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From and after a redemption date, provided that the Company has made
available at the office of the redemption agent a sufficient amount of cash
for the payment of the redemption price of the shares called for redemption,
dividends on the 6.50% Convertible Preferred Stock called for redemption will
cease to accrue, and such shares shall no longer be deemed to be outstanding
and all rights of the holders thereof as stockholders of the Company shall
cease except the right to receive the cash payable upon such redemption on
such redemption date, without interest from the date of such redemption.
LIQUIDATION PREFERENCE
Upon the dissolution, liquidation or winding up of the Company, whether
voluntary or involuntary, the holders of shares of 6.50% Convertible Preferred
Stock will be entitled to receive out of the assets of the Company available
for distribution to stockholders, before any payment or distribution may be
made on the Common Stock or on any other class of stock ranking junior to the
6.50% Convertible Preferred Stock upon liquidation, the amount of $50.00 per
share, plus a sum equal to all dividends (whether or not earned or declared)
accrued and unpaid thereon to the date of final distribution and no more.
In the event the assets of the Company available for distribution to the
holders of the 6.50% Convertible Preferred Stock upon any dissolution,
liquidation or winding-up of the Company, whether voluntary or involuntary,
shall be insufficient to pay in full the liquidation preference of the 6.50%
Convertible Preferred Stock, no such distribution shall be made on account of
any shares of any other class or series of Preferred Stock ranking on a parity
with the shares of 6.50% Convertible Preferred Stock upon such dissolution,
liquidation or winding-up unless proportionate distributive amounts shall be
paid on account of the shares of the 6.50% Convertible Preferred Stock,
ratably, in proportion to the full distributable amounts for which holders of
all such parity shares are respectively entitled upon such dissolution,
liquidation or winding-up. Neither the sale, lease or exchange (for cash,
shares of stock, securities or other consideration) of all or substantially
all the property and assets of the Company nor the merger or consolidation of
the Company into or with any other corporation or the merger or consolidation
of any other corporation into or with the Company will be considered a
dissolution, liquidation or winding-up, voluntary or involuntary, of the
Company.
VOTING RIGHTS
Except as indicated below, or except as otherwise from time to time required
by applicable law, the holders of shares of 6.50% Convertible Preferred Stock
have no voting rights.
If, on the date used to determine stockholders of record for any meeting of
stockholders for election of directors, six full quarterly dividends (whether
or not consecutive) payable on any series of Preferred Stock are accrued and
unpaid, the number of directors then constituting the Board will be increased
by two and the holders of the Preferred Stock of all series (whether or not
the holders of such series of Preferred Stock would be entitled to vote for
election of directors if such nonpayment of dividends did not exist) will have
the right at such meeting, voting together as a single class without regard to
series, to the exclusion of the holders of the Common Stock, to elect two
directors of the Company to fill such newly created directorships. Each
director elected by the holders of the shares of Preferred Stock will continue
to serve as such director for the full term for which such director shall have
been elected, notwithstanding that prior to the end of such term all such
dividends on all Preferred Stock shall have been paid for all past dividend
periods.
The approval of the holders of at least 66-2/3% of the outstanding shares of
6.50% Convertible Preferred Stock, voting separately as a class, will be
necessary for authorizing, effecting or validating the amendment, alteration
or repeal of any of the provisions of the Certificate of Incorporation or of
any certificate amendatory or supplemental thereto (including any certificate
of designation or any
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similar document relating to any series of Preferred Stock) so as to affect
adversely the powers, preference or rights of the 6.50% Convertible Preferred
Stock. The increase of the authorized amount of the Preferred Stock or the
creation or authorization of any shares of any other class of stock of the
Company ranking prior to or on a parity with the 6.50% Convertible Preferred
Stock as to dividends or upon liquidation, or the reclassification of any
authorized stock of the Company into any such prior or parity shares, or the
creation or authorization of any obligation or security convertible into or
evidencing the right to purchase any such prior or parity shares shall not be
deemed to affect adversely the powers, preferences or rights of the 6.50%
Convertible Preferred Stock.
Notwithstanding the foregoing, the approval of the holders of at least 66-
2/3% of the outstanding shares of 6.50% Convertible Preferred Stock and all
other series of Preferred Stock ranking on a parity with shares of the 6.50%
Convertible Preferred Stock, either as to dividends or upon liquidation,
voting together as a single class without regard to series, will be necessary
to authorize, effect or validate the issuance of any shares of any class of
stock of the Company that ranks prior to the 6.50% Convertible Preferred
Stock, as to dividends or upon liquidation, or to reclassify any of the
outstanding stock of the Company into any such prior shares, or to issue any
obligation or security convertible into or evidencing the right to purchase
any such prior shares.
The approval of the holders of at least a majority of the outstanding shares
of 6.50% Convertible Preferred Stock and all other series of Preferred Stock
ranking on a parity with shares of the 6.50% Convertible Preferred Stock,
either as to dividends or upon liquidation, voting as a single class, will be
necessary to authorize, effect or validate the merger or consolidation of the
Company into or with any other corporation if such merger or consolidation
would adversely affect the powers, preference or rights of the 6.50%
Convertible Preferred Stock or if, after such merger or consolidation, there
shall be outstanding any shares of any class of stock ranking prior to the
shares of the 6.50% Convertible Preferred Stock as to dividends or upon
liquidation or any obligation or security convertible into or evidencing the
right to purchase any such prior shares (except such stock, securities or
obligations of the Company as may have been outstanding immediately preceding
such merger or consolidation). See "--Conversion Rights--Adjustments to the
6.50% Convertible Preferred Stock Conversion Price."
CONVERSION RIGHTS
RIGHT TO CONVERT; TERMINATION OF CONVERSION RIGHTS
Shares of 6.50% Convertible Preferred Stock are convertible, in whole or in
part (but only in whole shares of 6.50% Convertible Preferred Stock), at any
time (except as provided in the next sentence), at the option of the holders
thereof, into shares of Steel Stock at a conversion price of $46.125 per share
of Steel Stock (equivalent to a conversion rate of 1.084 shares of Steel Stock
for each share of 6.50% Convertible Preferred Stock), subject to adjustment as
described below (the "6.50% Convertible Preferred Stock Conversion Price").
The right to convert shares of 6.50% Convertible Preferred Stock called for
redemption terminates at the close of business on the related redemption date,
unless the Company gives a notice of redemption of the 6.50% Convertible
Preferred Stock in connection with a dividend on or a redemption of Steel
Stock resulting from the Disposition of all or substantially all of the
properties and assets of the U.S. Steel Group, as set forth under "--Mandatory
Redemption if a U.S. Steel Group Special Event or a Marathon Group Special
Event Occurs" above, in which case, such right will terminate on the 31st day
prior to the date selected by the Board for the payment of such dividend or
such redemption. For information as to notices of redemption, see "--General
Redemption Procedures."
Conversion of shares of 6.50% Convertible Preferred Stock, or a specified
portion thereof, may be effected by delivering certificates evidencing such
shares, together with written notice of conversion and a proper assignment of
such certificates to USX or in blank, to the office or agency to be
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maintained by the Company for that purpose. Such office currently is the
Company's Shareholder Services Department located at the address set forth
under "--General."
Each conversion will be deemed to have been effected immediately prior to
the close of business on the date on which the certificates for shares of
6.50% Convertible Preferred Stock shall have been surrendered and notice
received by the Company as aforesaid (and, if applicable, as described below
under "--Right to Receive Dividends," payment of an amount equal to the
dividend payable on such shares) and the conversion shall be at the 6.50%
Convertible Preferred Stock Conversion Price in effect at such time and on
such date.
Fractional shares of common stock of the Company are not to be issued upon
conversion, but, in lieu thereof, the Company will pay a cash adjustment based
on the current market price thereof on the day prior to the conversion date.
RIGHT TO RECEIVE DIVIDENDS
Except as provided below, the Company is not required to make any payment or
allowance for unpaid dividends, whether or not in arrears, on converted shares
or for dividends on the shares of Steel Stock issued upon such conversion.
Holders of shares of 6.50% Convertible Preferred Stock at the close of
business on a dividend record date are entitled to receive the dividend
payable on such shares (except that holders of shares called for redemption on
a redemption date between such record date and the dividend payment date shall
not be entitled to receive such dividend on such dividend payment date) on the
corresponding dividend payment date notwithstanding the conversion of such
shares following such dividend record date and prior to such dividend payment
date. However, shares of 6.50% Convertible Preferred Stock surrendered for
conversion during the period between the close of business on any dividend
record date and the opening of business on the corresponding dividend payment
date (except shares called for redemption on a redemption date during such
period) must be accompanied by payment of an amount equal to the dividend
payable on such shares on such dividend payment date. A holder of shares of
6.50% Convertible Preferred Stock on a dividend record date who (or whose
transferee) tenders any such shares for conversion into shares of Steel Stock
on such dividend payment date will receive the dividend payable by the Company
on such shares of 6.50% Convertible Preferred Stock on such date, and the
converting holder need not include payment of the amount of such dividend upon
surrender of shares of 6.50% Convertible Preferred Stock for conversion.
ADJUSTMENTS TO THE 6.50% CONVERTIBLE PREFERRED STOCK CONVERSION PRICE
The 6.50% Convertible Preferred Stock Conversion Price is subject to
adjustment upon certain events, including:
(i) dividends and other distributions payable in Steel Stock on any class
of capital stock of the Company and combinations and subdivisions of Steel
Stock;
(ii) the issuance of certain rights or warrants entitling the holder
thereof to subscribe for or purchase Steel Stock at less than the Current
Market Price per share of Steel Stock (calculated as set forth in the
Certificate of Incorporation); provided that if such rights or warrants are
only exercisable upon the occurrence of certain triggering events, then the
6.50% Convertible Preferred Stock Conversion Price will not be adjusted
until such triggering events occur;
(iii) distributions to all holders of Steel Stock of any shares of
capital stock (other than any common stock of the Company), evidences of
indebtedness or cash or other assets of the Company (including securities,
but excluding, among other things, those dividends, distributions, rights
and warrants referred to above and dividends consisting exclusively of cash
and securities received pursuant to a merger or consolidation described
below);
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(iv) distributions consisting exclusively of cash (excluding any regular
quarterly cash dividends, any cash distributions referred to in (iii) above
and any cash distributed in a merger or consolidation referred to below) to
all holders of Steel Stock, if the aggregate amount of all such cash
distributions, together with (A) all other all-cash distributions (to which
such adjustment would otherwise apply) made within the preceding 12 months
not triggering a 6.50% Convertible Preferred Stock Conversion Price
adjustment and (B) all Excess Purchase Payments (as defined below) in
respect of each tender offer or exchange offer for, or other negotiated
purchase of, Steel Stock concluded by the Company or any of its
subsidiaries within the preceding 12 months not triggering a 6.50%
Convertible Preferred Stock Conversion Price adjustment, exceeds an amount
equal to 12 1/2% of the product of the Current Market Price per share of
Steel Stock (calculated as set forth in the Certificate of Incorporation)
times the number of shares of Steel Stock outstanding on the date fixed for
determination of holders of Steel Stock entitled to receive such
distribution; and
(v) payment of an Excess Purchase Payment, if the aggregate amount of
such Excess Purchase Payment, together with (A) the aggregate amount of any
all-cash distributions (excluding any regular quarterly cash dividends, any
cash distributions referred to in (iii) above and any cash distributed in a
merger or consolidation referred to below) made within the preceding 12
months not triggering a 6.50% Convertible Preferred Stock Conversion Price
adjustment and (B) all Excess Purchase Payments in respect of each tender
or exchange offer or other negotiated purchase for Steel Stock concluded by
the Company or any of its subsidiaries within the preceding 12 months not
triggering a 6.50% Convertible Preferred Stock Conversion Price adjustment,
exceeds an amount equal to 12 1/2% of the product of the Current Market
Price per share of Steel Stock (calculated as set forth in the Certificate
of Incorporation) times the number of shares of Steel Stock outstanding on
the expiration date of such tender offer or exchange offer or other
negotiated purchase. For purposes of these adjustments, the term "Excess
Purchase Payment" means the excess, if any, of (A) the aggregate of the
cash and the value of all other consideration paid by the Company or any of
its subsidiaries with respect to the shares of Steel Stock acquired in a
tender or exchange offer or such other purchase by the Company over (B) the
Current Market Price per share of Steel Stock times the number of shares of
Steel Stock acquired in the tender or exchange offer or such other purchase
(calculated as set forth in the Certificate of Incorporation).
The Company from time to time may reduce the 6.50% Convertible Preferred
Stock Conversion Price by any amount for any period of at least 20 business
days (or such other period as may then be required by applicable law), in
which case the Company shall give at least 15 days' notice of such reduction,
if the Board has made a determination that such reduction would be in the best
interests of the Company, which determination shall be conclusive. The Company
may, at its option, make such reductions in the 6.50% Convertible Preferred
Stock Conversion Price as the Board determines to be necessary in order that
any event treated for federal income tax purposes as a dividend of stock or
stock rights will not be taxable to recipients thereof. The Company will
comply with Rule 13e-4 under the Exchange Act in connection with any such
adjustment to the 6.50% Convertible Preferred Conversion Price.
No adjustments will be made in the 6.50% Convertible Preferred Stock
Conversion Price if distributions on or other transactions occur with respect
to the Marathon Stock or the Delhi Stock, except as provided in the next
paragraph.
After any date on which all outstanding shares of Steel Stock are exchanged
for shares of Marathon Stock or Delhi Stock as set forth under "Description of
Capital Stock and Amended and Restated Rights Plan--Steel Stock--Exchange and
Redemption," each share of 6.50% Convertible Preferred Stock will thereafter
be convertible into the number of shares of Marathon Stock or Delhi Stock, as
the case may be, receivable upon such exchange by a holder of that number of
shares or
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fraction thereof of Steel Stock into which one share of 6.50% Convertible
Preferred Stock was convertible immediately prior to such exchange. From and
after any such adjustment to the 6.50% Convertible Preferred Stock, 6.50%
Convertible Preferred Stock Conversion Price adjustments as nearly equivalent
as may be practicable to the adjustments upon certain events in respect of
Steel Stock described above for Steel Stock shall be made upon such events in
respect of shares of Marathon Stock or Delhi Stock, as the case may be.
In case the Company shall be a party to any transaction (including, without
limitation, a merger or consolidation of the Company, but excluding
transactions described in the prior paragraph), in each case as a result of
which shares of Steel Stock will be converted into the right to receive stock,
securities or other property (including cash or any combination thereof), each
share of 6.50% Convertible Preferred Stock, if outstanding after the
consummation of the transaction, will thereafter be convertible into the kind
and amount of shares of stock and other securities and property (including
cash) (or any combination thereof) receivable upon the consummation of such
transaction by a holder of that number of shares of Steel Stock or fraction
thereof into which one share of 6.50% Convertible Preferred Stock was
convertible immediately prior to such transaction (assuming such holder of
Steel Stock failed to exercise any rights of election and received per share
the kind and amount received per share by a plurality of non-electing shares).
The Company may not become a party to any such transaction unless the terms
thereof are consistent with the foregoing.
If the Company, by dividend or otherwise, distributes to all holders of
Steel Stock or other class of common stock into which shares of 6.50%
Convertible Preferred Stock are then convertible shares of common stock other
than Steel Stock or any class of common stock into which shares of 6.50%
Convertible Preferred Stock are then convertible, each share of 6.50%
Convertible Preferred Stock will be convertible, in addition to the number of
shares of Steel Stock and/or such other common stock into which such share is
then convertible, into the number of shares of such other common stock
receivable upon payment of such distribution by a holder of that number of
shares or fraction thereof of Steel Stock or such other common stock into
which one share of 6.50% Convertible Preferred Stock was convertible
immediately prior to the record date fixed for the determination of
stockholders entitled to receive such distribution. On the payment date of
such distribution, a conversion price in respect of such common stock will be
established in accordance with the Certificate of Incorporation and,
thereafter, conversion price adjustments as nearly as equivalent in type as
may be practicable to the adjustments described above which are to be made in
respect of Steel Stock shall be made in respect of shares of such common
stock.
No adjustment of the 6.50% Convertible Preferred Conversion Price in respect
of the Steel Stock or any other conversion price in respect of any other
common stock of the Company are required to be made in any case until
cumulative adjustments amount to 1% or more thereof. Any adjustments not so
required to be made will be carried forward and taken into account in
subsequent adjustments.
Notice to Holders
In order to give holders of shares of the 6.50% Convertible Preferred Stock
an opportunity to determine whether to convert such shares into shares of
Steel Stock, the Company is required to give notice of its intention (A) to
pay a dividend on, redeem shares of, or make a tender or exchange offer for,
Steel Stock that would constitute a U.S. Steel Group Special Event, or
exchange shares of Steel Stock for Marathon Stock or Delhi Stock following a
Disposition of all or substantially all of the properties and assets of the
U.S. Steel Group or (B) to exchange Steel Stock for shares of the U.S. Steel
Group Subsidiary, not less than 45 days prior to the date selected by the
Board for the payment of such dividend on or such redemption of Steel Stock
resulting from the Disposition of all or substantially all of the properties
and assets of the U.S. Steel Group and not less than 30 days prior to the
exchange date for such exchange, the consummation of such tender or exchange
offer or the payment date of any other such dividend. In addition, from and
after any exchange of Steel Stock for
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Marathon Stock, as described above, the Company is required to give a
comparable notice of its intention to take certain similar actions with
respect to Marathon Stock that would constitute a Marathon Group Special
Event.
BOOK-ENTRY SYSTEM--THE DEPOSITORY TRUST COMPANY
DTC will act as securities depositary (the "Depository") for the Trust
Convertible Preferred Securities and, if such are distributed to the holders
of Trust Convertible Preferred Securities as described herein, is expected to
act as the Depository for the Convertible Debentures. For purposes of the
description of the book-entry system below, the Trust Convertible Preferred
Securities and the Convertible Debentures are referred to as the "Convertible
Securities."
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 Exchange Act. DTC
holds securities that its participants (the "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 (the "Direct
Participants"). DTC is owned by a number of its Direct Participants and by the
NYSE, the American Stock Exchange, Inc., 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
transactions through or maintain a direct or indirect 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 Commission.
The ownership interest of each actual owner of a Convertible Security
("Beneficial Owner") within the DTC system is recorded on the Direct and
Indirect Participants' records and is credited to the Direct Participant on
DTC's records. Beneficial Owners do not receive written confirmation from DTC
of their transactions, but Beneficial Owners are expected to receive written
confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the Direct or Indirect Participants through
which the Beneficial Owners exchanged or hold Convertible Securities.
Transfers of ownership interests in the Convertible Securities 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 a Convertible Security, except in
the event that use of the book-entry system for such Convertible Security is
discontinued.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in the Convertible Securities
represented by a global certificate.
To facilitate subsequent transfers, all the Convertible Securities deposited
by Participants with DTC are registered in the name of Cede. The deposit of
Convertible Securities with DTC and their registration in the name of Cede
effect no change in beneficial ownership. DTC has no knowledge of the identity
of the Beneficial Owners of the Convertible Securities, as its records reflect
only the identity of the Direct Participants to whose accounts such
Convertible Securities 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 that may be in effect from time to time.
Redemptions are coordinated through DTC. Redemption notices shall be sent to
Cede. If less than all of the Convertible Securities held by DTC are being
redeemed, DTC will reduce the amount of the interest of each Direct
Participant in such Convertible Securities in accordance with its procedures.
Conversions are coordinated through DTC. Conversions notices shall be sent
to Cede by a Direct Participant for the benefit of Beneficial Owners. DTC will
reduce the amount of interest of a Direct Participant in the Convertible
Securities as result of any such conversion in accordance with its procedures.
In addition, although voting with respect to the Convertible Securities is
limited, in those cases where a vote is required, neither DTC nor Cede will
itself consent or vote with respect to such securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the issuer of the Convertible
Security for which a vote is being solicited as soon as possible after the
record date. The Omnibus Proxy assigns Cede consenting or voting rights to
those Direct Participants to whose accounts the voting Convertible Securities
are credited on the record date (identified in a listing attached to the
Omnibus Proxy). The Company and the Trust believe that the arrangements among
DTC, Direct and Indirect Participants, and Beneficial Owners will enable the
Beneficial Owners to exercise rights equivalent in substance to the rights
that can be directly exercised by a holder of a Convertible Security.
Distribution payments on the Convertible Securities are made to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment
date in accordance with their respective holdings shown of DTC's record unless
DTC has reason to believe that it will not receive payments on such payment
date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the account of customers in bearer form or registered in "street
name," and such payments will be the responsibility of such Participant and
not of DTC, the Trust, or the Company, subject to any statutory or regulatory
requirements to the contrary that may be in effect from time to time. Payment
of distributions to DTC is the responsibility of the issuer of the Convertible
Security, disbursement of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of the Convertible Securities (including, without
limitation, the presentation of a stock certificate for conversion) only at
the direction of one or more Participants to whose account with DTC interests
in shares presented by a global certificate are credited and only in respect
of such number of the shares of the Convertible Securities represented by a
global certificate as to which such Participants have given such direction.
Except as provided herein, a Beneficial Owner in a global Convertible
Security certificate will not be entitled to receive physical delivery of such
securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC to exercise any rights under such securities. Because DTC can only act on
behalf of Participants, who in turn act on behalf of Indirect Participants,
the ability of a person having a beneficial interest in shares represented by
a global certificate to pledge such interest to persons or entities that do
not participate in the DTC system, or otherwise take actions in respect of
such interest, may be affected by the lack of a physical certificate of such
interest.
DTC may discontinue providing its services as Depository with respect to the
Convertible Securities at any time by giving reasonable notice to the issuer.
Under such circumstances, in the
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event that a successor securities depositary is not obtained, certificates for
the Convertible Securities for which DTC has discontinued its services are
required to be printed and delivered. In addition, the issuer of the
Convertible Security may decide to discontinue use of the system of book-entry
transfers through DTC (or any successor depositary) with respect to its
Convertible Securities. In that event, certificates for such Convertible
Securities will be printed and delivered. The information in this section
concerning DTC and DTC's book-entry system has been obtained from sources that
the Company and the Trust believe to be reliable, but neither the Company nor
the Trust takes responsibility for the accuracy thereof.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
In the opinion of Miller & Chevalier, Chartered, special tax counsel to the
Company and the Trust ("Special Tax Counsel"), the following are the material
United States federal income tax consequences of the acquisition by exchange,
ownership, and disposition of the Trust Convertible Preferred Securities.
Unless otherwise stated, this summary deals with the beneficial owners of
6.50% Convertible Preferred Stock who are United States persons. As used
herein, a "United States person" means (i) a person that is a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or any
political subdivision thereof, (iii) an estate the income of which is subject
to United States federal income taxation regardless of its source, or (iv) a
trust if a court within the United States is able to exercise primary
supervision over the administration of such trust and one or more United
States fiduciaries have the authority to control all the substantial decisions
of such trust. Unless otherwise stated, this summary deals only with Trust
Convertible Preferred Securities held as capital assets by holders who
exchange shares of 6.50% Convertible Preferred Stock. It does not deal with
special classes of holders such as banks, thrifts, real estate investment
trusts, regulated investment companies, insurance companies, dealers in
securities or currencies, tax-exempt investors, foreign governments, or with
persons that hold the Trust Convertible Preferred Securities or the 6.50%
Convertible Preferred Stock as a position in a "straddle," as part of a
"synthetic security" or "hedge," as part of a "conversion transaction" or
other integrated investment, or as other than a capital asset. This summary
also does not address the tax consequences to persons that have a functional
currency other than the U.S. Dollar or the tax consequences to stockholders,
partners, or beneficiaries of a holder of Trust Convertible Preferred
Securities. Further, it does not include any description of any alternative
minimum tax consequences or the tax laws of any state or local government or
any foreign government that may be applicable to the Trust Convertible
Preferred Securities or to a holder's decision to exchange shares of 6.50%
Convertible Preferred Stock for Trust Convertible Preferred Securities. This
summary is based on the Code, Treasury regulations thereunder, and
administrative and judicial interpretations thereof, as of the date hereof,
all of which are subject to change, possibly on a retroactive basis.
ALL HOLDERS OF 6.50% CONVERTIBLE PREFERRED STOCK ARE ADVISED TO CONSULT
THEIR OWN TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL, AND FOREIGN TAX
CONSEQUENCES OF AN EXCHANGE OF SHARES OF 6.50% CONVERTIBLE PREFERRED STOCK FOR
TRUST CONVERTIBLE PREFERRED SECURITIES AND THE OWNERSHIP, CONVERSION AND
DISPOSITION OF TRUST CONVERTIBLE PREFERRED SECURITIES RECEIVED IN THE EXCHANGE
OFFER IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
EXCHANGE OF 6.50% CONVERTIBLE PREFERRED STOCK FOR TRUST CONVERTIBLE PREFERRED
SECURITIES
The exchange of shares of 6.50% Convertible Preferred Stock for Trust
Convertible Preferred Securities will be a taxable event. If, with respect to
a particular holder, such holder does not own,
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directly or constructively, any other stock of the Company, or if the exchange
satisfies one of the tests of section 302 of the Code described below, it will
be treated as a transaction in which capital gain or loss is recognized,
rather than as a dividend. The tests under section 302 of the Code are applied
on a stockholder-by-stockholder basis. Therefore, whether an exchange will be
treated as a transaction in which capital gain or loss is recognized or as a
dividend with respect to a particular holder will depend on that holder's
particular facts and circumstances. If the exchange of shares of 6.50%
Convertible Preferred Stock for Trust Convertible Preferred Securities is
treated as a transaction in which capital gain or loss is recognized with
respect to a particular holder, the capital gain or loss will be based on the
difference between the issue price of the Trust Convertible Preferred
Securities received in the exchange and the holder's adjusted tax basis in the
shares of 6.50% Convertible Preferred Stock surrendered therefor. Any capital
gain or loss will be long-term capital gain or loss if the shares of 6.50%
Convertible Preferred Stock surrendered in the exchange were held by the
holder for more than one year. The exchanging holder's tax basis in the Trust
Convertible Preferred Securities received in the exchange will equal the fair
market value of the Trust Convertible Preferred Securities at the time of the
exchange and the holding period for the Trust Convertible Preferred Securities
will begin on the day after the day on which the Trust Convertible Preferred
Securities are acquired by the holder.
The issue price of the Convertible Debentures represented by the Trust
Convertible Preferred Securities will generally be equal to their fair market
value, determined as of the date on which the Trust Convertible Preferred
Securities are issued. It is possible that, in certain circumstances, the
issue price of the Convertible Debentures represented by the Trust Convertible
Preferred Securities may exceed their principal amount, in which case a United
States person generally may elect to amortize such premium over the term of
the Trust Convertible Preferred Securities. It is also possible that, in
certain circumstances, the issue price of the Convertible Debentures
represented by the Trust Convertible Preferred Securities may be less than
their stated redemption price at maturity by more than a de minimis amount
and, as a result, the Convertible Debentures could be considered to have been
issued with OID (within the meaning of section 1273(a) of the Code). See "--
Interest Income and Original Issue Discount". Because the fair market value of
the Trust Convertible Preferred Securities will not be known until after the
date they are issued, it is not possible, as of the date of this Prospectus,
to determine whether any such premium or discount will exist as of the date of
issuance.
Pursuant to section 302 of the Code, an exchange will be treated as a
transaction in which gain or loss is recognized if, after giving effect to the
constructive ownership rules of section 318 of the Code, the exchange (i)
represents a "complete termination" of the exchanging holder's stock interest
in the Company, (ii) is "substantially disproportionate" with respect to the
exchanging holder or (iii) is "not essentially equivalent to a dividend" with
respect to the exchanging holder, all within the meaning of section 302(b) of
the Code. Under the constructive ownership rules of section 318 of the Code, a
holder of Trust Convertible Preferred Securities will be treated as owning the
Steel Stock into which such Trust Convertible Preferred Securities are
convertible. Accordingly, an exchange pursuant to the Exchange Offer could
not, standing alone, satisfy the "complete termination" or the "substantially
disproportionate" tests. An exchange will be "not essentially equivalent to a
dividend" as to a particular holder if it results in a "meaningful reduction"
in such holder's interest in the Company (after application of the
constructive ownership rules of section 318 of the Code). In general, there
are no fixed rules for determining whether a "meaningful reduction" has
occurred. However, based upon published rulings of the IRS, a meaningful
reduction will be deemed to have occurred if the holder's stock ownership
(treating the Trust Convertible Preferred Securities as converted) is minimal,
the holder exercises no control over the affairs of the Company, and the
holder's percentage equity interest in the Company is reduced in the
redemption to any extent. Because the number of shares of Steel Stock issued
upon conversion of a Trust Convertible Preferred Security will be less than
the number of shares issued upon conversion of a share of 6.50% Convertible
Preferred Stock, the meaningful reduction test should be satisfied by the
exchange. However, no assurance can be given
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that these tests will be satisfied, and, if such tests are not satisfied, the
exchange will be treated as a dividend. EACH HOLDER SHOULD CONSULT ITS OWN TAX
ADVISOR AS TO ITS ABILITY IN LIGHT OF ITS OWN PARTICULAR CIRCUMSTANCES TO
SATISFY ANY OF THE FOREGOING TESTS.
If an exchange is treated as a dividend with respect to a particular
exchanging holder under section 302 of the Code, such holder (i) will not
recognize any loss on the exchange, (ii) will recognize dividend income
(rather than capital gain) in an amount equal to the fair market value of the
Trust Convertible Preferred Securities received without regard to the holder's
basis in the shares of 6.50% Convertible Preferred Stock surrendered in the
exchange, to the extent of its proportionate share of the Company's current or
accumulated earnings and profits. The holding period for the Trust Convertible
Preferred Securities will begin on the day after the day on which the Trust
Convertible Preferred Securities are acquired by the exchanging Holder.
CORPORATE HOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS CONCERNING THE
AVAILABILITY OF THE CORPORATE DIVIDENDS--RECEIVED DEDUCTION AND THE POSSIBLE
APPLICATION OF THE EXTRAORDINARY DIVIDEND RULES OF CODE SECTION 1059 TO AN
EXCHANGE BY A CORPORATE HOLDER FOR WHOM THE DISTRIBUTION IS TAXABLE AS A
DIVIDEND.
CLASSIFICATION OF THE CONVERTIBLE DEBENTURES
In connection with the issuance of the Convertible Debentures, Special Tax
Counsel will render its opinion that, although the matter is not free from
doubt, the Convertible Debentures will be classified for United States federal
income tax purposes as indebtedness of the Company under current law. By
accepting a Trust Convertible Preferred Security, each holder covenants to
treat the Convertible Debentures as indebtedness and the Trust Convertible
Preferred Securities as evidence of an indirect beneficial ownership in the
Convertible Debentures. No assurance can be given, however, that the
classification of the Convertible Debentures as indebtedness will not be
challenged by the IRS. Nevertheless, Special Tax Counsel has advised that it
is of the view that, if challenged, the opinions expressed herein would be
sustained by a court with jurisdiction in a properly presented case. The
remainder of this discussion assumes that the Convertible Debentures will be
classified for United States federal income tax purposes as indebtedness of
the Company.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Trust Convertible Preferred
Securities, Special Tax Counsel will render its opinion that the Trust will be
classified for United States federal income tax purposes as a grantor trust
and not as an association taxable as a corporation. Accordingly, for United
States federal income tax purposes, each holder of Trust Convertible Preferred
Securities will be considered the owner of an undivided interest in the
Convertible Debentures, and pursuant to the agreement to treat the Convertible
Debentures as indebtedness, each holder will be required to include in its
gross income interest received or accrued with respect to its allocable share
of the Convertible Debentures.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Corporate holders of the Trust Convertible Preferred Securities will not be
entitled to a dividends-received deduction with respect to any income
recognized with respect to the Trust Convertible Preferred Securities.
Depending on the fair market value of the Convertible Debentures at the time
of issuance, they may be treated as issued with OID. The Convertible
Debentures will be considered to having been issued with OID (within the
meaning of section 1273(a) of the Code) if the "issue price" of the
Convertible Debentures is less than the "stated redemption price at maturity"
of the Convertible Debentures by an amount that is greater than the product of
.25% of such "stated redemption price at
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maturity" and the number of complete years to maturity of the Convertible
Debentures (such product is referred to herein as the "De Minimis OID
Amount"). The "issue price" of the Convertible Debentures will be equal to the
fair market value of the Convertible Debentures as of the date of issuance.
The "stated redemption price at maturity" of the Convertible Debentures will
be equal to the sum of all payments to be made on the Convertible Debentures,
other than payments of "qualified stated interest." Accordingly, under the de
minimis rule, there will be no reportable OID if the amount of discount on the
Convertible Debentures is less than 9.75% of the stated redemption price at
maturity (i.e., if the fair market value of the Convertible Debentures, as
measured by the fair market value of the Trust Convertible Preferred
Securities, at the date of issuance exceeds $45.125).
Although the Company cannot assure the ultimate outcome of OID treatment, it
is the intent of the Company to consummate the Exchange Offer only if the
Company reasonably expects on the Expiration Date to issue the Convertible
Debentures without reportable OID.
If the Convertible Debentures are considered to be issued with OID for
United States federal income tax purposes, the holders of Trust Convertible
Preferred Securities will be required to accrue their pro rata share of the
excess of the stated redemption price at maturity over the issue price (as
OID) on a daily economic accrual basis (using the constant-yield-to-maturity
method of accrual described in section 1272(a) of the Code) regardless of
their regular method of accounting. Consequently, holders would be required to
include the amount of such excess in gross income for United States federal
income tax purposes in advance of the receipt of the cash attributable to such
income. A holder will have an adjusted tax basis in its Trust Convertible
Preferred Securities equal to the issue price of its pro rata share of
Convertible Debentures (evidenced by the Trust Convertible Preferred
Securities) plus any OID included in gross income.
The stated interest on the Convertible Debentures should be considered
"qualified stated interest" under the applicable Treasury regulations (the
"Regulations") because the Company believes that the terms of the Convertible
Debentures ensure that the likelihood of its exercising its option to defer
payments of interest is "remote" because exercising that option would prevent
the Company from declaring dividends on any class of its equity securities and
the Company has paid regular quarterly dividends on the Steel Stock (and its
common stock prior to the issuance of the Steel Stock) for more than five
years. Accordingly, based on the advice of Special Tax Counsel, the Company
intends to take the position that, as long as the issue price of the
Convertible Debentures is not less than their stated redemption price at
maturity by more than the de minimis OID Amount, the Convertible Debentures
will not be considered to be issued with OID and, further, stated interest on
the Convertible Debentures generally will be taxable to a holder as ordinary
income at the time it is paid or accrued in accordance with the holder's
method of tax accounting. See "--Exchange of 6.50% Convertible Preferred Stock
for Trust Convertible Preferred Securities."
Moreover, under the Regulations, if the Company exercises its right to defer
payments of interest, the Convertible Debentures will become OID instruments,
and all holders of the Trust Convertible Preferred Securities will be required
to accrue the stated interest (and any OID, or if the Convertible Debentures
are not considered to be issued with OID, any de minimis OID) on a daily basis
during the extended interest period even though the Company will not pay the
interest in cash until the end of the extended interest period, and even if
some holders generally use the cash method of accounting. A holder who sells
the Trust Convertible Preferred Securities during the extended interest period
will not receive from the Company any cash related to the interest income the
holder accrued and included in its taxable income under the OID rules (because
that cash will be paid to the holder of record at the end of the extended
interest period).
If the Convertible Debentures become OID instruments (i.e., if the Company
ever exercises its right to defer payments of interest), the Convertible
Debentures will be taxed as OID instruments for as long as they remain
outstanding. Thus, even after the end of the extended interest period, all
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holders will be required to continue accruing interest (and any OID or de
minimis OID) on the Convertible Debentures on a daily basis, regardless of
their method of accounting. Under the OID rules, a holder would accrue an
amount of interest income each year that approximates the stated interest
payments (and any OID or de minimis OID) called for under the terms of the
Convertible Debentures, and actual cash payments of interest on the
Convertible Debentures would not be reported separately as taxable income. Any
amount of OID included in a holder's gross income (whether or not during an
extended interest period) with respect to a Trust Convertible Preferred
Security will increase such holder's adjusted tax basis in such Trust
Convertible Preferred Security, and the amount of distributions received by
such holder in respect of such accrued OID will reduce the adjusted tax basis
of such Trust Convertible Preferred Security.
The Regulations have not yet been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to Special Tax Counsel's interpretation.
RECEIPT OF CONVERTIBLE DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST;
SHORTENING OF STATED MATURITY
Under certain circumstances, as described under "Description of the Trust
Convertible Preferred Securities--Special Event Distribution or Redemption;
Shortening of Stated Maturity" the Convertible Debentures may be distributed
to holders in exchange for the Trust Convertible Preferred Securities and in
liquidation of the Trust. This distribution cannot occur without an opinion of
an independent tax counsel to the effect that the distribution will not result
in recognition of gain or loss to each holder. If the exchange is a non-
taxable event, each holder would receive an aggregate tax basis in the
Convertible Debentures equal to the holder's aggregate tax basis in the Trust
Convertible Preferred Securities. A holder's holding period in the Convertible
Debentures received in liquidation of the Trust would include the period
during which the Trust Convertible Preferred Securities were held by the
holder. However, the tax-free treatment of the distribution may be adversely
affected as a result of a change in law. In certain circumstances, the stated
maturity of the Convertible Debentures could be shortened at the option of the
Company. Assuming the Convertible Debentures are properly treated as
indebtedness, this change, by itself, would occur pursuant to the terms of the
instrument and would not result in recognition of gain or loss to a holder of
Trust Convertible Preferred Securities. However, the maturity advancement
could be treated as a reissuance for purposes of the OID rules, and could
increase the amount of OID on a Convertible Debenture.
Under certain circumstances described herein (see "Description of the Trust
Convertible Preferred Securities--Trust Special Event Distribution or
Redemption; Shortening of Stated Maturity"), the Convertible Debentures may be
redeemed for cash and the proceeds of the redemption distributed to holders in
redemption of the Trust Convertible Preferred Securities. Under current law,
such a redemption would, for United States federal income tax purposes,
constitute a taxable disposition of the redeemed Trust Convertible Preferred
Securities and a holder would recognize gain or loss as if it sold the
redeemed Trust Convertible Preferred Securities for cash. See "--Sale or
Redemption of Trust Convertible Preferred Securities."
SALE OR REDEMPTION OF TRUST CONVERTIBLE PREFERRED SECURITIES
A holder that sells or redeems Trust Convertible Preferred Securities will
recognize gain or loss equal to the difference between its adjusted tax basis
in the Trust Convertible Preferred Securities and the amount realized on such
sale or redemption (except to the extent that such amount realized is
characterized as a payment in respect of accrued interest on such holder's
allocable share of the Convertible Debentures that such holder has not
included in gross income previously). Assuming that the Company does not defer
payment of interest on the Convertible Debentures, a holder's adjusted tax
basis in the Trust Convertible Preferred Securities will be the fair market
value of those securities on the date of the exchange of shares of 6.50%
Convertible Preferred Stock for Trust Convertible
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Preferred Securities. Subject to the discussion below regarding accrued and
unpaid interest, such gain or loss generally will be a capital gain or loss
and generally will be a long-term capital gain or loss if the Trust
Convertible Preferred Securities have been held for more than one year.
Should the Company exercise its right to defer payments on interest, a
holder who disposes of its Trust Convertible Preferred Securities between
record dates for payments of distributions thereon will be required to include
accrued and unpaid interest on the Convertible Debentures through the date of
disposition in income as ordinary income, and to add such amount to its
adjusted tax basis in its allocable share of the underlying Convertible
Debentures deemed disposed. The OID from a holder's pro rata share is then
added to his adjusted basis in the Trust Convertible Preferred Securities. To
the extent the selling price is less than the holder's adjusted tax basis, a
holder will recognize a capital loss. Subject to certain limited exceptions,
capital losses cannot be applied to offset ordinary income for United States
federal income tax purposes.
CONVERSION OF TRUST CONVERTIBLE PREFERRED SECURITIES INTO THE STEEL STOCK
A holder of Trust Convertible Preferred Securities will not recognize
income, gain or loss upon the conversion, through the Conversion Agent, of
Convertible Debentures into the Steel Stock except to the extent of ordinary
income recognized with respect to accrued and unpaid interest on the
Convertible Debentures at that time. A holder of Trust Convertible Preferred
Securities will also recognize gain upon the receipt of cash in lieu of a
fractional share of the Steel Stock equal to the amount of the cash received
less such holder's tax basis in such fractional share. Such a holder's tax
basis in the Steel Stock received upon conversion should generally be equal to
such holder's tax basis in the Trust Convertible Preferred Securities
delivered to the Conversion Agent for exchange, plus the amount of interest
income recognized on the exchange, minus the basis allocated to any fractional
share for which cash is received, and such holder's holding period in the
Steel Stock received upon conversion will begin on the day after the day the
holder acquired the Trust Convertible Preferred Securities delivered to the
Conversion Agent for exchange (except that the holding period of the Steel
Stock deemed issued for accrued interest will begin on the day following the
date of conversion).
CONVERSION PRICE ADJUSTMENT
Treasury Regulations promulgated under section 305 of the Code would treat
holders of Trust Convertible Preferred Securities as having received a
constructive distribution from the Company in the event the Conversion Price
of the Convertible Debentures were adjusted if (i) as a result of such
adjustment, the proportionate interest of such holder in the assets or
earnings and profits of the Company were increased and (ii) the adjustment was
not made pursuant to a bona fide, reasonable anti-dilution formula. An
adjustment to the Conversion Price would not be considered made pursuant to
such formula if the adjustment was made to compensate for certain taxable
distributions with respect to the Steel Stock. Thus, under certain
circumstances, a reduction in the Conversion Price for the holders may result
in deemed dividend income to holders to the extent of the current or
accumulated earnings and profits of the Company. Holders of the Convertible
Debentures would be required to include their allocable share of such deemed
dividend in gross income but will not receive any cash related thereto.
PROPOSED TAX LEGISLATION
See the discussion under "Risk Factors--Risks Relating to the Trust
Convertible Preferred Securities--Proposed Tax Legislation."
112
<PAGE>
INFORMATION REPORTING TO HOLDERS
Income on the Trust Convertible Preferred Securities will generally be
reported to holders on Form 1099, which should be mailed to holders of the
Trust Convertible Preferred Securities by January 31 following each calendar
year.
The Trust will be obligated to report annually to Cede, as holder of record
of the Trust Convertible Preferred Securities, the interest received or
accrued related to the Convertible Debentures for the year. The Trust
currently intends to report such information on Form 1099 prior to January 31
following each calendar year even though the Trust is not legally required to
report to record holders until April 15 following each calendar year. Under
current law, holders of Trust Convertible Preferred Securities who hold as
nominees for beneficial holders will not have any obligation to report
information regarding the beneficial holders to the Trust. The Trust,
moreover, will not have any obligation to report to beneficial holders who are
not also record holders. Thus, beneficial holders of the Trust Convertible
Preferred Securities who hold their Trust Convertible Preferred Securities
through nominees will receive Form 1099 reflecting the income on their Trust
Convertible Preferred Securities from such nominee holders rather than the
Trust.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of the Trust Convertible
Preferred Securities or the Convertible Debentures distributed to holders of
the Trust Convertible Preferred Securities may be subject to a "backup"
withholding tax of 31% unless the holder complies with certain identification
requirements. Any withheld amounts will be allowed as a refund or credit
against the holder's United States federal income tax provided the required
information is provided to the IRS.
NON-UNITED STATES PERSONS
For purposes of this discussion, "non-United States person" means any person
who, for United States federal income tax purposes, is not a United States
person (as defined above).
On April 15, 1996, the U.S. Treasury Department issued proposed regulations
that could affect the procedures to be followed by a non-United States person
in establishing non-United States person status. These proposed regulations
would generally be effective for payments made after December 31, 1997. Non-
United States persons should consult their tax advisors regarding the effect,
if any, of the proposed regulations on their acquisition, ownership and
disposition of the Trust Convertible Preferred Securities.
ALL HOLDERS OF 6.50% CONVERTIBLE PREFERRED STOCK THAT ARE NON-UNITED STATES
PERSONS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE FEDERAL,
STATE, LOCAL, AND FOREIGN TAX CONSEQUENCES OF THEIR EXCHANGE OF SHARES OF
6.50% CONVERTIBLE PREFERRED STOCK FOR TRUST CONVERTIBLE PREFERRED SECURITIES
AND THE OWNERSHIP, CONVERSION, AND DISPOSITION OF TRUST CONVERTIBLE PREFERRED
SECURITIES RECEIVED IN THE EXCHANGE OFFER IN LIGHT OF THEIR OWN PARTICULAR
CIRCUMSTANCES.
EXCHANGE OF 6.50% CONVERTIBLE PREFERRED STOCK FOR TRUST CONVERTIBLE PREFERRED
SECURITIES
Subject to the discussion of backup withholding below, if a holder that is a
non-United States person proves, in a manner and under arrangements
satisfactory to the Company or other withholding agent, that the exchange of
shares of 6.50% Convertible Preferred Stock for Trust Convertible Preferred
Securities qualifies as a transaction in which gain or loss is recognized
rather than as a dividend (see "--Exchange of 6.50% Convertible Preferred
Stock for Trust Convertible Preferred
113
<PAGE>
Securities"), the Company or other withholding agent will not withhold federal
income tax on the issuance of the Trust Convertible Preferred Securities to
that holder and that holder generally will not be subject to United States
federal income tax in respect of gain recognized on the exchange unless (i)
the gain is effectively connected with a trade or business conducted by the
non-United States person within the United States (in which case the branch
profits tax may also apply if the holder is a foreign corporation), (ii) in
the case of a non-United States person that is an individual, the holder is
present in the United States for a period or periods aggregating 183 days or
more in the taxable year of the exchange and certain other conditions are
satisfied or (iii) the Company is or has been a "United States real property
holding corporation" within the meaning of section 897(c)(2) of the Code
within the shorter of the holder's holding period or the five-year period
ending on the date of the exchange (which the Company does not believe it has
been or is currently) and certain other conditions are satisfied, and no
treaty exception is applicable.
If a holder that is a non-United States person exchanges shares of 6.50%
Convertible Preferred Stock for Trust Convertible Preferred Securities and
does not prove, in a manner satisfactory to the Company or other withholding
agent, that such exchange qualifies as a transaction in which gain or loss is
recognized, the Company will treat the issuance of Trust Convertible Preferred
Securities to the non-United States person as a dividend distribution. The
Company will withhold United States federal income tax from the gross proceeds
to that holder in an amount equal to 30% of the proceeds (including Trust
Convertible Preferred Securities that the holder would otherwise have
received) unless the holder is eligible for a reduced tax treaty rate with
respect to dividend income (in which case tax will be withheld at the reduced
rate) or unless the holder establishes that it is exempt from tax (such as by
providing the appropriate form certifying its status as a foreign government).
Except as may otherwise be provided in an applicable income tax treaty, a
holder that is a non-United States person will be taxed at ordinary federal
income tax rates on a net income basis if such dividend is effectively
connected with the conduct of a trade or business of such holder within the
United States (in which case the branch profits tax may also apply if the
holder is a foreign corporation) and will not be subject to the withholding
tax described in the preceding sentence. A holder that is a non-United States
person may be eligible to obtain from the IRS a refund of tax withheld if such
holder meets one of three tests of section 302 described above under "--
Exchange of 6.50% Convertible Preferred Stock for Trust Convertible Preferred
Securities" or is otherwise able to establish that no tax (or a reduced amount
of tax) was due.
PAYMENTS ON TRUST CONVERTIBLE PREFERRED SECURITIES
Subject to a discussion of backup withholding below, payments of principal,
premium, if any, and interest (including OID, if any) on a Trust Convertible
Preferred Security by the Company or its agent (in its capacity as such) to a
beneficial owner that is a non-United States person will not be subject to
United States federal withholding tax provided that (a) such person does not
actually or constructively own 10% or more of the total combined voting power
of all classes of stock of the Company entitled to vote, (b) such person is
not a controlled foreign corporation that is related to the Company actually
or constructively through stock ownership, (c) such person is not a bank that
acquired its Trust Convertible Preferred Security in consideration of an
extension of credit made pursuant to a loan agreement entered into in the
ordinary course of business and (d) either (i) the beneficial owner certifies
under penalties of perjury on a Form W-8 delivered to the Company or its
agent, that it is not a United States person and provides its name and address
or (ii) a qualifying securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its
trade or business and that holds the Trust Convertible Preferred Security
certifies to the Company or its agent under penalties of perjury that such
statement has been received from the beneficial owner in a suitable form by it
or by a qualifying intermediary and furnishes the payor with a copy thereof.
114
<PAGE>
If the beneficial owner of a Trust Convertible Preferred Security who is a
non-United States person is engaged in a trade or business within the United
States and interest (including OID, if any) on the Trust Convertible Preferred
Security is effectively connected with the conduct of such trade or business,
such beneficial owner may be subject to United States federal income tax on
such interest (including OID, if any) at ordinary federal income tax rates on
a net basis (in which case the branch profits tax may also apply if the holder
is a foreign corporation). As discussed under the heading "Risk Factors--Risks
Relating to the Trust Convertible Preferred Securities--Proposed Tax
Legislation," the Proposed Legislation would deny an interest deduction to the
Company for interest payable on the Convertible Debentures. Such Proposed
Legislation may also cause the Convertible Debentures to be classified as
equity (rather than indebtedness) of the Company for United States federal
income tax purposes. If the Convertible Debentures are not classified for
United States federal income tax purposes as indebtedness of the Company,
payments by the Trust or any of its paying agents to any holder of a Trust
Convertible Preferred Security who is a non-United States person could be
subject to United States withholding tax at a 30% rate (or a lower rate
prescribed by an applicable treaty). Prospective investors that are non-United
States persons should consult their tax advisors concerning the possible
application of these rules.
SALE, EXCHANGE OR CONVERSION OF TRUST CONVERTIBLE PREFERRED SECURITIES
Subject to the discussion of backup withholding below, any capital gain
realized upon the sale or exchange of a Trust Convertible Preferred Security
(including upon retirement of a Trust Convertible Preferred Security or to the
extent cash is received in lieu of a fractional share of Steel Stock upon
conversion) by a beneficial owner who is a non-United States person ordinarily
will not be subject to United States federal income tax unless (i) such gain
is effectively connected with a trade or business conducted by such non-United
States person within the United States (in which case the branch profits tax
may also apply if the holder is a foreign corporation), (ii) in the case of a
non-United States person that is an individual, such holder is present in the
United States for a period or periods aggregating 183 days or more in the
taxable year of the exchange and certain other conditions are satisfied or
(iii) the Company is or has been a "United States real property holding
corporation" within the meaning of section 897(c)(2) of the Code within the
shorter of the holder's holding period or the five-year period ending on the
date of the exchange and certain other conditions are satisfied, and no treaty
exception is applicable.
The conversion of Trust Convertible Preferred Securities into Steel Stock
will not result in a realization of gain or loss or be subject to United
States withholding tax.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Information reporting on IRS Form 1099 and backup withholding at a rate of
31% will not apply to payments of principal and interest (including OID, if
any) or a paying agent to a non-United States holder on a Trust Convertible
Preferred Security if the certification described in clause (d) under "--
Payments on Trust Convertible Preferred Securities" above is received,
provided that the payor does not have actual knowledge that the holder is a
United States person. However, interest (including OID, if any) on a Trust
Convertible Preferred Security owned by a holder that is non-United States
person may be required to be reported annually on IRS Form 1042S.
Payments of the proceeds from the sale by a holder that is a non-United
States person of a Trust Convertible Preferred Security 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 a Trust Convertible Preferred Security to or through the United States
office of a broker is
115
<PAGE>
subject to information reporting and backup withholding unless the holder
certifies as to its non-United States person status or otherwise establishes
an exemption from information reporting and backup withholding.
ERISA CONSIDERATIONS
Generally, employee benefit plans that are subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 4975
of the Code ("Plans"), may exchange shares of the 6.50% Convertible Preferred
Stock for the Trust Convertible Preferred Securities, subject to the investing
fiduciary's determination that the investment in the Trust Convertible
Preferred Securities satisfies ERISA's fiduciary standards and other
requirements applicable to investments by the Plan.
ANY PLANS OR OTHER ENTITIES WHOSE ASSETS INCLUDE PLAN ASSETS SUBJECT TO
ERISA OR SECTION 4975 OF THE CODE PROPOSING TO ACQUIRE THE TRUST CONVERTIBLE
PREFERRED SECURITIES SHOULD CONSULT WITH THEIR OWN COUNSEL.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Trust
Convertible Preferred Securities offered hereby will be passed upon for the
Trust and the Company by Morris, Nichols, Arsht & Tunnell, Wilmington,
Delaware, and certain matters relating to the validity of the Convertible
Debentures, the Guarantee and the Steel Stock will be passed upon for the
Company by J.A. Hammerschmidt, Esq., Assistant General Counsel--Corporate, and
Assistant Secretary of the Company. Mr. Hammerschmidt, in his capacity as
Assistant General Counsel--Corporate, and Assistant Secretary of the Company,
is paid a salary by the Company and participates in various employee benefit
plans offered to officers or employees of the Company generally. Certain
federal income tax matters will be passed upon for the Company by Miller &
Chevalier, Chartered, Washington, D.C. Certain legal matters will be passed
upon for the Dealer Managers by Simpson Thacher & Bartlett (a partnership
which includes professional corporations), New York, New York. Simpson Thacher
& Bartlett will rely as to certain matters of Delaware law on the opinion of
Morris, Nichols, Arsht & Tunnell.
EXPERTS
The consolidated financial statements of USX, the financial statements of
the U.S. Steel Group, the financial statements of the Marathon Group and the
financial statements of the Delhi Group as of December 31, 1996 and 1995 and
for each of the three years in the period ended December 31, 1996,
incorporated in this Prospectus by reference to USX's Annual Report on Form
10-K for the year ended December 31, 1996, have been so incorporated in
reliance on the reports of Price Waterhouse LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
----------------
116
<PAGE>
INDEX OF CERTAIN TERMS
<TABLE>
<S> <C>
Acquiring Person............................................................ 95
Additional Interest......................................................... 77
Administrative Action....................................................... 60
Agent's Message............................................................. 44
ATOP........................................................................ 44
Available Delhi Dividend Amount............................................. 92
Available Steel Dividend Amount............................................. 84
Base Indenture.............................................................. 71
Beneficial Owner............................................................ 105
Board....................................................................... 2
Book-Entry Confirmation..................................................... 44
Business Day................................................................ 53
Cede........................................................................ 67
Certificate of Incorporation................................................ 82
Change in 1940 Act Opinion.................................................. 60
Code........................................................................ 12
Commission.................................................................. 6
Common Stock................................................................ 8
Company..................................................................... 8
Composite Tape.............................................................. 1
Compound Interest........................................................... 75
Conversion Agent............................................................ 54
Conversion Price............................................................ 54
Convertible Debentures...................................................... 1
Convertible Securities...................................................... 105
Debenture Trustee........................................................... 71
Declaration Event of Default................................................ 63
Declaration................................................................. 50
Delaware Trust Act.......................................................... 9
Delaware Trustee............................................................ 50
Delhi Fraction.............................................................. 83
Delhi Group................................................................. 83
Delhi Group Subsidiary...................................................... 92
Delhi Net Income............................................................ 92
Delhi Right................................................................. 95
Delhi Stock................................................................. 8
De Minimis OID Amount....................................................... 110
Depository.................................................................. 105
DGPC........................................................................ 83
Direct Action............................................................... 27
Direct Participants......................................................... 105
Disposition................................................................. 83
Dissolution Tax Opinion..................................................... 60
Distribution Rate........................................................... 3
Distributions............................................................... 3
DTC......................................................................... 40
Eligible Institution........................................................ 43
ERISA....................................................................... 116
Excess Purchase Payment..................................................... 56
Exchange Act................................................................ 6
</TABLE>
117
<PAGE>
<TABLE>
<S> <C>
Exchange Offer........................................................... 1
Expiration Date.......................................................... 2
Extension Period......................................................... 3
Group.................................................................... 8
Guarantee................................................................ 4
Guarantee Payments....................................................... 68
Guarantee Trustee........................................................ 26
Holder................................................................... 40
Indenture................................................................ 71
Indenture Event of Default............................................... 63
Indirect Participants.................................................... 105
Institutional Trustee Account............................................ 50
Institutional Trustee.................................................... 50
Interest and Other Financial Costs....................................... 22
Interest Payment Date.................................................... 74
Investment Company....................................................... 60
Investment Company Event................................................. 60
IRS...................................................................... 60
Issue Price.............................................................. 110
Junior Preferred Stock................................................... 82
LLC Loan Agreement....................................................... 72
Letter of Transmittal.................................................... 1
Liquidation.............................................................. 62
Liquidation Distribution................................................. 63
Marathon................................................................. 8
Marathon Group........................................................... 82
Marathon Group Special Event............................................. 59
Marathon Group Subsidiary................................................ 90
Marathon Right........................................................... 95
Marathon Stock........................................................... 8
Market Capitalization.................................................... 90
Market Value............................................................. 83
Market Value Ratio....................................................... 87
Maturity Advancement..................................................... 61
Minimum NYSE Distribution Condition...................................... 2
Moody's.................................................................. 18
NASD..................................................................... 48
Net Proceeds............................................................. 84
1940 Act................................................................. 60
No Recognition Opinion................................................... 59
non-United States person................................................. 113
NYSE..................................................................... 4
OID...................................................................... 2
OID Condition............................................................ 2
Participants............................................................. 105
Plans.................................................................... 116
Preferred Stock.......................................................... 82
Proposed Legislation..................................................... 24
Prospectus............................................................... 1
Qualified Stated Interest................................................ 110
Redemption Price......................................................... 58, 95
Redemption Tax Opinion................................................... 60
</TABLE>
118
<PAGE>
<TABLE>
<S> <C>
Registration Statement...................................................... 6
Regular Trustees............................................................ 50
Regulations................................................................. 110
Restated Rights Agreement................................................... 82
Right....................................................................... 95
Rights Agent................................................................ 82
Securities Act.............................................................. 6
Senior Indebtedness......................................................... 72
SFAS........................................................................ 85
6.50% Convertible Preferred Stock........................................... 1
6.50% Convertible Preferred Stock Conversion Price.......................... 101
Soliciting Dealer........................................................... 48
Special Tax Counsel......................................................... 107
Stated Redemption Price at Maturity......................................... 110
Steel Net Income............................................................ 85
Steel Right................................................................. 95
Steel Stock................................................................. 1
Stock Acquisition Date...................................................... 95
substantially all of the properties and assets of the U.S. Steel Group...... 86
Successor Securities........................................................ 66
Super Majority.............................................................. 64
Supplemental Indenture...................................................... 71
Surplus..................................................................... 31
S&P......................................................................... 18
Tax Event................................................................... 60
Transferor.................................................................. 45
Trust....................................................................... 1
Trust Common Securities..................................................... 1
Trust Common Securities Guarantee........................................... 69
Trust Convertible Preferred Securities...................................... 1
Trust Securities............................................................ 1
Trust Special Event......................................................... 59
Trustees.................................................................... 50
Unit........................................................................ 95
United States person........................................................ 107
U.S. Steel.................................................................. 8
U.S. Steel Group............................................................ 8
U.S. Steel Group Special Events............................................. 59
U.S. Steel Group Subsidiary................................................. 86
USX......................................................................... 8
Voting Stock................................................................ 95
</TABLE>
119
<PAGE>
The Exchange Agent:
THE BANK OF NEW YORK
By Hand or Overnight Courier: By Mail
(Registered or Certified Mail
Recommended):
Tender & Exchange Department Tender & Exchange Department
101 Barclay Street P.O. Box 11248
Receive and Deliver Window Church Street Station
New York, New York 10286 New York, New York 10286-1248
By Facsimile Transmission
(For Eligible Institutions Only):
(212) 815-6213
Confirm Receipt of Notice of Guaranteed Delivery
by Telephone:
(800) 507-9357
The Information Agent:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, NY 10022
(212) 754-8000
Toll Free (800) 566-9061
Banks and Brokerage Firms
please call:
(800) 662-5200
Any questions or requests for assistance or additional copies of this
Prospectus and the Letter of Transmittal may be directed to the Information
Agent at its telephone number and location set forth above. You may also
contact your broker, dealer, commercial bank or trust company or other nominee
for assistance concerning the Exchange Offer.
The Dealer Managers for the Exchange Offer are:
GOLDMAN, SACHS & CO. MERRILL LYNCH & CO.
85 Broad Street World Financial Center
New York, New York 10004 North Tower--Fifth Floor
(800) 323-5678 (Toll-Free) New York, New York 10281
(800) 436-1019 (Toll-Free)
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article V of the Company's By Laws provides that the Company 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 the Company or was serving
at the request of the Company as an officer, director, employee or agent of
another corporation, partnership, joint venture, enterprise, or nonprofit
entity.
The Company 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 the Company) by reason of the fact that such person is or was an
officer, employee, agent or director of the Company, or is or was serving at
the request of the Company 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 the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
Company may indemnify any such person against expenses (including attorneys'
fees) in an action by or in the right of the Company under the same
conditions, except that no indemnification is permitted without judicial
approval if such person is adjudged to be liable to the Company. To the extent
such person is successful on the merits or otherwise in the defense of any
action referred to above, the Company must indemnify him against the expenses
which he actually and reasonably incurred in connection therewith.
Policies of insurance are maintained by the Company under which directors
and officers of the Company 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. In
addition, the Regular Trustees of the Trust and their attorneys-in-fact are
similarly insured.
The Company's Certificate of Incorporation provides that no director shall
be personally liable to the Company 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 the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to
Section 174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal benefit.
Section 11 of the form of Dealer Manager Agreement filed as Exhibit 1.1 to
this registration statement provides for indemnification of each of the
Company and the Trust, their directors, trustees, and officers who sign this
registration statement, and each person, if any, who controls the Company or
the Trust within the meaning of either Section 15 of the Securities Act of
1933, as amended,or Section 20 of the Securities Exchange Act of 1934, as
amended, by the Dealer Manager, with respect to information relating to the
Dealer Manager, furnished to the Company or the Trust in writing by the Dealer
Manager, expressly for use in this registration statement and certain other
materials prepared in connection with the exchange offer contemplated hereby.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
See Index to Exhibits.
ITEM 22. UNDERTAKINGS.
(a) The Company hereby undertakes to respond to requests for information
that is incorporated by reference into the prospectus pursuant to Item 4,
10(b), 11 or 13 of Form S-4, within one business day of receipt of such
request, and to send the incorporated documents by first-class mail or equally
prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement throughout the
date responding to the request.
(b) The undersigned registrants each hereby undertake to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(c) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Company'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.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company 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 Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
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 March 26, 1997.
USX Corporation
(Registrant)
/s/ Kenneth L. Matheny
By___________________________________
Kenneth L. Matheny
Vice President & Comptroller
Pittsburgh, Pennsylvania
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed by the following persons in the
capacities indicated on March 26, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
* Chairman of the Board of Directors,
- ------------------------------------------------------------- Chief Executive Officer and Director
Thomas J. Usher (Principal Executive Officer)
* Vice Chairman & Chief Financial
- ------------------------------------------------------------- Officer and Director
Robert M. Hernandez (Principal Financial Officer)
/s/ Kenneth L. Matheny Vice President & Comptroller
------------------------------------------------------------- (Principal Accounting Officer)
Kenneth L. Matheny
Director
-------------------------------------------------------------
Neil A. Armstrong
* Director
- -------------------------------------------------------------
Victor G. Beghini
Director
- -------------------------------------------------------------
Jeanette Grasselli Brown
* Director
- -------------------------------------------------------------
Charles A. Corry
* Director
- -------------------------------------------------------------
Charles R. Lee
* Director
- -------------------------------------------------------------
Paul E. Lego
* Director
- -------------------------------------------------------------
Ray Marshall
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
Director
_____________________________________________
John F. McGillicudy
* Director
_____________________________________________
John M. Richman
* Director
_____________________________________________
Seth E. Schofield
* Director
_____________________________________________
John W. Snow
* Director
_____________________________________________
Paul J. Wilhelm
* Director
_____________________________________________
Douglas C. Yearley
</TABLE>
/s/ Kenneth L. Matheny
*By_____________________________________
Kenneth L. Matheny, Attorney-in-Fact
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
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
Dallas, State of Texas, on March 26, 1997.
USX Capital Trust I
*
By: _________________________________
A. G. Adkins
Trustee
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed on March 26, 1997 by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
*
_____________________________________________
A. G. Adkins Trustee
*
_____________________________________________
P. J. Kuntz Trustee
*
_____________________________________________
M. K. Stewart Trustee
The Bank of New York Trustee
By: _______________________________________
Title: ____________________________________
The Bank of New York (Delaware) Trustee
By: _______________________________________
Title: ____________________________________
/s/ W. F. Schwind, Jr.
*By: ________________________________________
W. F. Schwind, Jr.
Attorney-in-Fact
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C>
NUMBER EXHIBIT
1.1 Form of Dealer Manager Agreement.*
3.1 Certificate of Trust of the Trust.*
4.1 Restated Certificate of Incorporation of the Company, as amended and currently in
effect.*
4.2 Bylaws of the Company, as amended and currently in effect (incorporated by
reference to Exhibit 3(a) to the Company's Report on Form 10-Q for the quarter
ended June 30, 1996).
4.3 Form of Multiple Series Indenture, between the Company and The Bank of New York,
as trustee.
4.4 Form of First Supplemental Indenture, between the Company and The Bank of New
York, as trustee.
4.5 Declaration of Trust of the Trust.*
4.6 Form of Amended and Restated Declaration of Trust of the Trust, including form of
Trust Convertible Preferred Security.*
4.7 Form of Guarantee Agreement.*
4.8 Form of Common Stock certificate of the Company.
4.9 Amended and Restated Rights Agreement (incorporated by reference to Form 8
Amendment to Form 8-A filed on October 5, 1992).
5.1 Opinion of Morris, Nichols, Arsht & Tunnell.
5.2 Opinion of John A. Hammerschmidt, Esq.
8.1 Opinion of Miller & Chevalier, Chartered.
12.1 Statement re computation of ratio of earnings to fixed charges for the Company
(incorporated by reference to Exhibit 12.2 to the Company's Annual Report on Form
10-K for the year ended December 31, 1996).
12.2 Statement re computation of ratio of earnings to combined fixed charges and
preferred stock dividends for the Company (incorporated by reference to Exhibit
12.1 to the Company's Annual Report on Form 10-K for the year ended December 31,
1996).
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Morris Nichols Arhst & Tunnell (contained in its opinion filed as
Exhibit 5.1 to this Registration Statement).
23.3 Consent of J. A. Hammerschmidt (contained in the opinion filed as Exhibit 5.2).
23.4 Consent of Miller & Chevalier, Chartered (contained in its opinion filed as
Exhibit 8.1 to this Registration Statement).
24.1 Powers of Attorney (the Company) (previously filed with the exception of Thomas
J. Usher's, which is filed herewith).
24.2 Power of Attorney (the Trust) (contained in Exhibit 4.5).*
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as trustee under the Indenture.*
25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as trustee under the Amended and Restated
Declaration of Trust of the Trust.*
25.3 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as trustee under the Guarantee Agreement.*
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.*
99.3 Form of Letter to Registered Holders and Depository Trust Company Participants.*
99.4 Form of Letter to Clients.
99.5 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.*
99.6 Form of Newspaper Announcement.*
</TABLE>
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* Previously filed
<PAGE>
USX CORPORATION
as Issuer
and
THE BANK OF NEW YORK
as Trustee
MULTIPLE SERIES INDENTURE
Dated as of , 1997
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1.
DEFINITIONS AND OTHER
PROVISIONS OF GENERAL APPLICATION...................... 1
Section 1.1 Definitions..................................................... 1
Section 1.2 Form of Documents Delivered to Trustee.......................... 9
Section 1.3 Notices, etc., to Trustee, Company.............................. 10
Section 1.4 Notice to Holders; Waiver....................................... 10
Section 1.5 Legal Holidays.................................................. 11
Section 1.6 Moneys of Different Currencies To Be Segregated................. 11
Section 1.7 Payment To Be in Proper Currency................................ 11
Section 1.8 Language of Notices, etc........................................ 12
ARTICLE 2.
THE SECURITIES............................... 12
Section 2.1 Amount Unlimited; Issuable in Series............................ 12
Section 2.2 Denominations................................................... 15
Section 2.3 Execution, Authentication, Delivery and Dating.................. 16
Section 2.4 Temporary Securities............................................ 18
Section 2.5 Registration; Registration of Transfer and Exchange............. 21
Section 2.6 Mutilated, Destroyed, Lost and Stolen Securities................ 24
Section 2.7 Persons Deemed Owners........................................... 25
Section 2.8 Cancellation.................................................... 26
Section 2.9 Payment of Interest; Interest Rights Preserved.................. 26
Section 2.10 Computation of Interest........................................ 27
Section 2.11 Currency and Manner of Payments in Respect of Securities....... 27
Section 2.12 Compliance with Certain Laws and Regulations................... 32
Section 2.13 Security Forms Generally....................................... 32
Section 2.14 Form of Trustee's Certificate of Authentication................ 33
Section 2.15 Securities in Global Form...................................... 33
Section 2.16 CUSIP Numbers.................................................. 34
ARTICLE 3.
REDEMPTION OF SECURITIES AND SINKING FUNDS................. 34
Section 3.1 Applicability of Article........................................ 34
Section 3.2 Mandatory and Optional Sinking Fund Payments.................... 35
Section 3.3 Election to Redeem: Notice to Trustee........................... 35
Section 3.4 Selection by Trustee of Securities to be Redeemed............... 35
Section 3.5 Notice of Redemption............................................ 36
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<PAGE>
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----
Section 3.6 Deposit of Redemption Price..................................... 37
Section 3.7 Securities Payable on Redemption Date........................... 37
Section 3.8 Securities Redeemed in Part..................................... 38
Section 3.9 Satisfaction of Sinking Fund Payments with Securities........... 38
Section 3.10 Redemption of Securities for Sinking Fund...................... 38
Section 3.11 Redemption of Securities During Event of Default............... 39
ARTICLE 4.
PARTICULAR COVENANTS OF THE COMPANY..................... 39
Section 4.1 Payment of Principal, Premium and Interest...................... 39
Section 4.2 Maintenance of Office or Agency................................. 40
Section 4.3 Prohibition of Extension of Claims for Interest................. 41
Section 4.4 Appointment to Fill Vacancy of Trustee.......................... 41
Section 4.5 Paying Agents: Money for Securities Payments Held in Trust...... 41
Section 4.6 Compliance Certificate.......................................... 43
Section 4.7 Additional Amounts.............................................. 43
Section 4.8 Calculation of Original Issue Discount.......................... 44
ARTICLE 5.
SECURITYHOLDERS' LISTS AND REPORTS BY
THE COMPANY AND THE TRUSTEE......................... 44
Section 5.1 Company To Furnish Trustee Names and Addresses of Holders....... 44
Section 5.2 Preservation of Information: Communications to Holders.......... 44
Section 5.3 Reports by Company.............................................. 46
Section 5.4 Reports by Trustee.............................................. 46
ARTICLE 6.
REMEDIES OF THE TRUSTEE AND
SECURITYHOLDERS IN EVENT OF DEFAULT..................... 48
Section 6.1 Event of Default; Acceleration, Etc............................. 48
Section 6.2 Collection of Indebtedness and Suits for Enforcement by Trustee. 50
Section 6.3 Application of Money Collected.................................. 52
Section 6.4 Limitation on Suits: Unconditional Rights of Holders............ 52
Section 6.5 Remedies Cumulative, Restoration of Rights and Remedies......... 53
Section 6.6 Control by Holders: Waiver of Past Default...................... 54
Section 6.7 Notice of Defaults.............................................. 54
Section 6.8 Undertaking for Costs........................................... 55
Section 6.9 Special Record Date for Consents................................ 55
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<PAGE>
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----
ARTICLE 7.
CONCERNING THE TRUSTEE........................... 55
Section 7.1 Certain Duties and Responsibilities............................. 55
Section 7.2 Certain Rights of Trustee....................................... 57
Section 7.3 Not Responsible for Recitals or Issuance of Securities.......... 58
Section 7.4 May Hold Securities............................................. 58
Section 7.5 Money Held in Trust............................................. 58
Section 7.6 Compensation and Reimbursement.................................. 58
Section 7.7 Right to Rely on Officers' Certificate.......................... 59
Section 7.8 Disqualification: Conflicting Interests........................ 59
Section 7.9 Corporate Trustee Required; Eligibility......................... 65
Section 7.10 Resignation and Removal: Assignment of Successor............... 65
Section 7.11 Acceptance of Appointment by Successor......................... 67
Section 7.12 Merger, Conversion, Consolidation, Etc......................... 68
Section 7.13 Preferential Collection of Claims Against Company.............. 69
Section 7.14 Appointment of Authenticating Agent............................ 72
Section 7.15 Judgment Currency.............................................. 74
Section 7.16 Corporate Trust Office......................................... 75
ARTICLE 8.
CONCERNING THE SECURITYHOLDERS....................... 75
Section 8.1 Acts of Holders................................................. 75
Section 8.2 Authenticity of Instruments..................................... 75
Section 8.3 Authenticity of Bearer Securities............................... 75
Section 8.4 Determination of Principal Amounts of Original Issue Discount
Securities and Securities in Foreign Currencies....................... 76
Section 8.5 Company Solicitation of Holder.................................. 76
ARTICLE 9.
SECURITYHOLDERS' MEETING.......................... 77
Section 9.1 Purposes for Which Meetings May be Called....................... 77
Section 9.2 Call, Notice and Place of Meeting............................... 77
Section 9.3 Call of Meetings by Company or Holders.......................... 78
Section 9.4 Persons Entitled to Vote........................................ 78
Section 9.5 Determination of Voting Rights: Conduct and Adjournment of
Meetings.............................................................. 78
Section 9.6 Counting Votes and Recording Action of Meetings................. 79
Section 9.7 No Delay in Exercise of Rights.................................. 79
Section 9.8 Quorum: Action.................................................. 79
Section 9.9 Disregard of Securities Owned by Company or Controlling Person.. 80
-iii-
<PAGE>
Page
----
ARTICLE 10.
SUPPLEMENTAL INDENTURES.......................... 81
Section 10.1 Supplemental Indentures Without Consent of Holders............. 81
Section 10.2 Supplemental Indentures With Consent of Holders................ 83
Section 10.3 Effect of Supplemental Indentures.............................. 84
Section 10.4 Reference in Securities to Supplemental Indentures............. 85
ARTICLE 11.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE................. 85
Section 11.1 Company May Consolidate, Etc. Only on Certain Terms............ 85
Section 11.2 Rights and Duties of Successor Corporation..................... 86
ARTICLE 12.
SATISFACTION AND DISCHARGE OF INDENTURE:
UNCLAIMED MONEYS.............................. 87
Section 12.1 Satisfaction and Discharge of Indenture........................ 87
Section 12.2 Application of Trust Money..................................... 88
Section 12.3 Satisfaction, Discharge and Defeasance of Securities of Any
Series................................................................ 88
Section 12.4 Definitions.................................................... 90
Section 12.5 Repayment of Money Held by Trustee............................. 91
ARTICLE 13.
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS........................... 91
Section 13.1 No Recourse: Exemption from Personal Liability................. 91
ARTICLE 14.
MISCELLANEOUS PROVISIONS.......................... 92
Section 14.1 Successors and Assigns......................................... 92
Section 14.2 Validity of Acts by Successor Corporations..................... 92
Section 14.3 Surrender of Powers............................................ 92
Section 14.4 Notices........................................................ 92
Section 14.5 Governing Law.................................................. 92
Section 14.6 Compliance Certificates and Opinions........................... 92
Section 14.7 Effect of Headings and Table of Contents....................... 93
Section 14.8 Conflict with Trust Indenture Act.............................. 93
Section 14.9 Benefits of Trust Indenture.................................... 93
Section 14.10 No Security Interest.......................................... 93
-iv-
<PAGE>
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Section 14.11 Execution in Counterparts..................................... 93
Section 14.12 Separability.................................................. 94
ARTICLE 15.
SUBORDINATION............................... 94
Section 15.1 Securities Subordinate to Senior Indebtedness.................. 94
Section 15.2 Payment Over of Proceeds Upon Dissolution, Etc................. 94
Section 15.3 No Payment When Senior Indebtedness in Default................. 95
Section 15.4 Payment Permitted in Certain Situations........................ 95
Section 15.5 Subrogation to Rights of Holders of Senior Indebtedness........ 96
Section 15.6 Provisions Solely to Define Relative Rights.................... 96
Section 15.7 Trustee to Effectuate Subordination............................ 96
Section 15.8 No Waiver of Subordination Provisions.......................... 97
Section 15.9 Notice to Trustee.............................................. 97
Section 15.10 Reliance on Judicial Order or Certificate of Liquidating
Agent................................................................. 98
Section 15.11 Trustee Not Fiduciary for Holders of Senior Indebtedness...... 98
Section 15.12 Rights of Trustee as Holder of Senior Indebtedness,
Preservation of Trustee's Rights...................................... 98
Section 15.13 Article Applicable to Paying Agents........................... 99
Section 15.14 Certain Conversions Deemed Payment............................ 99
ARTICLE 16.
CONVERSION................................. 99
Section 16.1 Applicability of Article....................................... 99
Section 16.2 Conversion Privilege...........................................100
Section 16.3 Conversion Procedure...........................................100
Section 16.4 Fractional Shares..............................................100
Section 16.5 Taxes on Conversion............................................100
Section 16.6 Company to Provide Securities Issuable Upon Conversion.........100
Section 16.7 Adjustments....................................................100
Section 16.8 Valuation......................................................100
Section 16.9 Reorganization of Company......................................101
Section 16.10 Trustee's Disclaimer..........................................101
-v-
<PAGE>
EXHIBIT A Forms of Certification
EXHIBIT A.1 Form of Certificate to be Given by Person Entitled to Receive
Bearer Security
EXHIBIT A.2 Form of Certificate to be Given by Euro-Clear, CEDEL S.A. and
any other Entity Performing Similar Functions in connection
with the Exchange of Portion of a Temporary Global Security
EXHIBIT A.3 Form of Certificate to be Given by Euro-Clear, CEDEL S.A. and
any other Entity Performing Singular Functions to obtain
Interest prior to an Exchange Date
EXHIBIT A.4 Form of Certificate to be Given by Beneficial Owners to obtain
Interest prior to an Exchange Date
EXHIBIT A.5 Form of Confirmation to be sent to Purchasers of Bearer
Securities
-vi-
<PAGE>
THIS MULTIPLE SERIES INDENTURE, dated as of __________________, 1997
(the "Indenture"), is between USX CORPORATION, a Delaware corporation (the
"Company"), and THE BANK OF NEW YORK, as trustee (the "Trustee").
ARTICLE 1.
DEFINITIONS AND OTHER
PROVISIONS OF GENERAL APPLICATION
Section 1.1 Definitions. The terms defined in this Section 1.1 (except as
-----------
otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Indenture and of any indenture supplemental hereto shall have
the respective meanings specified in this Section 1.1. All other terms used in
this Indenture which are defined in the Trust Indenture Act of 1939 or which are
by reference therein defined in the Securities Act of 1933 (except as herein
otherwise expressly provided or unless the context otherwise requires) shall
have the meanings assigned to such terms in said Trust Indenture Act and in
said Securities Act as they were in force at the date of the execution of this
Indenture. All accounting terms used herein and not expressly defined shall
have the meaning given to them in accordance with generally accepted accounting
principles, and the term "generally accepted accounting principles" with respect
to any computation required or permitted hereunder shall mean such accounting
principles which are generally accepted at the date or time of such computation.
The terms "hereof", "herein" and "hereunder" and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section or
other subdivision. Unless the context otherwise requires, the terms defined in
this Article include the plural as well as the singular and the use of the word
"or" in this Indenture is not exclusive.
Certain terms, used principally within an Article of this Indenture, may be
defined in that Article.
"Act", when used with respect to any Holder, has the meaning specified in
Section 8.1.
"Affiliate" of any specified Person shall mean any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purpose of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" shall mean the agent of the Trustee, if any, which
at the time shall be appointed and acting pursuant to Section 7.14 of this
Indenture.
"Authorized Newspaper" means a newspaper of general circulation in the
place of publication, printed in the official language of the country of
publication and customarily published on each Business Day, whether or not
published on Saturdays, Sundays or holidays.
<PAGE>
2
Whenever successive weekly publications in an Authorized Newspaper are
authorized or required hereunder, they may be made (unless otherwise expressly
provided herein) on the same or different days of the week and in the same or
different Authorized Newspapers.
"Bearer Security" means any Security which is not registered in the
Security Register as to principal (including without limitation any Security in
temporary or permanent global bearer form).
"Board of Directors" shall mean the Board of Directors, the Executive
Committee of the Board of Directors or any other committee of the Board of
Directors of the Company with authority to act in the matter.
"Board Resolution" shall mean a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification.
"Business Day," when used with respect to any Place of Payment or place of
publication, means each Monday, Tuesday, Wednesday, Thursday and Friday which is
not a day on which banking institutions in that Place of Payment, place of
conversion of currency, if applicable, or place of publication are authorized or
obligated by or pursuant to law, regulation or executive order to close or as
specified for a series of Securities pursuant to Section 2.1 or as specified for
any Security in such Security.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after the execution of this instrument such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Common Depository" has the meaning specified in Section 2.4.
"Company" shall mean USX Corporation, a Delaware corporation, and, subject
to the provisions of Article Eleven, shall also include its successors and
assigns.
"Company Order" and "Company Request" mean, when used with reference to the
Company, a written order or request signed in the name of the Company by its
Chairman of the Board, Chief Executive Officer, President, Chief Operating
Officer, Chief Financial Officer, any Vice President (whether or not designated
by a number or word or words added before or after the title Vice President), or
Treasurer or an Assistant Treasurer, or by its Secretary or an Assistant
Secretary, or its Comptroller or an Assistant Comptroller, as the case may be,
and delivered to the Trustee.
"Component Currency" has the meaning specified in Section 2.11(i).
<PAGE>
3
"Conversion Agent" means any Person authorized by the Company to facilitate
the conversion of any Security which by its terms is convertible into any other
security of the Company.
"Corporate Trust Office" or "Principal Office of the Trustee" shall mean
the office of the Trustee at which at any particular time its corporate trust
business shall be principally administered, which office at the date hereof is
set forth in Section 7.16 of this Indenture, except that with respect to the
presentation of Securities (or Coupons, if any, representing an installment
series of interest) for payment or for registration of transfer and exchange,
such term shall mean the office or the agency of the Trustee in said city at
which at any particular time its corporate agency business shall be conducted.
"Corporation" includes corporations, associations, companies and business
trusts.
"Coupon" or "coupon" means any interest coupon appertaining to a Bearer
Security or Partially Registered Security.
"Currency Conversion Date" has the meaning specified in Section 2.11(e).
"Currency Conversion Rate" has the meaning specified in Section 7.15.
"Defaulted Interest" shall have the meaning specified in Section 2.9.
"Dollar" means the coin or currency of the United States as at the time of
payment is legal tender for the payment of public and private debts.
"Dollar Equivalent of the Currency Unit" has the meaning specified in
Section 2.11(h).
"Dollar Equivalent of the Foreign Currency" has the meaning specified in
Section 2.11(g).
"ECU" means the European Currency Unit as defined and revised from time to
time by the Council of the European Communities.
"Euro-clear" means the operator of the Euro-clear System.
"European Communities" means the European Economic Community, the European
Coal and Steel Community and the European Atomic Energy Community.
"Event of Default" shall mean any event specified in Section 6.1, continued
for the period of time, if any, and after the giving of notice, if any, therein
designated.
"Exchange Date" has the meaning specified in Section 2.4.
<PAGE>
4
"Exchange Rate Agent" means an entity appointed by the Company pursuant to
Section 2.11(i) from time to time.
"Exchange Rate Officer's Certificate" means a tested telex or a certificate
setting forth (i) the applicable Official Currency Unit Exchange Rate and (ii)
the Dollar or Foreign Currency or currency unit amounts of principal, premium,
if any, and interest, if any, respectively (on an aggregate basis and on the
basis of a Security having a principal amount of 1,000 in the relevant currency
unit), payable on the basis of such Official Currency Unit Exchange Rate, sent
(in the case of a tested telex) or executed (in the case of a certificate) by
the Treasurer or any Assistant Treasurer of the Company and delivered to the
Trustee; such tested telex or certificate need not comply with Section 14.6.
"Foreign Currency" means a currency issued by the government of any country
other than the United States.
"Fully Registered Security" means any Security registered in the Security
Register as to principal and interest, if any.
"Holder," "holder of Securities" and "Securityholder" or other similar term
shall mean, with respect to a Registered Security, the Person in whose name at
the time a particular Registered Security is registered in the Security Register
and, with respect to a Bearer Security and/or a Coupon, the bearer thereof.
"Indebtedness" shall mean and include, without duplication, all items of
indebtedness or liability (except stockholders' equity) which in accordance with
generally accepted accounting principles would be included in determining total
liabilities as shown on the liability side of a balance sheet as at the date as
of which indebtedness is to be determined; indebtedness secured by any mortgage,
pledge or lien existing on property owned subject to such mortgage, pledge or
lien, whether or not the indebtedness secured thereby shall have been assumed;
and guarantees, endorsements (other than the endorsement of negotiable
instruments for deposit or collection in the ordinary course of business) and
other contingent obligations (whether direct or indirect) in respect of, or to
purchase or otherwise acquire, indebtedness of others except guarantees,
endorsements or contingent obligations in connection with the sale or discount
of accounts receivable, trade acceptances and other paper arising in the
ordinary course of business or conditional sales contracts, chattel mortgages,
leases, trust receipts or repurchase or other obligations arising out of the
sale and/or delivery of equipment in the ordinary course of business.
"Indenture" means this instrument as originally executed or as from time to
time supplemented or amended by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof and shall include the
terms of particular series of Securities established as contemplated hereunder.
"Interest," when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
<PAGE>
5
"Interest Payment Date," when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
"Market Exchange Rate" has the meaning specified in Section 2.11(i).
"Maturity" when used with respect to any Security means the date on which
the principal of such Security or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Mortgage" shall mean and include any mortgage, pledge, lien, security
interest, conditional sale or other title retention agreement or other similar
encumbrance.
"Officers" Certificate" shall mean a certificate, in the case of the
Company, signed in the name of the Company by its Chairman of the Board, Chief
Executive Officer, President, Chief Operating Officer, Chief Financial Officer,
any Vice President (whether or not designated by a number or word or words added
before or after the title Vice President), or Treasurer or an Assistant
Treasurer, and by its Secretary or an Assistant Secretary, or its Comptroller or
an Assistant Comptroller, as the case may be, and delivered to the Trustee.
"Official Currency Unit Exchange Rate" means with respect to any payment to
be made hereunder, the exchange rate between the relevant currency unit and the
currency or currency unit of payment calculated by the Exchange Rate Agent for
the Securities of the relevant series (in the case of ECU, reported by the
Commission of the European Communities and currently based on the rates in
effect at 2:30 p.m., Brussels time, on the exchange markets of the Component
Currencies of ECU), on the Business Day (in the city in which such Exchange Rate
Agent has its principal office) immediately preceding delivery of any Exchange
Rate Officer's Certificate.
"Opinion of Counsel" shall mean an opinion in writing signed by legal
counsel, who may be an employee of, or of counsel to, the Company, and who is
acceptable to the Trustee.
"Original Issue Discount Security" means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 6.1.
"Outstanding" when used with respect to Securities means, as of the date of
determination, all Securities theretofore authenticated and delivered under this
Indenture, except:
(a) Securities theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation; and
(b) Securities for which payment or redemption money in the necessary
amount and in the required "currency" or currency unit has been theretofore
deposited with
<PAGE>
6
the Trustee or any paying agent (other than the Company) in trust for the
holders of such Securities; provided that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made; and
(c) Securities in exchange for or in lieu of which other Securities have
been authenticated and delivered or which have been paid pursuant to this
Indenture, unless proof satisfactory to the Trustee is presented that any such
Securities are held by Persons in whose hands any of such Securities is a valid,
binding and legal obligation of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or whether a
quorum is present at a meeting of Holders of Outstanding Securities or the
number of votes entitled to be cast by each Holder of a Security in respect of
such Security at any such meeting (i) the principal amount of an Original Issue
Discount Security that shall be deemed to be Outstanding for such purposes shall
be the amount of the principal thereof that would be due and payable as of the
date of such determination upon a declaration of acceleration of the Maturity
thereof pursuant to Section 6.1, (ii) the principal amount of a Security
denominated in a Foreign Currency or currency unit shall be the Dollar
equivalent (as determined by the Company in good faith) as of the date of
original issuance of such Security, of the principal amount (or, in the case of
an Original Issue Discount Security, the Dollar equivalent (as determined by the
Company in good faith) of the amount determined as provided in (i) above) of
such Security, and (iii) Securities owned by the Company or any other obligor
upon the Securities or any Affiliate of the Company or of such other obligor
shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities which the Trustee knows to be so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and that the pledgee
is not the Company or any other obligor upon the Securities or any Affiliate of
the Company or of such other obligor.
"Partially Registered Security" means any Security registered in the
Security Register as to principal only.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest, if any, on any Securities on
behalf of the Company.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
<PAGE>
7
"Place of Payment," when used with respect to the Securities of any series,
means the place or places where the principal of (and premium, if any) and
interest on the Securities of that series are payable as specified in accordance
with Section 2.1.
"Predecessor Security" or "Predecessor" followed by the title or
designation of a particular Security means every previous Security (or Coupon,
as the case may be) evidencing all or a portion of the same debt as that
evidenced by such particular Security (or Coupon, as the case may be) and, for
the purposes of this definition, any Security (or Coupon, as the case may be),
authenticated and delivered under Section 2.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security (or Coupon, as the case may be),
shall be deemed to evidence the same debt as the mutilated, destroyed, lost or
stolen Security (or Coupon, as the case may be).
"Redemption Date" when used with respect to any Security to be redeemed in
the currency or currency unit in which such Security is payable, means the date
fixed for such redemption pursuant to this Indenture.
"Redemption Price" when used with respect to any Security to be redeemed
means the price in the currency or currency unit in which such Security is
payable, at which it is to be redeemed pursuant to this Indenture.
"Registered Security" means any Fully Registered Security or any Partially
Registered Security (including without limitation any Security in temporary or
permanent global registered form) which is registered on the Security Register.
"Regular Record Date" for the interest payable on any Interest Payment Date
on the Fully Registered Securities of any series means the date specified for
that purpose as contemplated by Section 2.1, which date shall be, unless
otherwise specified pursuant to Section 2.1, the fifteenth day preceding such
Interest Payment Date, whether or not such day shall be a Business Day.
"Required Currency" has the meaning specified in Section 1.7.
"Responsible Officer" when used with respect to the Trustee, shall mean the
chairman of the board of directors, the president, any vice president or
assistant vice president, the secretary, the treasurer, or any officer or
employee of the Trustee customarily performing corporate trust functions or to
whom any corporate trust matter is referred because of his knowledge of and
familiarity with the particular subject.
"Securities" shall mean the unsecured debentures, notes, bonds or other
evidences of indebtedness to be issued in one or more series as in this
Indenture provided, and more particularly means any Securities authenticated and
delivered under this Indenture.
"Security Register" and "Security Registrar" shall have the respective
meanings specified in Section 2.5.
<PAGE>
8
"Senior Indebtedness" shall mean, with respect to the Company, the
principal, premium, if any, and interest on (i) all indebtedness of the Company,
whether outstanding on the date hereof or hereafter 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 the Company 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 expressly provided
that such indebtedness is not superior in right of payment to the Securities of
any series. 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.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 2.9.
"Specified Amount" has the meaning specified in Section 2.11(i).
"Stated Maturity" when used with respect to any Security (or Coupon, if
any, representing an installment of interest) or any installment of principal
thereof or interest thereon, means the date specified in such Security (or
Coupon) as the fixed date on which the principal of such Security or such
installment of principal or interest is due and payable.
"Subsidiary" shall mean, at any given time, any corporation, association or
other business entity of which either stock having by the terms thereof ordinary
voting power to elect a majority of the directors of such entity, whether or not
at the time stock of any other class or classes of such entity shall have or
might have voting power by reason of the happening of any contingency, or other
ownership interest representing more than 50% ownership of an entity, is at the
time, directly or indirectly, owned or controlled by the Company, or by one or
more Subsidiaries of the Company, or by the Company and one or more
Subsidiaries.
"Trustee" shall mean the Person named as the "Trustee" in the first
paragraph of this Instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each person who is then a Trustee hereunder;
provided, however, that if at any time there is more than one such Person,
"Trustee" as used with respect to the Securities of any series, shall mean only
the Trustee with respect to Securities of that series.
"Trust Indenture Act of 1939" shall mean (except as herein otherwise
provided) the Trust Indenture Act of 1939 as it was in force at the date of
execution of this Indenture.
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9
"U.S. Depository" means, with respect to the Securities of any series
issuable or issued in whole or in part in the form of one or more permanent
global Securities, the Person designated as U.S. Depository by the Company
pursuant to Section 2.1 until a successor U.S. Depository shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter "U.S.
Depository" shall mean or include each Person who is then a U.S. Depository
hereunder, and if at any time there is more than one such Person, "U.S.
Depository" as used with respect to the Securities of any such series shall mean
the U.S. Depository with respect to the Securities of that series.
"United States Alien" means any Person who, for United States Federal
income tax purposes, is a foreign corporation, a nonresident alien individual, a
nonresident alien fiduciary of a foreign estate or trust or a foreign
partnership one or more of the members of which is, for United States Federal
income tax purposes, a foreign corporation, a nonresident alien individual or a
nonresident alien fiduciary of a foreign estate or trust.
"United States" means the United States of America (including the states
and the District of Columbia) and its possessions at the relevant date. As of
the date of these Standard Provisions, the possessions of the United States
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island,
and the Northern Mariana Island.
"Valuation Date" has the meaning specified in Section 2.11(e).
"Warrant Agent" shall mean the agent of the Company authorized to deliver
Securities issuable upon due exercise of warrants.
Section 1.2 Form of Documents Delivered to Trustee. In any case where
--------------------------------------
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
<PAGE>
10
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 1.3 Notices, etc., to Trustee, Company. Any request, demand,
----------------------------------
authorization, direction, notice, consent, waiver or Act of Holders or other
document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with,
(a) the Trustee by any Holder or by the Company shall be made, given,
furnished or filed in writing to or with the Trustee at its Corporate Trust
Office and unless otherwise herein expressly provided, any such document shall
be deemed to be sufficiently made, given, furnished or filed upon its receipt by
a Responsible Officer of the Trustee or
(b) the Company by the Trustee or by any Holder shall be made, given,
furnished or filed in writing to or with the Company, as the case may be,
addressed to it at the office specified in Section 14.4 of this instrument or at
any other address previously furnished in writing to the Trustee by the Company,
as the case may be.
Section 1.4 Notice to Holders; Waiver. Where this Indenture provides for
-------------------------
notice to Holders of any event:
(a) if any of the Securities affected by such event are Registered
Securities, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Holder affected by such event, at his address as it appears in the Security
Register, within the time prescribed for the giving of such notice, and
(b) if any of the Securities affected by such event are Bearer Securities,
such notice shall be sufficiently given (unless otherwise herein expressly
provided or unless otherwise specified in such Securities) if
(1) published once in an Authorized Newspaper in The City of New York,
London and such other city or cities as may be specified for the Securities of a
series pursuant to Section 2.1 and
(2) mailed in the manner prescribed in (i) above to such Persons who have
filed their names and addresses with the Trustee within the two-year period
preceding such notice and to all Persons whose names are furnished to the
Trustee pursuant to Section 5.1.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice to Holders of
Registered Securities by mail, then such notification as shall be made with the
approval of the Trustee shall constitute a sufficient notification for every
purpose hereunder. In any case where notice to Holders of Registered Securities
is given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder of a Registered Securities shall
affect the
<PAGE>
11
sufficiency of such notice with respect to other Holders of Registered
Securities or the sufficiency of any notice to Holders of Bearer Securities
given as provided herein.
In case by reason of the suspension of publication of any Authorized
Newspaper or Authorized Newspapers or by reason of any other cause it shall be
impracticable to publish any notice to Holders of Bearer Securities as provided
above, then such notification to Holders of Bearer Securities as shall be given
with the approval of the Trustee shall constitute sufficient notice to such
Holders for every purpose hereunder. Neither the failure to give notice by
publication to Holders of Bearer Securities as provided above, nor any defect in
any notice so published, shall affect the sufficiency of any notice to Holders
of Registered Securities given as provided herein.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders of Securities shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
Section 1.5 Legal Holidays. Except as otherwise specified as contemplated
--------------
by Section 2.1, in any case where any Interest Payment Date, Redemption Date or
Stated Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or of the
Securities or Coupons, if any) payment of interest or principal (and premium, if
any) need not be made at such Place of Payment on such date, but may be made on
the next succeeding Business Day at such Place of Payment with the same force
and effect as if made on the Interest Payment Date or Redemption Date, or at the
Stated Maturity, provided that no interest shall accrue for the period from and
after such Interest Payment Date, Redemption Date or Stated Maturity, as the
case may be, to the next succeeding Business Day at such Place of Payment.
Section 1.6 Moneys of Different Currencies To Be Segregated. The Trustee
-----------------------------------------------
shall segregate moneys, funds and accounts held by the Trustee hereunder in one
currency (or unit thereof) from any moneys, funds or accounts in any other
currencies (or units thereof), notwithstanding any provision herein which would
otherwise permit the Trustee to commingle such amounts.
Section 1.7 Payment To Be in Proper Currency. In the case of any
--------------------------------
Securities denominated in any particular currency or currency unit (the
"Required Currency"), except as otherwise provided herein, therein or in or
pursuant to the related Board Resolution or supplemental indenture, the
obligation of the Company to make any payment of principal, premium or interest
thereon shall not be discharged or satisfied by any tender by the Company, or
recovery by the Trustee, in any currency or currency unit other than the
Required Currency, except to the extent that such tender or recovery shall
result in the Trustee timely holding the full amount of the Required Currency
then due and payable. If any such tender or recovery is made in other than the
Required Currency, the Trustee may take such actions as it considers appropriate
to exchange such other currency or currency unit for the Required Currency. The
costs and risks of any such exchange, including without
<PAGE>
12
limitation the risks of delay and exchange rate fluctuation, shall be borne by
the Company, the Company shall remain fully liable for any shortfall or
delinquency in the full amount of the Required Currency then due and payable and
in no circumstances shall the Trustee be liable therefor. The Company hereby
waives any defense of payment based upon any such tender or recovery which is
not in the Required Currency, or which, when exchanged for the Required Currency
by the Trustee, is less than the full amount of the Required Currency then due
and payable.
Section 1.8 Language of Notices, etc. Any request, demand, authorization,
------------------------
direction, notice, consent or waiver required or permitted under this Indenture
shall be in the English language, except that any published notice may be in an
official language of the country of publication.
ARTICLE 2.
THE SECURITIES
Section 2.1 Amount Unlimited; Issuable in Series. The aggregate principal
------------------------------------
amount of Securities which may be authenticated and delivered under this
Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution, and set forth in an Officers'
Certificate, or established in one or more indentures supplemental hereto, prior
to the issuance of Securities of any series:
(a) the title of the Securities of the series (which shall distinguish the
Securities of the series from all other Securities);
(b) any limit upon the aggregate principal amount of the Securities of the
series which may be authenticated and delivered under this Indenture (except for
Securities authenticated and delivered upon registration of transfer of, or in
exchange for in lieu of, other Securities of the series pursuant to Sections
2.4, 2.5, 2.6, 3.8 or 10.4 and except for any Securities which, pursuant to
Section 2.3, are deemed never to have been authenticated and delivered
hereunder);
(c) the date or dates on which the principal of the Securities of the
series is payable or the method of determination thereof;
(d) the rate or rates, or the method of determination thereof, at which
the Securities of the series shall bear interest, if any, the date or dates, or
method of determination thereof, from which such interest shall accrue, the
Interest Payment Dates on which such interest shall be payable on the Regular
Record Date for any interest payable on any Registered Securities of any
Interest Payment Date;
<PAGE>
13
(e) the place or places where the principal of (and premium, if any) and
interest, if any, on Securities and Coupons, if any, of the series shall be
payable and the office or agency for the Securities of the series maintained by
the Company pursuant to Section 4.2;
(f) the period or periods within which, the price or prices at which and
the terms and conditions upon which Securities of the series may be redeemed, in
whole or in part, at the option of the Company;
(g) the obligation, if any, of the Company to redeem, repay or purchase
Securities of the series pursuant to any sinking fund or analogous provisions or
at the option of a Holder thereof and the period or periods within which, the
price or prices at which and the terms and conditions upon which Securities of
the series shall be redeemed, repaid or purchased, in whole or in part, pursuant
to such obligation;
(h) if other than denominations of $1,000, if registered, and $5,000, if
bearer, and any integral multiple of the applicable denominations for Securities
denominated in Dollars, the denominations in which Securities of the series
shall be issuable;
(i) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration on the Maturity thereof pursuant to Section 6.1;
(j) whether Section 12.3 is not applicable to the Securities of such
series or such other means of satisfaction and discharge as may be specified for
the Securities and Coupons, if any, for a series;
(k) any deletions or modifications of or additions to the Events of
Default set forth in Section 6.1, or covenants of the Company set forth in
Article 4 pertaining to the Securities of the series and application, if any, of
Article 15 to Securities of such series;
(l) the forms the Securities and Coupons, if any, of the series;
(m) if other than such coin or currency of the United States as at the
time of payment is legal tender for payment of public or private debts, the coin
or currency or currencies, or currency unit or units, in which payment of the
principal of (and premium, if any) and interest, if any, on the Securities of
the series shall be payable and the Exchange Rate Agent, if any, for such
series;
(n) if the principal of (and premium, if any) or interest, if any, on the
Securities of the series are to be payable at the election of the Company or a
Holder thereof, or under some or all other circumstances, in a coin or currency
or currencies, or currency unit or units, other than that in which the
Securities are denominated, the period or periods within which, and the terms
and conditions upon which, such election may be made, or the other circumstances
under which the Securities are to be so payable, including without limitation
the application of Section 2.11(b) and any deletions to, modifications of or
additions to the
<PAGE>
14
provisions thereof, and any provision requiring the Holder to bear currency
exchange costs by deduction from such payments;
(o) if the amount of payments of principal (and premium, if any) or
interest, if any, on the Securities of the series may be determined with
reference to an index based on (i) a coin or currency or currencies, or currency
unit or units other than that in which the Securities are stated to be payable
or (ii) any method not inconsistent with the provisions of this indenture
specified in or pursuant to such Board Resolution, then in each case (i) and
(ii) the manner in which such amounts shall be determined;
(p) whether the Securities of the series are to be issued as Fully
Registered Securities, Partially Registered Securities or Bearer Securities
(with or without Coupons), or any combination thereof, whether Partially
Registered Securities or Bearer Securities may be exchanged for Fully Registered
Securities of the series and whether Fully Registered Securities may be
exchanged for Partially Registered Securities or Bearer Securities of the series
(if permitted by applicable laws and regulations) and the circumstances under
which and the place or places where any such exchanges, if permitted, may be
made;
(q) whether any Securities of the series are to be issuable initially in
temporary global form with or without coupons and, if so, the name of the Common
Depository with respect to any such temporary global Security, and whether any
Securities of the series are to be issuable in permanent global form with or
without coupons and, if so, the U.S. Depository or Common Depository for such
global Securities and whether beneficial owners of interests in any such
permanent global Security may exchange such interests for definitive Securities
of such series and of like tenor of any authorized form and denomination and the
circumstances under which (including any certification requirements), and the
place or places where, any such exchanges may occur, if other than in the manner
provided in Section 2.5;
(r) if the Securities and Coupons, if any, of the series are to be issued
upon the exercise of warrants, the time, manner and place for Securities to be
authenticated and delivered;
(s) whether and under what circumstances and with what procedures and
documentation the Company will pay additional amounts on the Securities and
Coupons, if any, of the series to any Holder who is a United States Alien
(including a definition of such term), in respect of any tax assessment or
governmental charge withheld or deducted and, if so, whether the Company will
have the option to redeem such Securities rather than pay additional amounts
(and the terms of any such option);
(t) whether the Securities of the series are convertible into any other
security of the Company pursuant to the provisions of Article 16 or as otherwise
specified in the Securities of such series;
(u) the Person to whom any interest on any Registered Securities of the
series shall be payable, if other than the Person in whose name that Security
(or one or more
<PAGE>
15
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, the manner in which, or the Person to whom, any
interest on any Bearer Securities of the series shall be payable, if otherwise
than upon presentation and surrender of the Coupons appertaining thereto as they
severally mature, the extent to which, or the manner in which, any interest
payable on the temporary global Security on any Interest Payment Date will be
paid if other than in the manner provided in Section 2.4 and the extent to
which, or the manner in which, any interest payable on a permanent global
Security on an Interest Payment Date will be paid;
(v) any paying agents, transfer agents, registrars or other agents with
respect to the Securities of the series; and
(w) if Bearer Securities of the series are to be issuable, (x) whether
interest in respect of any portion of a temporary global Security of the series
payable in respect of any Interest Payment Date prior to the exchange of such
temporary global Security for a permanent global Security or for definitive
Securities of the series shall be paid to any clearing organization with respect
to the portion of such temporary global Security held for its account and, in
such event, the terms and conditions (including any certification requirements)
upon which any such interest payment received by a clearing organization will be
credited to the Persons entitled to interest payable on such Interest Payment
Date, and (y) the terms and conditions (including any certification
requirements) upon which interests in such temporary global Security may be
exchanged for interests in a permanent global Security or for definitive
Securities of the series.
(x) any other terms of the series (which terms shall not be inconsistent
with the provisions of this Indenture).
All Securities of any one series and the, Coupons appertaining to any
Bearer Securities of such series shall be substantially identical except, in the
case of Registered Securities, as to denomination and except as may otherwise be
provided in or pursuant to the Board Resolution referred to above and (subject
to Section 2.3) set forth in such Officers' Certificate referred to above or in
any such indenture supplemental hereto.
At the option of the Company, interest on the Registered Securities of any
series that bears interest may be paid by mailing, on the applicable Interest
Payment Date, a check to the address of the Person entitled thereto as such
address shall appear in the Security Register.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
Section 2.2 Denominations. The Securities of each series shall be
-------------
issuable in such denominations as may be established and specified in accordance
with Section 2.1. In the absence of any such provisions with respect to the
Securities of any series, the Securities
<PAGE>
16
of such series denominated in Dollars shall be issuable in denominations of
$1,000, if registered, and $5,000, if bearer, and in any integral multiple of
the applicable denominations. The Securities may bear such letters and numbers
distinguishing the several denominations and the several Securities of each
denomination as may be determined by the Company with the approval of the
Trustee. At the office or agency of the Company to be maintained by the Company
as provided in Section 4.2 and in the manner, subject to the limitations and
upon payment of the charges provided herein, Securities of each series may be
exchanged for a like aggregate principal amount of Securities of such series of
other authorized denominations.
Section 2.3 Execution, Authentication, Delivery and Dating. The
----------------------------------------------
Securities shall be executed on behalf of the Company by its Chairman of the
Board, its Chief Executive Officer, its President, its Chief Operating Officer,
its Chief Financial Officer, one of its Vice Presidents (whether or not
designated by a number or word or words added before or after the title Vice
President), its Treasurer or an Assistant Treasurer under its corporate seal
reproduced thereon (which may be by facsimile) and attested by its Secretary or
one of its Assistant Secretaries. The signature of any of these officers on the
Securities may be manual or facsimile. Any Coupons shall be executed on behalf
of the Company by the manual or facsimile signature of any such officer of the
Company.
Securities and Coupons bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series, together with any
Coupons appertaining thereto, executed by the Company to the Trustee for
authentication, together with the Company Order for the authentication and
delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and make available for delivery such Securities;
provided, however, that definitive Bearer Securities may only be delivered at an
office or agency outside the United States in exchange for a portion of a Bearer
Security in temporary global form of equal aggregate principal amount and series
and only if (x) prior to such delivery, the owner of such Bearer Security or a
financial institution or clearing organization through which the owner holds
such Bearer Security directly or indirectly, shall have furnished a certificate
in the form set forth in Exhibit A.1 to this Indenture (which certificate and
all other certificates to this Indenture may be changed by the Company pursuant
to an Officers' Certificate), dated no earlier than 15 days prior to the date on
which Euro-clear or CEDEL S.A. (or such other entity performing similar
functions as selected by the Company and approved by the Trustee in its
reasonable discretion), as the case may be, furnishes to the Common Depository,
in accordance with the procedures established in Section 2.4, a certificate in
the form set forth in Exhibit A.2 to this Indenture that relates to all or such
portion of such temporary global Security, and (y) the Person to whom such
certificate is provided does not know or have reason to know that the
information contained in such certificate is false. A confirmation in the form
set forth in Exhibit A.5 to this Indenture shall be sent to each purchaser of a
Bearer Security. If any Bearer Security shall
<PAGE>
17
initially be represented by a portion of a temporary global Security, then, for
purposes of this Section and Section 2.4, the notation of a beneficial owner's
interest therein upon exchange for a portion of a permanent global Security
shall be deemed to be delivery of such beneficial owner's interest in such
permanent global Security. Except as permitted by Section 2.6, the Trustee
shall not authenticate and make available for delivery any Bearer Security
unless all appurtenant Coupons for interest then matured have been detached and
cancelled.
If the forms or terms of the Securities of the series and any related
Coupons have been established by or pursuant to one or more Board Resolutions as
permitted by Sections 2.13 and 2.1, in authenticating such Securities, and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive, and (subject to
Section 7.1) shall be fully protected in relying upon, an Opinion of Counsel
stating:
a. if the forms of such Securities and any Coupons have been established
by or pursuant to a Board Resolution as permitted by Section 2.13, that such
forms have been established in conformity with the provisions of this Indenture;
b. if the terms of such Securities and any Coupons have been established
by or pursuant to a Board Resolution as permitted by Section 2.1, that such
terms have been established in conformity with the provisions of this Indenture;
and
c. that such Securities, together with any Coupons appertaining thereto,
when authenticated and delivered by the Trustee and issued by the Company in the
manner and subject to any conditions specified in such Opinion of Counsel, will
constitute valid and legally binding obligations of the Company, entitled to the
benefits of the Indenture and enforceable in accordance with their terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting the enforcement of
creditors' rights and to general equity principles.
If such forms or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 2.1 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 2.1 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the time
of authentication of each Security of such series if such documents are
delivered at or prior to the authentication upon original issuance of the first
Security of such series to be issued.
Each Registered Security shall be dated the date of its authentication; and
each Bearer Security and any Bearer Security in global form shall be dated as of
the date of original issuance of the indebtedness evidenced by such Bearer
Security.
<PAGE>
18
No Security or Coupon shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Security,
or the Security to which such Coupon appertains, a certificate of authentication
substantially in the form provided for herein executed by the Trustee by manual
signature, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder. Notwithstanding the foregoing, if any Security shall have
been duly authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 2.8 together with a written statement (which
need not comply with Section 14.6 and need not be accompanied by an Opinion of
Counsel) stating that such Security has never been issued and sold by the
Company, for all purposes of this Indenture such Security shall be deemed never
to have been authenticated and delivered hereunder and shall never be entitled
to the benefits of this Indenture.
Section 2.4 Temporary Securities. Pending the preparation of definitive
--------------------
Securities of any series, the Company may execute, and upon Company Orders, the
Trustee shall authenticate and make available for delivery, temporary Securities
which are printed, lithographed, typewritten or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive Securities
in lieu of which they are issued, in registered form or, if authorized, in
bearer form with one or more Coupons or without Coupons, and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Securities may determine, as evidenced conclusively by
their execution of such Securities. In the case of Securities of any series,
such temporary Securities may be in global form representing all or a portion of
the Outstanding Securities of such series. In the case of any series issuable as
Bearer Securities, such temporary Securities shall be delivered in compliance
with the conditions set forth in Section 2.3.
Except in the case of temporary Securities in global form (which shall be
exchanged in accordance with the provisions of the following paragraphs), if
temporary Securities of any series are issued, the Company will cause definitive
Securities of that series to be prepared without unreasonable delay. Except as
otherwise specified pursuant to Section 2.1(w) with respect to a series of
Securities issuable as Bearer Securities, after the preparation of definitive
Securities of such series, the temporary Securities of such series shall be
exchangeable for definitive Securities of such series upon surrender of the
temporary Securities of such series at the office or agency of the Company
maintained pursuant to Section 4.2 in a Place of Payment for such series for the
purpose of exchange of Securities of such series, without charge to the Holder.
Upon surrender for cancellation of any one or more temporary Securities of any
series (accompanied by any unmatured Coupons appertaining thereto), the Company
shall execute and the Trustee or an Authenticating Agent shall authenticate and
make available for delivery in exchange therefor a like aggregate principal
amount of definitive Securities of the same series, of like tenor and of
authorized denominations; provided, however, that no definitive Bearer Security
shall be delivered in exchange for a temporary Registered Security; and
provided, further, that a definitive Bearer Security shall be delivered in
exchange for a temporary Bearer Security only in compliance with the conditions
set forth in Section 2.3.
<PAGE>
19
All Bearer Securities shall be issued initially in the form of a temporary
global Security, and any such temporary global Security shall, unless otherwise
provided therein, be delivered to the London office of a Depository or common
Depository (the "Common Depository"), for the benefits of Euro-clear and CEDEL
S.A. (and such other entity performing similar functions as selected by the
Company and approved by the Trustee in its reasonable discretion), for credit to
the respective accounts of the beneficial owners of such Securities (or to such
other accounts as they may direct).
Without unnecessary delay but in any event not later than the date
specified in, or determined pursuant to the terms of, any such temporary global
Security (the "Exchange Date"), the Company shall deliver to the Trustee, or its
agent, definitive Securities, in aggregate principal amount equal to the
principal amount of such temporary global Security, executed by the Company. On
or after the Exchange Date, such temporary global Security shall be surrendered
by the Common Depository to the Trustee or its agent, as the Company's agent for
such purpose, to be exchanged, in whole or from time to time in part, for
definitive Securities without charge and the Trustee shall authenticate and
deliver, in exchange for each portion of such temporary global Security, an
equal aggregate principal amount of definitive Securities of the same series of
authorized denominations and of like tenor as the portion of such temporary
global security to be exchanged; provided, however, that, unless, otherwise
specified in such temporary global Security, upon such presentation by the
Common Depository, such temporary global Security shall be accompanied by a
certificate dated the Exchange Date or a subsequent date and signed by Euro-
clear or CEDEL S.A. (or such other entity performing similar functions as
selected by the Company and approved by the Trustee in its reasonable
discretion) in each case as to the portion of such temporary global Security
held for its respective account then to be exchanged, each in the form set forth
in Exhibit A.2 to this Indenture. The definitive Securities to be delivered in
exchange for any such temporary global Security shall be in bearer form,
registered form, permanent bearer global form, permanent global registered form,
or any combination thereof, as specified pursuant to Section 2.1, and, if any
combination thereof is so specified, as requested by the beneficial owner
thereof; provided, however, that definitive Securities shall be delivered in
exchange for a portion of a temporary global Security only in compliance with
the requirements of Section 2.3.
Unless otherwise specified in such temporary global Security, the interest
of a beneficial owner of Securities of a series in a temporary global Security
shall be exchanged for definitive Securities of the same series and of like
tenor following the Exchange Date when the beneficial owner of the Security, or
a financial institution or clearing organization through which the beneficial
owner directly holds such Security, instructs Euro-clear or CEDEL S.A. (or such
other entity performing similar functions as selected by the Company and
approved by the Trustee in its reasonable discretion), as the case may be, to
request such exchange on his behalf and delivers to Euro-clear or CEDEL S.A. (or
such other entity performing similar functions as selected by the Company and
approved by the Trustee in its reasonable discretion), as the case may be, a
certificate in the form set forth in Exhibit A.1 to this Indenture, dated no
earlier than 15 days prior to the date on which Euro-clear or CEDEL S.A. (or
such other entity performing similar functions as selected by the Company and
approved by the Trustee in its reasonable discretion), as the case may be,
furnishes to the
<PAGE>
20
Common Depository in accordance with the preceding paragraph a certificate in
the form set forth in Exhibit A.2 to this Indenture that relates to the interest
to be exchanged for definitive Securities. Copies of the certificate in the
form set forth in Exhibit A.1 to this Indenture shall be available from the
offices of Euro-clear, CEDEL S.A. (and such other entity performing similar
functions as selected by the Company and approved by the Trustee in its
reasonable discretion), the Trustee, any Authenticating Agent appointed for such
series of Securities and any Paying Agent appointed for such series of
Securities. Unless otherwise specified in such temporary global Security, any
such exchange shall be made free of charge to the beneficial owners of such
temporary global Security, except that a Person receiving definitive Securities
must bear the cost of insurance, postage, transportation and the like in the
event that such Person does not take delivery of such definitive Securities in
person at the offices of Euro-clear or CEDEL S.A. (or such other entity
performing similar functions as selected by the Company and approved by the
Trustee in its reasonable discretion).
The definitive Securities in bearer form to be delivered in exchange for
any portion of a temporary global Security shall be delivered only outside the
United States.
Until exchanged in full as hereinabove provided, the temporary Securities
of any series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of the same series and of like tenor
authenticated and delivered hereunder, except that, unless otherwise specified
pursuant to Section 2.1, interest payable on a temporary global Security on an
Interest Payment Date for Securities of such series occurring prior to the
applicable Exchange Date shall be payable to Euro-clear and CEDEL S.A. (and such
other entity performing similar functions as selected by the Company and
approved by the Trustee in its reasonable discretion) on such Interest Payment
Date upon delivery by Euro-clear and CEDEL S.A. (and such other entity
performing similar functions as selected by the Company and approved by the
Trustee in its reasonable discretion) to the Trust of a certificate or
certificates in the form set forth in Exhibit A.3 to this Indenture, for credit
without further interest on or after such Interest Payment Date to the
respective accounts of the Persons who are the beneficial owners of such
temporary global Security (or to such other accounts as they may direct) on such
Interest Payment Date and who have each delivered to Euro-clear or CEDEL S.A.
(or such other entity performing similar functions as selected by the Company
and approved by the Trustee in its reasonable discretion), as the case may be, a
certificate in the form set forth in Exhibit A.4 to this Indenture. If such
interest Payment Date occurs on or after the Exchange Date, Euro-Clear or CEDEL
S.A. (or such other entity performing similar functions as selected by the
Company and approved by the Trustee in its reasonable discretion), as the case
may be, following the receipt of such certificate, shall exchange, in accordance
with the procedures hereinabove provided, the portion of the temporary global
Security that relates to such certificate for definitive Securities (which, in
the absence of instructions to the contrary, shall be an interest in a permanent
global Security). Any interest so received by Euro-clear or CEDEL S.A. (or such
other entity performing similar functions as selected by the Company and
approved by the Trustee in its reasonable discretion) and not paid as herein
provided shall be returned to the Trustee immediately prior to the expiration of
two years after such Interest Payment Date in order to be repaid to the Company
in accordance with Section 12.5.
<PAGE>
21
Section 2.5 Registration; Registration of Transfer and Exchange.
---------------------------------------------------
The Company shall cause to be kept at one of its offices or agencies
maintained, in accordance with Section 4.2, a register (being the combined
register of the Security Registrar and all transfer agents designated pursuant
to Section 4.2 for the purpose of registration of transfer of Securities and
sometimes collectively referred to as the "Security Register") in which, subject
to such reasonable regulations as it may prescribe, the Company shall provide
for the registration of Registered Securities and the registration of transfers
of Registered Securities as herein provided. The Company hereby appoints the
Trustee as the "Security Registrar" for the purpose of registering Registered
Securities and transfers of Registered Securities as herein provided, and for
facilitating exchanges of temporary global Securities for permanent global
Securities or definitive Securities or both, or of permanent global Securities
for definitive Securities, or both, as herein provided.
Upon surrender for registration of transfer of any Registered Security of
any series at the office or agency of the Company maintained for that purpose as
a Place of Payment for such series, the Company shall execute, and the Trustee
or the Authenticating Agent, if any, shall authenticate and deliver, in the name
of the designated transferee or transferees, one or more new Registered
Securities of the same series (in authorized denominations) of a like aggregate
principal amount.
Notwithstanding any other provision of this Section, unless and until it is
exchanged in whole or in part for Securities in definitive form, a global
Security representing all or a portion of the Securities of a series may not be
transferred except as a whole by the U.S. Depository or Common Depository, as
the case may be, for such series to a nominee of such U.S. Depository or Common
Depository or by a nominee of such U.S. Depository or Common Depository to such
U.S. Depository or Common Depository or another nominee of such U.S. Depository
or Common Depository or by such U.S. Depository or Common Depository or any such
nominee to a successor U.S. Depository or Common Depository for such series or a
nominee of such successor U.S. Depository or Common Depository.
At the option of the Holder, Registered Securities of any series (other
than a global Security, except as set forth below) may be exchanged for other
Registered Securities of the same series of any authorized denominations, of a
like aggregate principal amount and tenor, upon surrender of the Registered
Securities to be exchanged at such office or agency. Whenever any Securities are
so surrendered for exchange, the Company shall execute, and the Trustee or the
Authenticating Agent, if any, shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive. Unless otherwise
determined by the Company, Bearer Securities may not be delivered by the Trustee
in exchange for Registered Securities.
At the option of the Holder, except as otherwise specified pursuant to
Section 2.1(w) with respect to a global Security, Bearer Securities of any
series may be exchanged for Registered Securities (if the Securities of such
series are issuable as Registered Securities) or Bearer Securities (if Bearer
Securities of such series are issuable in more than one denomination) of the
same series, of any authorized denominations and of a like aggregate
<PAGE>
22
principal amount and tenor, upon surrender of the Bearer Securities to be
exchanged at any such office or agency, with all unmatured Coupons (except as
provided below) and all matured Coupons in default thereto appertaining. If the
Holder of a Bearer Security is unable to produce any such unmatured Coupon or
Coupons or mature Coupon or Coupons in default, such exchange may be effected if
the Bearer Securities are accompanied by payment in funds acceptable to the
Company in an amount equal to the face amount of such missing Coupon or Coupons,
or the surrender of such missing Coupon or Coupons, may be waived by the Company
and the Trustee if there is furnished to them such security or indemnity as they
may require to save each of them and any Paying Agent harmless. If thereafter
the Holder of such Security shall surrender to any Paying Agent any such missing
Coupon in respect of which such a payment shall have been made, such Holder
shall be entitled to receive the amount of such payment; provided, however,
that, except as otherwise provided in Section 4.2, interest represented by
Coupons shall be payable only upon presentation and surrender of those Coupons
at an office or agency located outside the United States. Notwithstanding the
foregoing, in case a Bearer Security of any series is surrendered at any such
office or agency in exchange for a Registered Security of the same series and
like tenor after the close of business at such office or agency on (i) any
Regular Record Date and before the opening of business at such office or agency
on the relevant Interest Payment Date, or (ii) any Special Record Date and
before the opening of business at such office or agency on the related proposed
date for payment of Defaulted Interest, such Bearer Security shall be
surrendered without the Coupon relating to such Interest Payment Date or
proposed date for payment, as the case may be, and interest or Defaulted
Interest, as the case may be, will not be payable on such Interest Payment Date
or proposed date for payment, as the case may be, in respect of the Registered
Security issued in exchange for such Bearer Security, but will be payable only
to the Holder of such Coupon when due in accordance with the provisions of this
Indenture.
Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
Notwithstanding the foregoing, except as otherwise specified pursuant to
Section 2.1, any permanent global Security shall be exchangeable pursuant to
this Section only as provided in this paragraph. If at any time the U.S.
Depository or Common Depository for the Securities of a series notifies the
Company that it is unwilling or unable to continue as U.S. Depository or Common
Depository, as the case may be, for the Securities of such series or if at any
time the U.S. Depository for the Securities of such series shall no longer be
eligible under Section 2.15, the Company shall appoint a successor U.S.
Depository or Common Depository, as the case may be, with respect to the
Securities of such series. If (a) a successor U.S. Depository or Common
Depository, as the case may be, for the Securities of such series is not
appointed by the Company within 90 days after the Company receives such notice
or becomes aware of such ineligibility, (thereby automatically making the
Company's election pursuant to Section 2.1(q) no longer effective with respect
to the Securities of such series), (b) the beneficial owners of interests in a
permanent global Security are entitled to exchange such interests for Securities
of such series and of like tenor and principal amount of another authorized form
and denomination, as specified pursuant to Section 2.1, or (c) the Company in
its sole discretion determines that the Securities of any
<PAGE>
23
series issued in the form of one or more global Securities shall no longer be
represented by such global Security or Securities, then without unnecessary
delay but in any event not later than the earliest date on which such interest
may be so exchanged, if appropriate, the Company shall deliver to the Trustee
definitive Securities in aggregate principal amount equal to the principal
amount of such global Security, executed by the Company. On or after the
earliest date on which such interests may be so exchanged, such global Security
shall be surrendered by the U.S. Depository or Common Depository as, the case
may be, to the Trustee, as the Company's agent for such purpose, to be
exchanged, in whole or from time to time in part, for definitive Securities upon
payment, at the option of the Company, of a service charge for such exchange and
of a proportionate share of the cost of printing such definitive Securities, and
the Trustee shall authenticate and deliver, (a) to each Person specified by the
U.S. Depository, or Common Depository, as the case may be, in exchange for each
portion of such global Security, an equal aggregate principal amount of
definitive Securities of the same series of authorized denominations and of like
tenor as the portion of such global Security to be exchanged which, unless the
Securities of the series are not issuable both as Bearer Securities and as
Registered Securities, as specified pursuant to Section 2.1, shall be in the
form of Bearer Securities or Registered Securities, or any combination thereof,
as shall be specified by the beneficial owner thereof and (b) to such U.S.
Depository or Common Depository, as the case may be, a global Security in a
denomination equal to the difference, if any, between the principal amount of
the surrendered global Security and the aggregate principal amount of definitive
Securities delivered to Holders thereof; provided, however, that no such
exchanges may occur during a period beginning at 15 days before the mailing of
notice of selection of Securities of that series to be redeemed and ending on
the relevant Redemption Date; and provided, further, that no Bearer Security
delivered in exchange for a portion of a global Security shall be mailed or
otherwise delivered to any location in the United States; and provided, further,
that no definitive Bearer Security shall be delivered in exchange for a global
Security unless the Company or its agent shall have received from the Person
entitled to receive such definitive Security a certificate substantially in the
form of Exhibit A.1 to this Indenture. If a Registered Security is issued in
exchange for any portion of a permanent global Security after the close of
business at the office or agency where such exchange occurs on (i) any Regular
Record Date and before the opening of business at such office of agency of the
relevant Interest Payment Date, or (ii) any Special Record Date and before the
opening of business at such office or agency on the related proposed date for
payment of Defaulted Interest, interest or Defaulted Interest, as the case may
be, will not be payable on such Interest Payment Date or proposed date for
payment, as the case may be, in respect of such Registered Security, but will be
payable on such Interest Payment Date or proposed date for payment, as the case
may be, only to the Person to whom Interest in respect of such portion of such
permanent global Security is payable in accordance with the provisions of this
Indenture.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company evidencing the same
debt and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
<PAGE>
24
Every Registered Security presented or surrendered for registration of
transfer or exchange shall (if so required by the Company or the Trustee or the
Authenticating Agent, if any) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar duly executed, by the Holder thereof or his attorney duly authorized
in writing and such other documentation as the Trustee may reasonably require.
The Company may require payment of a service charge for any registration of
transfer or exchange of Securities, and may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 2.4, 3.8 or 10.4 not involving any transfer.
In the event of any redemption in part, the Company shall not be required:
(i) to issue, register the transfer or exchange Securities of any series during
a period beginning at the opening of 15 days before the mailing of notice of
selection of Securities of that series to be redeemed and ending at the close of
business on (A) if Securities of the series are issuable only as Registered
Securities, the day of the mailing of the relevant notice of redemption and (B)
if Securities of the series are issuable only as Bearer Securities, the day of
the first publication of the relevant notice of redemption or, (C) if Securities
of the series are issuable as Registered Securities and Bearer Securities and
there is no publication, the day of mailing of the relevant notice of
redemption, or (ii) to register the transfer or exchange of any Registered
Security so selected for redemption, in whole or in part, except the unredeemed
portion of any Security being redeemed in part, or (iii) to exchange any Bearer
Security so selected for redemption except that such a Bearer Security may be
exchanged for a Registered Security of that series and like tenor; provided that
such Registered Security shall be simultaneously surrendered for redemption.
Section 2.6 Mutilated, Destroyed, Lost and Stolen Securities. If any
------------------------------------------------
mutilated Security or Security with a mutilated Coupon appertaining to it is
surrendered to the Trustee, the Company shall execute and the Trustee shall
authenticate and make available for delivery in exchange therefor a new Security
of the same series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding with Coupons corresponding to the Coupons, if
any, appertaining to the surrendered Security.
If there shall be delivered to the Company and to the Trustee (i) evidence
to their satisfaction of the mutilation, destruction, loss or theft of any
Security or Coupon, and (ii) such security or indemnity as may be required by
them to save each of them, and any agent of either of them harmless, then, in
the absence of notice to the Company or the Trustee that such Security or Coupon
has been acquired by a bona fide purchaser, the Company shall execute and upon
its request the Trustee or the Authenticating Agent, if any, shall authenticate
and make available for delivery in lieu of any such destroyed, lost or stolen
Security or in exchange for the Security to which a destroyed, lost or stolen
Coupon appertains (upon surrender to the Trustee of such Security with all
appurtenant Coupons not destroyed, lost or stolen), a new Security of the same
series and of like tenor and principal amount and bearing a number not
contemporaneously outstanding, with Coupons
<PAGE>
25
corresponding to the Coupons, if any, appertaining to such destroyed, lost or
stolen Security or to the Security to which such destroyed, lost or stolen
Coupon appertains.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security or Coupon as otherwise required above, pay
such Security or Coupon; provided, however, that principal of (and premium, if
any) and interest on Bearer Securities shall, except as otherwise provided in
Section 4.2, be payable only at an office or agency located outside the United
States and, unless otherwise specified pursuant to Section 2.1, any interest on
Bearer Securities shall be payable only upon presentation and surrender of the
Coupons appertaining thereto.
Upon the issuance of any new Security or Coupon under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee or the Authenticating
Agent, if any) connected therewith.
Every new Security of any series issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security or Coupon shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities or Coupons of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities or Coupons.
Section 2.7 Persons Deemed Owners. Prior to due presentment of a
---------------------
Registered Security for registration of transfer, the Company, the Trustee, the
Authenticating Agent, if any, and any agent of the Company, or Trustee may treat
the Person in whose name such Registered Security is registered as the absolute
owner of such Security for the purpose of receiving payment of principal of (and
premium, if any), and (subject to Sections 2.5 and 2.9) interest on, such
Security and for all other purposes whatsoever whether or not such Security be
overdue, and notwithstanding any notation of ownership or other writing thereon,
neither the Company, the Trustee, the Authenticating Agent, if any, nor any
agent of the Company, or the Trustee shall be affected by notice or knowledge to
the contrary.
Title to any Bearer Security and any Coupons appertaining thereto shall
pass by delivery. The Company, the Trustee and any agent of the Company or the
Trustee may treat the Holder of any Bearer Security and the Holder of any Coupon
as the absolute owner of such Security or Coupon for the purpose of receiving
payment thereof or on account thereof and for all other purposes whatsoever,
whether or not such Security or Coupon be overdue, and neither the Company, the
Trustee nor the agent of the Company or the Trustee shall be affected by notice
or knowledge to the contrary.
<PAGE>
26
Section 2.8 Cancellation. Unless otherwise provided with respect to a
------------
series of Securities, all Securities and Coupons surrendered for payment,
redemption, transfer or exchange or for credit against any sinking fund payment
shall if surrendered to the Company, or any agent of the Company, be delivered
to the Trustee and all such Securities and Coupons so delivered shall be
promptly cancelled by the Trustee. All Bearer Securities and Coupons held by
the Trustee pending such cancellation shall be deemed to be delivered for
cancellation for all purposes of this Indenture and the Securities. The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and may deliver to the Trustee (or to any
other Person for delivery to the Trustee) for cancellation any Securities
previously authenticated hereunder which the Company has not issued and sold,
and all Securities so delivered shall be Promptly cancelled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for Securities
cancelled as provided in this Section, except as expressly permitted by this
Indenture. The Trustee may destroy, unless otherwise agreed to by the Company,
all cancelled Securities and Coupons and, in which case, Trustee shall deliver a
certificate of such destruction to the Company.
Section 2.9 Payment of Interest; Interest Rights Preserved. Unless
----------------------------------------------
otherwise specified pursuant to Section 2.1 with respect to any series of
Securities, interest on any Registered Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.
Any interest on any Registered Security of any series which is payable, but
is not punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable to the
Holder on the relevant Regular Record Date by virtue of having been such Holder,
and such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in either clause (1) or (2) below:
(a) The Company may elect to make payment of any Defaulted Interest to the
Persons in whose names the Registered Securities of such series (or their
respective Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the Trustee in writing
of the amount of Defaulted Interest proposed to be paid on each Registered
Security of such series and the date of the proposed payment (subject to the
limitations on fixing the Special Record Date set forth below), and at the same
time the Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit prior to
the date of the proposed payment, such money when deposited to be held in trust
for the benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a Special Record Date for the
payment of such Defaulted Interest which shall be not more than 15 days and not
less than 10 days prior to the date of the proposed payment and not less than 10
days after the receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company of such Special Record Date the
name and at the expense of
<PAGE>
27
the Company, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be given as provided in Section
1.4, to each holder of Registered Securities of such series, not less than 10
days prior to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so given,
such Defaulted Interest shall be paid to the Persons in whose names the
Securities of such series (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and shall no
longer be payable pursuant to the following clause (2).
(b) The Company may make payment of any Defaulted Interest on the
Registered Securities of any series in any other lawful manner not inconsistent
with the requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant to
this clause, such manner of payment, shall be deemed practicable by the Trustee.
Defaulted Interest on any Bearer Security shall be paid upon presentation
of the applicable Coupon for payment.
Subject to the foregoing provisions of this Section and Section 2.5, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
Section 2.10 Computation of Interest. Except as otherwise specified
-----------------------
pursuant to Section 2.1 for Securities of any series, interest on the Securities
of each series shall be computed on the basis of a 360-day year of twelve 30-day
months.
Section 2.11 Currency and Manner of Payments in Respect of Securities.
--------------------------------------------------------
The provisions of this Section shall apply to the Securities of any series
unless otherwise specified pursuant to Section 2.1.
(a) The following payment provisions shall apply to any Registered
Security of any series denominated in Dollars, a Foreign Currency or any
currency unit, including without limitation ECU, except as provided in paragraph
(b) below:
(1) Except as provided in subparagraph (a)(2) or in paragraph (e) below,
payment of principal and premium, if any, on such Registered Security will be
made at the Place of Payment by delivery of a check in the currency or currency
unit in which the Security is denominated on the payment date against surrender
of such Registered Security, and any interest on any Registered Security will be
paid at the Place of Payment by mailing a check in the currency or currency unit
in which such interest is payable (which shall be the same as that in which the
Security is denominated unless otherwise provided) to the Person entitled
thereto at the address of such Person appearing on the Security Register.
<PAGE>
28
(2) Payment of the principal of, premium, if any, and interest, if any, on
such Security, may also, subject to applicable laws and regulations, be made at
other place or places as may be designated by the Company by any appropriate
method.
(b) With respect to any Registered Security of any series denominated in
any currency unit, including without limitation ECU, if the following provisions
(or any substitute therefor, or addition thereto, not inconsistent with this
Indenture) are established pursuant to Section 2.1 and if the Company has not,
before delivery of the election referred to in clause (1) below, deposited funds
or securities in compliance with Section 12.1 or clause (a) or (if specified
pursuant to Section 2.1) clause (b) of Section 12.3 the following payment
provisions shall apply to any payment to be made prior to the giving of any
notice to Holders of any election to redeem pursuant to Section 3.5, except as
otherwise provided in paragraphs (e) and (f) below:
(1) A Holder of Securities of a series shall have the option to elect to
receive payments of principal of, premium, if any, and interest, if any, on such
Securities in a currency or currency unit (including Dollars), other than that
in which the Security is denominated. Such election, as designated in the
certificates for such Securities (or as provided by Section 2.1 or a
supplemental indenture thereto with respect to uncertificated securities), shall
be made by delivering to the Trustee a written election, to be in form and
substance satisfactory to the Trustee, not later than the close of business in
The City of New York, on the day 15 days prior to the applicable payment date.
Such election will remain in effect for such Holder until changed by the Holder
by written notice to the Trustee (but any such written notice must be received
by Trustee not later than the close of business on the day 15 days prior to the
next payment date to be effective for the payment to be made on such payment
date and no such change may be made with respect to payments to be made on any
Security of such series with respect to which notice of redemption has been
given by the Company pursuant to Article Three). Any Holder of any such
Security who shall not have delivered any such election to the Trustee in,
accordance with this paragraph (b) will be paid the amount due on the applicable
payment date in the relevant currency unit as provided in paragraph (a) of this
Section 2.11. Payment of principal of and premium, if any, shall be made on the
payment date therefor against surrender of such Security. Payment of principal
of, premium, if any, and interest, if any, shall be made at the Place of Payment
by mailing at such location a check, in the applicable currency or currency
unit, to the Holder entitled thereto at the address of such Holder appearing on
the Security Register.
(2) Payment of the principal of, premium, if any, and interest, if any, on
such Security may also, subject to applicable laws and regulations, be made at
such other place or places as may be designated by the Company by any
appropriate method.
(c) Payment of the principal of and premium, if any, and interest, if any,
on any Bearer Security shall be made, except as provided in Section 2.4 with
respect to temporary global Securities, unless otherwise specified pursuant to
Section 2.1 and/or Section 10.1(h), at such place or places outside the United
States as may be designated by the Company pursuant to any applicable laws or
regulations by any appropriate method in the currency or currencies or currency
unit or units in which the Security is payable (except as
<PAGE>
29
provided in paragraph (e) below) on the payment date therefor against surrender
of the Bearer Security, in the case of payment of principal and premium, if any,
or the relevant Coupon, in the case of payment of interest, if any, to a Paying
Agent designated for such series pursuant to Section 4.2.
(d) Not later than 10 Business Days (with respect to any Place of Payment)
prior to each payment date, the Trustee (and if a calculation agent is appointed
with respect to any Securities bearing interest at a rate or rates determined by
reference to an interest rate formula, such calculation agent with respect to
such Securities) shall deliver to the Company a copy of its record of the
respective aggregate amounts of principal of, premium, if any, and interest, if
any, on the Securities to be made on such payment date, in the currency or
currency unit in which each of the Securities is payable, specifying the amounts
so payable in respect of Registered Securities and Bearer Securities and in
respect of the Registered Securities as to which the Holders of Securities
denominated in any currency unit shall have elected to be paid in another
currency or currency unit as provided in paragraph (b) above. If the election
referred to in paragraph (b) above has been provided for pursuant to Section 2.1
and if at least one Holder has made such election, then, not later than the
fifth Business Day (with respect to any Place of Payment) prior to the
applicable payment date the Company shall deliver to the Trustee an Exchange
Rate Officer's Certificate in respect of the Dollar or Foreign Currency or
currency unit payments to be made on such payment date. The Dollar or Foreign
Currency or currency unit amount receivable by Holders of Registered Securities
denominated in a currency unit who have elected payment in another currency or
currency unit as provided in paragraph (b) above shall be determined by the
Company on the basis of the applicable Official Currency Unit Exchange Rate set
forth in the applicable Exchange Rate Officer's Certificate.
(e) If a Foreign Currency in which any Security is denominated or payable
ceases to be recognized both by the government of the country which issued such
currency and for the settlement of transactions by public institutions of or
within the international banking community, or if ECU ceases to be used both
within the European Monetary System and for the settlement of transactions by
public institutions of or within the European Communities, or if any other
currency unit in which a Security is denominated or payable ceases to be used
for the purposes for which it was established, in each case determined in good
faith by the Company, then with respect to each date for the payment of
principal of, premium, if any, and interest, if any, on the applicable security
denominated or payable in such Foreign Currency, ECU or such other currency unit
occurring after the last date on which such Foreign Currency, ECU or such other
currency unit was so recognized or used (the "Currency Conversion Date"), the
Dollar shall become the currency of payment for use on each such payment date
(but ECU or the Foreign Currency or the currency unit previously the currency of
payment shall, at the Company's election, resume being the currency of payment
on the first such payment date preceded by 15 Business Days during which the
circumstances which gave rise to the Dollar becoming such currency no longer
prevail, in each case as determined in good faith by the Company). The Dollar
amount to be paid by the Company to the Trustee and by the Trustee or any Paying
Agent to the Holder of such Security with respect to such payment date shall be
the Dollar Equivalent of the Foreign Currency or, in the case of a currency
unit, the Dollar Equivalent of the Currency Unit, as
<PAGE>
30
determined by the Exchange Rate Agent (which shall be delivered in writing to
the Trustee not later than the fifth Business Day prior to the applicable
payment date) as of the Currency Conversion Date or, if later, the date most
recently preceding the payment date in question on which such determination is
possible of performance, but not more than 15 days before such payment date
(such Currency Conversion Date or date preceding a payment date as aforesaid
being called the "Valuation Date") in the manner provided in paragraph (g) or
(h) below.
(f) (i) If the Holder of a Registered Security denominated in a currency
unit elects payment in a specified Foreign Currency or currency unit as provided
for by paragraph (b) and such Foreign Currency ceases to be used both by the
government of the country which issued such currency and for the settlement of
transactions by public institutions of or within the international banking
community, in each case as determined in good faith by the Company, such Holder
shall (subject to paragraph (e) above) receive payment in the currency unit in
which the Security is denominated, and (ii) if ECU ceases to be used both within
the European Monetary System and for the settlement of transactions by public
institutions of or within the European Communities and such Registered Security
is payable in such currency unit, or if any other such currency unit ceases to
be used for the purposes for which it was established and such Registered
Security is payable in such currency unit, in each case as determined in good
faith by the Company, such Holder shall receive payment in Dollars. Each payment
covered by an election pursuant to paragraph (b) above be governed by the
provisions of this paragraph (f) (but, subject to any contravening valid
election pursuant to paragraph (b) above, the specified Foreign Currency in case
(i) or ECU or other currency unit in case (ii) shall, at the Company's election,
resume being the currency or currency unit, as applicable, of payment with
respect to Holders who have so elected, but only with respect to payments on
payment dates preceded by 15 Business Days during which the circumstances which
gave rise to such currency unit in case (i) or the Dollar in case (ii) becoming
the currency unit or currency, as applicable, of payment, no longer prevails, in
each case as determined in good faith by the Company).
(g) "The Dollar Equivalent of the Foreign Currency" shall be determined by
the Exchange Rate Agent as of each Valuation Date and shall be obtained by
converting the specified Foreign Currency into Dollars at the Market Exchange
Rate on the Valuation Date.
(h) The "Dollar Equivalent of the Currency Unit" shall be determined by
the Exchange Rate Agent as of each Valuation Date and shall be the sum obtained
by adding together the results obtained by converting the Specified Amount of
each Component Currency into Dollars at the Market Exchange Rate on the
Valuation Date for such Component Currency.
(i) For purposes of this Section 2.11 the following terms shall have the
following meanings:
A "Component Currency" shall mean any currency which, on the Currency
Conversion Date, was a component currency of the relevant currency unit,
including without limitation ECU.
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31
An "Exchange Rate Agent" means a New York clearinghouse bank appointed by
the Company from time to time to determine exchange rates between Dollars and
other currencies or currency units. The Company may appoint different Exchange
Rate Agents for different currencies and currency units and may change an
Exchange Rate Agent at any time after 15 days' notice to the Trustee.
A "Specified Amount" of a Component Currency shall mean the number of units
or fractions thereof which such Component Currency represented in the relevant
currency unit, including without limitation ECU, on the Currency Conversion
Date. If after the Currency Conversion Date the official unit of any Component
Currency is altered by way of combination or subdivision, the Specified Amount
of such Component Currency shall be divided or multiplied in the same
proportion. If after the Currency Conversion Date two or more Component
Currencies are consolidated into a single currency, the respective Specified
Amounts of such Component Currencies shall be replaced by an amount in such
single currency equal to the sum of the respective Specified Amounts of such
consolidated Component Currencies expressed in such single currency, and such
amount shall thereafter be a Specified Amount and such single currency shall
thereafter be a Component Currency. If after the Currency Conversation Date any
Component Currency shall be divided into two or more currencies, the Specified
Amount of such Component Currency shall be replaced by specified amounts of such
two or more currencies, the sum of which, at the Market Exchange Rate of such
two or more currencies on the date of such replacement, shall be equal to the
Specified Amounts of such currencies shall thereafter be Component Currencies.
"Market Exchange Rate" shall mean for any currency the noon Dollar buying
rate for that currency for cable transfers quoted in New York City on the
Valuation Date as certified for customs purposes by the Federal Reserve Bank of
New York. If such rates are not available for any reason with respect to one or
more currencies for which an Exchange Rate is required. The Exchange Rate Agent
shall use such quotation of the Federal Reserve Bank of New York as of the most
recent available date, or quotations from one or more major banks with its head
office in New York City or in the country of issue of the currency in question,
or such other quotations as the Exchange Rate Agent shall deem appropriate.
Unless otherwise specified by the Exchange Rate Agent if there is more than one
market for dealing in any currency by reason of foreign exchange regulations or
otherwise, the market to be used in respect of such currency shall be that upon
which a nonresident issuer of securities designated in such currency would, as
determined in its sole discretion and without liability on the part of the
Exchange Rate Agent, purchase such currency in order to make payments in respect
of such securities.
All decisions and determinations of the Exchange Rate Agent regarding the
Dollar Equivalent of the Foreign Currency, the Dollar Equivalent of the Currency
Unit and the Market Exchange Rate shall be in its sole discretion and shall, in
the absence of manifest error, be conclusive for all purposes and irrevocably
binding upon the Company and all Holders of the Securities and Coupons
denominated or payable in the relevant currency or currency units. In the event
that a Foreign Currency ceases to be used both by the government of the country
which issued such currency and for the settlement of transactions by public
institutions of or within the international banking community, the Company,
after
<PAGE>
32
learning thereof, will immediately give notice thereof to the Trustee (and the
Trustee will promptly thereafter give notice in the manner provided in Section
1.4 to the Holders) specifying the Currency Conversion Date. In the event the
ECU ceases to be used both within the European Monetary System and for the
settlement of transactions by public institutions of or within the European
Communities, or any other currency unit in which Securities or Coupons are
denominated or payable, ceases to be used for the purposes for which it was
established, the Company, after learning thereof, will immediately give notice
thereof to the Trustee (and the Trustee will promptly thereafter give notice in
the manner provided in Section 1.4 to the Holders) specifying the Currency
Conversion Date and the Specified Amount of each Component Currency on the
Currency Conversion Date. In the event of any subsequent change in any
Component Currency as set forth in the definition of Specified Amount above, the
Company, after learning thereof, will similarly give notice to the Trustee. Any
actions taken pursuant to the parentheticals at the end of the first sentence of
Section 2.11(e) and at the end of Section 2.11(f) shall be promptly set forth in
like notices from the Company to the Trustee and then from the Trustee to the
Holders (which notice may be mailed with payment to the Holders).
Subject to the provisions of Sections 7.1 and 7.2, the Trustee shall be
fully justified and protected in conclusively relying and acting upon
information received by it from the Company and the Exchange Rate Agent, and
shall not otherwise have any duty or obligation to determine such information
independently.
Section 2.12 Compliance with Certain Laws and Regulations. If any Bearer
--------------------------------------------
Securities are to be issued in any series of Securities, the Company will use
reasonable efforts to provide for arrangements and procedures designed pursuant
to then applicable laws and regulations, if any, to ensure that such Bearer
Securities are sold or resold, exchanged, transferred and paid only in
compliance with such laws and regulations and without adverse consequences to
the Company, the Holders and the Trustee.
Section 2.13 Security Forms Generally. The Securities of each series and
------------------------
the Coupons, if any, to be attached thereto shall be in substantially the forms
as shall be established by or pursuant to a Board Resolution or in one or more
indentures supplemental hereto, in each case with such appropriate insertions,
omissions, substitutions, and other variations as are required or permitted by
this Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the applicable laws and regulations and the rules of any
securities exchange or as may, consistently herewith, be determined by the
offices executing such Securities and Coupons, if any, as evidenced by their
executions of the Securities and Coupons, if any. If the forms of Securities of
any series is established by, or by action taken pursuant to a Board Resolution,
a copy of the Board Resolution together with an appropriate record of any action
taken pursuant thereto, which Board Resolution or record of such action shall
have amended thereto a true and correct copy of the forms of Security approved
by or pursuant to such Board Resolution, shall be certified by the Secretary or
an Assistant Secretary of the Company and delivered to the Trustee at or prior
to the delivery of the Company Order contemplated by Section 2.3 for the
authentication and delivery of such Securities.
<PAGE>
33
The definitive Securities and Coupons, if any, shall be printed,
lithographed or engraved on steel engraved borders and may be produced in any
other manner, as all determined by the officers executing such Securities and
Coupons, if any, as evidenced by their execution of such Securities and Coupons,
if any.
Section 2.14 Form of Trustee's Certificate of Authentication. The
-----------------------------------------------
Trustee's certificate of authentication shall be in substantially the following
form:
This is one of the Securities of the series designated therein issued under
the within mentioned Indenture.
The Bank of New York, as Trustee
By
Authorized Signatory
Section 2.15 Securities in Global Form. If Securities of a series are
-------------------------
issuable in global form, as specified pursuant to Section 2.1, then,
notwithstanding clause (h) of Section 2.1 and the provisions of Section 2.2,
such Security shall represent such of the Outstanding Securities of such series
as shall be specified therein and may provide that it shall represent the
aggregate amount of Outstanding Securities from time to time endorsed thereon
and that the aggregate amount of Securities represented thereby may from time to
time be reduced to reflect exchanges. Any endorsement of a Security in global
form to reflect the amount, or any increase or decrease in the amount, of
Outstanding Securities represented thereby shall be made by the Trustee in such
manner and upon written instructions given by such Person or Persons as shall be
specified in such Security or in the Company Order to be delivered to the
Trustee pursuant to Section 2.3 or Section 2.4. Subject to the provisions of
Section 2.3 and, if applicable, Section 2.4, the Trustee shall deliver and
redeliver any Security in permanent global form in the manner and upon written
instructions given by the Person or Persons specified in such Security or in the
applicable Company Order. If a Company Order pursuant to Section 2.3 or 2.4 has
been, or simultaneously is, delivered, any instructions by the Company with
respect to endorsement or delivery or redelivery of a Security in global form
shall be in writing but need not comply with Section 14.6 and need not be
accompanied by an Opinion of Counsel.
Notwithstanding the provisions of Sections 2.13 and 2.9, unless otherwise
specified pursuant to Section 2.1, payment of principal of and any premium and
any interest on any Security in permanent global form shall be made to the
Person or Persons specified therein.
The holders of beneficial interests in any temporary or permanent global
Security shall have no rights under this Indenture with respect to any global
Security held on their behalf by a U.S. Depository or Common Depository, as the
case may be, and such U.S. Depository or Common Depository, as the case may be,
may be treated by the Company, the Trustee, and any agent of the Company or the
Trustee as the owner of such global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee, or any agent of the Company or the Trustee, from giving effect to any
<PAGE>
34
written certification, proxy or other authorization furnished by a U.S.
Depository or Common Depository, as the case may be, or impair, as between a
U.S. Depository or Common, as the case may be, and holders of beneficial
interests in any temporary or permanent global Security as the case may be, the
operation of customary practices governing the exercise of the rights of a
Holder of a Security of any series, including without limitation the granting of
proxies or other authorization of participants to give or take any request,
demand, authorization, direction, notice, consent, waiver or other action which
a Holder is entitled to give or take under this Indenture.
None of the Company, the Trustee, any Paying Agent or the Security
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a global Security or for supervising or reviewing any records
relating to such beneficial ownership interests.
Each U.S. Depository designated pursuant to Section 2.1 for a global
Security in registered form must, at the time of its designation and at all
times while it serves as U.S. Depository, be a clearing agency registered under
the Securities Exchange Act of 1934, as amended, and any other applicable
statute or regulation.
Section 2.16 CUSIP Numbers. The Company in issuing the Securities may use
-------------
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided
--------
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the CUSIP numbers.
ARTICLE 3.
REDEMPTION OF SECURITIES AND SINKING FUNDS
Section 3.1 Applicability of Article. Securities (including any Coupons)
------------------------
of any series which are redeemable before their Stated Maturity shall be
redeemable in accordance with their terms and (except as otherwise specified
pursuant to Section 2.1 for Securities (including any Coupons) of any series) in
accordance with this Article.
The provisions of Sections 3.9 to 3.10 of this Article shall be applicable
if any sinking fund is to be provided for the retirement of Securities
(including any Coupons) of any series except as otherwise specified pursuant to
Section 2.1 for Securities (including any Coupons) of such series.
Section 3.2 Mandatory and Optional Sinking Fund Payments. The minimum
--------------------------------------------
amount of any sinking fund payment provided for by the terms of Securities
(including any Coupons) of any series is herein referred to as a "mandatory
sinking fund payment", and any payment in excess of such minimum amount provided
for by the terms of Securities
<PAGE>
35
(including any Coupons) of any series is herein referred to as an "optional
sinking fund payment". If provided for by the terms of Securities (including
any Coupons) of any series, the cash amount of any sinking fund payment may be
subject to reduction as provided in Section 3.9. Each sinking fund payment
shall be applied to the redemption of Securities (including any Coupons) of any
series as provided for by the terms of Securities (including any Coupons) of
such series.
Section 3.3 Election to Redeem: Notice to Trustee. The election of the
-------------------------------------
Company to redeem any Securities (including any Coupons) shall be evidenced by a
Board Resolution or by an action taken pursuant to a Board Resolution. In case
of any redemption at the election of the Company of less than all of the
Securities (including any Coupons) of any series, the Company shall, at least 45
days prior to the Redemption Date fixed by the Company (unless the Trustee shall
allow a lesser period of time) deliver to the Trustee an Officers' Certificate
(1) notifying the Trustee of such Redemption Date and of the principal amount of
Securities (including any Coupons) of such series to be redeemed and (2) stating
that no defaults in the payment of interest or Events of Default with respect to
the Securities (including any Coupons) of that series have occurred (which have
not been waived or cured). In the case of any redemption of Securities
(including any Coupons) prior to the expiration of any restriction on such
redemption provided in the terms of such Securities (including any Coupons) or
elsewhere in this Indenture, the Company shall furnish the Trustee with an
Officers' Certificate evidencing compliance with such restriction.
Section 3.4 Selection by Trustee of Securities to be Redeemed. If less
-------------------------------------------------
than all the Securities (including any Coupons) of any series are to be
redeemed, the particular Securities (including any Coupons) to be redeemed shall
be selected by the Trustee, not more than 45 days prior to the Redemption Date
from the Outstanding Securities of such series not previously called for
redemption, by such method as the Trustee shall deem fair and appropriate and
which may provide for the selection for redemption of portions equal to the
minimum authorized denomination for Securities (including any Coupons) of that
series, or any integral multiple thereof, of the principal amount of Securities
(including any Coupons) of such series, or of a denomination larger than the
minimum authorized denomination for Securities (including any Coupons) of that
Series.
The Trustee shall promptly notify the Company in writing of the Securities
(including any Coupons) selected for redemption and, in the case of any
Securities (including any Coupons) selected for partial redemption, the
principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities (including any Coupons)
shall relate, in the case of any Security (including any Coupons) redeemed or to
be redeemed only in part, to the portion of the principal of such Security
(including any Coupons) which has been or is to be redeemed.
Securities shall be excluded from liability for selection for redemption if
they are identified by registration and certificate number in an Officers'
Certificate of the Company delivered to the Trustee at least 45 days prior to
the Redemption Date (unless the
<PAGE>
36
Trustee shall allow a lesser period of time) as being owned of record and
beneficially by, and not pledged or hypothecated by, either (a) the Company or
(b) an entity specifically identified in such written statement as an Affiliate
of the Company.
Section 3.5 Notice of Redemption. Notice of redemption shall be given not
--------------------
less than 30 nor more than 60 days prior to the Redemption Date, to each Holder
of Securities to be redeemed, as provided in Section 1.4.
Each such notice of redemption shall specify the CUSIP Number, the
Redemption Date, the Redemption Price, the Place or Places of Payment, that the
Securities of such series are being redeemed at the option of the Company
pursuant to provisions contained in the terms of the Securities of such series
or in a supplemental indenture establishing such series, if such be the case,
together with a brief statement of the facts permitting such redemption, that on
the Redemption Date the Redemption Price will become due and payable upon each
Security redeemed, that payment will be made upon presentation and surrender of
the applicable Securities, that all Coupons, if any, maturing subsequent to the
Redemption Date shall be void, that any interest accrued to the Redemption Date
will be paid as specified in said notice, and that on and after said Redemption
Date any interest thereon or on the portions thereof to be redeemed will cease
to accrue. If the Securities of such series are convertible into other
securities of the Company, the notice shall also state the conversion price, the
last date on which the Securities may be converted prior to the Redemption Date,
and that the Holders who wish to convert their Securities must comply with and
satisfy all the terms, conditions and requirements for conversion as set forth
in the Securities and/or this Indenture. If less than all the Securities of any
series are to be redeemed the notice of redemption shall specify the numbers of
the Securities of such series to be redeemed, and, if only Bearer Securities of
any series are to be redeemed, and if such Bearer Securities may be exchanged
for Registered Securities, the last date on which exchanges of Bearer Securities
for Registered Securities not subject to redemption may be made. In case any
Security of any series is to be redeemed in part only, the notice of redemption
shall state the portion of the principal amount thereof to be redeemed and shall
state that on and after the Redemption Date, upon surrender of such Security and
any Coupons appertaining thereto, a new Security or Securities of such series in
principal amount equal to the unredeemed portion thereof and with appropriate
Coupons will be issued, or, in the case of Registered Securities providing
appropriate space for such notation, at the option of the Holders, the Trustee,
in lieu of delivering a new Security or Securities as aforesaid, may make a
notation on such Security of the payment of the redeemed portion thereof.
Notice of redemption of Securities and Coupons, if any, to be redeemed at
the election of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company.
Section 3.6 Deposit of Redemption Price. On or before the opening of
---------------------------
business on any Redemption Date, the Company shall deposit with the Trustee or
with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 4.5) an amount of money in
the relevant currency (or a sufficient number of currency units, as the case may
be) sufficient to pay the Redemption Price of, and
<PAGE>
37
(except if the Redemption Date shall be an Interest Payment Date) accrued
interest on, all the Securities and Coupons, if any, which are to be redeemed on
that date.
Section 3.7 Securities Payable on Redemption Date. Notice of redemption
-------------------------------------
having been given as aforesaid, the Securities to be redeemed shall, on the
Redemption Date, become due and payable at the Redemption Price therein
specified, and from and after such date (unless the Company shall default in the
payment of the Redemption Price and accrued interest) such Securities shall
cease to bear interest and the Coupons for such interest appertaining to any
Bearer Securities, so to be redeemed, except to the extent provided below, shall
be void. Upon surrender of any such Security for redemption in accordance with
said notice, together with all Coupons, if any, appertaining thereto maturing
after the Redemption Date, such Security shall be paid by the Company at the
Redemption Price, together with accrued interest to the Redemption Date;
provided, however, that installments of interest on Bearer Securities whose
Stated Maturity is on or prior to the Redemption Date shall be payable only at
an office or agency located outside the United States (except as otherwise
provided in Section 4.2) and, unless otherwise specified pursuant to Section
2.1, only upon presentation and surrender of Coupons for such interest, and
provided, further, that, unless otherwise specified pursuant to Section 2.1,
installments of interest on Registered Securities whose Stated Maturity is on or
prior to the Redemption Date shall be payable to the Holders of such Securities,
or one or more Predecessor Securities, registered as such at the close of
business on the relevant Regular and Special Record Dates according to their
terms and the provisions of Section 2.9.
If any Bearer Security surrendered for redemption shall not be accompanied
by all appurtenant Coupons maturing after the Redemption Date, such Security may
be paid after deducting from the Redemption Price an amount equal to the face
amount of all such missing Coupons, or the surrender of such missing Coupon or
Coupons may be waived by the Company and the Trustee if there be furnished to
them such security or indemnity as they may require to save each of them and any
Paying Agent harmless. If thereafter the Holder of such Security shall
surrender to the Trustee or any Paying Agent any such missing Coupon in respect
of which a deduction shall have been made from the Redemption Price, such Holder
shall be entitled to receive the amount so deducted; provided, however, that
interest represented by Coupons shall be payable only at an office or agency
located outside the United States (except as otherwise provided in Section 4.2)
and, unless otherwise specified pursuant to Section 2.1, only upon presentation
and surrender of those Coupons.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in by the
Security.
Section 3.8 Securities Redeemed in Part. Any Security (including any
---------------------------
Coupons appertaining thereto) which is to be redeemed only in part may be
surrendered at a Place of Payment therefor (with, if the Company or the Trustee
so requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing) and the Company shall execute and
the Trustee shall authenticate and make available for delivery to
<PAGE>
38
the Holder of such Security (including any Coupons appertaining thereto) without
service charge to the Holder thereof, a new Security or Securities (including
any Coupons Pertaining thereto) of the same series and Stated Maturity, of any
authorized denomination as requested by such Holder in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered. Any Bearer Security that is redeemed only in part
shall be surrendered at an office or agency of the Company located outside the
United States, except as otherwise provided in Section 4.2, and the Company
shall execute, and the Trustee shall authenticate and make available for
delivery to the Holder of such Security outside the United States without
service charge, a new Bearer Security or Bearer Securities of the same series
(or a new Registered Security or Registered Securities of the same series, if
the Securities of such series are issuable as Registered Securities), of any
authorized denomination as requested by such Holder in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered; except in either case that if a global Security is
so surrendered, the Company shall execute, and the Trustee shall authenticate
and make available for delivery to the U.S. Depository or Common Depository, as
the case may be, for such global Security, without service charge, a global
Security in a denomination equal to and in exchange for the unredeemed portion
of the principal of the global Security so surrendered.
Section 3.9 Satisfaction of Sinking Fund Payments with Securities. The
-----------------------------------------------------
Company (1) may deliver Outstanding Securities (including any Coupons) of a
series (other than any previously called for redemption) and (2) may apply as a
credit Securities (including any Coupons) of a series which have been redeemed
either at the election of the Company pursuant to the terms of such Securities
(including any Coupons) or through the application of permitted optional sinking
fund payments pursuant to the terms of such Securities (including any Coupons),
in each case in satisfaction of all or any part of any sinking fund payment with
respect to the Securities (including any Coupons) of such series required to be
made pursuant to the terms of such Securities (including any Coupons) provided
for by the terms of such series; provided that such Securities (including any
Coupons) have not been previously so credited. Such Securities (including any
Coupons) shall be received and credited for such purpose by the Trustee at the
Redemption Price specified in such Securities (including any Coupons) for
redemption through operation of the sinking fund and the amount of such sinking
fund payment shall be reduced accordingly.
Section 3.10 Redemption of Securities for Sinking Fund. Not less than 45
-----------------------------------------
days prior to each sinking fund payment date (unless the Trustee shall allow a
lesser period of time) for any series of Securities (including any Coupons), the
Company will (1) deliver to the Trustee an Officers' Certificate (A) stating
that no defaults in the payment of interest or Events of Default with respect to
Securities (including any Coupons) of that series have occurred (which have not
been waived or cured), (B) specifying the amount of the next ensuing sinking
fund payment for that series pursuant to the terms of that series, the portion
thereof, if any, which is to be satisfied by payment of cash and the portion
thereof, if any, which is to be satisfied by delivering and crediting Securities
(including any Coupons) of that series pursuant to Section 3.9 and (C) if
applicable, stating whether or not the Company intends to exercise its right to
make an optional sinking fund payment with respect to such series on the next
ensuing sinking fund payment date and, if so, specifying the amount of
<PAGE>
39
such optional sinking fund payment and (2) deliver to the Trustee any Securities
(including any Coupons) to be so delivered. Not less than 30 days before each
such sinking fund payment date the Trustee shall select the Securities
(including any coupons) to be redeemed upon such sinking fund payment date in
the manner specified in Section 3.4 and cause notice of the redemption thereof
to be given in the name of and at the expense of the Company in the manner
provided in Section 3.5.
Section 3.11 Redemption of Securities During Event of Default. The
------------------------------------------------
Trustee shall not redeem or cause to be redeemed any Security (including any
Coupons) of a series with sinking fund moneys or otherwise as provided in this
Article (unless all outstanding Securities (including any Coupons) of such
series are to be redeemed) or mail any notice of any such redemption of
Securities (including any Coupons) of a series during the continuance of a
default in payment of interest on such Securities (including any Coupons) or of
any Event of Default with respect to such series known two Business Days prior
to such payment or mailing to a Responsible Officer of the Trustee except that,
where the mailing of notice of redemption of any Securities (including any
Coupons) shall theretofore have been made, the Trustee shall redeem or cause to
be redeemed such Securities (including any Coupons), provided that it shall have
received from the Company a sum sufficient for such redemption. Except as
aforesaid, any moneys theretofore or thereafter received by the Trustee in
respect of such series of Securities at the time when any such default or Event
of Default shall have occurred shall, during the continuance of such default or
Event of Default, be deemed to have been collected under Article Seven and held
for the payment of all the Securities (including any Coupons) of that series.
In case such Event of Default shall have been waived as provided in Section 6.1
or the default cured on or before the sixtieth day preceding a sinking fund
payment date or a Redemption Date, as the case may be, such moneys held
thereafter shall be applied in accordance with the provisions of this Article to
the redemption of such Securities including any Coupons).
ARTICLE 4.
PARTICULAR COVENANTS OF THE COMPANY
Section 4.1 Payment of Principal, Premium and Interest. The Company
------------------------------------------
covenants and agrees for the benefit of each series of Securities and Coupons,
if any, that it will duly and punctually pay or cause to be paid the principal
of (and premium, if any) and interest, if any, on the Securities and Coupons, if
any, of that series in accordance with the terms of the Securities and Coupons,
if any, of such series and this Indenture.
Section 4.2 Maintenance of Office or Agency. If Securities of a series
-------------------------------
are issuable only as Registered Securities, the Company will maintain in each
Place of Payment for such series an office, which may be an office of the
Trustee, or agency where Securities of that series may be presented or
surrendered for payment, where Securities of that series may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Securities of that series and this Indenture may
be served. If the Securities of a series are convertible into any other
security of the Company, the Company will maintain in each Place of Payment for
such series an office, which may be
<PAGE>
40
an office of the Trustee, or agency where Securities of that series may be
presented or surrendered for conversion. If Securities of a series are issuable
as Bearer Securities, the Company will maintain (A) in the Borough of Manhattan,
The City of New York, an office, which may be an office of the Trustee, or
agency where any Registered Securities of that series may be presented or
surrendered for payment, where any Registered Securities of that series may be
surrendered for registration of transfer, where Securities of that series may be
surrendered for exchange, where notices and demands to or upon the Company in
respect of the Securities of that series and this Indenture may be served and
where Bearer Securities of that series and related Coupons may be presented or
surrendered for payment in the circumstances described in the last proviso of
this paragraph (and not otherwise), (B) subject to any laws or regulations
applicable thereto, in a Place of Payment for that series which is located
outside the United States, an office, which may be an office of the Trustee, or
agency where Securities of that series and related Coupons may be presented and
surrendered for payment (including payment of any additional amounts payable on
Securities of that series pursuant to Section 4.7); provided, however, that if
the Securities of that series are listed on The Stock Exchange of the United
Kingdom and the Republic of Ireland, the Luxembourg Stock Exchange or any other
stock exchange located outside the United States and such stock exchange shall
so require, the Company will maintain a Paying Agent reasonably acceptable to
the Trustee for the Securities of that series in London, Luxembourg or any other
required city located outside the United States, as the case may be, so long as
the Securities of that series are listed on such exchange, and (C) subject to
any laws or regulations applicable thereto, in a Place of Payment for that
series located outside the United States, an office, which may be an office of
the Trustee, or agency where any Registered Securities of that series may be
surrendered for registration of transfer, where Securities of that series may be
surrendered for exchange and where notices and demands to or upon the Company in
respect of the Securities of that series and this Indenture may be served. The
Company will give prompt written notice to the Trustee and the Holders of the
location, and any change in the location, of any such office or agency. If at
any time the Company shall fail to maintain any such required office or agency
in respect of any series of Securities or shall fail to furnish the Trustee with
the address thereof, such presentations and surrenders of Securities of that
series may be made and notices and demands may be made or served at the
Corporate Trust Office of the Trustee, except that Bearer Securities of that
series and the related Coupons may be presented and surrendered for payment
(including payment of any additional amounts payable on Bearer Securities of
that series pursuant to Section 4.7) at the London office of the Trustee (or an
agent with a London office appointed by the Trustee and acceptable to the
Company), and the Company hereby appoints the same as its agent to receive such
respective presentations, surrenders notices and demands. No payment of
principal, premium or interest on Bearer Securities shall be made at any office
or agency of the Company in the United States or by check mailed to any address
in the United States or by wire transfer to an account maintained in the United
States; provided, however, that, if the Securities of a series are denominated
and payable in Dollars, payment of principal of and any premium and interest on
any Bearer Security (including any additional amounts payable on Securities of
such series pursuant to Section 4.7) shall be made at the office of the
Company's Paying Agent in the Borough of Manhattan, The City of New York, if
(but only if) payment in Dollars of the full amount of such principal, premium,
interest or additional amounts, as the case may be, at all offices or agencies
outside the United States maintained for the purpose
<PAGE>
41
by the Company in accordance with this Indenture is illegal or effectively
precluded by exchange controls or other similar restrictions.
The Company may also from time to time designate one or more other offices,
which may be offices of the Trustee, or agencies where the Securities of one or
more series may be presented or surrendered for any or all such purposes and may
from time to time rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in accordance with the requirements
set forth above for Securities of any series for such purposes. The Company
will give prompt written notice to the Trustee and the Holders of any such
designation or rescission and of any change in the location of any such other
office or agency.
Section 4.3 Prohibition of Extension of Claims for Interest. In order to
-----------------------------------------------
prevent any accumulation of claims for interest thereon after maturity thereof,
the Company will not directly or indirectly extend or consent to the extension
of the time for the payment of any claim for interest on any of the Securities
and Coupons, if any, of a series and will not directly or indirectly be a party
to or approve any such arrangement by the purchase or funding of said claims for
interest or in any other manner. No claim for interest, the time of payment of
which shall have been so extended or which shall have been so purchased or
funded, shall be entitled in case of an Event of Default hereunder to the
benefits of this Indenture except after the prior payment in full of the
principal of (and premium, if any) all the Securities and Coupons, if any, of a
series and claims for interest not so extended, purchased or funded; provided,
however, that this Section 4.3 shall not apply in any case where an extension
shall be made pursuant to a plan proposed by the Company to the Holders of all
the Securities and Coupons, if any, of a series, then outstanding. Every
provision of this Indenture specifying the Holders of the Securities and
Coupons, if any, of a series who are entitled to the benefits of this Indenture
or relating to the distribution of the avails of any enforcement hereof shall be
subject to the provisions of this Section 4.3.
Section 4.4 Appointment to Fill Vacancy of Trustee. The Company, whenever
--------------------------------------
necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in
the manner provided in Section 7.10, a Trustee, so that there shall at all times
be a Trustee hereunder.
Section 4.5 Paying Agents: Money for Securities Payments Held in Trust.
----------------------------------------------------------
(a) Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, at or prior to the opening of business on each
due date of the principal of (and premium, if any) or interest on any Securities
of that series, deposit with a Paying Agent a sum sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be held
in trust for the benefit of the Persons entitled to such principal, premium or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act; provided,
however, the Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed upon in writing with the
Company.
<PAGE>
42
The Company will cause each Paying Agent for any series of Securities other
than the Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the provisions of
this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Securities of that series in trust for the
benefit of the Persons entitled thereto, including the Company pursuant to the
proviso set forth above in this subsection (a), until such sums shall be paid to
such Persons or otherwise disposed of as herein provided;
(2) give the Trustee prompt notice of any default by the Company (or any
other obligor upon the Securities of that series) in making of any payment of
principal (and premium, if any) or interest on the Securities of that series;
and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent.
(b) The Company may act as its own Paying Agent. If the Company shall act
as its own Paying Agent with respect to any series of Securities, it will, on or
before each due date of the principal of (and premium, if any) or interest on
any of the Securities of that series, set aside, segregate and hold in trust for
the benefit of the Persons entitled thereto a sum sufficient to pay such
principal (and premium, if any) or interest so becoming due. The Company will
promptly notify the Trustee of such action or of any failure by the Company to
take such action or the failure by any other obligor on the Securities to make
any payment of the principal of (and premium, if any) or interest on any of the
Securities of that series when the same shall be due and payable.
(c) The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
(d) Anything in this Section 4.5 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 4.5 is subject to
the provisions of Section 12.2, Section 12.3 and Section 12.5.
Section 4.6 Compliance Certificate. The Company will deliver to the
----------------------
Trustee for each series of Securities, within 120 days after the end of each
fiscal year ending after the date hereof so long as any Security is outstanding
hereunder, a certificate signed by the principal executive officer, principal
financial officer or principal accounting officer of the Company stating, as to
each signer thereof, that:
<PAGE>
43
(a) a review has been made under his or her supervision of the activities
of the Company during such year and of the performance under this Indenture; and
(b) to the best of his or her knowledge, based on such review, the Company
has complied with all conditions and covenants under this Indenture throughout
such year. For purposes of this Section, such compliance shall be determined
without regard to any period of grace or requirement of notice provided under
this Indenture.
Section 4.7 Additional Amounts. If the Securities of a series provide for
------------------
the payment of additional amounts, the Company will pay to the Holder of any
Security of such series or any Coupon appertaining thereto who are United States
Aliens additional amounts as provided therein. Whenever in this Indenture there
is mentioned, in any context, the payment of the principal of or any premium or
interest on, or in respect of, any Security of any series or payment of any
related Coupon or the net proceeds received on the sale or exchange of any
Security of any series, such mention shall be deemed to include mention of the
payment of additional amounts provided for in this Section to the extent that,
in such context, additional amounts are, were or would be payable in respect
thereof pursuant to the provisions of this Section and express mention of the
payment of additional amounts (if applicable) in any provisions hereof shall not
be construed as excluding additional amounts in those provisions hereof where
such express mention is not made.
If the Securities of a series provide for the payment of additional
amounts, at least 10 days prior to the first Interest Payment Date with respect
to that series of Securities (or if the Securities of that series will not bear
interest prior to Maturity, the first day on which a payment of principal and
any premium is made), and at least 10 days prior to each date of payment of
principal and any premium or interest if there has been any change with respect
to the matters set forth in the Officers' Certificate to be delivered pursuant
to Section 4.6, the Company will furnish the Trustee and the Company's Paying
Agent or Paying Agents, if other than the Trustee, with an Officers' Certificate
instructing the Trustee and such Paying Agent or Paying Agents whether such
payment of principal of and any premium or interest on the Securities of that
series shall be made to Holders of Securities of that series or any related
Coupons who are United States Aliens without withholding for or on account of
any tax, assessment or other governmental charge described in the Securities of
that series. If any such withholding shall be required, then such Officers'
Certificate shall specify by country the amount, if any, required to be withheld
on such payments to such Holders of Securities or Coupons and the Company shall
pay to the Trustee or such Paying Agent the additional amounts required by this
Section. The Company covenants to indemnify the Trustee and any Paying Agent
for, and to hold them harmless against, any loss, liability or expense
reasonably incurred without negligence or bad faith on their part arising out of
or in connection with actions taken or omitted by any of them in reliance on any
Officers' Certificate furnished pursuant to this Section.
Section 4.8 Calculation of Original Issue Discount. The Company shall
--------------------------------------
file with the Trustee promptly at the end of each calendar year (i) a written
notice specifying the amount of original issue discount (including daily rates
and accrual periods) accrued on Outstanding Securities as of the end of such
year and (ii) such other specific information
<PAGE>
44
relating to such original issue discount as may then be relevant under the
Internal Revenue Code of 1986, as amended from time to time.
ARTICLE 5.
SECURITYHOLDERS' LISTS AND REPORTS BY
THE COMPANY AND THE TRUSTEE
Section 5.1 Company To Furnish Trustee Names and Addresses of Holders.
---------------------------------------------------------
The Company will furnish or cause to be furnished to the Trustee:
(a) semiannually, within one Business Day of each record date in each
year, a list, in such form as the Trustee may reasonably require, of the names
and addresses of the Holders of each series of Registered Securities, and
(b) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of similar
form and content, such list to be, dated as of a date not more than 14 days
prior to the time such list is furnished, and
(c) such information concerning the Holders of Bearer Securities which is
known to the Company; provided, however, that the Company shall not have an
obligation to investigate any matter relating to any Holder of a Bearer Security
or a Coupon;
notwithstanding the foregoing subsections (a) and (b), so long as the Trustee is
the Security Registrar with respect to a particular series of Securities, no
such list shall be required to be furnished in respect of such series.
Section 5.2 Preservation of Information: Communications to Holders.
------------------------------------------------------
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the Holders of
each series of Securities (1) contained in the most recent list furnished to it
as provided in Section 5.1, and (2) received by it in the Paying Agent and
Security Registrar (if so acting) hereunder. The Trustee shall provide
information to the Company upon receipt of a Company Request for the same by the
Company. The Trustee may destroy any list furnished to it as provided in
Section 5.1 upon receipt of a new list for Securities so furnished.
(b) In case three or more Holders of any series of Securities (hereinafter
referred to as "applicants") apply in writing to the Trustee and furnish to the
Trustee reasonable proof that each such applicant has owned a Security of such
series for a period of at least six months preceding the date of such
application and such application states that the applicants desire to
communicate with other Holders of Securities of such series with respect to
their rights under this Indenture or under such Securities and is accompanied by
a copy of the form of proxy or other communication which such applicants propose
to transmit, then the
<PAGE>
45
Trustee shall, within five business days after the receipt of such application,
at its election, either
(1) afford such applicants access to the information preserved at the
time by the Trustee in accordance with the provisions of subsection (a) of this
Section 5.2, or
(2) inform such applicants as to the approximate number of Holders of
Securities of such series whose names and addresses appear in the information
preserved at the time by the Trustee in accordance with the provisions of
subsection (a) of this Section 5.2 and as to the approximate cost of mailing to
such Securityholders the form of proxy or other communication, if any, specified
in such application.
If the Trustee shall not elect to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Securityholder of such series whose name and address appear in the
information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 5.2, a copy of the form of proxy or
other communication which is specified in such request with reasonable
promptness after a tender to the Trustee by such Applicants of the material to
be mailed and of payment, or provision for the payment, of the reasonable
expenses of mailing, unless, within five days after such tender, the Trustee
shall mail to such applicants and file with the Commission, together with a copy
of the material to be mailed, a written statement to the effect that in the
opinion of the Trustee such mailing would be contrary to the best interest of
the Holders of Securities of such series or would be in violation of applicable
law. Such written statement shall specify the basis of such opinion. If the
Commission, after opportunity for a hearing upon the objections specified in the
written statement so filed, shall enter an order refusing to sustain any of such
objections or if, after the entry of an order sustaining one or more of such
objections, the Commission shall find, after notice and opportunity for a
hearing, that all the objections so sustained have been met and shall enter an
order so declaring, the Trustee shall mail copies of such material to all such
securityholders with reasonable promptness after the entry of such order and the
renewal of such tender; otherwise the Trustee shall be relieved of any
obligation or duty to such applicants respecting their application.
(c) Each and every Holder of the Securities or Coupons, by receiving and
holding the same, agrees with the Company and the Trustee that neither the
Company nor the Trustee nor any Paying Agent nor any Security Registrar shall be
held accountable by reason of the disclosure of any such information as to the
names and addresses of the Holders in accordance with the provisions of
subsection (b) of this Section 5.2, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under said subsection
(b).
Section 5.3 Reports by Company.
------------------
(a) The Company covenants and agrees to file with the Trustee, with
reasonable promptness, after the Company is required to file the same with the
Commission, copies of the annual reports and of the information, documents, and
other reports (or copies
<PAGE>
46
of such portions of any of the foregoing as the Commission may from time to time
by rules and regulations prescribe) which the Company may be required to file
with the Commission pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934; or, if the Company is not required to file information,
documents or reports pursuant to either of such sections, then to file with the
Trustee and the Commission, in accordance with rules and regulations prescribed
from time to time by the Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant to Section 13
of the Securities Exchange Act of 1934 in respect of a security listed and
registered on a national securities exchange as may be prescribed from time to
time in such rules and regulations.
(b) The Company covenants and agrees to file with the Trustee and the
Commission, in accordance with the rules and regulations prescribed from time to
time by the Commission, such additional information, documents, and reports with
respect to compliance by the Company with the conditions and covenants provided
for in this Indenture as may be required from time to time by such rules and
regulations.
(c) The Company covenants and agrees to transmit to the respective holders
of Registered Securities, within thirty days after the filing thereof with the
Trustee, in the manner and to the extent provided in subsection (c) of Section
5.4, such summaries of any information, documents and reports required to be
filed by the Company pursuant to subsections (a) and (b) of this Section 5.3 as
may be required by rules and regulations prescribed from time to time by the
Commission.
(d) Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 5.4 Reports by Trustee.
------------------
(a) On or before 60 days after May 15 in each year, so long as any
Securities are Outstanding hereunder, the Trustee shall transmit to
Securityholders of each series as hereinafter provided in this Section 5.4, a
brief report with respect to any of the following events which may have occurred
within the previous twelve (12) months (but if no such event has occurred within
such period, no report need be transmitted):
(1) any change to its eligibility under Section 7.9 and its qualifications
under Section 7.8;
(2) the creation of or any material change to a relationship specified in
paragraphs (1) through (10) of Section 7.8(c) of this Indenture;
(3) the character and amount of any advances to or on behalf of the
Company (and if the Trustee elects so to state, the circumstances surrounding
the making thereof) made
<PAGE>
47
by the Trustee (as such) which remain unpaid on the date of such report, and for
the reimbursement of which it claims or may claim a lien or charge prior to that
of the Securities on any property or funds held or collected by it as Trustee,
except that the Trustee shall not be required (but may elect) to report such
advances if such advances so remaining unpaid aggregate not more than one-half
of 1% of the principal amount of the Securities Outstanding on the date of such
report;
(4) the amount, interest rate and maturity date of all other indebtedness
owing by the Company (or by any other obligor on the Securities) to the Trustee
in its individual capacity, on the date of such report, with a brief description
of any property held as collateral security therefor, except an indebtedness
based upon a creditor relationship arising in any manner described in paragraphs
(2), (3), (4), or (6) of subsection (b) of Section 7.13;
(5) any change to the property and funds held hereunder, if any,
physically in the possession of the Trustee, as such, on the date of such
report;
(6) any action taken by the Trustee in the performance of its duties under
this Indenture which it has not previously reported and which in its opinion
materially affects the Securities, except action in respect of a default, notice
of which has been or is to be withheld by it in accordance with the provisions
of Section 6.7; and
(7) any additional issue of Securities which the Trustee has not
previously reported.
(b) The Trustee shall transmit to the Securityholders, as hereinafter
provided, a brief report with respect to the character and amount of any
advances (and if the Trustee elects so to state, the circumstances surrounding
the making thereof) made by the Trustee (as such) since the date of the last
report transmitted pursuant to the provisions of subsection (a) of this Section
5.4 (or if no such report has yet been so transmitted, since the date of
execution of this Indenture) for the reimbursement of which it claims or may
claim a lien or charge prior to that of the Securities on property or funds held
or collected by it as Trustee and which it has not previously reported pursuant
to this subsection, except that the Trustee shall not be required (but may
elect) to report such advances if such advances remaining unpaid at any time
aggregate 10% or less of the principal amount of Securities outstanding at such
time, such report to be transmitted within 90 days after such time.
(c) Reports to the Holders of Securities pursuant to this Section 5.4
shall be transmitted in the manner as provided in Section 1.4 by mail to all
Holders of Securities.
(d) A copy of each such report shall, at the time of such transmission to
Securityholders, be filed by the Trustee with each stock exchange upon which the
Securities are listed and with the Commission and shall be furnished to the
Company. The Company agrees to notify the Trustee when and as the Securities
become listed on any stock exchange.
ARTICLE 6.
<PAGE>
48
REMEDIES OF THE TRUSTEE AND
SECURITYHOLDERS IN EVENT OF DEFAULT
Section 6.1 Event of Default; Acceleration, Etc. "Event of Default,"
------------------------------------
wherever used herein with respect to Securities of any series, means any one of
the following events (whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body), unless it is either
inapplicable to a particular series or it is specifically deleted or modified in
or pursuant to the supplemental indenture or Board Resolution establishing such
series of Securities or in the form of Security for such series:
(a) default in the payment of any installment of interest upon any of the
Securities of that series as and when the same shall become due and payable, and
continuance of such default for a period of 30 days after the date on which
written notice specifying such default and requiring the Company to remedy the
same, shall have been given to the Company by the Trustee by registered mail, or
to the Company and the Trustee by any one or more Holders of the Securities of
that series at the time Outstanding; or
(b) default in the payment of the principal of (or premium, if any, on)
any of the Securities of that series as and when the same shall become due and
payable either at Maturity, by declaration or otherwise; or
(c) default in the deposit of any sinking fund payment when and as due by
the terms of a Security of that series, and continuance of such default for a
period of 30 days after the date on which written notice specifying such default
and requiring the Company to remedy the same, shall have been given to the
Company by the Trustee by registered or certified mail, return receipt
requested, or to the Company and the Trustee by any one or more Holders of the
Securities of that series at the time outstanding; or
(d) failure on the part of the Company duly to observe or perform any
other covenants or agreements (other than as set forth in Section 6.1(a), (b) or
(c) above) on the part of the Company in the Securities of that series or in
this Indenture contained (other than a covenant or warranty which has expressly
been included in this Indenture solely for the benefit of any series of
Securities other than that series) and such failure shall continue unremedied
for a period of 90 days after the date on which written notice of such failure,
requiring the Company to remedy the same, shall have been given to the Company
by the Trustee by registered or certified mail, return receipt requested, or to
the Company and the Trustee by the Holders of at least 25% in principal amount
of the Securities of that series at the time Outstanding; or
(e) a decree or order by a court having jurisdiction in the premises for
relief in respect of the Company under Title 11 of the United States Code, as
now constituted or hereafter in effect, or any other applicable Federal or State
bankruptcy, insolvency or similar law, shall have been entered, either adjudging
the Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization of the Company, and such decree
<PAGE>
49
or order shall have continued undischarged and unstayed for a period of 90 days;
or a decree or order of a court having jurisdiction in the premises for the
appointment of a receiver or liquidator or trustee or custodian or assignee in
bankruptcy or insolvency of the Company, or of its property, or for the winding-
up or liquidation of its affairs, shall have been entered, and such decree or
order shall have remained in force undischarged and unstayed for a period of 90
days; or
(f) the Company shall institute proceedings for relief to be adjudicated a
voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding
against it, or shall file a petition or answer or consent seeking reorganization
under Title 11 of the United States Code, as now constituted or hereafter in
effect, or any other applicable Federal or State bankruptcy, insolvency or
similar law, or shall consent to the institution of proceedings thereunder or to
the filing of any such petition, or shall consent to the appointment of a
receiver or liquidator or trustee or custodian or assignee in bankruptcy or
insolvency of it or of its property, or shall make an assignment for the benefit
of creditors, or shall admit in writing its inability to pay its debts generally
as they become due, or shall fail generally to pay its debts as such debts
become due, or corporate action shall be taken by the Company in furtherance of
any of the aforesaid purposes; or
(g) any other Event of Default with respect to the Securities of that
Series.
If an Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing, and in each and every such case, unless
the principal of all the Securities of that series shall have already become due
and payable, either the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Securities of that series then Outstanding hereunder, by
notice in writing (except with respect to an Event of Default specified in
subsections (e) and (f), for which such notice shall not be required) to the
Company and to the Trustee, may declare the principal amount (or, if the
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of that series) of all
the Securities of that series to be due and payable immediately, and upon any
such declaration the same shall become and shall be immediately due and payable,
anything in this Indenture or in the Securities of that series contained to the
contrary notwithstanding. This provision, however, is subject to the conditions
that if, at any time after such principal amount of the Securities of any series
shall have been so declared due and payable, and before any judgment or decree
for the payment of the moneys due shall have been obtained or entered as
hereinafter provided, the Company shall pay or shall deposit with the Trustee a
sum sufficient to pay all matured installments of interest upon all the
Securities of that series (with interest, to the extent that payment of such
interest is enforceable under applicable law, upon overdue installments of
interest, at the rate borne by the Securities of that series to the date of such
payment or deposit) and such amount as shall be sufficient to cover all sums due
the Trustee and each predecessor Trustee under Section 7.6, and any and all
defaults under the Indenture, other than the nonpayment of the principal amount
of the Securities of that series which shall have become due by acceleration,
shall have been remedied, then and in every such case the Holders of a majority
in aggregate principal amount of the Securities of that series then Outstanding,
by written notice to the Company and to the Trustee, may waive all defaults and
rescind and annul such declaration
<PAGE>
50
and its consequences; but no such waiver or rescission and annulment shall
extend to or shall affect any subsequent default or shall impair any right
consequent thereon.
In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned because
of such rescission or annulment or for any other reason or shall have been
determined adversely to the Trustee, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders of
the Securities of that series shall be restored respectively to their former
positions and rights hereunder, and all rights, remedies and powers of the
Company, and the Trustee shall continue as though no such proceedings had been
taken.
Subject to the provisions of Section 7.1, the Trustee shall not be deemed
to have knowledge of any default described in subsections (d), (e), (f), or (g)
of this Section 6.1 unless (i) the Trustee shall have actual knowledge of such
default or (ii) the Trustee shall have received written notice thereof from the
Company or any Holder.
Section 6.2 Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Trustee. The Company covenants that (1) in case it shall default in the
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payment of any installment of interest on any Security, or Coupon, as and when
the same shall become due and payable, and such default shall have continued for
a period of thirty days (unless a different period is provided for with respect
to such Security), or (2) in case it shall default in the payment of the
principal of (or premium, if any, on) any of the Securities when the same shall
have become payable, whether upon Maturity of such Securities or upon
declaration or otherwise, then, upon demand of the Trustee, the Company will pay
to the Trustee, for the benefit of the holders of such Securities and Coupons,
if any, the whole amount that then shall have become due and payable on all such
Securities and Coupons, if any, for principal (and premium, if any), or
interest, or both, as the case may be, with interest upon the overdue principal
(and premium, if any) and (to the extent that payment of such interest is
enforceable under applicable law) upon overdue installments of interest at the
rate borne by such Securities and Coupons, if any, and, in addition thereto,
such further amount as shall be sufficient to cover all sums due the Trustee and
each predecessor Trustee under Section 7.6.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any action or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceedings to judgment or final decree, and may enforce such
judgment or final decree against the Company or other obligor upon such
Securities and Coupons, if any, and collect in the manner provided by law out of
the property of the Company or other obligor upon such Securities and Coupons,
if any, wherever situated, the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings in bankruptcy or for the
reorganization of the Company or any other obligor upon the Securities and
Coupons, if any, of any series under Title 11 of the United States Code, as now
constituted or hereafter in effect, or any other applicable bankruptcy,
insolvency or other similar law relative to the
<PAGE>
51
Company or to such other obligor, its creditors or its property, or in case a
receiver or trustee shall have been appointed for its property, or in case of
any other judicial proceedings relative to the Company or other obligor upon the
Securities and Coupons, if any, of such series, its creditors or its property,
the Trustee, irrespective of whether the principal of the Securities of such
series shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section 6.2, shall be entitled and empowered,
by intervention in such proceedings or otherwise, to file and prove a claim or
claims for the whole amount of principal (and premium, if any) and interest
owing and unpaid in respect of the Securities and Coupons, if any, of such
series, and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
sums due the Trustee and each predecessor Trustee under Section 7.6) and of the
Securityholders allowed in any judicial proceedings relative to any obligor upon
the Securities and Coupons, if any, of such series, its creditors or its
property and to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of the Securityholders and of the Trustee on their behalf;
and any receiver, liquidator, trustee, custodian or assignee under any of the
provisions of Title 11 of the United States Code, as now constituted or
hereafter in effect, is hereby authorized by each of the Securityholders to make
payments to the Trustee, and, in the event that the Trustee shall consent to the
making of payments directly to the Securityholders, to pay to the Trustee such
amount as shall be sufficient to cover all sums due the Trustee and each
predecessor Trustee under Section 7.6.
All rights of action and of asserting claims under this Indenture or under
any of the Securities and Coupons, if any, of any series may be enforced by the
Trustee without the possession of any of the Securities and Coupons, if any, of
that series or the production thereof at any trial or other proceedings relative
thereto, and any such action or proceedings instituted by the Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment shall, after provision for all amounts due the Trustee and each
predecessor Trustee under Section 7.6, be for the ratable benefit of the Holders
of the Securities and Coupons, if any, of such series.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to, or accept or adopt on behalf of any Securityholder, any
plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Securityholder, or to authorize the Trustee to
vote in respect of the claim of any Securityholder in any such proceeding.
In case of an Event of Default hereunder, the Trustee may in its discretion
proceed to protect and enforce the rights vested in it by this Indenture by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any of such rights, either at law or in equity or in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Indenture, or to enforce any other legal or
equitable right vested in the Trustee by this Indenture or by law.
<PAGE>
52
Section 6.3 Application of Money Collected. Any moneys collected by the
------------------------------
Trustee pursuant to Section 6.2 shall be applied in the order following, at the
date or dates fixed by the Trustee, and in case of the distribution of such
moneys on account of principal (or premium, if any) or interest upon
presentation of the Securities, and stamping or notation thereon of the payment,
if only partially paid, and upon surrender thereof if fully paid:
FIRST: To the payment of out-of-pocket costs and expenses of collection,
and reasonable compensation and all other amounts due to the Trustee and each
predecessor Trustee under Section 7.6;
SECOND: In case the principal (or premium, if any) of such Securities
shall not have become due, to the payment of interest on such Securities and
Coupons, if any, in the order of the maturity of the installments of such
interest, with interest (to the extent that such interest has been collected by
the Trustee) upon the overdue installments of interest at the rate borne by such
Securities and Coupons, if any, such payments to be made ratably to the Persons
entitled thereto, without discrimination or preference;
THIRD: In case the principal of (and premium, if any, on) such Securities
shall have become due, by declaration or otherwise, to the payment of the whole
amount then owing and unpaid upon such Securities and Coupons, if any, for
principal (and premium, if any) and interest, with interest on the overdue
principal (and premium, if any) and (to the extent that such interest has been
collected by the Trustee) upon overdue installments of interest at the rate
borne by such Securities and Coupons, if any; and in case such money shall be
insufficient to pay in full the whole amount so due and unpaid upon such
Securities, then to the payment of such principal and interest, without
preference or priority of principal over interest, or of interest over
principal, or of any installment of interest over any other installment of
interest, or of any Security over any other Security, ratably to the aggregate
of such principal and accrued and unpaid interest; and
FOURTH: To the payment of the remainder and accrued interest remaining on
any money collected by the Trustee pursuant to Section 6.2, if any, to the
Company or its respective successors or assigns, or to whomsoever may be
lawfully entitled to receive the same, or as a court of competent jurisdiction
may direct.
Section 6.4 Limitation on Suits: Unconditional Rights of Holders. No
----------------------------------------------------
Holder of any Security of any series shall have any right by virtue or by
availing of any provision of this Indenture to institute any action or
proceeding at law or in equity or in bankruptcy or otherwise, upon or under or
with respect to this Indenture, or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless such Holder previously shall have
given to the Trustee written notice of default and of the continuance thereof,
as hereinbefore provided, and unless also the Holders of not less than 25% in
aggregate principal amount of the Securities of that series then Outstanding
shall have made written request upon the Trustee to institute such action or
proceedings in its own name as trustee hereunder and shall have offered to the
Trustee such reasonable security or indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for 60 days after its receipt of such notice, request and offer of
security or indemnity, shall
<PAGE>
53
have failed to institute any such action or proceedings and no direction
inconsistent with such written request shall have been given to the Trustee
pursuant to Section 6.6; it being understood and intended and being expressly
covenanted by the Holder of every Security of any series with every other Holder
and the Trustee, that no one or more Holders of Securities of that series shall
have any right in any manner whatever by virtue or by availing of any provision
of this Indenture to affect, disturb or prejudice the rights of the Holders of
any other of such Securities, or to obtain or seek to obtain priority over or
preference to any other such Holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all Holders of Securities of such series. For the protection
and enforcement of the provisions of this Section 6.4, each and every
Securityholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.
Notwithstanding any other provision in this Indenture, the Holder of any
Security or any Coupon shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium, if any),
interest (subject to Section 2.9) on such Security, or Coupon on the Stated
Maturity or Maturities expressed in such Security (or, in the case of
redemption, on the Redemption Date) and to institute suit for the enforcement of
any such payment, and such rights shall not be impaired without the consent of
such Holder.
Notwithstanding any other provision of this Indenture, the right of a
Holder of any Security which is convertible into any other security of the
Company to convert the Security, or to bring suit for the enforcement of the
right to convert the Security, shall not be impaired or affected without the
consent of the Holder.
Section 6.5 Remedies Cumulative, Restoration of Rights and Remedies.
-------------------------------------------------------
Except as provided by Section 2.6, all powers and remedies given by this Article
6 to the Trustee or to the Securityholders shall, to the extent permitted by
law, be deemed cumulative and not exclusive of any thereof or of any other
powers and remedies available to the Trustee or the Securityholders, by judicial
proceedings or otherwise, to enforce the performance and observance of the
covenants and agreements contained in this Indenture, and no delay or omission
of the Trustee or of any Holder of any of the Securities of any series to
exercise any right or power accruing upon any default occurring and continuing
as aforesaid shall impair any such right or power, or shall be construed to be a
waiver of any such default or an acquiescence therein; and, subject to the
provisions of Section 6.4, every power and remedy given by this Article 6 or by
law to the Trustee or to the Securityholders may be exercised from time to time,
and as often as shall be deemed expedient, by the Trustee or by the
Securityholders.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
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54
No delay or omission of the Trustee or of any Holder of any Securities to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
Section 6.6 Control by Holders: Waiver of Past Default. The Holders of a
------------------------------------------
majority in aggregate principal amount of the Securities of any series at the
time Outstanding shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee affecting the Securities of such
series; provided, however, that, subject to the provisions of Section 7.1
hereof, the Trustee shall have the right to decline to follow any such direction
if the Trustee, being advised by counsel of its selection, determines that the
action so directed may not lawfully be taken, or if the Trustee in good faith
shall, by a Responsible Officer or officers, determine that the action so
directed would be unduly prejudicial to the Holders of the Securities of such
series not taking part in such direction (it being understood that (subject to
Section 7.1) the Trustee shall have no duty to ascertain whether or not such
action is unduly prejudicial to such Holders) or would involve the Trustee in
personal liability. Nothing in this Indenture shall impair the right of the
Trustee to take any other action deemed reasonably proper by the Trustee which
is not inconsistent with such direction. Prior to the declaration of the
maturity of the Securities of such series as provided in Section 6.1 hereof, the
Holders of a majority in aggregate principal amount of the Securities of such
series at the time Outstanding may on behalf of the Holders of all of the
Securities of such series waive any past default hereunder and its consequences,
except a default in the payment of the principal of (or premium, if any) or
interest on any of the Securities of such series or in respect of a covenant or
provision hereof which cannot be modified or amended without the consent of the
Holder of each Security affected. In the case of any such waiver, the Company,
the Trustee and the Holders of the Securities of that series shall be restored
to their former positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other default or impair any right consequent
thereon.
Section 6.7 Notice of Defaults. Within 90 days after the occurrence of
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any default hereunder with respect to the Securities of any series, the Trustee
shall transmit notice as provided in Section 5.4(c) of such default hereunder
known to the Trustee, unless such default shall have been cured or waived;
provided, however, that, except in the case of a default in the payment of the
principal of (or premium, if any) or interest on any Security of such series or
in the payment of any sinking fund installment with respect to Securities of
such series, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or a trust committee of
directors or Responsible Officers of the Trustee in good faith determine that
the withholding of such notice is in the interest of the Holders of Securities
of such series; provided, further, that in the case of any default of the
character specified in Section 6.1(d) with respect to Securities of such series,
no such notice to Holders shall be given until at least 30 days after the
occurrence of an Event of Default. For the purpose of this Section, the term
"default" means any event which is, or
<PAGE>
55
after notice or lapse of time or both would become, an Event of Default with
respect to Securities of such series.
Section 6.8 Undertaking for Costs. All parties to this Indenture agree,
---------------------
and each Holder of any Security of any series by his acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section 6.8 shall not apply to
any suit instituted by the Trustee, to any suit instituted by any Securityholder
or group of Securityholders holding in the aggregate more than 10% in principal
amount of the Securities of any series outstanding or to any suit instituted by
any Securityholder for the enforcement of the payment of the principal of (or
premium, if any), or interest on any Security of such series on or after the due
date expressed in such Security (or in the case of redemption, on the Redemption
Date).
Section 6.9 Special Record Date for Consents. The Company may set a
--------------------------------
record date for purposes of determining the identity of Securityholders entitled
to vote or consent to any action by vote or consent authorized or permitted by
Section 6.6 of this Indenture. Such record date shall be the later of thirty
(30) days prior to the first solicitation of such consent or the date of the
most recent list of holders furnished to the Trustee pursuant to Section 5.1 of
this Indenture prior to such solicitation.
ARTICLE 7.
CONCERNING THE TRUSTEE
Section 7.1 Certain Duties and Responsibilities. The Trustee, prior to
-----------------------------------
the occurrence of an Event of Default with respect to Securities of any series
and after the curing or waiving of all Events of Default with respect to
Securities of any series which may have occurred, undertakes to perform such
duties and only such duties as are specifically set forth in this Indenture with
respect to such series. In case an Event of Default with respect to Securities
of any series has occurred (which has not been cured or waived), the Trustee
shall exercise such of the rights and powers vested in it by this Indenture with
respect to such series, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default with respect to
Securities of any series and after the curing or waiving of all Events of
Default with respect to Securities of any series which may have occurred:
<PAGE>
56
(1) the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Indenture, and the Trustee shall
not be liable except for the performance of such duties and obligations as
are specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee by the Company and conforming to the
requirements of this Indenture; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Indenture;
(b) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to any action taken,
suffered or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a majority in aggregate principal
amount of the Securities of any series at the time Outstanding (determined as
provided in Section 8.4) relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee, under this Indenture; and
(d) none of the provisions of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any personal
financial liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if there shall be reasonable grounds
for believing that repayment of such funds or adequate security or indemnity
against such risk or liability is not reasonably assured to it.
Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section
7.1.
Section 7.2 Certain Rights of Trustee. Subject to the provisions of
-------------------------
Section 7.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, and order, bond, debenture, note or
other paper or document believed by it to be genuine to have been signed or
presented by the proper party or parties;
(b) any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officers' Certificate signed in the
name of the Company (unless other evidence in respect thereof be herein
specifically prescribed); and any resolution
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57
of the Board of Directors of the Company may be evidenced to the Trustee by a
copy thereof certified by the Secretary or an Assistant Secretary of the
Company;
(c) the Trustee may consult with counsel selected by it and the
written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken or suffered
or omitted by it hereunder in good faith and in accordance with such written
advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, note or other
paper or document, unless requested in writing so to do by the holders of a
majority in aggregate principal amount of the Securities then outstanding;
provided, however, that if the payment within a reasonable time to the Trustee
of the costs, expenses or liabilities likely to be incurred by it in the making
of such investigation is, in the opinion of the Trustee, not reasonably assured
to the Trustee by the security conferred upon it by the terms of this Indenture,
the Trustee may require reasonable security or indemnity against such costs,
expenses or liabilities as a condition to such proceeding; the reasonable
expense for such investigation shall be paid by the Company, or if paid by the
Trustee, shall be repaid by the Company upon demand; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
Section 7.3 Not Responsible for Recitals or Issuance of Securities.
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The recitals contained herein and in the Securities shall be taken as the
statements of the Company, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the
validity or sufficiency of this Indenture or of the Securities. Neither the
Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of any of the Securities or of the proceeds thereof.
Section 7.4 May Hold Securities. The Trustee, any Paying Agent, any
-------------------
Security Registrar, or any agent of the Company or the Trustee, in its
individual or any other capacity, may become the owner or pledgee of Securities
or warrants to purchase Securities and, subject to Sections 7.8 and 7.13, may
otherwise deal with, and collect obligations owed
<PAGE>
58
to it by, the Company with the same rights it would have if it were not Trustee,
Paying Agent, Security Registrar or such agent.
Section 7.5 Money Held in Trust. Subject to the provisions of
-------------------
Section 12.5 hereof, all moneys received by the Trustee or any Paying Agent
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be segregated from other
funds except to the extent required by law. So long as no Event of Default
shall have occurred and be continuing, all interest allowed on any such moneys
pursuant to Section 4.5(a) shall be paid to the Company upon request from time
to time.
Section 7.6 Compensation and Reimbursement. The Company covenants
------------------------------
and agrees to pay to the Trustee from time to time, and the Trustee shall be
entitled to, such compensation as shall be agreed upon in writing (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust), and, except as otherwise expressly provided
herein, the Company will pay or reimburse the Trustee upon its request for all
costs and expenses of collection and all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any of the
provisions of this Indenture (including the reasonable compensation and the
expenses and disbursements of its counsel and agents) except any such expense,
disbursement or advance as may arise from its negligence or bad faith. The
Company also covenants to indemnify each of the Trustee and any predecessor
Trustee for, and to hold each of them harmless against, any loss, liability or
expense incurred without negligence or bad faith on the part of the Trustee or
such predecessor Trustee, as the case may be, arising out of or in connection
with the acceptance or administration of this trust and its duties hereunder,
including the reasonable cost and expense of defending itself against any claim
of liability in connection with the exercise or performance of its powers or
duties hereunder. The obligations of the Company under this Section 7.6 to
compensate and indemnify the Trustee and any predecessor Trustee and to pay or
reimburse the Trustee for costs of collection and expenses, disbursements and
advances shall constitute additional indebtedness hereunder and shall survive
the satisfaction and discharge of this Indenture. Such additional indebtedness
shall be secured by a senior claim to which the Securities are hereby made
subordinate upon all property and funds held or collected by the Trustee as
such, except funds held in trust for the benefit of the holders of particular
Securities.
Section 7.7 Right to Rely on Officers' Certificate. Subject to the
--------------------------------------
provisions of Section 7.1, whenever in the administration of the provisions of
this Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or suffering or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of bad faith on the part of the
Trustee, be deemed to be conclusively proved and established by an Officers'
Certificate of the Company delivered to the Trustee and such Certificate, in the
absence of bad faith on the part of the Trustee, shall be full warrant to the
Trustee for any action taken, suffered or omitted by it under the provisions of
this Indenture upon the faith thereof.
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59
Section 7.8 Disqualification: Conflicting Interests.
----------------------------------------
(a) If the Trustee has or shall acquire any conflicting interest, as
defined in this Section 7.8, it shall, within 90 days after ascertaining that it
has such conflicting interest, and if the Event of Default (exclusive of any
period of grace or requirement of notice) to which such conflicting interest
relates has not been cured or duly waived or otherwise eliminated before the end
of each 90-day period, either eliminate such conflicting interest or, except as
otherwise provided below in this Section 7.8, resign in the manner and with the
effect specified in Section 7.10, such resignation to become effective upon the
appointment of a successor trustee and such successor's acceptance of such
appointment, and the Company shall take prompt steps to have a successor
appointed in the manner provided in Section 7.10.
(b) In the event that the Trustee shall fail to comply with the
provisions of subsection (a) of this Section 7.8, with respect to Securities of
any series, the Trustee shall, within 10 days after the expiration of such 90-
day period, transmit notice of such failure to the Securityholders of such
series in the manner and to the extent provided in subsection (c) of Section
5.4.
(c) For the purposes of this Section 7.8, each series issued under
this Indenture will be considered to have been issued under a separate indenture
and the Trustee shall be deemed to have a conflicting interest with respect to
any series issued under this Indenture if there shall have occurred an Event of
Default and:
(1) the Trustee is trustee under another indenture under which any
other securities, or certificates of interest or participation in any other
securities, of the Company are outstanding or is a trustee for more than
one outstanding series of Securities, as hereinafter defined, under a
single indenture of the Company, unless such other indenture is a
collateral trust indenture under which the only collateral consists of
Securities issued under this Indenture; provided that there shall be
excluded from the operation of this paragraph this Indenture with respect
to the Securities of any series other than that series or any indenture or
indentures under which other securities, or certificates of interest or
participation in other securities, of the Company are outstanding, if (i)
this Indenture and such other indenture or indentures and all series of
securities issuable are wholly unsecured and rank equally and such other
indenture or indentures (and such series) are specifically described in
Section 7.17 of this Indenture or are hereafter qualified under the Trust
Indenture Act of 1939, unless, in either case, the Commission shall have
found and declared by order pursuant to subsection (b) of Section 305 or
subsection (c) of Section 307 of the Trust Indenture Act of 1939 that
differences exist between the provisions of this Indenture (or such series)
and the provisions of such other indenture or indentures (or such series)
which are so likely to involve a material conflict of interest as to make
it necessary in the public interest or for the protection of investors to
disqualify the Trustee from acting as such under this Indenture or such
other indenture or indentures, or (ii) the Company shall have sustained the
burden of proving, on application to the Commission and after opportunity
for hearing thereon, that the trusteeship under this Indenture and such
other indenture or the existence of more than one outstanding series under
a single
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60
indenture is not so likely to involve a material conflict of interest as to
make it necessary in the public interest or for the protection of investors
to disqualify the Trustee from acting as such under one of such indentures
or with respect to such series;
(2) the Trustee or any of its directors or executive officers is an
underwriter for the Company;
(3) the Trustee directly or indirectly controls or is directly or
indirectly controlled by or is under direct or indirect common control with
an underwriter for the Company;
(4) the Trustee or any of its directors or executive officers is a
director, officer, partner, employee, appointee or representative of the
Company or of an underwriter (other than the Trustee itself) for the
Company who is currently engaged in the business of underwriting, except
that (A) one individual may be a director and/or an executive officer of
the Trustee and a director and/or an executive officer of the Company, but
may not be at the same time an executive officer of both the Trustee and
the Company; (B) if and so long as the number of directors of the Trustee
in office is more than nine, one additional individual may be a director
and/or an executive officer of the Trustee and a director of the Company,
and (C) the Trustee may, be designated by the Company or by any underwriter
for the Company to act in the capacity of transfer agent, registrar,
custodian, paying agent, fiscal agent, escrow agent or depository, or in
any other similar capacity, or, subject to the provisions of paragraph (1)
of this subsection (c), to act as trustee whether under an indenture or
otherwise;
(5) 10% or more of the voting securities of the Trustee is
beneficially owned either by the Company or by any director, partner or
executive officer thereof, or 20% or more of such voting securities is
beneficially owned, collectively, by any two or more of such persons; or
10% or more of the voting securities of the Trustee is beneficially owned
either by an underwriter for the Company or by any director, partner or
executive officer thereof, or is beneficially owned, collectively, by any
two or more of such persons;
(6) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default, (A) 5% or more of the
voting securities, or 10% or more of any other class of security, of the
Company, not including the Securities issued under this Indenture and
securities issued under any other indenture under which the Trustee is also
trustee, or (B) 10% or more of any class of security of an underwriter for
the Company;
(7) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter defined in
this subsection), 5% or more of the voting securities of any person who, to
the knowledge of the Trustee, owns
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61
10% or more of the voting securities of, or controls directly or indirectly
or is under direct or indirect common control with, the Company;
(8) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter defined in
this subsection), 10% or more of any class of security of any person who,
to the knowledge of the Trustee, owns 50% or more of the voting securities
of the Company;
(9) the Trustee owns, on the date of an Event of Default upon the
Securities (exclusive of any period of grace or requirement of notice) or
any anniversary of such Event of Default while such Event of Default upon
the Securities remains outstanding, in the capacity of executor,
administrator, testamentary or inter vivos trustee, guardian, committee or
conservator, or in any other similar capacity, an aggregate of 25% or more
of the voting securities, or of any class of security, of any person, the
beneficial ownership of a specified percentage of which would have
constituted a conflicting interest under paragraphs (6), (7) or (8) of this
subsection (c). As to any such securities of which the Trustee acquired
ownership through becoming executor, administrator or testamentary trustee
of an estate which included them, the provisions of the preceding sentence
shall not apply, for a period of two years from the date of such
acquisition, to the extent that such securities included in such estate do
not exceed 25% of such voting securities or 25% of any such class of
security. Promptly after the dates of any such Event of Default and
annually in each succeeding year that such Event of Default is continuing,
the Trustee shall make a check of its holdings of such securities in any of
the above-mentioned capacities as of such dates. If the Company fails to
make payment in full of principal of or interest on any of the Securities
when and as the same become due and payable, and such failure continues for
30 days thereafter, the Trustee shall make a prompt check of its holdings
of such securities in any of the above-mentioned capacities as of the date
of the expiration of such 30-day period, and after such date,
notwithstanding the foregoing provisions of this paragraph (9), all such
securities so held by the Trustee, with sole or joint control over such
securities vested in it, shall, but only so long as such failure shall
continue, be, considered as though beneficially owned by the Trustee for
the purposes of paragraphs (6), (7) and (8) of this subsection (c).
(10) except under the circumstances described in paragraphs (1), (3),
(4), (5) or (6) of Section 7.13(b) of this Indenture, the Trustee shall be
or shall become a creditor of the Company.
For purposes of paragraph (1) of this Section 7.8(c), the term "series
of securities" or "series" means a series, class or group of securities issuable
under an indenture pursuant to whose terms holders of one such series may vote
to direct the indenture trustee, or otherwise take action pursuant to a vote of
such holders, separately from holders of another such series; provided, that
"series of securities" or "series" shall not include any series of securities
issuable under an indenture if all such series rank equally and are wholly
unsecured.
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62
The specifications of percentages in paragraphs (5) to (9), inclusive,
of this subsection (c) shall not be construed as indicating that the ownership
of such percentages of the securities of a person is or is not necessary or
sufficient to constitute direct or indirect control for the purposes of
paragraph (3) or (7) of this subsection (c); or
For the purposes of paragraphs (6), (7), (8) and (9) of this
subsection (c) only, (A) the terms "security" and "securities" shall include
only such securities as are generally known as corporate securities, but shall
not include any note or other evidence of indebtedness issued to evidence an
obligation to repay moneys lent to a person by one or more banks, trust
companies or banking firm, or any certificate of interest or participation in
any such note or evidence of indebtedness; (B) an obligation shall be deemed to
be "in default" when a default in payment of principal shall have continued for
30 days or more and shall not have been cured; and (C) the Trustee shall not be
deemed to be the owner or holder of (i) any security which it holds as
collateral security (as trustee or otherwise) for an obligation which is not in
default as defined in clause (B) above, or (ii) any security which it holds as
collateral security under this Indenture, irrespective of any default hereunder,
or (iii) any security which it holds as agent for collection, or as custodian,
escrow agent or depository, or in any similar representative capacity.
Except as above provided, the words "security" or "securities" as used
in this Indenture shall mean any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in any profit
sharing agreement, collateral trust certificate, preorganization certificate or
subscription, transferable share, investment contract, voting trust certificate,
certificate of deposit for a security, fractional undivided interest in oil, gas
or other mineral rights, or, in general, any interest or instrument commonly
known as a "security," or any certificate of interest or participation in,
temporary or interim certificate for, receipt for, guarantee of, or warrant or
right to subscribe to or purchase, any of the foregoing.
Except in the case of a default in the payment of the principal of or
interest on any Security, the Trustee shall not be required to resign as
provided by this subsection if the Trustee shall have sustained the burden of
proving, on application to the Commission and after opportunity for hearing
thereon, that:
(i) the default under this Indenture may be cured or waived during a
reasonable period and under the procedures described in such application, and
(ii) a stay of the Trustee's duty to resign will not be inconsistent
with the interests of holders of the Securities. The filing of such an
application shall automatically stay the performance of the duty to resign until
the Commission orders otherwise.
(d) For the purposes of this Section 7.8:
(1) The term "underwriter" when used with reference to the Company
shall mean every person who, within one year prior to the time as of which
the determination is made, has purchased from the Company with a view to,
or has
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63
offered or sold for the Company in connection with, the distribution of any
security of the Company outstanding at such time, or has participated or
has had a direct or indirect participation in any such undertaking, or has
participated or has had a participation in the direct or indirect
underwriting of any such undertaking, but such term shall not include a
person whose interest was limited to a commission from an underwriter or
dealer not in excess of the usual and customary distributors' or sellers'
commission.
(2) The term "director" shall mean any director of a corporation or
any individual performing similar functions with respect to any
organization whether incorporated or unincorporated.
(3) The term "person" shall mean an individual, a corporation, a
partnership, an association, a joint stock company, a trust, an
unincorporated organization, or a government or political subdivision
thereof. As used in this paragraph, the term "trust" shall include only a
trust where the interest or interests of the beneficiary or beneficiaries
are evidenced by a security.
(4) The term "voting security" shall mean any security presently
entitling the owner or holder thereof to vote in the direction or
management of the affairs of a person, or any security issued under or
pursuant to any trust, agreement or arrangement whereby a trustee or
trustees or agent or agents for the owner or holder of such security are
presently entitled to vote in the direction or management of the affairs of
a person.
(5) The term "Company" shall mean any obligor upon the Securities.
(6) The term "executive officer" shall mean the president, every vice
president, every trust officer, the cashier, the secretary, and the
treasurer of a corporation, and any individual customarily performing
similar functions with respect to any organization whether incorporated or
unincorporated, but shall not include the chairman of the board of
directors.
(e) The percentages of voting securities and other securities specified in
this Section 7.8 shall be calculated in accordance with the following
provisions:
(1) A specified percentage of the voting securities of the Trustee,
the Company or any other person referred to in this Section 7.8 (each of
whom is referred to as a "person" in this paragraph) means such amount of
the outstanding voting securities of such person as entitles the holder or
holders thereof to cast such specified percentage of the aggregate votes
which the holders of all the outstanding voting securities of such person
are entitled to cast in the direction or management of the affairs of such
person.
(2) A specified percentage of a class of securities of a person means
such percentage of the aggregate amount of securities of the class
outstanding.
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64
(3) The term "amount," when used in regard to securities, means the
principal amount if relating to evidences of indebtedness, the number of
shares if relating to capital shares, and the number of units if relating
to any other kind of security.
(4) The term "outstanding" means issued and not held by or for the
account of the issuer. The following securities shall not be deemed
outstanding within the meaning of this definition:
(A) securities of an issuer held in a sinking fund relating to
securities of the issuer of the same class;
(B) securities of an issuer held in a sinking fund relating to
another class of securities of the issuer, if the obligation evidenced
by such other class of securities is not in default as to principal or
interest or otherwise;
(C) securities pledged by the issuer thereof as security for an
obligation of the issuer not in default as to principal or interest or
otherwise;
(D) securities held in escrow if placed in escrow by the issuer
thereof; provided, however, that any voting securities of an issuer
shall be deemed outstanding if any person other than the issuer is
entitled to exercise the voting rights thereof.
(5) A security shall be deemed to be of the same class as another
security if both securities confer upon the holder or holders thereof
substantially the same rights and privileges; provided, however, that, in
the case of secured evidences of indebtedness, all of which are issued
under a single indenture, differences in the interest rates or maturity
dates of various series thereof shall not be deemed sufficient to
constitute such series different classes and provided, further, that, in
the case of unsecured evidences of indebtedness, differences in the
interest rates or maturity dates thereof shall not be deemed sufficient to
constitute them securities of different classes, whether or not they are
issued under a single indenture.
Section 7.9 Corporate Trustee Required; Eligibility. The Trustee
---------------------------------------
hereunder shall at all times be a corporation organized and doing business under
the laws of the United States or of any State or of the District of Columbia,
authorized under such laws to exercise corporate trust powers, either (a) having
a combined capital and surplus of at least fifty million dollars ($50,000,000)
or (b) having a combined capital and surplus of at least ten million dollars
($10,000,000) and being a wholly-owned subsidiary of a corporation having a
combined capital and surplus of at least fifty million dollars ($50,000,000),
and in each case subject to supervision or examination by Federal, State or
District of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 7.9, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of
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65
this Section 7.9, the Trustee shall resign immediately in the manner and with
the effect specified in Section 7.10. Neither the Company or any other obligor
upon the Securities, nor any person directly or indirectly controlling,
controlled by, or under common control with such obligor shall serve as Trustee
under this Indenture.
Section 7.10 Resignation and Removal: Assignment of Successor.
------------------------------------------------
(a) The Trustee, or any Trustee or Trustees hereafter appointed, may
resign at any time with respect to the Securities of one or more series by
giving written notice of resignation to the Company and notice to the
Securityholders of that series in the manner specified in Section 1.4 within 30
days after such notice is given to the Company. Upon receiving such notice of
resignation and, if the Company shall deem it appropriate, evidence satisfactory
to it of such mailing, the Company shall promptly appoint a successor Trustee or
Trustees with respect to the Securities of that or those series (it being
understood that any such successor Trustee may be appointed with respect to the
Securities of one or more or all of such series and that at any time there shall
be only one Trustee with respect to the Securities of any particular series) by
Company Order, one copy of which shall be delivered to the resigning Trustee and
one copy to the successor Trustee. If no successor Trustee with respect to the
Securities of any series shall have been so appointed and have accepted
appointment within 30 days after the mailing of such notice of resignation, the
resigning Trustee of such series may petition any court of competent
jurisdiction for the appointment of a successor Trustee, or any Securityholder
who has been a bona fide Holder of a Security or Securities of that series for
at least six months may, subject to the provisions of Section 6.8, on behalf of
himself and all others similarly situated, petition any such court for the
appointment of a successor Trustee with respect to the Securities of such
series. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, appoint a successor Trustee with respect to the Securities
of such series.
(b) In case at any time any of the following shall occur
(1) the Trustee shall fail to comply with the provisions of
subsection (a) of Section 7.8 after written request therefor by the Company
or by any Securityholder who has been a bona fide Holder of a Security or
Securities for at least six months, unless the Trustee's duty to resign is
stayed as provided in Section 7.8 of this Indenture, or
(2) the Trustee shall cease to be eligible in accordance with the
provisions of Section 7.9 and shall fail to resign after written request
therefor by the Company or by any such Securityholder, or
(3) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, or
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66
(4) the Company shall for any other reason determine that the Trustee
shall be removed, provided that at the time of such removal there exists no
Event of Default or no event which, with the passage of time or giving of
notice, would become an Event of Default, then, in any such case, the
Company may remove the Trustee with respect to all Securities and appoint a
successor Trustee by Order of the Company, one copy of which shall be
delivered to the Trustee so removed and one copy to the successor Trustee,
or, subject to the provisions of Section 6.8, any Securityholder who has
been a bona fide Holder of a Security or Securities for at least six months
may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee with respect
to all Securities and the appointment of a successor Trustee or Trustees.
Such court may thereupon, after such notice, if any, as it may deem proper
and prescribe, remove the Trustee and appoint a successor Trustee.
(c) The Holders of a majority in aggregate principal amount of the
Securities at the time Outstanding may at any time remove the Trustee and
appoint a successor Trustee by delivery to the Trustee so removed, to the
successor Trustee and to the Company of the evidence provided for in Section 8.1
of the action taken by the Securityholders.
(d) Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 7.10 shall
become effective upon acceptance of appointment by the successor Trustee or
Trustees as provided in Section 7.11.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of the Trustee for any cause, with
respect to the Securities of one more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or more
or all of such series and that at any time there shall be only one Trustee with
respect to the Securities of any particular series) and such successor Trustee
or Trustees shall comply with the applicable requirements of Section 7.11. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee with respect to the Securities
of any series shall be appointed by Act of the Holders of a majority in
principal amount of the Outstanding Securities of such series delivered to the
Company and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment in accordance with the
applicable requirements of Section 7.11, become the successor Trustee with
respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee with
respect to the Securities of any series shall have been so appointed by the
Company or the Holders and accepted appointment in the manner required by
Section 7.11, any Holder who has been a bona fide Holder of a Security of such
series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
(f) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor
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67
Trustee with respect to the Securities of any series by giving notice of such
event to all Holders of Securities of such series as provided by Section 1.4.
Each notice shall include the name of the successor Trustee with respect to the
Securities of such series and the address of its Corporate Trust Office.
Section 7.11 Acceptance of Appointment by Successor.
--------------------------------------
(a) Any successor Trustee appointed as provided in Section 8.10 with
respect to all Securities shall execute, acknowledge and deliver to the Company
and to its predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor Trustee
shall become effective and such successor Trustee without any further act, deed
or conveyance, shall become vested with all the rights, powers, duties and
obligations of its predecessors hereunder, with like effect as if originally
named as Trustee herein; but, nevertheless, on the written request of the
Company or of the successor Trustee, the Trustee ceasing to act shall execute
and deliver an instrument transferring to such successor Trustee all the rights
and powers of the Trustee so ceasing to act. Upon request of any such successor
Trustee, the Company shall execute any and all instruments in writing for more
fully and certainly vesting in and confirming to such successor Trustee all such
rights and powers. Any Trustee ceasing to act shall, nevertheless, retain a
senior claim upon all property or funds held or collected by such Trustee to
secure any amounts then due it pursuant to the provisions of Section 7.6.
(b) In case of the appointment of a successor Trustee as provided in
Section 7.10 with respect to the Securities of one or more (but not all) series,
the Company, the predecessor Trustee and each successor Trustee with respect to
the Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such appointment
and which (1) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee all the
rights, powers, trusts and duties of the predecessor Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates, (2) if the predecessor Trustee is not retiring with respect to
all Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
predecessor Trustee with respect to the Securities of that or those series as to
which the predecessor Trustee is not retiring shall continue to be vested in the
predecessor Trustee, and (3) shall add to or change any of the provisions of
this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the predecessor Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the predecessor Trustee with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates; but, on
request of the Company or any successor Trustee, such predecessor Trustee shall
duly assign, transfer and deliver to such
<PAGE>
68
successor Trustee all property and money held by such predecessor Trustee
hereunder with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates. Whenever there is a successor
Trustee with respect to one or more (but less than all) series of Securities
issued pursuant to this Indenture, the terms "Indenture" and "Securities" shall
have the meanings specified in the provisos to the respective definitions of
those terms in Section 1.1 which contemplate such situation.
(c) No successor Trustee shall accept appointment as provided in this
Section 7.11 unless at the time of such acceptance such successor Trustee shall
be qualified under the provisions of Section 7.8 and eligible under the
provisions of Section 7.9. Upon acceptance of appointment by a successor
Trustee as provided in this Section 7.11, the Company shall mail to the
Securityholders by first-class mail notice thereof. If the Company fails to
mail such notice within 30 days after acceptance of appointment by the successor
Trustee, the successor Trustee shall, in its discretion, cause such notice to be
mailed at the expense of the Company.
Section 7.12 Merger, Conversion, Consolidation, Etc. Any corporation into
---------------------------------------
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger or conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation shall be qualified
under the provisions of Section 7.8 and eligible under the provisions of Section
7.9, without the execution or filing of any paper or any further act on the part
of any of the parties hereto, anything herein to the contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture and any of the Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor Trustee and deliver such
Securities so authenticated; and in case at that time any of the Securities
shall not have been authenticated, any successor to the Trustee may authenticate
such Securities either in the name of any predecessor hereunder or in the name
of the successor Trustee; and in all such certificates shall have the full force
which it is anywhere in the Securities or in this Indenture provided that the
certificate of the Trustee shall have; provided, however, that the right to
adopt the certificate of authentication of any predecessor Trustee or
authenticate Securities in the name of any predecessor Trustee shall apply only
to its successor or successors by merger, conversion or consolidation.
Section 7.13 Preferential Collection of Claims Against Company.
-------------------------------------------------
(a) Subject to the provisions of subsection (b) of this Section 7.13, if
the Trustee shall be or shall become a creditor, directly or indirectly, secured
or unsecured, of the Company or of any other obligor on the Securities within
three months prior to a default, as defined in subsection (c) of this Section
7.13, or subsequent to such a default, then, unless and until such default shall
be cured, the Trustee shall set apart and hold in a special account for the
benefit of the Trustee individually, the Holders of the Securities and Coupons,
if any,
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69
and the holders of other indenture securities (as defined in subsection (c) of
this Section 7.13):
(1) an amount equal to any and all reductions in the amount due and
owing upon any claim as such creditor in respect of principal or interest,
effected after the beginning of such three-month period and valid as
against the Company and its creditors, except any such reduction resulting
from the receipt or disposition of any property described in paragraph (2)
of this subsection, or from the exercise of any right of set-off which the
Trustee could have exercised if a petition in bankruptcy had been filed by
or against the Company upon the date of such default; and
(2) all property received by the Trustee in respect of any claim as
such creditor, either as security therefor, or in satisfaction or
composition thereof, or otherwise, after the beginning of such three-month
period, or an amount equal to the proceeds of any such property, if
disposed of, subject, however, to the rights, if any, of the Company and
its other creditors in such property or such proceeds.
Nothing herein contained, however, shall affect the right of the Trustee:
(A) to retain for its own account (i) payments made on account
of any such claim by any person (other than the Company who is liable
thereon, and (ii) the proceeds of the bona fide sale of any such claim
by the Trustee to a third person, and (iii) distributions made in
cash, securities or other property in respect of claims filed against
the Company in bankruptcy or receivership or in proceedings for
reorganization pursuant to Title 11 of the United States Code, as now
constituted or hereafter in effect, or applicable state law;
(B) to realize, for its own account, upon any property held by
it as security for any such claim, if such property was so held prior
to the beginning of such three-month period;
(C) to realize, for its own account, but only to the extent of
the claim hereinafter mentioned, upon any property held by it as
security for any such claim, if such claim was created after the
beginning of such three-month period and such property was received as
security therefor simultaneously with the creation thereof and if the
Trustee shall sustain the burden of proving that at the time such
property was so received the Trustee had no reasonable cause to
believe that a default as defined in subsection (c) of this Section
7.13 would occur within three months; or
(D) to receive payment on any claim referred to in paragraph (B)
or (C), against the release of any property held as security for such
claim as provided in such paragraph (B) or (C), as the case may be, to
the extent of the fair value of such property.
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70
For the purposes of paragraphs (B), (C) and (D), property substituted after
the beginning of such three-month period for property held as security at the
time of such substitution shall, to the extent of the fair value of the property
released, have the same status as the property released, and, to the extent that
any claim referred to in any such paragraphs is created in renewal of or in
substitution for or for the purpose of repaying or refunding any pre- existing
claim of the Trustee as such creditor, such claim shall have the same status as
such pre-existing claim.
If the Trustee shall be required to account, the funds and property held in
such special account and the proceeds thereof shall be apportioned between the
Trustee, the Securityholders and the holders of other indenture securities in
such manner that the Trustee, the Securityholders and the holders of other
indenture securities realize, as a result of payments from such special account
and payments of dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to Title 11 of the
United States Code, as now constituted or hereafter in effect, or applicable
bankruptcy, insolvency or other similar law, the same percentage of their
respective claims, figured before crediting to the claim of the Trustee anything
on account of the receipt by it from the Company of the finds and property in
such special account and before crediting to the respective claims of the
Trustee, the Securityholders and the holders of other indenture securities
dividends on claims filed against the Company in bankruptcy or receivership or
in proceedings for reorganization pursuant to Title 11 of the United States
Code, as now constituted or hereafter in effect, or applicable bankruptcy,
insolvency or other similar law, but after crediting thereon receipts on account
of the indebtedness represented by their respective claims from all sources
other than from such dividends and from the funds and property so held in such
special account. As used in this paragraph, with respect to any claim, the term
"dividends" shall include any distribution with respect to such claim, in
bankruptcy or receivership or in proceedings for reorganization pursuant to
Title 11 of the United States Code, as now constituted or hereafter in effect,
or applicable bankruptcy, insolvency or other similar law, whether such
distribution is made in cash, securities, or other property, but shall not
include any such distribution with respect to the secured portion, if any, of
such claim. The court in which such bankruptcy, receivership or proceeding for
reorganization is pending shall have jurisdiction (i) to apportion between the
Trustee, the Securityholders and the holders of other indenture securities, in
accordance with the provisions of this paragraph, the funds and property held in
such special account and the proceeds thereof, or (ii) in lieu of such
apportionment, in whole or in part, to give to the provisions of this paragraph
due consideration in determining the fairness of the distributions to be made to
the Trustee, the Securityholders and the holders of other indenture securities
with respect to their respective claims, in which event it shall not be
necessary to liquidate or to appraise the value of any securities or other
property held in such special account or as security for any such claim, or to
make a specific allocation of such distributions as between the secured and
unsecured portions of such claims, or otherwise to apply the provisions of this
paragraph as a mathematical formula.
Any Trustee who has resigned or been removed after the beginning of such
three-month period shall be subject to the provisions of this subsection (a) as
though such resignation or removal had not occurred. If any Trustee has
resigned or been removed prior
<PAGE>
71
to the beginning of such three-month period, it shall be subject to the
provisions of this subsection (a) if and only if the following conditions exist:
(1) the receipt of property or reduction of claim which would have
given rise to the obligation to account, if such Trustee had continued as
trustee, occurred after the beginning of such three-month period; and
(2) such receipt of property or reduction of claim occurred within
three months after such resignation or removal.
(b) There shall be excluded from the operation of subsection (a) of this
Section 7.13 a creditor relationship arising from:
(1) the ownership or acquisition of securities issued under any
indenture, or any security or securities having a maturity of one year or
more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court of
competent jurisdiction, or by this Indenture, for the purpose of preserving
any property which shall at any time be subject to the lien of this
Indenture or of discharging tax liens or other prior liens or encumbrances
thereon, if notice of such advance and of the circumstances surrounding the
making thereof is given to the Securityholders at the time and in the
manner provided in Section 5.4(c) with respect to reports pursuant to
subsections (a) and (b) thereof, respectively;
(3) disbursements made in the ordinary course of business in the
capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depository, or other similar
capacity;
(4) an indebtedness created as a result of services rendered or
premises rented, or an indebtedness created as a result of goods or
securities sold in a cash transaction as defined in subsection (c) of this
Section 7.13;
(5) the ownership of stock or of other securities of a corporation
organized under the provisions of Section 25(a) of the Federal Reserve Act,
as amended, which is directly or indirectly a creditor of the Company; or
(6) the acquisition, ownership, acceptance or negotiation of any
drafts, bills of exchange, acceptances or obligations which fall within the
classification of self liquidating paper as defined in subsection (c) of
this Section 7.13.
(c) As used in this Section 7.13:
(1) The term "default" shall mean any failure to make payment in full
of the principal of or interest upon any of the Securities or upon the
other indenture securities when and as such principal or interest becomes
due and payable.
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72
(2) The term "other indenture securities" shall mean securities upon which
the Company is an obligor (as defined in the Trust Indenture Act of 1939)
outstanding under any other indenture (A) under which the Trustee is also
trustee, (B) which contains provisions substantially similar to the
provisions of subsection (a) of this Section 7.13, and (C) under which a
default exists at the time of the apportionment of the funds and property
held in said special account.
(3) The term "cash transaction" shall mean any transaction in which
full payment for goods or securities sold is made within seven days after
delivery of the goods or securities in currency or in checks or other
orders drawn upon banks or bankers and payable upon demand.
(4) The term "self-liquidating paper" shall mean any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company for the purpose of financing the purchase,
processing, manufacture, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to,
possession of or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security, provided the security is
received by the Trustee simultaneously with the creation of the creditor
relationship with the Company arising from the making, drawing, negotiating
or incurring of the draft, bill of exchange, acceptance or obligation.
(5) The term "Company" shall mean any obligor upon the Securities.
Section 7.14 Appointment of Authenticating Agent. The Trustee may appoint
-----------------------------------
an Authenticating Agent or Agents (which may be an Affiliate of the Company if
eligible to be an Authenticating Agent hereunder) with respect to one or more
series of Securities which shall be authorized to act on behalf of the Trustee
to authenticate Securities of such series issued upon original issue or upon
exchange, registration of transfer or partial redemption thereof or pursuant to
Section 2.6, and Securities so authenticated shall be entitled to the benefits
of this Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Securities by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation having a
combined capital and surplus of not less than the equivalent of $50,000,000 and
subject to supervision or examination by Federal or State authority or the
equivalent foreign authority, in the case of an Authenticating Agent who is not
organized and doing business under the laws of the United States of America, any
State thereof or the District of Columbia. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Authenticating Agent
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time an Authenticating
<PAGE>
73
Agent shall cease to be eligible in accordance with the provisions of this
Section, such Authenticating Agent shall resign immediately in the manner and
with the effect specified in this Section.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency business
of any Authenticating Agent, shall be the successor of the Authenticating Agent
hereunder, if such successor corporation is otherwise eligible under this
Section 7.14 without the execution or filing of any paper or any further act on
the part of the Trustee or the Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written notice of
resignation to the Trustee, to the Company. The Trustee may at any time
terminate the agency of any Authenticating Agent by giving written notice of
termination to such Authenticating Agent and to the Company. Upon receiving
such a notice of resignation or upon such termination, or in case at any time
any Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 7.14, the Trustee promptly may appoint a successor
Authenticating Agent and shall give written notice of such appointment to the
Company, and shall cause a notice of any such appointment to be given in the
manner prescribed by Section 1.4, to the Holders of Securities of the series
with respect to which such Authenticating Agent shall act. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers, duties and responsibilities of its
predecessor hereunder, with like effect as if originally named as Authenticating
Agent. No successor Authenticating Agent shall be appointed unless eligible
under the provisions of this Section 7.14. The Trustee agrees to pay to the
Authenticating Agent from time to time reasonable compensation for its services,
to the extent such payment has not otherwise been made by the Company, and the
Trustee shall be entitled to be reimbursed for such payments subject to the
provisions of Section 7.6.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated therein issued
under the within-mentioned Indenture.
The Bank of New York
As Trustee
By
As Authenticating Agent
By
Authorized Officer Signatory
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74
If all of the Securities of a series may not be originally issued at one
time, and if the Trustee does not have an office capable of authenticating
Securities upon original issuance located in a Place of Payment or other place
where the Company wishes to have Securities of such series authenticated upon
original issuance, the Trustee, if so requested by the Company in writing (which
writing need not comply with Section 14.6 and need not be accompanied by an
Opinion of Counsel), shall appoint in accordance with this Section an
Authenticating Agent (which may be an Affiliate of the Company if eligible to be
appointed as an Authenticating Agent hereunder) having an office in such Place
of Payment or other place designated by the Company with respect to such series
of Securities.
Section 7.15 Judgment Currency. If for the purpose of obtaining a
-----------------
judgment in any court with respect to any obligation of the Company hereunder or
under any Security or Coupon, it shall become necessary to convert into any
other currency or currency unit any unit in the currency or currency unit due
hereunder or under such Security or Coupon, then such conversion shall be made
at the Currency Conversion Rate (as defined below) as in effect on the date the
Company shall make payment to any person in satisfaction of such judgment. If
pursuant to any such judgment, conversion shall be made on a date other than the
date payment is made and there shall occur a change between such Currency
Conversion Rate and the Currency Conversion Rate as in effect on the date of
payment, the Company agrees to pay such additional amounts (if any) as may be
necessary to ensure that the amount paid is the amount in such other currency or
currency unit which, when converted at the Currency Conversion Rate as in effect
on the date of payment or distribution, is the amount then due hereunder or
under such Security or Coupon. Any amount due from the Company under this
Section 7.15 shall be due as a separate debt and is not to be affected by or
merged into any judgment being obtained for any other sums due hereunder or in
respect of any Security or Coupon so that in any event the Company's obligations
hereunder or under such Security or Coupon will be effectively maintained as
obligations in such currency or currency unit. In no event, however, shall the
Company be required to pay more in the currency or currency unit stated to be
due hereunder or under such Security or Coupon.
For purposes of this Section 7.15, "Currency Conversion Rate" shall mean
the spot rate at which in accordance with normal banking procedures the currency
or currency unit into which an amount due hereunder or under any Security or
Coupon is to be converted could be purchased with the currency or currency unit
due hereunder or under any Security or Coupon from major banks located in New
York, London or any other principal market for such purchased currency or
currency unit.
Section 7.16 Corporate Trust Office. At the date of this Indenture, the
----------------------
Corporate Trust Office of the Trustee is located at 101 Barclay Street, New
York, New York, 10286. Attention: Corporate Trust Administrator.
<PAGE>
75
ARTICLE 8.
CONCERNING THE SECURITYHOLDERS
Section 8.1 Acts of Holders. Any request, demand, authorization,
---------------
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by agent duly appointed in writing. Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Holders of such series may, alternatively, be embodied in
and evidenced by the record of Holders of Securities of such series voting in
favor thereof, either in person or by proxies duly appointed in writing, at any
meeting of Holders of Securities of such series duly called and held in
accordance with the provisions of Article 9, or a combination of such
instruments and any such record. Except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments and record (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Holders signing such instrument or instruments or so voting at any such
meeting. Proof of execution of any such instrument, or any such record, or of a
writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 7.1) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Article 8. The record of
any meeting of Holders of Securities shall be proved in the manner provided in
Section 9.6.
Section 8.2 Authenticity of Instruments. The fact and date of the
---------------------------
execution by any Person of any such instrument or writing referred to in Section
8.1 may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is
by a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
Section 8.3 Authenticity of Bearer Securities.
---------------------------------
(a) The principal amount and serial numbers of Bearer Securities held by
any Person, and the date of holding the same, may be proved by the production of
such Bearer Securities or by a certificate executed by any trust company, bank,
banker or other depository, wherever situated, showing that at the date therein
mentioned such Person had on deposit with such depository, or exhibited to it,
the Bearer Securities therein described; or such facts may be proved by the
certificate or affidavit of the Person holding such Bearer Securities, if such
certificate or affidavit is deemed by the Trustee to be satisfactory. The
Trustee and the Company may assume that such ownership of any Bearer Security
continues until (1) another certificate or affidavit bearing a later date issued
in respect of the same Bearer Security is produced, (2) such Bearer Security is
produced to the Trustee by some other Person, (3) such
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76
Bearer Security is surrendered in exchange for a Registered Security or (4) such
Bearer Security is no longer Outstanding.
(b) The fact and date of execution of any such instrument or writing
pursuant to clause (a) above, the authority of the Person executing the same and
the principal amount and serial numbers of Bearer Securities held by the Person
so executing such instrument or writing and the date of holding the same may
also be proved in any other manner which the Trustee deems sufficient; and the
Trustee may in any instance require further proof with respect to any of the
matters referred to in this clause.
(c) The principal amount and serial numbers of Registered Securities held
by any Person and the date of holding the same shall be proved by the Security
Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of a Holder shall bind every future Holder of the same Security
and/or Coupon and the Holder of every Security and/or Coupon issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security and/or Coupon.
Section 8.4 Determination of Principal Amounts of Original Issue Discount
-------------------------------------------------------------
Securities and Securities in Foreign Currencies. Whenever any Act is taken
- -----------------------------------------------
hereunder by the Holders of Original Issue Discount Securities, the principal
amount of an Original Issue Discount Security that will be deemed to be
outstanding will be the amount of the principal thereof that would be due and
payable as of the date of such determination upon acceleration of the Maturity
thereof. Whenever any Act is to be taken hereunder by the Holders of two or
more series of Securities denominated in different currencies (currency units),
then, for the purpose of determining the principal amount of Securities held by
such Holders, the aggregate principal amount of the Securities denominated in a
Foreign Currency (or any currency units) shall be deemed to be that amount of
Dollars that could be obtained for such principal amount on the basis of the
spot rate of exchange for such Foreign Currency or such currency unit as
determined by the Company or by any authorized Exchange Rate Agent and evidenced
to the Trustee by an Officers' Certificate as of the date the taking of such Act
by the Holders of the requisite percentage in principal amount of the Securities
is evidenced to the Trustee or such other date selected by the Company which is
not more than 10 days before such date. Any such determination by the Company
or by any such Exchange Rate Agent shall be conclusive and binding on all
Holders, the Company and the Trustee, and neither the Company nor any such
Exchange Rate Agent shall be liable therefor in the absence of bad faith.
Section 8.5 Company Solicitation of Holder. If the Company shall solicit
------------------------------
from the Holders any request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may, at its option, by or pursuant to a Board
Resolution, fix in advance a record date for the determination of the Holders
entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company shall have no obligation to do so.
If such a record date is fixed, such request, demand,
<PAGE>
77
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the close of
business on such record date shall be deemed to be Holders for the purpose of
determining whether Holders of the requisite proportion of Outstanding
Securities have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for that
purpose the Outstanding Securities shall be computed as of such record date;
provided that no such authorization, agreement or consent by the Holders on such
record date shall be deemed effective unless it shall become effective pursuant
to the provisions of this Indenture not later than six months, after the record
date.
ARTICLE 9.
SECURITYHOLDERS' MEETING
Section 9.1 Purposes for Which Meetings May be Called.
-----------------------------------------
(a) A meeting of Holders of Securities of any series may be called at any
time and from time to time pursuant to the provisions of this Article Ten for
any of the following purposes:
(1) to give any notice to the Company or to the Trustee, or to give
any directions to the Trustee, or to consent to the waiving of any default
hereunder and its consequences, or to take any other action authorized to
be taken by Securityholders pursuant to any of the provisions of Article 6;
(2) to remove the Trustee and appoint a successor trustee pursuant to
the provisions of Article 7;
(3) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 10.2; or
(4) to take any other action authorized to be taken by or on behalf
of the Holders of any specified aggregate principal amount of the
Securities of a series under any other provision of this indenture or under
applicable law.
Section 9.2 Call, Notice and Place of Meeting. The Trustee may at any
---------------------------------
time call a meeting of Securityholders of any series to take any action
specified in Section 9.1, to be held at such time and at such place in the City
of Pittsburgh, Commonwealth of Pennsylvania, or in the City of New York, State
of New York, as the Company and Trustee shall determine. Notice of every
meeting of the Securityholders of any series setting forth the time and the
place of such meeting and in general term the action proposed to be taken at
such meeting, shall be provided to all Securityholders of such series in the
manner specified in Section 1.4, not less than 21 nor more than 180 days prior
to the date fixed for the meeting.
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78
Section 9.3 Call of Meetings by Company or Holders. In case at any time
--------------------------------------
the Company pursuant to a resolution of its Board of Directors, or the Holders
of at least 25% in aggregate principal amount of the Outstanding Securities of
any series shall have requested the Trustee to call a meeting of Securityholders
of such series to take any action specified in Section 9.1 by written request
setting forth in reasonable detail the action proposed to be taken at the
meeting, and the Trustee shall not have made publication of the notice of such
meeting within 21 days after receipt of such request or shall not thereafter
proceed to cause the meeting to be held as provided herein, then the Company or
the Holders of Securities of such series in the amount above specified may
determine the time and the location in the City of Pittsburgh, Commonwealth of
Pennsylvania, or the City of New York, State of New York, or the Company may
determine the time and location in any other place, for such meeting and may
call such meeting by providing notice thereof as provided in Section 9.2.
Section 9.4 Persons Entitled to Vote. To be entitled to vote at any
------------------------
meeting of Securityholders of any series a Person shall (a) be a Holder of one
or more Outstanding Securities of such series; or (b) be a Person appointed by
an instrument in writing as proxy for a Holder of one or more Outstanding
Securities of such series. The only Persons who shall be entitled to be present
or to speak at any meeting of Securityholders of any series shall be the Persons
entitled to vote at such meeting and their counsel and any representatives of
the Trustee and its counsel and any representatives of the Company and its
counsel.
Section 9.5 Determination of Voting Rights: Conduct and Adjournment of
----------------------------------------------------------
Meetings. Notwithstanding any other provisions of this Indenture, the Trustee
- --------
may make such reasonable regulations as it may deem advisable for any meeting of
Securityholders of a series, in regard to the proof of the holding of Securities
of such series and of the appointment of proxies, and in regard to the
appointment and duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it shall deem appropriate.
Except as otherwise permitted or required by any such regulations, the holding
of Securities of a series and the appointment of any proxy shall be proved in
the manner specified in Article 9; provided, however, that such regulations may
provide that written instruments appointing proxies, regular on their face, may
be presumed valid and genuine without the proof specified in Article 9.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Securityholders of a series as provided in Section 9.3, in which
case the Company or the Securityholders of that series calling the meeting, as
the case may be, shall in like manner appoint a temporary chairman. A permanent
chairman and a secretary of the meeting shall be elected by vote of the holders
of a majority in principal the Outstanding Securities of that series represented
at the meeting and entitled to vote.
Subject to the provisions of Section 9.9, at any meeting each
Securityholder of that series or proxy shall be entitled to one vote for each
$1,000 (or equivalent thereof) principal amount of Outstanding Securities of
such series held or represented by him; provided, however, that no vote shall be
cast or counted at any meeting in respect of any
<PAGE>
79
Security of that series challenged as not Outstanding and ruled by the chairman
of the meeting to be not Outstanding. The chairman of the meeting shall have no
right to vote other than by virtue of Securities of such series held by him or
instruments in writing as aforesaid duly designating him as the person to vote
on behalf of other Securityholders of that series. Any meeting of
Securityholders of a series duly called pursuant to the provisions of Section
9.2 or 9.3 may be adjourned from time to time, and the meeting may be held as so
adjourned without further notice.
Any meeting of Holders of Securities of any series duly called pursuant to
Section 9.2 or 9.3 at which a quorum is present may be adjourned from time to
time by Persons entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting; and the
meeting may be held as so adjourned without further notice.
Section 9.6 Counting Votes and Recording Action of Meetings. The vote
-----------------------------------------------
upon any resolution submitted to any meeting of Securityholders of any series
shall be by written ballots on which shall be subscribed the signatures of the
Securityholders of such series or of their rep by proxy and the principal amount
and serial numbers of the Outstanding Securities of such series held or
represented by them. The permanent chairman of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the meeting for or against
any resolution and who shall make and file with the secretary of the meeting
their verified written reports of all votes cast at the meeting. A record of
the proceedings of each meeting of Securityholders of a series shall be prepared
by the secretary of the meeting and there shall be attached to said record the
original reports of the inspectors of votes on any vote by ballot taken thereat
and affidavits by one or more persons having knowledge of the facts setting
forth a copy of the notice of the meeting and showing that said notice was
mailed as provided in Section 9.2 or 9.3 and, if applicable, Section 9.8. The
record shall be signed and verified by the affidavits of the permanent chairman
and secretary of the meeting and shall be delivered to the Company and a copy
shall be delivered to the Trustee to be preserved by the Trustee, the latter to
have attached thereto the ballots voted at the meeting. Any record so signed
and verified shall be conclusive evidence of the matters therein stated.
Section 9.7 No Delay in Exercise of Rights. Nothing in this Article 9
------------------------------
contained shall be deemed or construed to require any delay in the exercise of
any right or rights conferred upon or reserved to the Trustee or to the
Securityholders of a series under any of the provisions of this Indenture or of
the Securities of a series by reason of any call of a meeting of Securityholders
of a series or any rights expressly or impliedly conferred hereunder to make
such call.
Section 9.8 Quorum: Action. The Persons entitled to vote a majority in
--------------
principal amount of the Outstanding Securities of a series shall constitute a
quorum for a meeting of Holders of Securities of such series except as provided
pursuant to Section 2.1. In the absence of a quorum within 30 minutes of the
time appointed for any such meeting, the meeting shall, if convened at the
request of Holders of Securities of such series, be dissolved. In any other
case, the meeting may be adjourned for a period of not less than 10 days as
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80
determined by the chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less than 10 days
as determined by the chairman of the meeting prior to the adjournment of such
adjourned meeting. Notice of the reconvening of any adjourned meeting shall be
given as provided in Section 10.2, except that such notice need be given only
once not less than five days prior to the date on which the meeting is scheduled
to be reconvened. Subject to the foregoing, at the reconvening of any such
further adjourned meeting, the Persons entitled to vote 25% in aggregate
principal amount of the Outstanding Securities of such series shall constitute a
quorum for the taking of any action set forth in the notice of the original
meeting. Notice of the reconvening of an adjourned meeting which was adjourned
for lack of a quorum shall state expressly the percentage, as provided above, of
the principal amount of the Outstanding Securities of such series which shall
constitute a quorum.
Except as limited by Section 6.6 and the proviso to Section 10.2, and
subject to the provisions described in the next succeeding paragraph, any
resolution presented to a meeting or adjourned meeting duly reconvened at which
a quorum is present as aforesaid may be adopted by the affirmative vote of the
lesser of (i) the Holders of a majority in principal amount of the Outstanding
Securities of that series and (ii) 66 2/3% in principal amount of Outstanding
Securities of such series represented and voting at such meeting or adjourned
meeting; provided, however, that any resolution with respect to any request,
demand, authorization, direction, notice, consent, waiver or other action which
this Indenture expressly provides may be made, given or taken by the Holders of
a specified percentage which is less than a majority in principal amount of the
Outstanding Securities of a series may be adopted at a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as aforesaid by the
affirmative vote of the lesser of (i) the Holders of such specified percentage
in principal amount of the Outstanding Securities of that series and (ii) a
majority in principal amount of Securities of such series represented and voting
at such meeting or adjourned meeting. Any resolution passed or decision taken
at any meeting of Holders of Securities of any series duly held in accordance
with this Section shall be binding on all the Holders of Securities of such
series and the related Coupons, whether or not present or represented at the
meeting.
With respect to any consent, waiver or other action which this Indenture
expressly provides may be given by the Holders of a specified percentage of
Outstanding Securities of all series affected thereby (acting as one class),
only the principal amount of Outstanding Securities of any series represented at
a meeting or adjourned meeting duly reconvened at which a quorum is present,
held in accordance with this Section, and voting in favor of such action, shall
be counted for purposes of calculating the aggregate principal amount of
Outstanding Securities of all series affected thereby favoring such action.
Section 9.9 Disregard of Securities Owned by Company or Controlling
-------------------------------------------------------
Person. In determining whether the Holders of the requisite aggregate principal
amount of Securities have concurred in any direction, consent or waiver under
this Indenture, Securities which are owned by the Company or any other obligor
on the Securities or by any person directly or indirectly controlling,
controlled by or under direct or indirect common control with the Company or any
other obligor on the Securities shall be disregarded and deemed not to be
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81
Outstanding for the purpose of any such determination, except that for the
purpose of determining whether the Trustee shall be protected in relying on any
such direction, consent or waiver, only Securities which the Trustee knows are
so owned shall be so disregarded. Securities so owned which have been pledged
in good faith may be regarded as Outstanding for the purposes of this Section
9.9, if the pledgee shall establish to the satisfaction of the Trustee the
pledgee's right to vote such Securities and that the pledgee is not a person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company or any such other obligor. In case of a dispute
as to such right, any decision by the Trustee taken upon the advice of counsel
shall be full protection for the Trustee.
ARTICLE 10.
SUPPLEMENTAL INDENTURES
Section 10.1 Supplemental Indentures Without Consent of Holders. The
--------------------------------------------------
Company when authorized by a resolution of its Board of Directors, and the
Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act of 1939 as in force at the date of the execution thereof)
for one or more of the following purposes:
(a) to evidence the succession of another corporation to the Company or
successive successions, and the assumption by the successor corporation of the
covenants, agreements and obligations of the Company set forth herein and in the
Securities and any Coupons;
(b) to add to the covenants of the Company such further covenants,
restrictions, conditions or provisions as their respective Boards of Directors
and the Trustee shall consider to be for the protection of the Holders of all or
any series of Securities (and if such covenants, restrictions, conditions or
provisions are for the benefit of less than all series of Securities, stating
that such covenants, restrictions, conditions or provisions are expressly being
included solely for the benefit of such series) or to surrender any right or
power herein conferred upon the Company and to make the occurrence, or the
occurrence and continuance, of a default in any of such additional covenants,
restrictions, conditions or provisions a default or an Event of Default
permitting the enforcement of all or any of the several remedies provided in
this Indenture as herein set forth, provided, however, that in respect of any
such additional covenant, restriction, condition or provision such supplemental
indenture may provide for a particular period of grace after default (which
period may be shorter or longer than that allowed in the case of other defaults)
or may provide for an immediate enforcement upon such default or may limit the
remedies available to the Trustee upon such default or may limit the right of
the Holders of a majority in aggregate principal amount of the Securities of
that series to waive such default;
(c) to add to or change any of the provisions of this Indenture to such
extent as shall be necessary to facilitate the issuance of Securities in bearer
form, registrable or not registrable as to principal, and with or without
interest coupons; to change or eliminate any
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82
restrictions on the payment of principal of or any premium or interest on Bearer
Securities, to permit Bearer Securities to be issued in exchange for Registered
Securities, to permit Bearer Securities to be issued in exchange for Bearer
Securities of other authorized denominations; provided that any such addition or
change shall not materially adversely affect the interests of the Holders of
Securities of any series or any related Coupons in any material respect;
(d) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provisions contained herein or in any supplemental
indenture, or to convey, transfer, assign, mortgage or pledge any property to or
with the Trustee, or to make such other provisions in regard to matters or
questions arising under this Indenture, provided, that no such action shall
adversely affect the interests of the Holders of the Securities of any series in
any material respect;
(e) to establish the form or terms of Securities of any series as
permitted by Sections 2.1 and 2.2;
(f) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee with respect to the Securities of one or more series and to
add to or change any of the provisions of this Indenture as shall be necessary
to provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements of Section 7.11;
(g) to change or eliminate any of the provisions of this Indenture;
provided that any such change or elimination shall become effective only when
there is no Security Outstanding of any series created prior to the execution of
such supplemental indenture which is materially adversely affected by such
change in or elimination of such provision;
(h) if allowed under applicable laws and regulations, to permit payment in
the United States of principal, premium or interest on Bearer Securities or
Coupons, if any;
(i) to provide for the issuance of uncertificated Securities of one or
more series in addition to or in place of certificated securities; or
(j) make any other change to this Indenture or the form or terms of
Securities of any series which does not have a materially adverse effect on the
interests of the Holders of the Securities of any series.
The Trustee is hereby authorized to join with the Company in the execution
of any such supplemental indenture, to make any further appropriate agreements
and stipulations which may be therein contained and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Trustee shall not be obligated to enter into any such supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
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83
Any supplemental indenture authorized by the provisions of this Section
10.1 may be executed by the Company and the Trustee without the consent of the
Holders of any of the Securities of each series affected by such supplemental
indenture at the time Outstanding, notwithstanding any of the provisions of
Section 10.2.
Section 10.2 Supplemental Indentures With Consent of Holders. With the
-----------------------------------------------
consent (evidenced as provided in Section 8.1) of the Holders of not less than a
majority in aggregate principal amount of the Outstanding Securities of all
series affected by such supplemental indenture (acting as one class), by Act of
said Holders delivered to the Company and the Trustee, the Company when
authorized by resolutions of its Board of Directors, and the Trustee may from
time to time and at any time enter into an indenture or indentures supplemental
hereto (which shall conform to the provisions of the Trust Indenture Act of 1939
as in force at the date of the execution thereof) for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture, or of any supplemental indenture or of modifying in any manner
the rights of the Holders of the Securities of such series; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Security of such series so affected,
(a) change the Stated Maturity of the principal of, or any installment of
principal of or interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or reduce the amount of the principal of any Original Issue
Discount Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 6.1, or change any
obligation to pay additional amounts, or change any Place of Payment where, or
the currency, currencies or currency unit or units in which, any Security or any
premium or the interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption Date),
(b) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any such
supplemental indenture or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture,
(c) change the obligation of the Company, with respect to Outstanding
Securities of a series, to maintain an office or agency in the places and for
the purposes specified in Section 4.2 for such series,
(d) if the Securities of such series are convertible into any other
security of the Company, make any change that would materially adversely affect
the right to convert such Securities,
(e) change the terms of this Section 10.2.
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84
For purposes of this Section 10.2, if the Securities of any series are
issuable upon the exercise of warrants, each Holder of an unexercised and
unexpired warrant with respect to such series shall be deemed to be a Holder of
Outstanding Securities of such series in the amount issuable upon the exercise
of such warrant. For such purposes, the ownership of any such warrant shall be
determined by the Company in a manner consistent with customary commercial
practices. The Trustee for such series shall be entitled to rely on an
Officers' Certificate as to the principal amount of Securities of such series in
respect of which consents shall have been executed by Holders of such warrants.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
Upon a Company Request, accompanied by a copy of a resolution of its Board
of Directors, certified by the Secretary or an Assistant Secretary of the
Company, authorizing the execution of any such supplemental indenture, and upon
the filing with the Trustee of evidence of the consent of Securityholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties, or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture. The Trustee, subject to the provisions of
Sections 7.1 and 7.2, may receive an Opinion of Counsel as conclusive evidence
that any such supplemental indenture complies with the provisions of this
Article 10 and shall be entitled to rely on such opinion.
It shall not be necessary for the consent of the Securityholders under this
Section 10.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section 10.2, the
Company shall mail a notice to the Securityholders setting forth in general
terms the substance of such supplemental indenture. Any failure of the Company
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
Section 10.3 Effect of Supplemental Indentures. Upon the execution of any
---------------------------------
supplemental indenture pursuant to the provisions of this Article 10, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the Holders
of Securities of such series shall thereafter be determined, exercised and
enforced hereunder subject in all respects to such modifications and amendments,
and all the terms and conditions of any such supplemental indenture shall be
deemed to be part of the terms and conditions of this Indenture for any and all
purposes.
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85
Section 10.4 Reference in Securities to Supplemental Indentures.
--------------------------------------------------
Securities of any series authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article 10 or after
any action taken at a Securityholders' meeting pursuant to Article 9, may, and
shall if required by the Trustee, bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental indenture or as to
any such action. New Securities of such series so modified as to conform, in
the opinion of the Trustee and the Board of Directors of the Company to any
modification of this Indenture contained in any such Supplemental indenture or
reflecting such action may be prepared by the Company, authenticated by the
Trustee and delivered in exchange for the Securities of such series then
Outstanding.
ARTICLE 11.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 11.1 Company May Consolidate, Etc. Only on Certain Terms. Nothing
---------------------------------------------------
contained in this Indenture or in any of the Securities of any series shall
prevent any consolidation or merger of the Company with or into any other
corporation or corporations or successive consolidations or mergers in which the
Company or its successor or successors shall be a party or parties, or shall
prevent any sale or conveyance of the property of the Company as an entirety or
substantially as an entirety to any other corporation authorized to acquire and
operate the same; provided, however, the Company hereby covenants and agrees,
that any such consolidation, merger, sale or conveyance shall be upon the
condition that (a) immediately after such consolidation, merger, sale or
conveyance, the corporation (whether the Company or such other corporation)
formed by or surviving any such consolidation or merger, or to which such sale
or conveyance shall have been made, shall not be in default in the performance
or observance of any of the terms, covenants and conditions of this Indenture to
be kept or performed by the Company; (b) the corporation (if other than the
Company) formed by or surviving any such consolidation or merger, or to which
such sale or conveyance shall have been made, shall be a corporation organized
under the laws of the United States or any State thereof; (c) the due and
punctual payment of the principal of (and premium, if any) and interest on all
of the Securities of any series, according to their tenor, and the due and
punctual performance and observance of all the covenants and conditions of this
Indenture to be performed or observed by the Company, as the case may be,
including, without limitation, the performance of any act or obligation relating
to any conversion of Securities pursuant to Article Sixteen hereof, shall be
expressly assumed, by supplemental indenture, satisfactory in form to the
Trustee, executed and delivered to the Trustee by the corporation formed by such
consolidation, or into which the Company, as the case may be, shall have been
merged, or by the corporation which shall have acquired such property. If at
any time there shall be any consolidation or merger or sale or conveyance of
property to which the covenant of this Section 11.1 is applicable, then in any
such event the successor corporation will promptly deliver to the Trustee:
(a) An Officers' Certificate stating that as of the time immediately after
the effective date of any such transaction the covenants of the Company
contained in this Section
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86
11.1 have been complied with and the successor corporation is not in default
under the provisions of the Indenture; and
(b) An Opinion of Counsel stating that in his opinion such covenants have
been complied with and that any instrument or instrument executed in the
performance of such covenants comply with the requirements thereof.
Section 11.2 Rights and Duties of Successor Corporation. In case of any
------------------------------------------
such consolidation, merger, sale or conveyance and upon the assumption by the
successor corporation, by a supplemental indenture, executed and delivered to
the Trustee and satisfactory in form to the Trustee, of the due and punctual
payment of the principal of and interest on all of the Securities of that series
and the due and punctual performance and observance of all of the covenants and
conditions of this Indenture to be performed or observed by the Company, such
successor corporation shall succeed to and be substituted for the Company with
the same effect as if it had been named herein as the party of the first part.
Such successor corporation thereupon may cause to be signed, and may issue
either in its own name or in the name of the Company any or all of the
Securities of any series issuable hereunder which theretofore shall not have
been signed by the Company and delivered to the Trustee; and upon the Order of
such successor corporation, instead of the Company and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall make available for delivery any Securities of such series
which previously shall have been signed and delivered by the officers of the
Company to the Trustee for authentication, and any Securities of such series
which such successor corporation thereafter shall cause to be signed and
delivered to the Trustee for that purpose. All the Securities of such series so
issued shall in all respects have the same legal rank and benefit under this
Indenture as the Securities of that series theretofore or thereafter issued in
accordance with the terms of this Indenture as though all of such Securities of
such series had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale or conveyance, such changes
in phraseology and form (but not in substance) may be made in the Securities of
such series thereafter to be issued as may be appropriate.
Subject to the provisions of Section 11.1, nothing contained in this
Indenture or in any of the Securities of any series shall prevent the Company
from merging into itself any other corporation (whether or not affiliated with
the Company) or acquiring by purchase or otherwise all or any part of the
property of any other corporation (whether or not affiliated with the Company).
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87
ARTICLE 12.
SATISFACTION AND DISCHARGE OF INDENTURE:
UNCLAIMED MONEYS
Section 12.1 Satisfaction and Discharge of Indenture. This Indenture
---------------------------------------
shall, upon Company Request, cease to be of further effect (except as to any
surviving rights of (as applicable) registration of transfer or exchange of
Securities and Coupons, if any, of such series herein expressly provided for),
and the Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with respect to such
series, when
(a) either
(1) all Securities and Coupons of such series theretofore
authenticated and delivered (other than (i) Securities and Coupons of such
series which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 2.6, (ii) Securities and Coupons of
such series for whose payment money has theretofore been deposited in and
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust as provided in Section 12.5, (iii)
Coupons appertaining to Bearer Securities surrendered for exchange for
Registered Securities and maturing after such exchange whose surrender is
not required or has been waived as provided in Section 2.5, and (iv)
Coupons appertaining to Securities called for redemption and maturing after
the relevant Redemption Date whose surrender has been waived as provided in
Section 3.7) have been delivered to the Trustee for cancellation; or
(2) all such Securities and Coupons of such series not theretofore
delivered to the Trustee for cancellation
(A) have become due and payable, or
(B) will become due and payable at their Stated Maturity within
one year, or
(C) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company, and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for the purpose for which it was received, an amount in the
currency or currency unit in which such Securities and Coupons of such
series are payable sufficient to pay and discharge the entire
indebtedness on such Securities and Coupons of such series not
theretofore delivered to the Trustee for cancellation, for principal
(and premium, if any) and interest, if any, to the date of such
deposit (in the case of Securities and
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88
Coupons of such series which have become due and payable) or to the
Stated Maturity or Redemption Date, as the case may be;
(3) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(4) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture with
respect to a series, the obligations of the Company to the Trustee under Section
7.6, the obligations of the Trustee to any Authenticating Agent under Section
7.14 and, if money shall have been deposited with the Trustee pursuant to
subclause (B) of clause (1) of this Section, the obligations of the Trustee
under Section 12.2 and Section 12.5 shall survive; and any obligation of the
Company upon or with respect to the conversion of the Securities of a series
into any other security of the Company pursuant to the terms of the Securities
of such series or Article Seventeen hereof, shall survive until the Securities
of such series are no longer Outstanding.
Section 12.2 Application of Trust Money. Subject to Section 12.5, all
--------------------------
money deposited with the Trustee pursuant to Sections 12.1 and 12.3 shall be
held in trust and applied by it, in accordance with the provisions of the
Securities and Coupons, if any, and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of
the principal (and premium, if any) and interest for whose payment such money
has been deposited with the Trustee.
Section 12.3 Satisfaction, Discharge and Defeasance of Securities of Any
-----------------------------------------------------------
Series. Unless this Section is specified pursuant to Section 2.1, to be not
- ------
applicable to Securities and Coupons, the Company shall be Discharged (as
defined below) from its obligations with respect to Securities and Coupons, if
any, of such series after the applicable conditions set forth below have been
satisfied:
(a) (1) the Company has paid or caused to be paid all other sums payable
with respect to the Outstanding Securities and Coupons, if any, of such series
(in addition to any required under (b)); and
(2) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of the
entire indebtedness on all Outstanding Securities and Coupons, if any, of
any such series have been complied with;
(b) (1) the Company shall have deposited or caused to be deposited
irrevocably with the Trustee as a trust fund specifically pledged as security
for, and dedicated solely to, the benefit of the Holders of the Securities and
Coupons, if any, of such series (i)
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89
money in an amount (in such currency, currencies or currency unit or units in
which any Outstanding Securities and Coupons, if any, of such series are
payable) or (ii) in the case of Securities and Coupons, if any, denominated in
Dollars, U.S. Government Obligations (as defined below) or, in the case of
Securities and Coupons, if any, denominated in a Foreign Currency, Foreign
Government Securities (as defined below), which through the payment of interest
and principal in respect thereof in accordance with their terms will provide,
not later than the due date of any payment of principal (including any premium)
and interest, if any, under the Securities and Coupons, if any, of such series,
money in an amount or (iii) a combination of (i) and (ii) sufficient (in the
opinion with respect to (ii) and (iii) of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee) to pay and discharge each installment of principal of
(including any premium), and interest if any, on, the Outstanding Securities and
Coupons, if any, of such series on the dates such installments of interest or
principal are due, in the currency, currencies or currency unit or units, in
which such Securities and Coupons, if any, are payable; provided, however, that
"Outstanding" for the purpose of this Section 12.3 shall also include all
Securities of such series which may be issued upon exercise of warrants;
provided, further, however, that the Company shall not make or cause to be made
the deposit provided by this clause (1) unless the Company shall have delivered
to the Trustee an Opinion of Counsel to the effect that there will not occur any
violation of the Investment Company Act of 1940, as amended, on the part of the
Company, the trust funds representing such deposit or the Trustee as a result of
such deposit and the related exercise of the Company's option under this Section
12.3;
(2) (i) no Event of Default or event (including such deposit) which
with notice or lapse of time would become an Event of Default shall have
occurred and be continuing on the date of such deposit, (ii) no Event of
Default as defined in clause (f) or (g) of Section 6.1, or event which with
notice or lapse of time or both would become an Event of Default under
either such clause, shall have occurred within 90 days after the date of
such deposit and (iii) such deposit and the related intended consequence
under (a) or (b) will not result in any default or event of default under
any material indenture, agreement or other instrument binding upon the
Company, or any Subsidiary or any of their properties; and
(3) the Company shall have delivered to the Trustee an Opinion of
Counsel or a ruling by the Internal Revenue Service in form and substance
satisfactory to the Trustee, to the effect that Holders of the Securities
and Coupons, if any, of such series will not recognize income, gain or loss
for federal income tax purposes as a result of the Company's exercise of
its option under this Section 12.3 and will be subject to federal income
tax in the same amount, in the same manner and at the same times as would
have been the case if such option had not been exercised.
Any deposits with the Trustee referred to in clause (b)(1) above will be
made under the terms of an escrow trust agreement in form and substance
satisfactory to the Trustee which shall provide that any payment of principal of
(including any premium) or interest on the funds or Securities so deposited in
excess of the amount required to pay each installment of principal of (including
any premium) and interest, if any, on the Outstanding
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90
Securities and Coupons, if any, shall be paid to the Company from time to time.
If any Outstanding Securities and Coupons of such series are to be redeemed
prior to their Stated Maturity, whether pursuant to any mandatory redemption
provisions or in accordance with any mandatory sinking fund requirement, the
applicable escrow trust agreement will provide therefor and the Company will
make arrangements for the giving of notice of redemption by the Trustee in the
name, and at the expense, of the Company.
Section 12.4 Definitions. The following terms, as used in this Article
-----------
12, shall have the following meanings:
"Discharged" means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by, and obligations under the
Securities and Coupons, if any, of the series as to which this Section is
specified as applicable as aforesaid and to have satisfied all the obligations
under Sections 11.1 and 11.2 of this Indenture relating to the Securities and
Coupons, if any, of such series (and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging the same) except that the rights
of Holders thereof to receive, from the trust fund described in clause (b)(1) of
Section 12.3, payment of (including any premium) the principal of and the
interest, if any, on such Securities and Coupons, if any, when such payments are
due, shall survive such discharge. The Company shall reimburse the trust fund
for any loss suffered by it as a result of any tax, fee or other charge imposed
on or assessed on the Trustee as a result deposited U.S. Government Obligations
or Foreign Government Securities, as the case may be, or any principal or
interest paid on such obligations, and, subject to the provisions of Section
7.6, shall indemnify the Trustee against any claims made against the Trustee in
connection with any such loss.
"Foreign Government Securities" means, with respect to the Securities and
Coupons, if any, of any series that are denominated in a Foreign Currency,
securities that are (i) direct obligations of the government that issued or
caused to be issued such currency for the payment of which obligations its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of such government the
timely payment of which is unconditionally guaranteed as a full faith and credit
obligation by such government, which, in either case under clauses (i) or (ii),
are not callable or redeemable at the option of the issuer thereof.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States for the payment of which its full faith and
credit is pledged or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States the timely
payment of which is unconditionally guaranteed as a full faith and credit
obligation of the United States, which, in either case under clauses (i) or
(ii), are not callable or redeemable at the option of the issuer thereof, and
will also include a depository receipt issued by a bank or trust company as
custodian with respect to any such U.S. Government Obligation or a specified
payment of interest on or principal of any such U.S. Government Obligation held
by such custodian for the account of the holder of a depository receipt,
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from
<PAGE>
91
any amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of interest on or principal of the U.S.
Government Obligation evidenced by such depository receipt.
Section 12.5 Repayment of Money Held by Trustee. Any moneys deposited
----------------------------------
with the Trustee or any Paying Agent for the payment of the principal of (and
premium, if any) or interest on any Securities of any series and not applied but
remaining unclaimed by the Holders of Securities of such series and Coupons, if
any, for two years after the date upon which such payment shall have become due
shall be repaid to the Company by the Trustee upon the Order of the Company, or
(if then held by the Company) shall be discharged from such trust, and the
Holder of such Securities and Coupons, if any, entitled to receive such payment
shall thereafter, as an unsecured general creditor, look only to the Company for
the payment thereof and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, the City of New York, notice that such
money remains unclaimed and that, after a date specified herein, which shall not
be less than 30 days after such publication or mailing, any unclaimed balance of
said moneys then remaining will be returned to the Company.
ARTICLE 13.
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
Section 13.1 No Recourse: Exemption from Personal Liability. No recourse
----------------------------------------------
under or upon any obligation, covenant or agreement of this Indenture, or of any
Security of any series or Coupon, if any, or for any claim based thereon or
otherwise in respect thereof, shall be had against any incorporator,
stockholder, officer, director or employee, as such, past, present or future, of
the Company or of any successor corporation, either directly or through the
Company or any successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that this Indenture and the obligations
issued hereunder are solely corporate obligations, and that no such personal
liability whatever shall attach to, or is or shall be incurred by, the
incorporators, stockholders, officers, directors or employee, as such, of the
Company or of any successor corporation, or any of them, because of the creation
of the indebtedness hereby authorized, or under or by reason of the obligations,
covenants or agreements contained in this Indenture or in any of the Securities
of such series or Coupon, if any, or implied therefrom; and that any and all
such personal liability, either at common law or in equity or by constitution or
statute, of, and any and all such rights and claims against, every such
incorporator, stockholder, officer, director or employee, as such, because of
the creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any
Security of any series or Coupon, if any, or implied therefrom, are hereby
expressly waived and released as a condition
<PAGE>
92
of, and as a consideration for, the execution of this Indenture and the issue of
such Securities or Coupon, if any.
ARTICLE 14.
MISCELLANEOUS PROVISIONS
Section 14.1 Successors and Assigns. All the covenants, stipulations,
----------------------
promises, and agreements in this Indenture contained by or on behalf of the
Company shall bind their successors and assigns, whether so expressed or not.
Section 14.2 Validity of Acts by Successor Corporations. Any act or
------------------------------------------
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done or performed with like force and effect by the like board, committee or
officer of any corporation that shall at that time be the successor of the
Company.
Section 14.3 Surrender of Powers. The Company by instrument in writing
-------------------
executed by authority of their respective Boards of Directors and delivered to
the Trustee may surrender any of the powers or rights reserved to the Company
and thereupon such power or right so surrendered shall terminate both as to the
Company and as to any successor corporation.
Section 14.4 Notices. Any notice or demand which by any provision of this
-------
Indenture is required or permitted to be given or served by the Trustee or by
the holders of Securities of such series to or on the Company shall be delivered
by hand or sent by first-class mail postage prepaid addressed (until another
address is filed by the Company with the Trustee), as follows:
Company:
USX CORPORATION
600 Grant Street
Pittsburgh, Pennsylvania 15219-4776
Attention: Treasurer
Any notice, direction, request or demand by any Securityholder to or upon
the Trustee shall be deemed to have been sufficiently given or made for all
purposes, if given or made in writing, at the Corporate Trust Office of the
Trustee.
Section 14.5 Governing Law. This Indenture and each Security of each
-------------
series and any Coupon shall be deemed to be a contract made under the laws of
the State of New York and for all purposes shall be governed by and construed in
accordance with the laws of said State, unless otherwise required by mandatory
provisions of law.
Section 14.6 Compliance Certificates and Opinions. Upon any application
------------------------------------
or demand by the Company to the Trustee to take any action under any of the
provisions of this
<PAGE>
93
Indenture, the Company shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent (including any covenant compliance with
which constitutes a condition precedent), if any, provided for in this Indenture
relating to the proposed action have been complied with and an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent have been complied with, except that in the case of any such
application or demand as to which the furnishing of such document is
specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.
Each certificate or opinion provided for in this Indenture and delivered to
the Trustee with respect to compliance with a condition or covenant provided for
in this Indenture, other than certificates provided pursuant to Section 4.6,
shall include (1) a statement that the person making such certificate or opinion
has read such covenant or condition; (2) a brief statement as to the nature and
scope of the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; (3) a statement that, in the
opinion of such person, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and (4) a statement as to whether
or not, in the opinion of such person, such condition or covenant has been
complied with.
Section 14.7 Effect of Headings and Table of Contents. The Article and
----------------------------------------
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 14.8 Conflict with Trust Indenture Act. If and to the extent that
---------------------------------
any provision of this Indenture limits, qualifies or conflicts with another
provision included in this Indenture which is required to be included in this
Indenture by any of Sections 310 to 317, inclusive, of the Trust Indenture Act
of 1939, such required provision shall control.
Section 14.9 Benefits of Trust Indenture. Nothing in this Indenture or in
---------------------------
the Securities of any series or any Coupons, expressed or implied, shall give or
be construed to give to any person, firm or corporation, other than the parties
hereto and the Holders of the Securities of such series any legal or equitable
right, remedy or claim under or in respect of this Indenture, or under any
covenant, condition or provision herein contained; all its covenants, conditions
and provisions being for the sole benefit of the parties hereto and the Holders
of the Securities of such series.
Section 14.10 No Security Interest. Nothing in this Indenture or in the
--------------------
Securities of any series, expressed or implied, shall be construed to constitute
a security interest under the Uniform Commercial Code or similar legislation, as
now or hereafter enacted and in effect, in any jurisdiction where property of
the Company or its Subsidiaries is located.
Section 14.11 Execution in Counterparts. This Indenture may be executed
-------------------------
in any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
<PAGE>
94
Section 14.12 Separability. In case any provision in this Indenture or in
------------
the Securities of any series, or coupons, if any, shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not, to the extent permitted by applicable law, in any way be
affected or impaired thereby.
ARTICLE 15.
SUBORDINATION
Section 15.1 Securities Subordinate to Senior Indebtedness. The Company
---------------------------------------------
covenants and agrees, and each Holder of Securities of any series (or any
Coupons appertaining thereto) by the Holder's acceptance thereof, likewise
covenants and agrees, that, to the extent and in the manner hereinafter set
forth in this Article 15, the indebtedness represented by the Securities of such
series (or any Coupons appertaining thereto) and the payment of the principal of
(and premium, if any) and interest on each and all of the Securities of such
series (or any Coupons appertaining thereto) are hereby expressly made
subordinate and junior in right of payment to the prior payment in full of all
Senior Indebtedness of the Company, to the extent and in the manner herein set
forth (unless a different manner is set forth in the Securities of such series,
or any Coupons appertaining thereto). No provision of this Article 15 shall
prevent the occurrence of any default or Event of Default hereunder.
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.
Section 15.2 Payment Over of Proceeds Upon Dissolution, Etc.
-----------------------------------------------
In the event of
(i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding
relating to the Company, its creditors or its property,
(ii) any proceeding for the liquidation, dissolution or other
winding up of the Company, voluntary or involuntary, whether or not
involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Company for the benefit of its
creditors, or
(iv) any other marshalling of the assets of the Company,
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
the Company on account of the Securities of any series (or any Coupons
appertaining thereto). Any payment or distribution, whether in cash, securities
or other property (other than securities of the
<PAGE>
95
Company or any other corporation provided for by a plan of reorganization or a
readjustment, the payment of which is subordinate, at least to the extent
provided in these subordination provisions with respect to the indebtedness
evidenced by the Securities of any series (or any Coupons appertaining thereto),
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 these subordination provisions) be
payable or deliverable in respect of the Securities of any series (or any
Coupons appertaining thereto) 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 Securities
of any series (or any Coupons appertaining thereto) by any act or failure to act
on the part of the Company.
Section 15.3 No Payment When Senior Indebtedness in Default.
----------------------------------------------
In the event that
(i) the Company 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 the Company 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 Securities of any series (or any Coupons
appertaining thereto) or any interest thereon in respect of any repayment,
redemption, retirement, purchase or other acquisition of the Securities of any
series (or any Coupons appertaining thereto).
Section 15.4 Payment Permitted in Certain Situations. Nothing
---------------------------------------
contained in this Article 15 or elsewhere in the Indenture or in any of the
Securities of any series (or any Coupons appertaining thereto) shall prevent (a)
the Company, at any time except during the pendency of any dissolution, winding-
up, liquidation or reorganization of the Company, whether voluntary or
involuntary or any bankruptcy, insolvency, receivership or other proceedings of
the Company referred to in Section 15.2 or under the conditions described in
Section 15.3, from making payments at any time of principal of, or premium, if
any, or interest on the Securities of such series, or (b) the application by the
Trustee of any money deposited with it hereunder to the payment of or on account
of the principal of, or premium, if any, or interest on the Securities of such
series (or any Coupons appertaining thereto) or the
<PAGE>
96
retention of such payment by the Holders, if, at the time of such application by
the Trustee, it did not have knowledge that such payment would have been
prohibited by the provisions of this Article 15.
Section 15.5 Subrogation to Rights of Holders of Senior Indebtedness.
-------------------------------------------------------
Upon the payment in full of all Senior Indebtedness, the rights of the Holders
of Securities of any series (or any Coupons appertaining thereto) 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 Securities of any series (or any Coupons appertaining thereto) shall
have been paid in full, and such payments or distributions received by the
Holders of Securities of any series (or any Coupons appertaining thereto), 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 the Company and its creditors other than the holders of Senior
Indebtedness, on the one hand, and the Holders of Securities of any series (or
any Coupons appertaining thereto), on the other, be deemed to be a payment by
the Company on account of Senior Indebtedness, and not on account of the
Securities of any series (or any Coupons appertaining thereto).
Section 15.6 Provisions Solely to Define Relative Rights. The
-------------------------------------------
provisions of this Article 15 are and are intended solely for the purpose of
defining the relative rights of the Holders of Securities of any series (or any
Coupons appertaining thereto) on the one hand and the holders of Senior
Indebtedness on the other hand. Nothing contained in this Article 15 or
elsewhere in the Indenture or in the Securities of such series (or any Coupons
appertaining thereto) is intended to or shall (a) impair, as among the Company,
its creditors other than holders of Senior Indebtedness and the Holders of
Securities of such series (or any Coupons appertaining thereto), the obligation
of the Company, which is absolute and unconditional (and which, subject to the
rights under this Article 15 of the holders of Senior Indebtedness, is intended
to rank equally with all other general obligations of the Company), to pay to
the Holders of Securities of such series (or any Coupons appertaining thereto)
the principal of (and premium, if any) and interest on, the Securities of such
series (or any Coupons appertaining thereto) as and when the same shall become
due and payable in accordance with their terms; or (b) affect the relative
rights against the Company of the Holders of Securities of such series (or any
Coupons appertaining thereto) and creditors of the Company, as the case may be,
other than the holders of Senior Indebtedness; or (c) prevent the Trustee or the
Holder of any Securities of such series (or any Coupons appertaining thereto)
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article 15 of
the holders of Senior Indebtedness to receive cash, property and securities
otherwise payable or deliverable to the Trustee or such Holder.
Section 15.7 Trustee to Effectuate Subordination. Each Holder of
-----------------------------------
Securities of any series (or any Coupons appertaining thereto) by such Holder's
acceptance thereof authorizes and directs the Trustee on such Holder's behalf to
take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article 15 and appoints the Trustee such Holder's
attorney-in-fact for any and all such purposes.
<PAGE>
97
Section 15.8 No Waiver of Subordination Provisions. No right of any
-------------------------------------
present or future holder of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of Securities of
any series (or any Coupons appertaining thereto), without incurring
responsibility to the Holders of Securities of such series (or any Coupons
appertaining thereto) and without impairing or releasing the subordination
provided in this Article 15 or the obligations hereunder of the Holders of
Securities of such series (or any Coupons appertaining thereto) to the holders
of Senior Indebtedness do any one or more of the following: (a) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness or otherwise amend or supplement in any manner Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (b) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (c) release any Person liable in any manner for the collection of
Senior Indebtedness, and (d) exercise or refrain from exercising any rights
against the Company and any other Person.
Section 15.9 Notice to Trustee. The Company shall give prompt
-----------------
written notice to a Responsible Officer of the Trustee of any fact known to the
Company which would prohibit the making of any payment to or by the Trustee in
respect of any Securities of any series (or any Coupons appertaining thereto)
pursuant to the provisions of this Article 15. Notwithstanding the provisions
of this Article 15 or any other provision of the Indenture, the Trustee shall
not be charged with knowledge of the existence of any facts which would prohibit
the making of any payment to or by the Trustee in respect of any Securities of
any series (or any Coupons appertaining thereto) pursuant to the provisions of
this Article 15, unless and until a Responsible Officer of the Trustee shall
have received written notice thereof from the Company or a holder or holders of
Senior Indebtedness or from any trustee therefor; and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of Section 7.2,
shall be entitled in all respects to assume that no such facts exist; provided,
however, that if the Trustee shall have not received the notice provided for in
this Section at least two Business Days prior to the date upon which by the
terms hereof any money may become payable for any purpose (including, without
limitation, the payment of the principal of (or premium, if any) or interest on
any Securities of any series (or any Coupons appertaining thereto)), then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such moneys and to apply the same to
the purposes for which they were received, and shall not be affected by any
notice to the contrary that may be received by it within two Business Days prior
to such date.
<PAGE>
98
Subject to the provisions of Section 7.2, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee
therefor) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee therefor). In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of any
Person as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article 15, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article 15, and if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
Section 15.10 Reliance on Judicial Order or Certificate of
--------------------------------------------
Liquidating Agent. Upon any payment or distribution of assets of the Company
- -----------------
referred to in this Article 15, the Trustee, subject to the provisions of
Section 7.2, and the Holders of Securities of any series (or any Coupons
appertaining thereto) shall be entitled to conclusively rely upon any order or
decree entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities of such series (or any
Coupons appertaining thereto), for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, as the case may be, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article 15.
Section 15.11 Trustee Not Fiduciary for Holders of Senior
-------------------------------------------
Indebtedness. With respect to the holders of Senior Indebtedness, the Trustee
- ------------
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article 15, and no implied covenants or
obligations with respect to the holders of such Senior Indebtedness shall be
read into the Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of Senior Indebtedness and shall not be
liable to any such holders or creditors if it shall in good faith pay over or
distribute to Holders of Securities of any series (or any Coupons appertaining
thereto) or to the Company or to any other Person cash, property or securities
to which any holders of Senior Indebtedness shall be entitled by virtue of this
Article 15 or otherwise.
Section 15.12 Rights of Trustee as Holder of Senior Indebtedness,
---------------------------------------------------
Preservation of Trustee's Rights. The Trustee in its individual capacity shall
- --------------------------------
be entitled to all the rights set forth in this Article 15 with respect to any
Senior Indebtedness which may at any time be held by it, to the same extent as
any other holder of Senior Indebtedness and nothing in the Indenture shall
deprive the Trustee of any of its rights as such holder.
<PAGE>
99
Nothing in this Article 15 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 7.6.
Section 15.13 Article Applicable to Paying Agents. In case at any
-----------------------------------
time any Paying Agent other than the Trustee shall have been appointed by the
Company and be then acting hereunder, the term `Trustee' as used in this Article
15 shall in such case (unless the context otherwise requires) be construed as
extending to and including such Paying Agent within its meaning as fully for all
intents and purposes as if such Paying Agent were named in this Article 15 in
addition to or in place of the Trustee: provided, however, that this Section
15.13 shall not apply to the Company or any Affiliate of the Company if it or
such Affiliate acts as Paying Agent.
Section 15.14 Certain Conversions Deemed Payment. For the purposes
----------------------------------
of this Article 15 only, (a) the issuance and delivery of junior securities (or
cash paid in lieu of fractional shares) upon conversion of Securities of any
series (or any Coupons appertaining thereto) in accordance with Article 16, or
pursuant to the terms set forth in an Officers' Certificate or established in
one or more indentures supplemental hereto in accordance with Section 2.1, shall
not be deemed to constitute a payment or distribution on account of the
principal of or premium or interest on Securities of such series (or any Coupons
appertaining thereto) or on account of the purchase or other acquisition of
Securities of such series (or any Coupons appertaining thereto), and (b) the
payment, issuance or delivery of cash, property or securities (other than Junior
Securities and cash paid in lieu of fractional shares) upon conversion of a
Securities of any series (or any Coupons appertaining thereto) shall be deemed
to constitute payment on account of the principal of such Securities of such
series (or any Coupons appertaining thereto). Nothing contained in this Article
15 or elsewhere in the Indenture or in the Securities of any series (or any
Coupons appertaining thereto) is intended to or shall impair, as among the
Company, its creditors other than holders of Senior Indebtedness and the Holders
of Securities of such series (or any Coupons appertaining thereto), the right,
which is absolute and unconditional, of the Holder of any Securities of such
series (or any Coupons appertaining thereto) to convert such Securities of such
series (or any Coupons appertaining thereto) in accordance with Article 16 and
the terms set forth in an Officers' Certificate or established in one or more
indentures supplemental hereto in accordance with Section 2.1.
ARTICLE 16.
CONVERSION
Section 16.1 Applicability of Article. Securities of any series
------------------------
which are designated as being convertible into any other security of the Company
prior to their stated Maturity shall be convertible in accordance with their
terms and (except as otherwise specified pursuant to Section 2.1 for the
Securities of such series) in accordance with this Article.
Section 16.2 Conversion Privilege. A Holder of a Security of a
--------------------
series, which, by its terms, is convertible into any other security of the
Company, may convert such Security
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100
at any time during the period and in the manner as is set forth in the terms of
the Securities of that series. The number of shares or units of such other
security issuable upon conversion of a Security shall be determined in the
manner set forth in the terms of such Security.
Section 16.3 Conversion Procedure. To convert a Security, the Holder
--------------------
thereof must comply with and satisfy all of the terms, conditions and other
requirements set forth in the terms of such Security. As soon as practicable,
the Company shall deliver through the Conversion Agent a certificate for the
number of shares or units of the Security issuable upon the conversion.
Section 16.4 Fractional Shares. The terms of the Securities shall
-----------------
set forth whether the Company will issue a fractional share or units of a
security upon conversion of a Security or instead will deliver its check for the
value of the fractional share or units of a security.
Section 16.5 Taxes on Conversion. The terms of the Security shall
-------------------
state whether the Company will pay any documentary, stamp or similar issue or
transfer tax, due on the issue of shares or units of the security issuable and
whether upon the conversion the Holder will be required to pay any such tax
which is due because such shares or units are issued in a name other than that
of such Holder.
Section 16.6 Company to Provide Securities Issuable Upon Conversion.
------------------------------------------------------
The Company shall reserve or otherwise provide for a sufficient amount of its
respective securities which would be issuable upon the conversion of the
Securities, including reserving out of its respective authorized but unissued
equity securities or its equity securities held in treasury enough shares of
equity securities to permit the conversion of the Securities.
All shares of equity securities which may be issued upon conversion of
the Securities shall be fully paid and nonassessable.
The Company will endeavor to comply with all securities laws
regulating the offer and delivery of shares or units of its respective
securities upon conversion of Securities and will endeavor to list such shares
or units on any national securities exchange on which such shares or units are
listed.
Section 16.7 Adjustments. The terms of the Securities shall set
-----------
forth the nature of mechanics for and notice of any adjustments in the number or
price of securities of the Company issuable upon conversion of the Securities.
Section 16.8 Valuation. The terms of the Securities shall set forth
---------
the method or methods for valuing the securities of the Company issuable upon
conversion of the Securities.
Section 16.9 Reorganization of Company. The terms of the Securities
-------------------------
shall set forth the rights, if any, of the Holders to, convert their Securities
in the event that the
<PAGE>
101
Company is a party to a transaction subject to Article 11 or a merger which
reclassifies or changes its outstanding Securities into which the Securities are
convertible.
Section 16.10 Trustee's Disclaimer. The Trustee has no duty to
--------------------
determine when an adjustment under this Article or the terms of the Securities
should be made, how it should be made or what it should be. The Trustee makes
no representation as to the validity or value of any securities issued upon
conversion of Securities. The Trustee shall not be responsible for the failure
of the Company to comply with this Article. Each Conversion Agent other than
the Company shall have the same protection under this Section as the Trustee.
IN WITNESS WHEREOF, the parties hereto have caused this Multiple
Series Indenture to be duly executed on the date or dates indicated in the
acknowledgements and as of the day and year first above written.
USX CORPORATION
By
Name:
Title:
THE BANK OF NEW YORK,
as Trustee
By
Name:
Title:
<PAGE>
EXHIBIT A
FORMS OF CERTIFICATION
<PAGE>
EXHIBIT A.1
FORM OF CERTIFICATE TO BE GIVEN BY
PERSON ENTITLED TO RECEIVE BEARER SECURITY
CERTIFICATE
USX CORPORATION
Insert title or sufficient description
of Securities to be delivered
This is to certify that the above-captioned Securities are not being
acquired by or for the account or benefit of a United States person or for offer
to resell or for resale to a United States person or any person who is within
the United States, or if a beneficial interest in the Securities is being
acquired by a United States person, that such United States person (i) is a
foreign branch of a United States financial institution (as defined in U.S.
Treas. Reg. section 1.165-12(c)(1)(v)) which has provided to the person from
which it purchased the obligation a certificate stating that it agrees to comply
with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal
Revenue Code of 1986 and the regulations thereunder (a "qualifying foreign
branch"), (ii) acquired such securities through a qualifying foreign branch and
is holding the obligation through such qualifying foreign branch or (iii) is a
financial institution holding for purposes of resale during the restricted
period (as defined in U.S. Treas. Reg. section 1.163-5(c)(2)(i)(D)(7)), which
financial institution has not acquired the obligation for the purposes of resale
directly or indirectly to a United States person or to a person who is within
the United States or its possessions. This is also to certify that the above-
referenced Securities are not being acquired by or for the account or benefit of
a "U.S. person," as the term is defined in Regulation S under the United States
Securities Act 1933, as amended.
This Certificate excepts and does not relate to
principal amount of the above-captioned Securities held in the name of the
undersigned as to which the undersigned is not yet able to certify and as to
which it understands that exchange and delivery of definitive Securities and
payment of interest on a temporary global Security cannot be made until the
undersigned is able to so certify.
If the undersigned is a clearing organization, the undersigned has
obtained a similar certificate from its member organizations on which this
certificate is based; provided, however, that if the undersigned has actual
knowledge that the information contained in such a certificate is false, the
undersigned will not deliver a Security in temporary or definitive bearer form
to the person who signed such certificate notwithstanding the delivery of such
certificate to the undersigned.
As used herein, "United States person" means an individual who is a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in
<PAGE>
2
or under the laws of the United States or any political subdivision thereof, or
an estate or trust the income of which is subject to United States Federal
income taxation regardless of its source; "United States" means the United
States of America (including the states and the District of Columbia); and
"possessions" of the United States include Puerto Rico, the U.S. Virgin Islands,
Guam, American Samoa, Wake Island, and Northern Mariana Islands.
We undertake to advise you by telex if the above statement as to
beneficial ownership is not correct on the date of delivery of the above-
captioned Securities in bearer form as to all of such Securities.
We understand that this certificate may be required in connection with
certain tax legislation in the United States. If administrative or legal
proceeding are commenced or threatened in connection with which this certificate
is or would be relevant, we irrevocably authorize you to produce this
certificate or a copy thereof to any interested party in such proceedings.
Dated: , 19
To be dated on or after
, 19 (the date
determined as provided in the Indenture)
(Name of Person Entitled to
Receive Bearer Security
(Authorized Signatory)
Name:
Title:
<PAGE>
EXHIBIT A.2
(FORM OF CERTIFICATE TO BE GIVEN BY EURO-CLEAR, CEDEL S.A. AND ANY
OTHER ENTITY PERFORMING SIMILAR FUNCTIONS IN CONNECTION WITH THE
EXCHANGE OF A PORTION OF A TEMPORARY GLOBAL SECURITY)
CERTIFICATE
USX CORPORATION
Insert title or sufficient description
of Securities to be delivered
This is to certify with respect to $ principal amount of the above-
captioned Securities (i) that we have received from each of the persons
appearing in our records as persons entitled to a portion of such principal
amount (our "Qualified Account Holders") a certificate with respect to such
portion substantially in the form set out in Exhibit A.1 to the Indenture
relating to the above-captioned Securities, and (ii) that we are not submitting
herewith for exchange portion of the temporary global Security representing the
above-captioned Securities excepted in such certificates.
To the extent that we have knowledge that any of such certificates is
false and to the extent that we have not received with respect to any Securities
such certificates from Qualified Account Holders, we are not submitting for
exchange any portion of the temporary global Security attributable thereto.
We further certify that as of the date hereof we have not received an
notification from any of our Qualified Account Holders to the effect that the
statements made by such Qualified Account Holders with respect to any portion of
the part submitted herewith for exchange are no longer true and cannot be relied
upon as of the date hereof.
We understand that this certificate is required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceeding.
Date: , 19
To be dated no earlier than
the Exchange Date
, as
Operator of the Euro clear System
CEDEL S.A.
By
<PAGE>
EXHIBIT A.3
FORM OF CERTIFICATE TO BE GIVEN BY EURO-CLEAR, CEDEL S.A. AND ANY OTHER ENTITY
PERFORMING SIMILAR FUNCTIONS TO OBTAIN INTEREST PRIOR TO AN EXCHANGE DATE
CERTIFICATE
USX CORPORATION
Insert title or sufficient
description of Securities
We confirm that the interest payable on the Interest Payment Date on
Insert Date will be paid to each of the persons appearing in our records as
being entitled to interest payable on such ("Qualified Account Holders") from
whom we have received a written certification, dated not earlier than such
Interest Payment Date, substantially in the form set out in Exhibit A.4 to the
Indenture relating to the above-captioned Securities. We undertake to retain
certificates received from our member organizations in connection herewith for
four years from the end of the calendar year in which certificates are received.
To the extent that we have knowledge that any of such certificates is
false and to the extent that we have not received with respect to any Securities
such certificates from Qualified Account Holders, we are not requesting that
payment be made for interest with respect thereto.
We further certify that as of the date hereof we have not received any
notification for any of our Qualified Account Holders to the effect that the
statements made by such Qualified Account Holders with respect to any interest
payment on any portion of the principal amount of the Securities referred to
above are no longer true and cannot be relied upon as of the date hereof.
We undertake that any interest received by us and not paid as provided
above SW b returned to the Trustee for the above Securities immediately prior to
the expiration of two years such Interest Payment Date in order to be repaid by
such Trustee to the above issuer at the end of years after such Interest Payment
Date.
Date: , 19
To be dated on or after the
relevant Interest Payment Date
, as
Operator of the Euro-clear System,
CEDEL S.A.
<PAGE>
EXHIBIT A.4
FORM OF CERTIFICATE TO BE GIVEN BY BENEFICIAL OWNERS TO OBTAIN
INTEREST PRIOR TO AN EXCHANGE DATE
CERTIFICATE
USX CORPORATION
Insert title or sufficient description
of Securities
This is to certify that as of the Interest Payment Date on Insert Date
and except provided in the third paragraph hereof, none of the above-captioned
Securities held by you for our account was beneficially owned by a United States
person or if such Securities were, as of such date, beneficially owned by a
United States person, such United States person (i) was a foreign branch of a
United States financial institution (as defined in U.S. Treas. Reg. section
1.165-12(c)(1)(z)) which provided to the person from which it purchased the
obligation a certificate stating that it agrees to comply with the requirements
of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 19 and the
regulations thereunder (a "qualifying foreign branch"), (ii) acquired such
securities through qualifying foreign branch and was holding the obligation
through such qualifying foreign branch or (iii) was a financial institution
holding for purposes of resale during the restricted period (as defined U.S.
Treas. Reg. section 1.163-5(c)(2)(i)(D)(7), which financial institution did not
acquire the obligation for the purposes of resale directly or indirectly to a
United States person or to a person who is the United States or its possessions.
As used herein, "United States person" means an individual who is a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or a
political subdivision thereof, or an estate or trust the income of which is
subject to United States Federal income taxation regardless of its source;
"United States" means the United States of America (including the states and the
District of Columbia); and `possessions' of the United States include Puerto
Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island, and Northern
Mariana Islands.
This certificate excepts and does not relate to U.S. $ principal
amount of the above-captioned Securities appearing in your books as being held
for our account as to which we are not yet able to certify and as to which we
understand interest cannot be credited unless and until we are able to so
certify.
We understand that this certificate may be required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
<PAGE>
2
Date: , 19 Name of Person Entitled to
To be dated on or after Receive Interest
the 15th day before the
relevant Interest Payment Date
(Authorized Signature)
Name:
Title:
<PAGE>
EXHIBIT A.5
FORM OF CONFIRMATION TO BE SENT TO PURCHASERS OF BEARER SECURITIES
By your purchase of the securities referred to in the accompanying
confirmation (the "Securities"):
You represent that you are not a United States person (as defined
below) other than (i) a foreign branch of a United States financial institution
(as defined in U.S. Treas. Reg. Section 1.165-12(c)(l)(v)) which has provided to
the person from which you purchased the obligation a certificate stating that
you agree to comply with the requirements of Section 165(i)(3)(A), (B) and (C)
of the Internal Revenue of 1986 and the regulations thereunder (a `qualifying
foreign branch'), (ii) a United States person who has acquired the Securities
through a qualifying foreign branch and is holding the Securities through such
qualifying foreign branch or (iii) a financial institution holding for purposes
of resale during the restricted period (as defined in U.S. Treas. Reg. Section
1.163-5(c)(2)(i)(D)(7), which financial institution has not acquired the
obligation for the purposes of resale directly or indirectly to a United States
Person or to a person who is within the United States or its possessions.
"U.S. person" means a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof or an estate or
trust the income of which if subject to the United States Federal income
taxation regardless of its source; "United States" means the United States of
America (including the States and the District of Columbia); and the
"possessions" of the United States include Puerto Rico, the U.S. Virgin Islands,
Guam, American Somoa, Wake Island, and Northern Mariana Islands.
You also represent that the Securities are not being acquired by or
for the account or benefit of a `U.S. person', as that term is defined in
Regulation S under the United States Securities Act 1933, as amended.
If you are a dealer, (a) you also represent that you have not offered,
sold or delivered, and agree that you will not offer, sell, resell or deliver,
any of the Securities, directly or indirectly, in the United States or its
possessions or to any United States person other than a United States person
defined in (i), (ii) or (iii) above, or any U.S. person, and (b) you agree that
you will deliver to all purchasers of the Securities from you a written
statement in this form.
<PAGE>
Exhibit 4.4
USX CORPORATION
As Issuer
and
THE BANK OF NEW YORK
As Trustee
6.75% Convertible Junior Subordinated Debentures
First Supplemental Indenture
Dated as of ______________, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS................................. 1
SECTION 1.1. Definition of Terms............................................ 1
ARTICLE II
GENERAL TERMS AND CONDITIONS
OF THE CONVERTIBLE DEBENTURES........................ 9
SECTION 2.1. Designation and Principal Amount............................... 9
SECTION 2.2. Maturity....................................................... 9
SECTION 2.3. Form and Payment............................................... 9
SECTION 2.4. Global Debenture............................................... 9
SECTION 2.5. Interest....................................................... 10
SECTION 2.6. Ranking........................................................ 11
ARTICLE III
REDEMPTION OF THE CONVERTIBLE DEBENTURES 11
SECTION 3.1. Trust Special Event Redemption................................. 11
SECTION 3.2. Optional Redemption by Company................................. 12
SECTION 3.3. Redemption of Less Than All Convertible Debentures............. 13
SECTION 3.4. U.S. Steel Group Special Event; Marathon Group Special
Event................................................................. 13
SECTION 3.5. Notice of Redemption........................................... 15
SECTION 3.6. Notice of Certain Events....................................... 16
SECTION 3.7. No Sinking Fund................................................ 17
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD.................... 17
SECTION 4.1. Extension of Interest Payment Period........................... 17
SECTION 4.2. Notice of Extension............................................ 17
SECTION 4.3. Limitation of Transactions..................................... 18
ARTICLE V
EXPENSES.................................. 18
SECTION 5.1. Payment of Expenses............................................ 18
SECTION 5.2. Payment Upon Resignation or Removal............................ 19
ARTICLE VI
COVENANTS................................. 19
SECTION 6.1. Covenants as to the Trust...................................... 19
SECTION 6.2. Listing or Quotation of Convertible Debentures................. 20
-i-
<PAGE>
Page
ARTICLE VII
CONVERSION OF CONVERTIBLE DEBENTURES.................... 20
SECTION 7.1. Conversion Rights.............................................. 20
SECTION 7.2. Conversion Procedures.......................................... 20
SECTION 7.3. Certain Conversion Price Adjustments........................... 22
SECTION 7.4. Special Provisions Regarding Adjustment of Conversion Price
or Other Provisions................................................... 31
SECTION 7.5. Trustee Not Responsible for Determining Conversion Price or
Adjustments........................................................... 31
ARTICLE VIII
EVENTS OF DEFAULT............................. 32
SECTION 8.1. Events of Default.............................................. 32
ARTICLE IX
FORM OF CONVERTIBLE DEBENTURE....................... 32
SECTION 9.1. Form of Convertible Debenture.................................. 32
ARTICLE X
ORIGINAL ISSUE OF CONVERTIBLE DEBENTURES.................. 33
SECTION 10.1. Original Issue of Convertible Debentures...................... 33
ARTICLE XI
MISCELLANEOUS............................... 33
SECTION 11.1. Ratification of Base Indenture; Supplemental Indenture
Controls.............................................................. 33
SECTION 11.2. Trustee Not Responsible for Recitals.......................... 33
SECTION 11.3. Governing Law................................................. 33
SECTION 11.4. Separability.................................................. 33
SECTION 11.5. Counterparts.................................................. 33
-ii-
<PAGE>
THIS FIRST SUPPLEMENTAL INDENTURE, dated as of _________, 1997 the
"Supplemental Indenture"), is between USX CORPORATION, a Delaware corporation
(the "Company"), and THE BANK OF NEW YORK, as trustee (the "Trustee").
RECITALS
WHEREAS, the Company has executed and delivered the Base Indenture (as
defined herein) to the Trustee to provide for the issuance of the Company's
Securities from time to time in one or more series as might be determined by the
Company under the Base Indenture, in an unlimited aggregate principal amount as
may be authenticated and delivered as provided in the Base Indenture;
WHEREAS, pursuant to the terms of the Base Indenture, the Company desires
to provide for the establishment of a new series of its Securities to be known
as its 6.75% Convertible Junior Subordinated Debentures (the "Convertible
Debentures"), the form and substance of such Convertible Debentures and the
terms, provisions and conditions thereof to be set forth as provided in the Base
Indenture and this Supplemental Indenture;
WHEREAS, USX Capital Trust I, a Delaware statutory business trust (the
"Trust"), intends to issue up to $_________ aggregate liquidation amount of its
6.75% Convertible Quarterly Income Preferred Securities (the "Trust Convertible
Preferred Securities") and up to $__________ aggregate liquidation amount of its
6.75% Common Securities (the "Trust Common Securities" and, together with the
Trust Convertible Preferred Securities, the "Trust Securities"), representing
undivided beneficial ownership interests in the assets of the Trust; and
WHEREAS, the Trust proposes to issue Trust Securities to the Company in
exchange for Convertible Debentures in an aggregate principal amount equal to
the aggregate liquidation amount of the Trust Securities issued:
NOW, THEREFORE, in consideration of the issuance to the Company of Trust
Securities by the Trust and the acceptance of the Convertible Debentures in
exchange therefor by the Trust, and for the purpose of setting forth, as
provided in the Base Indenture, the form and substance of the Convertible
Debentures and the terms, provisions and conditions thereof, the Company
covenants and agrees with the Trustee as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definition of Terms.
For all purposes of this Supplemental Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
<PAGE>
2
(a) unless otherwise defined herein, the capitalized terms used herein
that are defined in the Base Indenture have the same meanings when used in this
Supplemental Indenture;
(b) the terms defined in this Article I have the meanings assigned to them
in this Article I and include the plural as well as the singular;
(c) all other terms used herein which are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(d) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles in
the United States of America, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with respect to
any computation required or permitted hereunder shall mean such accounting
principles as are generally accepted in the United States of America at the date
of such computation;
(e) a reference to a Section or Article (or subdivision thereof) or the
Recitals is to a Section or Article (or subdivision thereof) or the Recitals of
this Supplemental Indenture;
(f) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Supplemental Indenture as a whole and not to any
particular Article, Section or other subdivision;
(g) headings are for convenience of reference only and do not affect
interpretation;
(h) the terms defined as follows shall have the meanings assigned to them
as follows:
"Additional Interest" has the meaning specified in Section 2.5(c).
"Adjustment Date" has the meaning specified in Section 7.3(a)(iii).
"Adjustment Trigger Date" has the meaning specified in Section 7.3(a)(iii).
"Administrative Action" means an official administrative pronouncement,
ruling, regulatory procedure, notice or announcement, including any notice or
announcement of intent to adopt such procedures or regulations.
"Base Indenture" means that Indenture dated as of even date hereof between
the Company and the Trustee, as it may be amended, restated, supplemented and/or
modified from time to time.
<PAGE>
3
"Board of Directors" or "Board" means, at any time, the duly elected or
acting board of directors (or duly authorized committee thereof) of the Company
at such time.
"Business Day" means any day other than a Saturday, Sunday, or any other
day on which banking institutions in New York, New York or Pittsburgh,
Pennsylvania are permitted or required by any applicable law to close.
"Certificate of Incorporation" means the Company's Restated Certificate of
Incorporation, as amended from time to time.
"Clearing Agency" means an organization registered as a "Clearing Agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended from
time to time, or any successor legislation, that is acting as depositary for the
Convertible Debentures and in whose name or in the name of a nominee of that
organization shall be registered a Global Debenture and which shall undertake to
effect book entry transfers and pledges of the Convertible Debentures. The
initial Clearing Agency shall be The Depository Trust Company.
"Closing Price" of shares of any class of common stock of the Company for
any day means the last reported sales price, regular way on such day, or, if no
reported sale takes place on such day, the average of the reported closing bid
and asked prices on such day, regular way, in either case as reported on the
NYSE Composite Tape or, if such common stock is not listed or admitted to
trading on the NYSE, on the principal national securities exchange on which such
common stock is listed or admitted to trading or, if not listed or admitted to
trading on any national securities exchange, on the NASDAQ Stock Market or, if
such common stock is not quoted on the NASDAQ Stock Market, the average of the
closing bid and asked prices on such day in the over-the-counter market as
reported by NASDAQ or, if closing bid and asked prices for such common stock on
such day shall not have been reported through NASDAQ, the average of the closing
bid and asked prices on such day as furnished by any NYSE member firm regularly
making a market in such common stock selected for such purpose by the Board of
Directors.
"Common Security Certificate" means a definitive certificate in fully
registered form representing a Trust Common Security substantially in the form
of Exhibit A-2 to the Declaration.
"Company" has the meaning specified in the first paragraph hereof.
"Compounded Interest" has the meaning specified in Section 4.1.
"Constituent Person" has the meaning specified in Section 7.3(c).
"Conversion Agent" means the Institutional Trustee acting as Conversion
Agent for a Holder.
"Conversion Date" has the meaning specified in Section 7.2(b).
<PAGE>
4
"Conversion Notice" has the meaning specified in Section 7.2(a).
"Conversion Price" means $46.25, as of the date of this Supplemental
Indenture, as may be adjusted from time to time as set forth in Article VII.
"Convertible Debentures" has the meaning specified in the Recitals.
"Convertible Preferred Security Certificate" means a certificate
representing a Trust Convertible Preferred Security substantially in the form of
Exhibit A-1 to the Declaration.
"Coupon Rate" has the meaning specified in Section 2.5.
"Current Market Price" shall mean, with respect to any class of common
stock of the Company, the average of the daily Closing Prices of a share of such
common stock during the five consecutive Trading Days selected by the Company
commencing not more than 20 Trading Days before, and ending not later than, the
date in question; provided, however, that (i) if the "ex" date for any event
(other than the issuance or distribution requiring such computation) that
requires an adjustment to the Conversion Price pursuant to Sections 7.3(a)(ii)
through (v) occurs on or after the 20th Trading Day prior to the day in question
and prior to the "ex" date for the issuance or distribution requiring such
computation, the Closing Price for each Trading Day prior to the "ex" date for
such other event shall be adjusted by multiplying such Closing Price by the same
fraction by which the Conversion Price is so required to be adjusted as a result
of such other event, (ii) if the "ex" date for any event (other than the
issuance or distribution requiring such computation) that requires an adjustment
to the Conversion Price pursuant to Sections 7.3(a)(ii) through (v) occurs on or
after the "ex" date for the issuance or distribution requiring such computation
and on or prior to the day in question, the Closing Price for each Trading Day
on and after the "ex" date for such other event shall be adjusted by multiplying
such Closing Price by the reciprocal of the fraction by which the Conversion
Price is so required to be adjusted as a result of such other event, and (iii)
if the "ex" date for the issuance or distribution requiring such computation is
on or prior to the day in question, after taking into account any adjustment
required pursuant to clause (ii) of this proviso, the Closing Price for each
Trading Day on or after such "ex" date shall be adjusted by adding thereto the
amount of any cash and the fair market value on the day in question (as
determined by the Board of Directors in a manner consistent with any
determination of such value for purposes of Section 7.3(a)(iii) or (iv)) of the
evidences of indebtedness, shares of capital stock or assets being distributed
applicable to one share of the applicable class of common stock of the Company
as of the close of business on the day before such "ex" date. For purposes of
this definition, the term "ex" date, with respect to any class of common stock
of the Company, (i) when used with respect to any issuance or distribution,
means the first date on which such common stock trades regular way on such
exchange or in the relevant market from which the Closing Price was obtained
without the right to receive such issuance or distribution, (ii) when used with
respect to any subdivision or combination of shares of such common stock, means
the first date on which such common stock trades regular way on such exchange or
in such market after the time at which such subdivision or combination becomes
effective, and (iii) when used with respect to any tender
<PAGE>
5
or exchange offer means the first date on which such common stock trades regular
way on such exchange or in such market after the expiration time of such tender
or exchange offer.
"Declaration" means the Amended and Restated Declaration of Trust of the
Trust, dated as of ___________, 1997, as it may be amended, restated,
supplemented and/or modified from time to time.
"Deferred Interest" has the meaning specified in Section 4.1.
"Delaware Trustee" means the Delaware Trustee, if any, of the Trust.
"Delhi Group" means the Delhi Group of the Company.
"Delhi Stock" means shares of USX--Delhi Group Common Stock, par value
$1.00 per share, of the Company.
"Disposition" means the sale, transfer, assignment or other disposition
(whether by consolidation, sale or contribution of assets or stock or otherwise)
of properties or assets.
"Dissolution Event" means that, as a result of the occurrence and
continuation of a Trust Special Event, the Trust is to be dissolved in
accordance with the Declaration, and the Convertible Debentures held by the
Institutional Trustee are to be distributed to the holders of the Trust
Securities issued by the Trust pro rata in accordance with the Declaration.
"Dissolution Tax Opinion" means an opinion of independent tax counsel
experienced in such matters to the effect that, on or after ____________, 1997,
as a result of (a) any amendment to, clarification of, or change (including any
announced proposed change) in the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein affecting taxation, (b) any Administrative Action or any judicial
decision or (c) any amendment to, clarification of, or change in the official
position or the interpretation of such Administrative Action or judicial
decision that differs from the theretofore generally accepted position, there is
more than an insubstantial risk that (i) the Trust is or, within 90 days of the
date thereof, will be subject to United States federal income tax with respect
to interest accrued or received on the Convertible Debentures, (ii) the Trust is
or, within 90 days of the date thereof, will be subject to more than a de
minimis amount of taxes, duties or other governmental charges, or (iii) interest
payable in cash by the Company to the Trust on the Convertible Debentures (other
than interest attributable to the Trust Common Securities) is not, or within 90
days of the date thereof will not be, deductible, in whole or in part, by the
Company for United States federal income tax purposes; provided, however, that
such an opinion shall not be deemed to be a "Dissolution Tax Opinion" if the
occurrence of any of the events described in (a), (b) or (c) above requires the
Company for United States federal income tax purposes to defer taking a
deduction for any OID that accrues with respect to the Convertible Debentures
until the interest payment related to such OID is paid by the Company in cash,
provided the occurrence of any of the events described in (a), (b) or (c) above
does not create more than an insubstantial risk that the Company will
<PAGE>
6
be prevented from taking a deduction for OID accruing with respect to the
Convertible Debentures as of a date that is no later than the date the interest
payment related to such OID is actually paid by the Company in cash.
"Distribution" means a distribution to the holders of Trust Securities of
the amount of any interest (including Compounded Interest and Additional
Interest), premium and/or principal paid on the Convertible Debentures.
"Exercise Trigger Date" has the meaning specified in Section 7.3(a)(iii).
"Extended Interest Payment Period" has the meaning specified in Section
4.1.
"Global Debenture" has the meaning specified in Section 2.4.
"Guarantee" means that Guarantee Agreement, dated as of even date hereof,
between the Company and the Guarantee Trustee (as defined therein) for the
benefit of the holders of Trust Securities.
"Institutional Trustee" means the Institutional Trustee of the Trust.
"Interest Payment Date" has the meaning specified in Section 2.5.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of independent counsel experienced in such matters to the
effect that, as a result of the occurrence of a change in law or regulation or a
written change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority on or after
____________, 1997, there is more than an insubstantial risk that the Trust is
or will be considered an "investment company" which is required to be registered
under the Investment Company Act of 1940, as amended.
"Marathon Group" means the Marathon Group of the Company.
"Marathon Group Subsidiary" has the meaning set forth in the Certificate of
Incorporation.
"Marathon Stock" means shares of USX-Marathon Group Common Stock, par value
$1.00 per share of the Company.
"maturity advancement" has the meaning specified in Section 3.1.
"Maturity Date" means the date on which the Convertible Debentures mature
and on which the principal shall be due and payable, together with any accrued
and unpaid interest thereon, including Compounded Interest and Additional
Interest, if any.
"Ministerial Action" has the meaning specified in Section 3.1.
<PAGE>
7
"NASDAQ" means the National Association of Securities Dealers, Inc.
Automated Quotations System or any successor thereto.
"90-Day Period" has the meaning specified in Section 3.1.
"Non Book-Entry Convertible Preferred Securities" has the meaning specified
in Section 2.4.
"non-electing share" has the meaning specified in Section 7.3(c).
"No Recognition Opinion" means an opinion of independent tax counsel
experienced in such matters (which opinion may rely on published revenue rulings
of the Internal Revenue Service) to the effect that the holders of the Trust
Securities will not recognize any gain or loss for United States federal income
tax purposes as a result of the dissolution of the Trust and the distribution of
Convertible Debentures.
"NYSE" means the New York Stock Exchange, Inc. or any successor thereto.
"OID" means original issue discount.
"Optional Redemption Price" has the meaning specified in Section 3.2.
"Price Trigger Date" has the meaning specified in Section 7.3(a)(iii).
"Principal Amount of One Convertible Debenture" means $50.
"Purchase Date" shall have the meaning specified in Section 7.3(a)(iii).
"Redemption Tax Opinion" means an opinion of independent tax counsel
experienced in such matters that, as a result of a Tax Event, there is more than
an insubstantial risk that the Company would be precluded from deducting the
interest on the Convertible Debentures for United States federal income tax
purposes even after the Convertible Debentures were distributed to the holders
of Trust Securities in liquidation of such holders' interests in the Trust as
described in the Declaration.
"Regular Record Date" has the meaning specified in Section 2.5(a).
"Regular Trustee" means the Regular Trustee of the Trust.
"Restated Rights Agreement" has the meaning specified in Section
7.3(a)(iii).
"Securities" has the meaning set forth in Section 7.3(a)(iii).
"Special Redemption Price" has the meaning specified in Section 3.1.
<PAGE>
8
"Steel Stock" means shares of USX--U.S. Steel Group Common Stock, par value
$1.00 per share, of the Company.
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries. For the purposes of this definition, "voting stock"
means stock which ordinarily has voting power for the election of directors,
whether at all times or only so long as no senior class of stock has such voting
power by reason of any contingency.
"substantially all of the properties and assets of the U.S. Steel Group"
and "substantially all of the properties and assets of the Marathon Group" means
a portion of such properties and assets that represents at least 80% of either
of the then-current market value of, or the aggregate revenues for the
immediately preceding twelve fiscal quarterly periods of the Company derived
from, the properties and assets of the U.S. Steel Group or the Marathon Group,
respectively, as of such date (excluding the properties and assets of any
person, entity or group in which the Company, directly or indirectly, owns less
than a majority interest).
"Supplemental Indenture" has the meaning specified in the first paragraph
hereof.
"Tax Event" means that the Regular Trustees have received a Dissolution Tax
Opinion.
"Trading Day" means, with respect to any class of common stock of USX, any
day on which such common stock is traded on the NYSE, or if such common stock is
not listed or admitted to trading on the NYSE, on the principal national
securities exchange on which such common stock is listed or admitted, or if not
listed or admitted to trading on any national securities exchange, on the NASDAQ
Stock Market, or if such common stock is not quoted on the NASDAQ Stock Market,
in the applicable securities market in which such common stock is traded.
"Transaction" has the meaning specified in Section 7.3(c).
"Trust" has the meaning specified in the first paragraph hereof.
"Trust Common Securities" has the meaning specified in the Recitals.
"Trust Convertible Preferred Securities" has the meaning specified in the
Recitals.
"Trustee" has the meaning specified in the Recitals.
"Trust Securities" has the meaning specified in the Recitals.
"Trust Special Event" means a Tax Event or an Investment Company Event.
<PAGE>
9
"U.S. Steel Group" means the U.S. Steel Group of the Company.
"U.S. Steel Group Subsidiary" has the meaning set forth in the Certificate
of Incorporation.
ARTICLE II
GENERAL TERMS AND CONDITIONS
OF THE CONVERTIBLE DEBENTURES
SECTION 2.1. Designation and Principal Amount. There is hereby authorized
--------------------------------
a series of Debentures designated the "6.75% Convertible Junior Subordinated
Debentures," limited in aggregate principal amount to $335,000,000, which amount
shall be as set forth in a Company Order for the authentication and delivery of
Convertible Debentures pursuant to Section 2.3 of the Base Indenture.
SECTION 2.2. Maturity. The Maturity Date is March 31, 2037, unless a
--------
maturity advancement occurs pursuant to Section 3.1 as a result of a Tax Event,
in which case such advanced maturity date.
SECTION 2.3. Form and Payment. Except as provided in Section 2.4, the
----------------
Convertible Debentures shall be issued in fully registered certificated form
without Coupons, in denominations of the Principal Amount of One Convertible
Debenture and integral multiples thereof. Principal, premium, if any, and
interest on the Convertible Debentures issued in certificated form will be
payable, the transfer of such Convertible Debentures will be registrable, and
such Convertible Debentures will be exchangeable for Convertible Debentures
bearing identical terms and provisions, at the office or agency of the Trustee;
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the Holder at such address as shall appear in the
Security Register. Notwithstanding the foregoing, so long as the Holder of any
Convertible Debentures is the Institutional Trustee, the payment of the
principal of, premium, if any, and interest (including Compounded Interest and
Additional Interest, if any) on such Convertible Debentures held by the
Institutional Trustee will be made at such place and to such account as may be
designated by the Institutional Trustee.
SECTION 2.4. Global Debenture. (a) In connection with a Dissolution
----------------
Event,
(i) the Convertible Debentures in certificated form may be
presented to the Trustee by the Institutional Trustee in exchange for a
global Convertible Debenture in an aggregate principal amount equal to the
aggregate principal amount of all outstanding Convertible Debentures (a
"Global Debenture"), to be registered in the name of the Clearing Agency,
or its nominee, and delivered by the Trustee to the Clearing Agency for
crediting to the accounts of its participants pursuant to the instructions
of the Regular Trustees. The Company, upon any such presentation, shall
execute a Global Debenture in such aggregate principal amount and deliver
the same to the Trustee for authentication and delivery in accordance with
the Base Indenture.
<PAGE>
10
Payments on the Convertible Debentures issued as a Global Debenture will be
made to the Clearing Agency; and
(ii) any Convertible Preferred Security Certificate which
represents Trust Convertible Preferred Securities other than Trust
Convertible Preferred Securities held by the Clearing Agency or its nominee
("Non Book-Entry Convertible Preferred Securities") will be deemed to
represent beneficial ownership interests in Convertible Debentures having
an aggregate principal amount equal to the aggregate liquidation amount of,
with an interest rate identical to the distribution rate of, and accrued
and unpaid interest (including Compounded Interest) equal to accumulated
and unpaid distribution on the Non Book-Entry Convertible Preferred
Securities until such Convertible Preferred Security Certificates are
presented to the Security Registrar for transfer or reissuance at which
time such Convertible Preferred Security Certificates will be cancelled and
a Convertible Debenture, registered in the name of the Holder of the
Convertible Preferred Security Certificate or the transferee of the Holder
of such Convertible Preferred Security Certificate, as the case may be,
with an aggregate principal amount equal to the aggregate liquidation
amount of the Convertible Preferred Security Certificate cancelled, will be
executed by the Company and delivered to the Trustee for authentication and
delivery in accordance with the Base Indenture. On issue of such
Convertible Debentures, Convertible Debentures with an equivalent aggregate
principal amount that were presented by the Institutional Trustee to the
Trustee will be deemed to have been cancelled.
(b) A Global Debenture may be transferred, in whole but not in part,
only to another nominee of the Clearing Agency, or to a successor Clearing
Agency selected or approved by the Company or to a nominee of such successor
Clearing Agency.
SECTION 2.5. Interest. (a) Each Convertible Debenture will bear
--------
interest at the rate of 6.75% per annum (the "Coupon Rate") from March 31, 1997
until the principal thereof becomes due and payable, and on any overdue
principal and (to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the Coupon Rate,
compounded quarterly, payable (subject to the provisions of Article IV)
quarterly in arrears on the last calendar day of each March, June, September and
December of each year (each, an "Interest Payment Date"), commencing on June 30,
1997, to the Holder of such Convertible Debenture, at the close of business on
the record date for such Interest Payment Date, which record date (the "Regular
Record Date"), (i) shall be the close of business on the Business Day next
preceding that Interest Payment Date, in respect of (A) Convertible Debentures
of which the Institutional Trustee is the only Holder and the related Trust
Convertible Preferred Securities are in book-entry only form or (B) a Global
Debenture, and (ii) shall be any date selected by the Company but in any event
at least one Business Day before that Interest Payment Date in respect of
Convertible Debentures other than as set forth in (i).
(b) The amount of interest payable for any full quarterly interest
period shall be computed on the basis of a 360-day year of twelve 30-day months.
Except as provided in the following sentence, the amount of interest payable for
any period shorter than a full
<PAGE>
11
quarterly period for which interest is computed, shall be computed on the basis
of 30-day months and, for periods of less than a month, the actual number of
days elapsed per 30-day month. In the event that any date on which interest is
payable on the Convertible Debentures is not a Business Day, then payment of
interest payable on such date shall be made on the next succeeding day that 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.
(c) The Company shall pay as additional interest ("Additional
Interest") on the Convertible Debentures any and all taxes, duties, assessments
or governmental charges of whatever nature directly imposed on the Trust, in its
capacity as a legal entity or as a holder of the Convertible Debentures, by the
United States, or any other taxing authority, so that the net amounts received
and retained by such Trust and the Institutional Trustee after paying such
taxes, duties, assessments or governmental charges will be equal to the amounts
such Trust and the Institutional Trustee would have received had no such taxes,
duties, assessments or governmental charges been incurred by or imposed on such
Trust.
SECTION 2.6. Ranking. The Convertible Debentures shall rank on a
-------
parity in right of payment with Indebtedness under the Loan Agreement (the "LLC
Loan Agreement"), dated as of March 3, 1994, between the Company and USX Capital
LLC (including any amendments, renewals, extensions or refundings thereof) and
Indebtedness under the LLC Loan Agreement shall not be Senior Indebtedness with
respect to the Convertible Debentures.
ARTICLE III
REDEMPTION OF THE CONVERTIBLE DEBENTURES
SECTION 3.1. Trust Special Event Redemption. If a Trust Special
------------------------------
Event has occurred and is continuing and: (a) the Company has received a
Redemption Tax Opinion; or (b) the Regular Trustees have been informed by
independent tax counsel experienced in such matters that, for substantive
reasons, it cannot deliver a No Recognition Opinion to the Trust, then,
notwithstanding Section 3.2 but subject to Section 3.3, (a) the Company shall
have the right to shorten the maturity of the Convertible Debentures to the
minimum extent required, but in any event to a date not earlier than
___________, 2002 (the action referred to in this subclause (a) being referred
to herein as a "maturity advancement"), such that, in the opinion of counsel to
the Company experienced in such matters, after advancing the stated maturity,
interest paid on the Convertible Debentures will be deductible for federal
income tax purposes, or (b) if in the opinion of counsel to the Company who
rendered the Redemption Tax Opinion, there would in all cases, after effecting a
maturity advancement, be more than an insubstantial risk that the Company would
continue to be precluded from deducting interest on the Convertible Debentures,
the Company shall have the right upon not less than 30 days nor more than 60
days notice to the Holders of the Convertible Debentures to redeem the
Convertible Debentures, in whole or in part, for cash, within 90 days following
the occurrence of such Trust Special Event (the "90-Day Period"), at a
redemption price equal to 100% of the principal amount to be redeemed, together
with accrued and unpaid interest (including any Compounded Interest and
Additional Interest) thereon to, but excluding, the
<PAGE>
12
date of such redemption (the "Special Redemption Price"), provided that, if at
the time there is available to the Company the opportunity to eliminate, which
elimination shall be complete within the 90-Day Period, such Trust Special Event
by taking some ministerial action (such as filing a form or making an election,
or pursuing some other similar reasonable measure) that has no adverse effect on
the Company, the Trust or the Holders of the Trust Securities, or does not
subject any of them to more than de minimis regulatory requirements
("Ministerial Action"), the Company shall pursue such Ministerial Action in lieu
of redemption, and, provided, further, that the Company shall have no right to
redeem the Convertible Debentures while the Trust is pursuing any Ministerial
Action pursuant to its obligations under the Declaration; provided such
Ministerial Action can eliminate such Trust Special Event during the 90-Day
Period. The Special Event Redemption Price shall be paid prior to 12:00 noon,
New York time, on the date fixed by the Company for such redemption or at such
earlier time as the Company determines, provided that the Company shall deposit
with the Trustee an amount sufficient to pay the Special Event Redemption Price
by 10:00 a.m., New York time, on the date such Special Event Redemption Price is
to be paid.
SECTION 3.2. Optional Redemption by Company. Subject to the
------------------------------
provisions of Section 3.3 and to the provisions of Article 3 of the Base
Indenture, the Company shall have the right to redeem the Convertible
Debentures, in whole or in part, for cash, from time to time upon not less than
30 days nor more than 60 days notice to the Holders, at the following prices
(expressed as percentages of the principal amount of the Convertible Debentures)
(the "Optional Redemption Price"), together with any accrued and unpaid interest
(including Compounded Interest and Additional Interest, if any) thereon to, but
excluding, the date of such redemption, if redeemed during the 12-month period
beginning on April 1 of the following years:
Year Redemption Price
---- ----------------
1997 103.90%
1998 103.25%
1999 102.60%
2000 101.95%
2001 101.30%
2002 100.65%
2003 and thereafter 100.00%
No Convertible Debentures may be redeemed in accordance with this
Section 3.2 if the Company shall be advised on or prior to the related
redemption date by either Moody's Investors Service, Inc. ("Moody's") (provided
that Moody's is then rating the senior unsecured debt of the Company) or
Standard & Poor's Ratings Group ("S&P") (provided that S&P is then rating the
senior unsecured debt of the Company) that such redemption would result in an
immediate lowering by Moody's or S&P, as the case may be, of the credit rating
on the Company's senior unsecured debt from its then existing level, unless the
Company shall have received from the issuance of common stock of the Company,
since the date which
<PAGE>
13
is two years prior to the related redemption date, net proceeds in an aggregate
amount at least equal to the aggregate principal amount of the Convertible
Debentures to be redeemed.
If Convertible Debentures are redeemed on the last calendar day of any
March, June, September or December, accrued and unpaid interest shall be payable
to Holders on the relevant record date. The Company shall issue a press release
announcing any redemption pursuant to this Section 3.2.
The Optional Redemption Price plus such accrued and unpaid interest
thereon shall be paid prior to 12:00 noon, New York time, on the date fixed by
the Company for such redemption or at such earlier time as the Company
determines, provided that the Company shall deposit with the Trustee an amount
sufficient to pay the Optional Redemption Price, plus accrued and unpaid
interest thereon, by 10:00 a.m., New York time, on the date such Optional
Redemption Price is to be paid.
SECTION 3.3. Redemption of Less Than All Convertible Debentures. If
--------------------------------------------------
the Convertible Debentures are only partially redeemed, the Convertible
Debentures will be redeemed pro rata by the Trustee. The Company may not redeem
any Convertible Debentures unless all accrued and unpaid interest (including
Compounded Interest and Additional Interest, if any) has been paid on all of the
outstanding Convertible Debentures for all quarterly interest periods
terminating on or prior to the last Interest Payment Date before the date of
redemption.
SECTION 3.4. U.S. Steel Group Special Event; Marathon Group Special
------------------------------------------------------
Event. (a) The Company shall redeem the Debentures, in whole, for cash, at the
- -----
Special Redemption Price, if any of the following events with respect to the
U.S. Steel Group occur (such events, collectively, the "U.S. Steel Group Special
Events"):
(i) (A) the Company exchanges all of the outstanding shares of
Steel Stock for all of the outstanding shares of common stock of the
U.S. Steel Group Subsidiary (as provided in Section 2(b)(iii) of
Division I of the Certificate of Incorporation) (the "Steel Group
Subsidiary Exchange") or (B) in the event of a Disposition of all or
substantially all of the properties and assets of the U.S. Steel
Group, the Company either pays a dividend on the Steel Stock in, or
redeems a number of shares of Steel Stock for, an amount equal to the
Net Proceeds (as defined in the Certificate of Incorporation) of such
Disposition (as provided in Section 2(b)(i)(A) or Section 2(b)(i)(B),
respectively, of Division I of the Certificate of Incorporation) (the
"Steel Group Disposition Dividend" or the "Steel Group Disposition
Redemption", respectively); or
(ii) the Company pays a dividend on, or the Company or any of
its Subsidiaries consummates a tender offer or exchange offer for,
shares of Steel Stock and the aggregate amount of such dividend or the
consideration paid in such tender offer or exchange offer is an amount
equal to all or substantially all of the properties and assets of the
U.S. Steel Group (the "Steel Group
<PAGE>
14
Special Dividend" or the "Steel Group Tender or Exchange Offer",
respectively); provided that the calculation of all or substantially
all of the properties and assets of the U.S. Steel Group shall be made
without giving effect to any money borrowed by the Company or any of
its Subsidiaries in connection with such dividend or tender offer or
exchange offer, as the case may be.
The redemption date of Debentures by the Company pursuant to this Section 3.4(a)
shall be, if the applicable U.S. Steel Group Special Event is (I) the Steel
Group Subsidiary Exchange, the date of such exchange, (II) the Steel Group
Disposition Dividend or the Steel Group Special Dividend, the date such dividend
is paid, (III) the Steel Group Disposition Redemption, the date of such
redemption or (IV) the Steel Group Tender or Exchange Offer, the date such
tender offer or exchange offer is consummated. Notwithstanding anything to the
contrary contained in this Section 3.4(a), any redemption pursuant to this
Section 3.4(a) shall be conditioned upon the actual exchange of Steel Stock for
shares of common stock of the U.S. Steel Group Subsidiary, payment of the Steel
Group Disposition Dividend or the amount due as a result of the Steel Group
Disposition Redemption (in each case in the required kind of capital stock,
cash, securities and/or other property), payment of the Steel Group Special
Dividend or the consummation of the Steel Group Tender or Exchange Offer, as the
case may be.
(b) The Company shall redeem Convertible Debentures, in whole, for
cash, at the Special Redemption Price, if following the Disposition of all or
substantially all of the properties and assets of the U.S. Steel Group, the
Company exchanges all of the outstanding shares of Steel Stock for Marathon
Stock (as provided in Section 2(b)(i)(C) of Division I of the Certificate of
Incorporation) and, at any time subsequent to such exchange, any of the
following events with respect to the Marathon Group occur (such events,
collectively, the "Marathon Group Special Events"):
(A) the Company exchanges all of the outstanding shares of
Marathon Stock for all of the outstanding shares of common stock of
the Marathon Group Subsidiary (as provided in Section 2(a)(i) of
Division I of the Certificate of Incorporation) (the "Marathon Group
Subsidiary Exchange"); or
(B) the Company pays a dividend on, or the Company or any of its
Subsidiaries consummates a tender offer or exchange offer for, shares
of Marathon Stock and the aggregate amount of such dividend or the
consideration paid in such tender offer or exchange offer is an amount
equal to all or substantially all of the properties and assets of the
Marathon Group (the "Marathon Group Special Dividend" or the "Marathon
Group Tender or Exchange Offer", respectively); provided that the
calculation of all or substantially all of the properties and assets
of the Marathon Group shall be made without giving effect to any money
borrowed by the Company or any of its Subsidiaries in connection with
such dividend or tender offer or exchange offer, as the case may be;
provided, further, that, at the time of the payment of such dividend
on, or the consummation of such tender or exchange offer for,
<PAGE>
15
Marathon Stock, there is another class of common stock, other than
Marathon Stock, of the Company then outstanding.
The redemption date of Convertible Debentures by the Company pursuant to this
Section 3.4(b) shall be, if the applicable Marathon Group Special Event is (I)
the Marathon Group Subsidiary Exchange, the date of such exchange, (II) the
Marathon Group Special Dividend, the date such dividend is paid or (III) the
Marathon Group Tender or Exchange Offer, the date such tender offer or exchange
offer is consummated. Notwithstanding anything to the contrary contained in
this Section 3.4(b), any redemption pursuant to this Section 3.4(b) shall be
conditioned upon the actual exchange of Marathon Stock for shares of common
stock of the Marathon Group Subsidiary, payment of the Marathon Group Special
Dividend or the consummation of the Marathon Group Tender or Exchange Offer, as
the case may be.
(c) Prior to giving a notice of redemption resulting from a U.S. Steel
Group Special Event or a Marathon Group Special Event, the Company shall pay all
accrued and unpaid interest (including Compound Interest and Additional
Interest, if any) on the Convertible Debentures through the Interest Payment
Date next preceding the date of such notice.
SECTION 3.5. Notice of Redemption. Notice of any redemption of the
--------------------
Convertible Debentures (other than as a result of a redemption pursuant to
Section 3.4) will be given by the Company by mail to each Holder of Convertible
Debentures to be redeemed not fewer than 30 nor more than 60 days before the
date fixed for redemption of the Convertible Debentures. In the event the
Company shall redeem Convertible Debentures pursuant to Section 3.4, notice of
such redemption shall be given by the Company, (x) if such redemption is a
result of the Steel Group Tender or Exchange Offer or the Marathon Group Tender
or Exchange Offer, on the date of the public announcement of such tender offer
or exchange offer by the Company or any of its Subsidiaries, but in any event
not less than 30 days prior to such redemption, and on the date of the public
announcement of any extension thereof, (y) if such redemption is a result of the
Steel Group Disposition Dividend or the Steel Group Disposition Redemption, on a
date not less than 45 days prior to the date selected by the Board of Directors
for the payment of such dividend or such redemption and (z) otherwise, on a date
at least 30 days but not more than 60 days prior to the date fixed by the Board
for the redemption of Convertible Debentures, in each case to each Holder.
For purposes of the calculation of the date of redemption or exchange
and the dates on which notices are given pursuant to this Section 3.5, a notice
shall be deemed to be given on the day such notice is first mailed by first-
class mail, postage prepaid, or by such other means suitable to assure delivery
of such written notice, to Holders of Convertible Debentures. Each notice shall
be addressed to the Holders of Convertible Debentures at the address of each
such Holder appearing in the books and records of the Company. No defect in the
notice or in the mailing of either thereof with respect to any Holder shall
affect the validity of the redemption or exchange proceedings with respect to
any other Holder. Any notice which was mailed in the manner herein provided
shall be conclusively presumed to have been duly given on the date mailed
whether or not the holder receives the notice. Each such notice shall state, as
appropriate: (A) the redemption date; (B) the aggregate principal
<PAGE>
16
amount of Convertible Debentures to be redeemed, including CUSIP numbers, and,
if less than all the Convertible Debentures held by such Holder are to be
redeemed, the aggregate principal amount of such Convertible Debentures to be
redeemed from such Holder; (C) the redemption price to be paid in respect of the
redemption; (D) the then current Conversion Price and, if any event then known
to the Company will result in an adjustment to the Conversion Price on or prior
to the redemption date, such adjusted conversion price and the date of such
adjustment; (E) if such redemption of Convertible Debentures is the result of a
U.S. Steel Group Special Event or a Marathon Group Special Event, that such
redemption is conditioned upon the occurrence of the applicable U.S. Steel Group
Special Event or Marathon Group Special Event and if that U.S. Steel Group
Special Event is the Steel Group Disposition Dividend or the Steel Group
Disposition Redemption, the last date on which the Convertible Debentures may be
converted into shares of Steel Stock; (F) that interest on the Convertible
Debentures to be redeemed shall cease to accrue on the redemption date, provided
that if such redemption of Convertible Debentures is the result of a U.S. Steel
Group Special Event or a Marathon Group Special Event, the conditions to such
redemption shall have been satisfied; and (G) a place for the Convertible
Debentures to be redeemed.
SECTION 3.6. Notice of Certain Events. (a) If the Company intends:
------------------------
(i) to effect a U.S. Steel Group Special Event or a Marathon
Group Special Event; or
(ii) exchange shares of Steel Stock for Marathon Stock or Delhi
Stock following a Disposition of all or substantially all of the properties
and assets of the U.S. Steel Group,
then the Company shall cause to be filed with the Institutional Trustee for the
Trust, and shall cause to be mailed to each Holder of Convertible Debentures,
not less than 45 days prior to the Steel Group Disposition Dividend or the Steel
Group Disposition Redemption and not less than 30 days prior to any other U.S.
Steel Group Special Event, any Marathon Group Special Event or any such exchange
of Steel Stock for shares of Marathon Stock or Delhi Stock, a notice stating, as
applicable, (A) the record date for any dividend that is a U.S. Steel Group
Special Event or a Marathon Group Special Event, (B) the date on which any
redemption or exchange that is a U.S. Steel Group Special Event, a Marathon
Group Special Event or an exchange of Steel Stock for shares of Marathon Stock
or Delhi Stock is expected to become effective, and the date as of which it is
expected that holders of record of Steel Stock or Marathon Stock shall be
entitled to exchange their shares of Steel Stock or Marathon Stock,
respectively, for securities or other property deliverable upon such redemption
or exchange or (C) the date on which the Steel Group Tender or Exchange Offer or
the Marathon Group Tender or Exchange Offer commenced, the consideration offered
and the other material terms thereof (or the material terms of any amendment
thereto). In addition, from and after any exchange of Steel Stock for Delhi
Stock, effected in accordance with Section 2(b)(i) of Division I of the
Certificate of Incorporation, the Company shall give similar notice of the
Company's intention to exchange Delhi Stock for shares of the Delhi Group
Subsidiary, if Steel Stock has been exchanged therefor, or to pay a dividend on,
or redeem shares of, Delhi Stock following the Disposition of all or
substantially all of the properties and assets of the
<PAGE>
17
Delhi Group. Failure to give or receive any such notice or any defect therein
shall not affect the legality or validity of the related transaction. In the
event of any conflict between the notice provisions of this Section 3.6 and
those of Section 7.3(g), the notice provisions of this Section 3.6 shall govern.
SECTION 3.7. No Sinking Fund. The Convertible Debentures are not
---------------
entitled to the benefit of any sinking fund.
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1. Extension of Interest Payment Period. As long as an
------------------------------------
Event of Default under Section 6.01(a) of the Base Indenture shall not have
occurred and be continuing, the Company shall have the right, at any time and
from time to time during the term of the Convertible Debentures, to defer
payments of interest by extending the interest payment period of such
Convertible Debentures for a period not exceeding 20 consecutive quarters (an
"Extended Interest Payment Period"), during which Extended Interest Payment
Period no interest shall be due and payable on the Convertible Debentures;
provided that no Extended Interest Payment Period may extend beyond the Maturity
Date. To the extent permitted by applicable law, interest, the payment of which
has been deferred during an Extended Interest Payment Period, shall bear
interest thereon at the Coupon Rate compounded quarterly for each quarter of the
Extended Interest Payment Period ("Compounded Interest"). Before the
termination of any such Extended Interest Payment Period the Company may further
extend such Extended Interest Payment Period, provided that such Extended
Interest Payment Period together with all such previous and further extensions
thereof shall not exceed 20 consecutive quarters, or extend beyond the Maturity
Date. At the end of the Extended Interest Payment Period, the Company shall pay
all interest accrued and unpaid on the Convertible Debentures, including any
Additional Interest and Compounded Interest (together, "Deferred Interest") that
shall be payable to the Holders of Convertible Debentures in whose names the
Convertible Debentures are registered in the Security Register on the first
record date after the termination of the Extended Interest Payment Period. Upon
the termination of any Extended Interest Payment Period and upon the payment of
all Deferred Interest then due, the Company may commence a new Extended Interest
Payment Period, subject to the foregoing requirements. No interest shall be due
and payable during an Extended Interest Payment Period, except at the end
thereof, but the Company may pay at any time all or any portion of the interest
accrued during an Extended Interest Payment Period.
SECTION 4.2. Notice of Extension. (a) If the Institutional Trustee
-------------------
shall be the only Holder of the Convertible Debentures at the time the Company
elects an Extended Interest Payment Period, the Company shall give written
notice to the Regular Trustees, the Institutional Trustee and the Trustee of its
election of such Extended Interest Payment Period one Business Day before the
earlier of (i) the date on which Distributions on the Trust Securities are
payable for the first quarter of such Extended Interest Payment Period, or (ii)
the date the Regular Trustees are required to give notice of the record date or
the date such Distributions are payable for the first quarter of such Extended
Interest Payment Period to any
<PAGE>
18
national stock exchange or other organization on which the Trust Convertible
Preferred Securities are listed or quoted or to holders of Trust Convertible
Preferred Securities, but in any event at least one Business Day before such
record date or such payment date.
(b) If the Institutional Trustee shall not be the Holder of the
Convertible Debentures at the time the Company elects an Extended Interest
Payment Period, the Company shall give the Holders of Convertible Debentures
written notice of its election of such Extended Interest Payment Period at least
10 Business Days before the earlier of (i) the Interest Payment Date for the
first quarter of such Extended Interest Payment Period, or (ii) the date the
Company is required to give notice of the record date or the date of such
interest payment for the first quarter of such Extended Interest Payment Period
to any national stock exchange or other organization on which the Convertible
Debentures are listed or quoted or to Holders of Convertible Debentures.
(c) The quarter in which any notice is given pursuant to subsections
(a) or (b) of this Section 4.2 shall be, and shall be counted as, one of the 20
quarters permitted in the maximum Extended Interest Payment Period permitted
under Section 4.1.
SECTION 4.3. Limitation of Transactions. If the Company shall
--------------------------
exercise its right to defer payment of interest as provided in Section 4.1, then
during such Extended Interest Payment Period (a) the Company shall not declare
or pay any dividend on, make any distributions with respect to, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of its
capital stock (other than (i) purchases or acquisitions of shares of capital
stock in connection with any employee benefit plan or program, director plan or
program, dividend reinvestment, stock repurchase or other similar plans
available to stockholders of the Company, or any option, warrant, right or
exercisable, exchangeable or convertible security outstanding as of
____________, 1997, (ii) as a result of a reclassification of the Company's
capital stock pursuant to the exchange or conversion provisions of the Company's
capital stock or the exchange or conversion of one class or series of the
Company's capital stock for another class or series of its capital stock or the
capital securities of a subsidiary (including a trust such as the Trust), or
(iii) the purchase of fractional interests in shares of the Company's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
security being converted or exchanged), and (b) the Company shall not make any
payment of interest, principal or premium, if any, on, or repay, repurchase or
redeem or make any guarantee payment (other than pursuant to the Guarantee) with
respect to, any debt securities issued by the Company that rank on a parity with
or junior to the Convertible Debentures.
ARTICLE V
EXPENSES
SECTION 5.1. Payment of Expenses. In connection with the Company's
-------------------
issuance of the Convertible Debentures to the Institutional Trustee in exchange
for the Trust Common Securities, the Company, in its capacity as borrower with
respect to the Convertible Debentures, shall:
<PAGE>
19
(a) pay all costs and expenses relating to the offering, sale,
issuance and/or exchange of the Convertible Debentures and the Trust Securities,
including fees payable pursuant to the Dealer Manager Agreement, dated as of
_________, 1997, by and among the Company, Goldman Sachs & Co. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated and compensation of the Trustee under
the Base Indenture in accordance with the provisions of Section 7.6 of the Base
Indenture;
(b) pay all costs and expenses of the Trust (including, but not
limited to, costs and expenses relating to the organization, maintenance and
dissolution of the Trust, the fees and expenses of the Institutional Trustee and
the Delaware Trustee, the costs and expenses relating to the operation of the
Trust, including, without limitation, costs and expenses of accountants,
attorneys, statistical or bookkeeping services, expenses for printing and
engraving and computing or accounting equipment, paying agent(s), registrar(s),
transfer agent(s), duplicating, travel and telephone and other
telecommunications expenses and costs and expenses incurred in connection with
the acquisition, financing, and disposition of Trust assets);
(c) pay all costs and expenses related to the enforcement by the
Institutional Trustee of its rights as a Holder of Convertible Debentures;
(d) be primarily liable for any indemnification obligations arising
with respect to the Declaration; and
(e) pay any and all taxes directly imposed on the Trust and all
liabilities, costs and expenses with respect to such taxes of the Trust.
SECTION 5.2. Payment Upon Resignation or Removal. Upon termination
-----------------------------------
of this Supplemental Indenture or the Base Indenture or the removal or
resignation of the Trustee pursuant to Section 7.10 of the Base Indenture, the
Company shall pay to the Trustee all amounts owed to the Trustee accrued to the
date of such termination, removal or resignation.
ARTICLE VI
COVENANTS
SECTION 6.1. Covenants as to the Trust. If the Institutional Trustee
-------------------------
is the Holder of the Convertible Debentures, the Company shall (a) maintain 100%
direct or indirect ownership of the Trust Common Securities; provided, however,
that any permitted successor of the Company under the Base Indenture may succeed
to the Company's ownership of the Common Securities, (b) use its reasonable
efforts to cause the Trust (i) to remain a statutory business trust, except in
connection with a distribution of Convertible Debentures to the holders of Trust
Securities, the redemption of all of the Trust Securities, or certain mergers,
consolidations or amalgamation, each as permitted by the Declaration, and (ii)
to continue to be classified as a grantor trust for United States federal income
tax purposes, and (c) use its reasonable efforts to cause each holder of Trust
Securities to be treated as owning an undivided beneficial ownership interest in
the Convertible Debentures.
<PAGE>
20
SECTION 6.2. Listing or Quotation of Convertible Debentures. If the
----------------------------------------------
Convertible Debentures are to be distributed to the holders of Trust Securities
upon a Dissolution Event, the Company shall use its reasonable efforts to
arrange to list, or seek approval for quotation of, such Convertible Debentures
on any stock exchange or other organization on which the Trust Convertible
Preferred Securities are then listed or quoted, if any.
ARTICLE VII
CONVERSION OF CONVERTIBLE DEBENTURES
SECTION 7.1. Conversion Rights. (a) Subject to and upon compliance
-----------------
with the provisions of this Article VII, the Convertible Debentures are
convertible, at the option of the Holder thereof, at any time prior to the close
of business (New York time) on March 31, 2037 (or earlier as provided in Section
7.1(b)) into that number of fully paid and nonassessable shares of Steel Stock
obtained by dividing the principal amount of the Convertible Debentures to be
converted by the Conversion Price (as in effect on the date provided for in
Section 7.2(b)). The initial Conversion Price is $46.25 per share of Steel
Stock. The Conversion Price is subject to adjustment as described in this
Article VII.
(b) The right to convert Convertible Debentures shall terminate prior
to the close of business (i) on March 31, 2037 (unless the stated maturity of
the Convertible Debentures is shortened following a Tax Event, in which case the
advanced maturity date) or (ii) in the case of Convertible Debentures called for
redemption, on the related redemption date, unless (A) the Company shall default
in making payment of any moneys payable upon such redemption under Article III
or (B) if the redemption is the result of a U.S. Steel Group Special Event or a
Marathon Group Special Event, the conditions to such redemption shall not have
been satisfied; provided, that if the Company has given notice of a redemption
pursuant to Section 3.4 which is conditioned on the occurrence of the Steel
Group Disposition Dividend or the Steel Group Disposition Redemption, the right
to convert Convertible Debentures shall terminate on the 31st day prior to the
date selected by the Board for such dividend or redemption.
SECTION 7.2. Conversion Procedures. (a) In order to convert all or
---------------------
a portion of the Convertible Debentures, the Holder thereof shall (i) sign and
deliver to the Conversion Agent an irrevocable notice of election to convert
("Conversion Notice") setting forth the principal amount of Convertible
Debentures to be converted (which shall equal the Principal Amount of One
Convertible Debenture or integral multiples thereof), together with the name or
names, if other than the Holder, in which the shares of Steel Stock should be
issued upon conversion, (ii) if such Convertible Debentures are definitive
Convertible Debentures, surrender to the Conversion Agent the Convertible
Debentures to be converted, with such endorsements or transfer documents as
requested by the Conversion Agent, and (iii) pay any transfer or similar tax, if
required. In addition, a holder of Trust Securities may exercise its right
under the Declaration to convert such Trust Securities into Steel Stock by
delivering to the Conversion Agent an irrevocable conversion request setting
forth the information called for by the preceding sentence and directing the
Conversion Agent (i) to exchange such Trust Securities for a portion of the
Convertible Debentures held by the Trust
<PAGE>
21
(at an exchange rate of $1 of principal amount of Convertible Debentures for
each $1 liquidation amount of Trust Securities) and (ii) to immediately convert
such Convertible Debentures, on behalf of such holder, into Steel Stock pursuant
to this Article VII and, if such Trust Securities are in definitive form,
surrendering such Convertible Preferred Security Certificates or Common Security
Certificates, as the case may be, duly endorsed or assigned to the Trust or in
blank. So long as any Trust Convertible Preferred Securities are outstanding,
the Trust shall not convert any Convertible Debentures except pursuant to a
conversion request delivered to the Conversion Agent by a holder of Trust
Securities.
Except as provided below, accrued but unpaid interest shall not be
paid in cash on Convertible Debentures that are converted by a Holder into Steel
Stock, nor shall such accrued interest be converted into additional shares of
Steel Stock, but such accrued interest shall be deemed to be paid in full and
then returned by the Holder to the Company as partial consideration for the
Steel Stock received upon conversion. Holders of Convertible Debentures at the
close of business on a Regular Record Date shall be entitled to receive the
interest payable on such Convertible Debentures (except that holders of
Convertible Debentures called for redemption on a redemption date between such
Regular Record Date and the Interest Payment Date shall not be entitled to
receive such interest on such Interest Payment Date) on the corresponding
Interest Payment Date notwithstanding the conversion of such Convertible
Debentures following such Regular Record Date and prior to such Interest Payment
Date. However, Convertible Debentures surrendered for conversion during the
period between the close of business on any Regular Record Date and the opening
of business on the corresponding Interest Payment Date (except Convertible
Debentures called for redemption on a redemption date during such period) shall
be accompanied by payment of an amount equal to the interest payable on such
Convertible Debentures on such Interest Payment Date. A Holder of Convertible
Debentures on a Regular Record Date who (or whose transferee) tenders any such
Convertible Debentures for conversion into shares of Steel Stock on such
Interest Payment Date shall receive the interest payable by the Company on such
Convertible Debentures on such date, and the converting Holder need not include
payment of the amount of such interest upon surrender of Convertible Debentures
for conversion. The Company shall make no payment or allowance for dividends on
the shares of Steel Stock issued upon conversion.
(b) Each conversion shall be deemed to have been effected immediately
prior to the close of business on the day on which the Conversion Notice was
received (the "Conversion Date") by the Conversion Agent from the Holder or from
a holder of the Trust Securities effecting a conversion thereof pursuant to its
conversion rights under the Declaration, as the case may be. The Person or
Persons entitled to receive Steel Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such Steel Stock as
of the Conversion Date. As promptly as practicable on or after the Conversion
Date, the Company shall issue and deliver at the office of the Conversion Agent,
unless otherwise directed by the Holder in the Conversion Notice, a certificate
or certificates for the number of full shares of Steel Stock issuable upon such
conversion, together with the cash payment, if any, in lieu of any fraction of
any share to the Person or Persons entitled to receive the same. The Conversion
Agent shall deliver such certificate or certificates to such Person or Persons.
<PAGE>
22
(c) The Company's delivery upon conversion of the fixed number of
shares of Steel Stock into which the Convertible Debentures are convertible
(together with the cash payment, if any, in lieu of fractional shares) shall be
deemed to satisfy the Company's obligation to pay the principal amount at the
Maturity Date of the portion of Convertible Debentures so converted and any
unpaid interest (including Compounded Interest and any Additional Interest)
accrued on such Convertible Debentures at the time of such conversion.
(d) No fractional shares or scrip representing fractions of shares of
Steel Stock or any other common stock of the Corporation shall be issued upon
conversion of the Convertible Debentures. Instead of any fractional interest in
a share of Steel Stock or such other common stock that would otherwise be
deliverable upon the conversion of the Convertible Debentures, the Company shall
pay to the Conversion Agent an amount in cash (and the Conversion Agent in turn
will pay such cash amount to the Holder of such Convertible Debentures or the
holder of the Trust Securities so converted, as appropriate) based upon the
Closing Price of Steel Stock or such other common stock on the Trading Day
immediately preceding the date of conversion. If more than one Convertible
Debenture shall be surrendered for conversion at any one time by the same
Holder, the number of full shares of Steel Stock or such other common stock
issuable upon conversion thereof shall be computed on the basis of the aggregate
principal amount of Convertible Debentures so surrendered.
(e) In the event of the conversion of any Convertible Debenture in
part only, a new Convertible Debenture or Convertible Debentures for the
unconverted portion thereof will be issued in the name of the Holder thereof
upon the cancellation thereof in accordance with Section 2.8 of the Base
Indenture.
(f) In effecting the conversion transactions described in this
Section 7.2, the Conversion Agent is acting as agent of the holders of Trust
Securities (in the exchange of Trust Securities for Convertible Debentures) and
as agent of the Holders of Convertible Debentures (in the conversion of
Convertible Debentures into Steel Stock), as the case may be. The Conversion
Agent is hereby authorized (i) to exchange Convertible Debentures held by the
Trust from time to time for Trust Securities in connection with the conversion
of such Trust Securities in accordance with this Article VII and (ii) to convert
all or a portion of the Convertible Debentures into Steel Stock and there upon
to deliver such shares of Steel Stock in accordance with the provisions of this
Article VII and to deliver to the Trust a new Convertible Debenture or
Convertible Debentures for any resulting unconverted principal amount.
SECTION 7.3. Certain Conversion Price Adjustments. (a) The
------------------------------------
Conversion Price per share of Steel Stock shall be adjusted from time to time as
follows:
(i) If the Company shall after the date on which Convertible
Debentures are initially issued (A) pay a dividend or make a distribution
on any class of its capital stock in shares of Steel Stock, (B) subdivide
the outstanding Steel Stock into a greater number of shares or (C) combine
the outstanding Steel Stock into a smaller number of
<PAGE>
23
shares, then the Conversion Price in effect at the opening of business on
the day next following the date fixed for the determination of stockholders
entitled to receive such dividend or distribution or at the opening of
business on the day next following the day on which such subdivision or
combination becomes effective, as the case may be, shall be adjusted so
that the Holder of any Convertible Debenture thereafter surrendered for
conversion shall be entitled to receive the number of shares of Steel Stock
that such Holder would have owned or have been entitled to receive after
the happening of any of the events described above had such Convertible
Debenture been converted immediately prior to the record date in the case
of a dividend or distribution or the effective date in the case of a
subdivision or combination. An adjustment made pursuant to this Section
7.3(a)(i) shall become effective immediately after the opening of business
on the day next following the record date (except as provided in Section
7.3(b) below) in the case of a dividend or distribution and shall become
effective immediately after the opening of business on the day next
following the effective date in the case of a subdivision or combination.
(ii) If the Company shall issue after the date on which
Convertible Debentures are initially issued rights or warrants (other than
any rights or warrants (including the Rights) referred to in Section
7.3(a)(iii) below) to all holders of Steel Stock entitling them (for a
period expiring within 45 days after the record date mentioned below) to
subscribe for or purchase Steel Stock at a price per share less than the
Current Market Price per share of Steel Stock on the record date for the
determination of stockholders entitled to receive such rights or warrants,
then the Conversion Price in effect at the opening of business on the day
next following such record date shall be adjusted to equal the price
determined by multiplying (I) the Conversion Price in effect immediately
prior to the opening of business on the day next following the date fixed
for such determination by (II) a fraction, the numerator of which shall be
the sum of (A) the number of shares of Steel Stock outstanding at the close
of business on the date fixed for such determination and (B) the number of
shares that the aggregate proceeds to the Company from the exercise of such
rights or warrants for Steel Stock would purchase at such Current Market
Price, and the denominator of which shall be the sum of (A) the number of
shares of Steel Stock outstanding on the close of business on the date
fixed for such determination and (B) the number of additional shares of
Steel Stock offered for subscription or purchase pursuant to such rights or
warrants. Such adjustment shall become effective immediately after the
opening of business on the day next following such record date (except as
provided in Section 7.3(h)). In determining whether any rights or warrants
entitle the holders of Steel Stock to subscribe for or purchase shares of
Steel Stock at less than the Current Market Price thereof, there shall be
taken into account any consideration received by the Company upon issuance
and upon exercise of such rights or warrants, the value of such
consideration, if other than cash, to be determined by the Board of
Directors.
(iii) If the Company shall distribute to all holders of the
Steel Stock any shares of capital stock (other than common stock of the
Company), evidences of indebtedness, cash or other assets of the Company
(including securities, but excluding
<PAGE>
24
(w) any dividend or distribution referred to in Section 7.3(a)(i), (x) any
rights or warrants referred to in Section 7.3(a)(ii) or in the second or
third paragraph of this Section 7.3(a)(iii), (y) any dividend or
distribution paid exclusively in cash or (z) any stocks, securities or
other property received as a result of a transaction referred to in Section
7.3(c)) (any of the foregoing being hereinafter referred to in this Section
7.3(a)(iii) as the "Securities"), then in each such case the Conversion
Price shall be adjusted so that it shall equal the price determined by
multiplying (I) the Conversion Price in effect immediately prior to the
close of business on the date fixed for the determination of stockholders
entitled to receive such distribution by (II) a fraction, the numerator of
which shall be the Current Market Price per share of Steel Stock on the
record date mentioned below less the then fair market value (as determined
by the Board of Directors) of the portion of the Securities so distributed
to one share of Steel Stock, and the denominator of which shall be the
Current Market Price per share of Steel Stock on the record date mentioned
below. Such adjustment shall become effective immediately at the opening
of business on the day next following the record date for the determination
of stockholders entitled to receive such distribution (except as provided
in Section 7.3(h)).
With respect to the Amended and Restated Rights Agreement, dated as of
October 1, 1992 (as amended or otherwise modified from time to time, the
"Restated Rights Agreement"), between the Company and Mellon Bank, N.A.
(terms used in this paragraph and not otherwise defined herein having the
meanings set forth in the Restated Rights Agreement), the Conversion Price
will be adjusted only when the Rights issuable pursuant thereto become
exercisable after the Company's right of redemption thereunder has expired.
Subject to the foregoing, upon the later to occur of the Distribution Date
and a Section 11(a)(ii) Event (the "Adjustment Date"), the Conversion Price
in effect at the opening of business on the Adjustment Date shall be
adjusted to equal the price determined by multiplying such Conversion Price
by a fraction the numerator of which shall be equal to the Current Market
Price per share of Steel Stock on the Trading Day immediately prior to the
Adjustment Date less an amount equal to the quotient of (x) the aggregate
fair market value on the Adjustment Date (as determined by the Board of
Directors) of the Rights distributed under the Restated Rights Agreement
divided by (y) the number of shares of Steel Stock outstanding on such day
prior to the Adjustment Date and the denominator of which shall be equal to
such Current Market Price per share of Steel Stock. Such adjustment shall
become effective immediately after the opening of business on the day next
following such Adjustment Date.
In case the Company shall (other than pursuant to the Restated Rights
Agreement) distribute rights or warrants to purchase Steel Stock pro rata
to all holders of Steel Stock which rights or warrants are not at such time
immediately exercisable but, upon the occurrence of a specified event or
events ("Exercise Trigger Date") will become exercisable and once they
become exercisable will entitle, or upon the occurrence of an additional
specified event or events ("Price Trigger Date") will entitle, the Holder
thereof to purchase Steel Stock at a price per share of Steel Stock less
than the Current Market Price of the Steel Stock on the Trading Day next
<PAGE>
25
succeeding the later of the Exercise Trigger Date or the Price Trigger Date
("Adjustment Trigger Date") and there shall have occurred such Adjustment
Trigger Date, thus permitting the holders of such rights or warrants
irrevocably to exercise any exchange, subscription or purchase rights
conferred by such rights or warrants at a price per share of Steel Stock
less than such Current Market Price, then the Conversion Price in effect at
the opening of business on the Adjustment Trigger Date shall be adjusted by
multiplying (I) such Conversion Price by (II) a fraction, the numerator of
which shall be equal to the Current Market Price per share of the Steel
Stock on the Trading Day immediately prior to the Adjustment Trigger Date
less an amount equal to the quotient of (x) the aggregate fair market value
on the Adjustment Trigger Date of the rights or warrants so distributed (as
determined by the Board of Directors) divided by (y) the number of shares
of Steel Stock outstanding on such day prior to the Adjustment Trigger Date
and the denominator of which shall be equal to such Current Market price
per share of the Steel Stock. Such adjustment shall become effective
immediately after the opening of business on the day next following such
Adjustment Trigger Date.
(iv) If the Company shall, by dividend or otherwise, at any time
distribute to all holders of the Steel Stock cash (excluding any regular
quarterly dividend payable solely in cash, any cash that is distributed as
part of a distribution requiring a Conversion Price adjustment pursuant to
Section 7.3(a)(iii) and cash that is distributed in a merger or
consolidation to which Section 7.3(c) applies) in an aggregate amount that,
together with (A) the aggregate amount of any other distributions to all
holders of the Steel Stock made exclusively in cash (to which this Section
7.3(a)(iv) would otherwise apply) within the 12 months preceding the date
of payment of such distribution and in respect of which no Conversion Price
adjustment has been made and (B) all Excess Purchase Payments in respect of
each tender offer or exchange offer or other negotiated purchase for Steel
Stock concluded by the Company or any of its Subsidiaries within the 12
months preceding the date of payment of such distribution and in respect of
which no Conversion Price adjustment has been made, exceeds an amount equal
to 12 1/2% of the product of the Current Market Price per share of Steel
Stock on the date fixed for determination of holders of Steel Stock
entitled to receive such distribution times the number of shares of Steel
Stock outstanding on such date, then the Conversion Price shall be adjusted
so that it shall equal the price determined by multiplying (I) such
Conversion Price in effect immediately prior to the Conversion Price
adjustment contemplated by this Section 7.3(a)(iv) by (II) a fraction the
numerator of which shall be the Current Market Price per share of the Steel
Stock on the date fixed for determination of holders of Steel Stock
entitled to receive such distribution less the combined amount of such cash
and such Excess Purchase Payments so distributed applicable to one share of
Steel Stock and the denominator of which shall be such Current Market Price
per share of the Steel Stock on such date of determination. Such
adjustment shall become effective immediately prior to the opening of
business on the day next following the date fixed for such determination.
<PAGE>
26
(v) In case a tender offer or exchange offer or other negotiated
purchase made by the Company or any of its Subsidiaries for all or any
portion of the Steel Stock shall be consummated, if the aggregate amount of
any Excess Purchase Payment, together with (A) the aggregate amount of any
distributions made to all holders of Steel Stock made exclusively in cash
(excluding any regular quarterly dividend payable solely in cash, any cash
that is distributed as part of a distribution requiring a Conversion Price
adjustment pursuant to Section 7.3(a)(iii) and cash that is distributed in
a merger or consolidation to which Section 7.3(c) applies) within the 12
months preceding the consummation of such tender or exchange offer or other
negotiated purchase and in respect of which no Conversion Price adjustment
has been made, and (B) all other Excess Purchase Payments in respect of
each tender or exchange offer or other negotiated purchase for Steel Stock
concluded by the Company or any of its Subsidiaries within the 12 months
preceding the consummation of such tender or exchange offer or other
negotiated purchase and in respect of which no Conversion Price adjustment
has been made, exceeds an amount equal to 12 1/2% of the product of the
Current Market Price per share of Steel Stock on the consummation date of
such tender or exchange offer or other negotiated purchase (any such date,
the "Purchase Date") times the number of shares of Steel Stock outstanding
(including any tendered, exchanged or purchased shares) on such Purchase
Date, then the Conversion Price shall be adjusted so that it shall equal
the price determined by multiplying (I) such Conversion Price in effect
immediately prior to such Purchase Date by (II) a fraction, the numerator
of which shall be the Current Market Price per share of the Steel Stock on
such Purchase Date less the combined amount of Excess Purchase Payments and
such cash so distributed applicable to one share of Steel Stock and the
denominator of which shall be such Current Market Price per share on such
Purchase Date. Such adjustment shall become effective immediately prior to
the opening of business on the day next following such Purchase Date.
(vi) The Company from time to time may reduce the Conversion
Price by any amount for any period of at least 20 Business Days (or such
other period as may then be required by applicable law), provided that the
Board of Directors shall have determined that such reduction is in the best
interests of the Company. No reduction in the Conversion Price pursuant to
this Section 7.3(a)(vi) shall become effective unless the Company shall
have mailed a notice, at least 15 days prior to the date on which such
reduction is scheduled to become effective, to each Holder of Convertible
Debentures and to each holder of the Trust Securities. Such notice shall
be given by first class mail, postage prepaid, at such holder's address as
the same appears on the records of the Company. Such notice shall state
the amount per share by which the Conversion Price will be reduced and the
period for which such reduction will be in effect.
(vii) The Company may make such reductions in the Conversion
Price, in addition to those required by Sections 7.3(a)(i) through (v), as
the Board determines to be necessary in order that any event treated for
Federal income tax purposes as a dividend of stock or stock rights will not
be taxable to the recipients; provided that any such reduction shall not be
effective until written evidence of the action of the
<PAGE>
27
Board authorizing such reduction shall be filed with the Secretary of the
Company and notice thereof shall have been given by first class mail,
postage prepaid, to each Holder of Convertible Debentures at such Holder's
address as the same appears on the stock transfer books of the Company.
(b) No adjustment in the Conversion Price shall be required unless
such adjustment would require a cumulative increase or decrease of at least 1%
in such price; provided, however, that any adjustments that by reason of this
Section 7.3(b) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment until made; and provided, further,
that any adjustment shall be required and made in accordance with the provisions
of this Article VII (other than this Section 7.3(b)) not later than such time as
may be required in order to preserve the tax-free nature of a distribution to
the holders of shares of Steel Stock or any other common stock into which
Convertible Debentures are convertible. Notwithstanding any other provisions of
this Article VII, the Company shall not be required to make any adjustment of
any Conversion Price established hereunder for the issuance of any shares of
common stock of the Company (including Steel Stock) pursuant to any plan
providing for the reinvestment of dividends or interest payable on securities of
the Company and the investment of additional optional amounts in shares of such
common stock under such plan. All calculations under this Article 7 shall be
made to the nearest 1/100 of a cent (with $.00005 being rounded upward) or to
the nearest 1/10,000 of a share (with .00005 of a share being rounded upward),
as the case may be.
(c) If the Company shall be a party to any transaction (including,
without limitation, a merger or consolidation of the Company and excluding any
transaction as to which Sections 7.3(a)(i) through (vi) or 7.3(f) apply), in
each case as a result of which shares of Steel Stock shall be converted into the
right to receive stock, securities or other property (including cash or any
combination thereof), (each of the foregoing being referred to herein as a
"Transaction"), each Convertible Debenture which is not converted into the right
to receive stock, securities or other property in connection with such
Transaction shall thereafter be convertible into the kind and amount of shares
of stock, securities and other property (including cash or any combination
thereof) receivable upon the consummation of such Transaction by a holder of
that number of shares or fraction thereof of Steel Stock into which one
Convertible Debenture was convertible immediately prior to such Transaction,
assuming such holder of Steel Stock (i) is not a person with which the Company
consolidated or into which the Company merged or which merged into the Company
or to which such sale or transfer was made, as the case may be (a "Constituent
Person"), or an affiliate of a Constituent Person and (ii) failed to exercise
his rights of election, if any, as to the kind or amount of stock, securities
and other property (including cash) receivable upon such Transaction (provided
that if the kind or amount of stock, securities and other property (including
cash) receivable upon such Transaction is not the same for each share of Steel
Stock of the Company held immediately prior to such Transaction by other than a
Constituent Person or an affiliate thereof and in respect of which such rights
of election shall not have been exercised ("non-electing share"), then for the
purpose of this Section 7.5 the kind and amount of stock, securities and other
property (including cash) receivable upon such Transaction by each non-electing
share shall be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares). The Company shall not be a
<PAGE>
28
party to any Transaction unless the terms of such Transaction are consistent
with the provisions of this Section 7.5 and it shall not consent or agree to the
occurrence of any Transaction until the Company has entered into an agreement
with the other party or parties to such transaction for the benefit of the
Holders of Convertible Debentures that will contain provisions enabling the
holders of such shares that remain outstanding after such Transaction to convert
into the consideration received by holders of Steel Stock at the Conversion
Price in effect immediately prior to such Transaction. The provisions of this
Section 7.5 shall similarly apply to successive Transactions.
(d) The reclassification of common stock into which Convertible
Debentures are then convertible into securities which include securities other
than such common stock (other than any reclassification upon a consolidation or
merger to which Section 7.3(c) applies), shall be deemed to involve (i) a
distribution of such securities other than such common stock to all holders of
such common stock (and the effective date of such reclassification shall be
deemed to be "the date fixed for the determination of stockholders entitled to
receive such distribution") and (ii) a subdivision or combination, as the case
may be, of the number of shares of such common stock outstanding immediately
prior to such reclassification into the number of shares of such common stock
outstanding immediately thereafter (and the effective date of such
reclassification shall be deemed to be the effective date of such subdivision or
combination).
(e) If the Company shall, by dividend or otherwise, distribute to all
holders of Steel Stock or other class of common stock into which Convertible
Debentures are then convertible shares of common stock other than Steel Stock or
any class of common stock into which Convertible Debentures are then convertible
(other than pursuant to Section 7.3(f)), each Convertible Debenture shall be
convertible, in addition to the number of shares of Steel Stock and/or such
other common stock into which such share is then convertible, into the number of
shares of such other common stock receivable upon payment of such distribution
to a holder of that number of shares or fraction thereof of Steel Stock or such
other common stock into which one Convertible Debenture was convertible
immediately prior to the record date fixed for the determination of stockholders
entitled to receive such distribution. Convertible Debentures shall become so
convertible immediately after the opening of business on the day next following
such record date (except as provided in Section 7.3(h)). In addition, a
Conversion Price shall be established with respect to such common stock in an
amount equal to the quotient of (i) the initial Principal Amount of One
Convertible Debenture divided by (ii) the number of shares or fraction thereof
of such common stock that a holder of one share of Steel Stock or such other
common stock into which Convertible Debentures are then convertible would be
entitled to receive on the payment date for such distribution from and after any
such date of determination of stockholders entitled to receive such distribution
and, thereafter, Conversion Price adjustments as nearly as equivalent in type as
may be practicable to the adjustments pursuant to Sections 7.3(a) through (c)
which are to be made in respect of Steel Stock shall be made in respect of
shares of such common stock. Notwithstanding the foregoing and the provisions
of Section 7.3(a)(iii), if the Company shall make such a distribution in common
stock and, thereafter, all of the shares of such common stock cease to be
outstanding, on the date such shares of common stock cease to be outstanding (x)
the Convertible Debentures shall cease to be convertible into shares of such
<PAGE>
29
common stock, (y) a distribution of shares of such common stock shall be deemed
to have occurred on such date and (z) the Conversion Price for the class of
common stock upon which such distribution was made, or if no shares of such
class are then outstanding because shares of such class were exchanged for
shares of another class of common stock, of such other class of common stock,
shall be adjusted in the manner set forth in Section 7.3(a)(iii) to the same
extent as if shares of the common stock in which such distribution was made were
within the meaning of the term "Securities" in Section 7.3(a)(iii).
(f) After the date, if any, on which all outstanding shares of Steel
Stock or of any other common stock into which Convertible Debentures are then
convertible are exchanged for shares of another class of common stock (as
provided in Section 2(b)(i)(C) or 2(b)(iii) of Division I of the Certificate of
Incorporation), each Convertible Debenture shall thereafter be convertible into
the number of shares of such other class of common stock receivable upon such
exchange by a holder of that number of shares or fraction thereof of Steel
Stock, and/or such other common stock into which Convertible Debentures are then
convertible, into which the Principal Amount of One Convertible Debenture was
convertible immediately prior to such exchange. From and after any such
exchange, Conversion Price adjustments as nearly equivalent as may be
practicable to the adjustments pursuant to Sections 7.3(a) through (f) which,
prior to such exchange, were made in respect of Steel Stock and/or such other
common stock into which Convertible Debentures are then convertible shall
instead be made pursuant to such Sections 7.3(a) through (f) in respect of
shares of such other class of common stock.
(g) Subject to the provisions of Section 3.6, if:
(i) the Company takes any action that would require an
adjustment of the Conversion Price pursuant to this Section 7.3; or
(ii) there shall be any consolidation or merger to which the
Company is a party and for which approval of any stockholders of the
Company is required; or
(iii) there shall occur the voluntary or involuntary
liquidation, dissolution or winding up of the Company; or
(iv) the Company or any of its Subsidiaries shall commence a
tender offer or exchange offer for all or a portion of the outstanding
shares of Steel Stock (or shall amend any such tender or exchange offer),
then the Company shall cause to be filed with the Trustee and the transfer agent
for the Trust Convertible Preferred Securities and the Convertible Debentures,
and shall cause to be mailed to the Holders of Convertible Debentures and the
holders of the Trust Securities at their addresses as shown on the securities
transfer records of the Company, as promptly as possible, but at least 15 days
prior to the earliest applicable date hereinafter specified, a notice stating,
as applicable, (A) the proposed record date for a dividend or distribution or
the proposed effective date of a consolidation, merger, sale, transfer,
liquidation, dissolution or winding up, (B) the date as of which it is expected
that holders of Steel Stock of record shall
<PAGE>
30
be entitled to exchange their shares of Steel Stock for securities or other
property, if any, deliverable upon such consolidation, merger, sale, transfer,
liquidation, dissolution or winding up or (C) the date on which such tender or
exchange offer is scheduled to expire unless extended, the consideration offered
and the other material terms thereof (or the material terms of any amendment
thereto). Failure to give or receive such notice or any defect therein shall
not affect the legality or validity of the related transaction.
(h) In any case in which Section 7.3(a) or 7.3(e) provides that an
adjustment shall become effective on the day next following a record date for an
event, the Company may defer until the occurrence of such event (A) issuing to
the holder of any Convertible Debenture converted after such record date and
before the occurrence of such event the additional shares of Steel Stock or any
other common stock of the Company issuable upon such conversion by reason of the
adjustment required by such event over and above the number of shares of Steel
Stock or such other common stock issuable upon such conversion before giving
effect to such adjustment and (B) paying to such holder any amount in cash in
lieu of any fraction thereof pursuant to Section 7.2(d).
(i) For purposes of this Article VII, the number of shares of Steel
Stock or any other common stock of the Company at any time outstanding shall not
include any shares of Steel Stock or such other common stock then owned or held
by or for the account of Company. The Company shall not pay a dividend or make
any distribution on shares of Steel Stock or such other common stock held in the
treasury of the Company.
(j) The Company shall at all times reserve and keep available, free
from preemptive rights, out of the aggregate of its authorized but unissued
shares of Steel Stock (and/or, if the Convertible Debentures are then
convertible into other common stock of the Company, such other common stock) or
its issued shares of Steel Stock or such other common stock, as the case may be,
held in its treasury, or both, for the purpose of effecting conversion of the
Convertible Debentures, the full number of shares of Steel Stock or such other
common stock deliverable upon the conversion of all the Convertible Debentures
then outstanding and not theretofore converted. Any shares of Steel Stock or
other shares of common stock of the Company issued upon conversion of the
Convertible Debentures shall be duly authorized, validly issued and fully paid
and nonassessable. The Company shall deliver the shares of Steel Stock or
shares of such other common stock received upon conversion of the Convertible
Debentures to the converting Holder free and clear of all liens, charges,
security interests and encumbrances, except for United States withholding taxes.
The Company shall endeavor to list the shares of Steel Stock or other common
stock of the Company required to be delivered upon conversion of the Convertible
Debentures, prior to such delivery, upon each national securities exchange, if
any, upon which the outstanding Steel Stock or such other common stock is listed
at the time of such delivery. Prior to the delivery of any securities that the
Company shall be obligated to deliver upon conversion of Convertible Debentures,
the Company shall endeavor to comply with all federal and state laws and
regulations thereunder requiring the registration of such securities with, or
any approval of or consent to the delivery thereof by, any governmental
authority. For purposes of this Section 7.3(j), the number of shares of Steel
Stock or such other shares of common stock that shall be deliverable upon the
conversion of all outstanding Convertible Debentures
<PAGE>
31
shall be computed as if at the time of computation all such outstanding
Convertible Debentures were held by a single Holder.
(k) The Company will pay any and all documentary, stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of shares of
Steel Stock or other securities or property on conversion of Convertible
Debentures pursuant hereto; provided, however, that the Company shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issue or delivery of shares of Steel Stock or other securities or
property in a name other than that of the holder of such shares to be converted
and no such issue or delivery shall be made unless and until the person
requesting such issue or delivery has paid to the Company the amount of any such
tax or established, to the reasonable satisfaction of the Company, that such tax
has been paid.
(l) Whenever the Conversion Price is adjusted as herein provided, the
Company shall promptly file with the Institutional Trustee for the Trust an
officer's certificate setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment,
which certificate shall be prima facie evidence of the correctness of such
adjustment. Promptly after delivery of such certificate, the Company shall
prepare a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the effective date of such adjustment and shall
send such notice of such adjustment of the Conversion Price by first class mail,
postage prepaid, to the Holders of the Convertible Debentures, at such Holders'
address as the same appears on the records of the Company.
SECTION 7.4. Special Provisions Regarding Adjustment of Conversion
-----------------------------------------------------
Price or Other Provisions. In the event that the provisions of this Article VII
- -------------------------
specifying the methods by which the Conversion Price or other provisions are
adjusted would require an adjustment that is determined in good faith by the
Board of Directors to be inconsistent with the purposes of the provisions hereof
providing for Conversion Price or other adjustments (generally, to place the
holders of the Convertible Debenture and the Trust Securities in a position
equivalent to the position they were in prior to the event requiring an
adjustment to the Conversion Price or other adjustments), the Board of Directors
may make an adjustment (in lieu of that required pursuant to such provisions)
that it determines in good faith to place the Holders of the Convertible
Debentures in a position at least equivalent to the position they were in prior
to such event, which determination shall be described in a Board Resolution.
There shall be no adjustment of the Conversion Price in case of the issuance of
any stock of the Company in a reorganization, acquisition or other similar
transaction except as specifically set forth in this Article VII. If any action
or transaction would require adjustment of any Conversion Price established
hereunder pursuant to more than one paragraph of this Article VII, only the
adjustment which would result in the largest reduction of such Conversion Price
shall be made.
SECTION 7.5. Trustee Not Responsible for Determining Conversion Price
--------------------------------------------------------
or Adjustments. Neither the Trustee nor any Conversion Agent shall at any time
- --------------
be under any duty or responsibility to any Holder of any Convertible Debenture
to determine whether any facts exist which may require any adjustment of the
Conversion Price, or with respect to the
<PAGE>
32
nature or extent of any such adjustment when made, or with respect to the method
employed, or whether this supplemental indenture need be entered into. Neither
the Trustee nor any Conversion Agent shall be accountable with respect to the
validity or value (or the kind of account) of any shares of Steel Stock or of
any securities or property, which may at any time be issued or delivered upon
the conversion of any Convertible Debenture; and neither the Trustee nor any
Conversion Agent makes any representation with respect thereto. Neither the
Trustee nor any Conversion Agent shall be responsible for any failure of the
Company to make any cash payment or to issue, transfer or deliver any shares of
Steel Stock or stock certificates or other securities or property upon the
surrender of any Convertible Debenture for the purpose of conversion.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Events of Default. (a) In addition to those events set
-----------------
forth in Section 6.1 of the Base Indenture, "Event of Default" with respect to
the Convertible Debentures, shall include the following events:
(i) in the event the Institutional Trustee is the Holder of the
Convertible Debentures, the Trust shall have voluntarily or involuntarily
dissolved, wound-up its business or otherwise terminated its existence except in
connection with (i) the distribution of Convertible Debentures to holders of
Trust Securities in liquidation of their interest in the Trust, (ii) the
redemption of all of the outstanding Trust Securities, or (iii) certain mergers,
consolidations or amalgamation, each as permitted by the Declaration; and
(ii) the failure by the Company to deliver the Steel Stock or other
shares of common stock of the Company upon a valid conversion election by a
Holder of Convertible Debentures to convert such Convertible Debentures into
shares of Steel Stock or other shares of common stock of the Company (whether or
not such conversion is prohibited by the subordination provisions set forth in
the Base Indenture).
(b) Notwithstanding any other provision to the contrary, a valid
extension of the interest payment period of the Convertible Debentures pursuant
to Section 4.1 shall not constitute a default in the payment of an installment
of interest under Section 6.1(a) of the Base Indenture.
ARTICLE IX
FORM OF CONVERTIBLE DEBENTURE
SECTION 9.1. Form of Convertible Debenture. The Convertible
-----------------------------
Debentures and the Trustee's Certificate of Authentication to be endorsed
thereon shall be substantially in the form set forth as Annex I to this
Supplemental Indenture.
<PAGE>
33
ARTICLE X
ORIGINAL ISSUE OF CONVERTIBLE DEBENTURES
SECTION 10.1. Original Issue of Convertible Debentures. Convertible
----------------------------------------
Debentures in the aggregate principal amount of up to $__________ may, upon or
following execution of this Supplemental Indenture, be executed by the Company
and delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and make available for delivery said Convertible Debentures to or
upon the written order of the Company, signed by its Chairman, its Vice
Chairman, its President, or any Vice President and its Treasurer or an Assistant
Treasurer, without any further action by the Company.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Ratification of Base Indenture; Supplemental Indenture
------------------------------------------------------
Controls. The Base Indenture, as supplemented by this Supplemental Indenture,
- --------
is in all respects ratified and confirmed, and this Supplemental Indenture shall
be deemed part of the Base Indenture in the manner and to the extent herein and
therein provided. The provisions of this Supplemental Indenture shall supersede
the provisions of the Base Indenture to the extent the Base Indenture is
inconsistent herewith.
SECTION 11.2. Trustee Not Responsible for Recitals. The recitals
------------------------------------
herein contained are made by the Company and not by the Trustee,and the Trustee
assumes no responsibility for the correctness thereof. The Trustee makes no
representation as to the validity or sufficiency of this Supplemental Indenture.
SECTION 11.3. Governing Law. This Supplemental Indenture and each
-------------
Convertible Debenture shall be deemed to be a contract made under the internal
laws of the State of New York, and for all purposes shall be construed in
accordance with the laws of said State.
SECTION 11.4. Separability. In case any one or more of the
------------
provisions contained in this Supplemental Indenture or in the Convertible
Debentures shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Supplemental Indenture or of the Convertible
Debentures, but this Supplemental Indenture and the Convertible Debentures shall
be construed as if such invalid or illegal or unenforceable provision had never
been contained herein or therein.
SECTION 11.5. Counterparts. This Supplemental Indenture may be
------------
executed in any number of counterparts each of which shall be an original; but
such counterparts shall together constitute but one and the same instrument.
<PAGE>
34
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed on the date or dates indicated in the
acknowledgements and as of the day and year first above written.
USX CORPORATION
By
Name:
Title:
THE BANK OF NEW YORK,
as Trustee
By
Name:
Title:
<PAGE>
35
ANNEX I
FORM OF CONVERTIBLE DEBENTURE
FORM OF FACE OF CONVERTIBLE DEBENTURE
IF THE CONVERTIBLE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT THE
FOLLOWING: This Convertible Debenture is a Global Debenture within the meaning
of the Indenture hereinafter referred to and is registered in the name of a
Depositary or a nominee of a Depositary. This Convertible Debenture is
exchangeable for Convertible Debentures registered in the name of a Person other
than the Depositary or its nominee only in the limited circumstances described
in the Indenture, and no transfer of this Convertible Debenture (other than a
transfer of this Convertible Debenture as a whole by the Depositary to a nominee
of the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary) may be registered except in such limited
circumstances. IF THE CLEARING AGENCY IS THE DEPOSITORY TRUST COMPANY, INSERT
THE FOLLOWING: Unless this Convertible Debenture is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the issuer or its agent for registration of transfer, exchange or
payment, and any Convertible Debenture issued is registered in the name of Cede
& Co. or such other name as requested by an authorized representative of The
Depository Trust Company and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.
No. CUSIP No.
USX CORPORATION
6.75% CONVERTIBLE JUNIOR SUBORDINATED DEBENTURE
USX Corporation, a Delaware corporation (the "Company", which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to _________________, or registered
assigns, the principal sum of ________________ Dollars ($______________) on
March 31, 2037 (or if a maturity advancement occurs, as provided in Section 3.1
of the Supplemental Indenture, on such advanced maturity date), and to pay
interest on said principal sum from March 31, 1997, or from the most recent date
on which interest has been paid to which interest has been paid or duly provided
for, quarterly (subject to deferral as set forth herein) in arrears on the last
calendar day of March, June, September and December of each year (each, an
"Interest Payment Date") commencing June 30, 1997, at the rate of 6.75% per
annum until the principal hereof shall have become due and payable, and on any
overdue principal and premium, if any, and overdue installment of interest at
the same rate per annum compounded quarterly (without duplication and to the
extent that payment of such interest is enforceable under applicable law). The
amount of interest payable on any Interest Payment Date for any full quarterly
interest period shall be computed on the basis of a 360-day year of twelve
<PAGE>
36
30-day months. Except as provided in the following sentence, the amount of
interest payable for any period shorter than a full quarterly period for which
interest is computed will be computed on the basis of 30-day months and, for
periods of less than a month, the actual number of days elapsed per 30-day
month. In the event that any date on which interest is payable on this
Convertible Debenture is not a Business Day, then payment of interest payable on
such date will be made on the next succeeding day that 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. The interest installment so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in the Indenture (referred to on the reverse hereof), be paid
to the person in whose name this Convertible Debenture is registered on the
Regular Record Date for such interest installment. Any such interest
installment not punctually paid or duly provided for shall forthwith cease to be
payable to the registered Holders on such Regular Record Date and may be paid to
the Person in whose name this Convertible Debenture is registered at the close
of business on a special record date to be fixed by the Trustee for the payment
of such defaulted interest, notice whereof shall be given to the registered
Holders of the Convertible Debentures not less than 10 days prior to such
special record date, or may be paid at anytime in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Convertible Debentures may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in the Indenture. The principal of
(and premium, if any) and the interest on this Convertible Debenture shall be
payable at the office or agency of the Trustee maintained for that purpose in
any coin or currency of the United States of America that at the time of payment
is legal tender for payment of public and private debts; provided, however, that
payment of interest may be made at the option of the Company by check mailed to
the registered Holder at such address as shall appear in the Security Register.
Notwithstanding the foregoing, so long as the Holder of this Convertible
Debenture is the Institutional Trustee, the payment of the principal of (and
premium, if any) and interest on this Convertible Debenture will be made at such
place and to such account as may be designated by the Institutional Trustee.
The indebtedness evidenced by this Convertible Debenture is, to the
extent provided in the Indenture, subordinate and junior in right of payment to
the prior payment in full of all Senior Indebtedness, and this Convertible
Debenture is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Convertible Debenture, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes and directs the
Trustee on his or her behalf to take such action as may be necessary or
appropriate to acknowledge or effectuate the subordination so provided and (c)
appoints the Trustee his or her attorney-in-fact for any and all such purposes.
Each Holder hereof, by his or her acceptance hereof, hereby waives all notice of
the acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Indebtedness, whether now outstanding or
hereafter incurred, and waives reliance by each such Holder upon said
provisions.
<PAGE>
37
This Convertible Debenture shall not be entitled to any benefit under
the Indenture hereinafter referred to, be valid or become obligatory for any
purpose until the Certificate of Authentication hereon shall have been signed by
or on behalf of the Trustee. The provisions of this Convertible Debenture are
continued on the reverse side hereof and such continued provisions shall for all
purposes have the same effect as though fully set forth at this place.
<PAGE>
38
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
USX CORPORATION
By:
Name:
Title
Attest:
By:
Name:
Title:
<PAGE>
39
FORM OF CERTIFICATE OF AUTHENTICATION
CERTIFICATE OF AUTHENTICATION
This is one of the Convertible Debentures of the series of Convertible
Debentures issued under the within-mentioned Indenture.
Dated:
THE BANK OF NEW YORK,
as Trustee
By By
Authorized Signatory Authorized Signatory
<PAGE>
40
FORM OF REVERSE OF DEBENTURE
This Convertible Debenture is one of a duly authorized series of
Securities of the Company specified in the Indenture, all issued or to be issued
in one or more series under and pursuant to an Indenture (the "Base Indenture"),
dated as of _______, 1997, duly executed and delivered between the Company and
The Bank of New York, as Trustee (the "Trustee"), as supplemented by the
Supplemental Indenture dated as of__________, 1997, between the Company and the
Trustee (the "Supplemental Indenture" and such Supplemental Indenture, as it
supplements the Base Indenture, the "Indenture"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a description of
the rights, limitations of rights, obligations, duties and immunities thereunder
of the Trustee, the Company and the Holders of Convertible Debentures. By the
terms of the Indenture, the Securities are issuable thereunder in series that
may vary as to amount, date of maturity, rate of interest and in other respects
as provided in the Indenture. This series of Securities is limited in aggregate
principal amount as specified in said Supplemental Indenture and is herein
sometimes referred to as the "Convertible Debentures."
Because of the occurrence and continuation of a Trust Special Event,
in certain circumstances, this Convertible Debenture may become due and payable,
in whole or in part, at 100% of the principal amount to be redeemed together
with any interest accrued thereon, including any Compounded Interest and
Additional Interest to, but excluding, the redemption date (the "Special
Redemption Price"). The Special Event Redemption Price shall be paid prior to
12:00 noon, New York time, on the date of such redemption or at such earlier
time as the Company determines. In addition, the Company shall have the right
to redeem this Convertible Debenture at the option of the Company, upon not less
than 30 nor more than 60 days notice, in whole or in part at any time at the
following prices (expressed as percentages of the principal amount of the
Convertible Debentures) (the "Optional Redemption Price") together with accrued
and unpaid interest (including Additional Interest and Compounded Interest)
thereon to, but excluding, the redemption date, if redeemed during the 12 month
period beginning on April 1 of the following years:
Year Redemption Price
---- ----------------
1997 103.90%
1998 103.25%
1999 102.60%
2000 101.95%
2001 101.30%
2002 100.65%
2003 and thereafter 100.00%
No Convertible Debentures may be redeemed in accordance with the
preceding paragraph if the Company shall be advised on or prior to the related
redemption date by either Moody's Investors Service, Inc. ("Moody's") (provided
that Moody's is then rating the senior unsecured debt of the Company) or
Standard & Poor's Corporation ("S&P") (provided
<PAGE>
41
that S&P is then rating the senior unsecured debt of the Company) that such
redemption would result in an immediate lowering by Moody's or S&P, as the case
may be, of the credit rating on the Company's senior unsecured debt from its
then existing level, unless the Company shall have received from the issuance of
common stock of the Company, since the date which is two years prior to the
related redemption date, net proceeds in an aggregate amount at least equal to
the product of the aggregate principal amount of the Convertible Debentures to
be redeemed.
In the event of a U.S. Steel Group Special Event or a Marathon Group
Special Event, the Company also has the right, as set forth in the Supplemental
Indenture, to redeem the Convertible Debentures, in whole, for the Special
Redemption Price.
The Company may not redeem any Convertible Debentures unless all
accrued and unpaid interest has been paid on all outstanding Convertible
Debentures for all quarterly interest payment periods terminating on or prior to
the last Interest Payment Date before the date of redemption. If Convertible
Debentures are redeemed on the last calendar day of any March, June, September
or December, accrued and unpaid interest shall be payable to Holders on the
relevant record date. The Company shall issue a press release announcing any
redemption.
If the Convertible Debentures are only partially redeemed by the
Company pursuant to an Optional Redemption, the Convertible Debentures will be
redeemed pro rata.
In the event of redemption of this Convertible Debenture in part only,
a new Convertible Debenture or Convertible Debentures of this series for the
unredeemed portion hereof will be issued in the name of the Holder hereof upon
the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Convertible Debentures
may be declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Securities of each series affected at the time
outstanding, as defined in the Indenture, to execute supplemental indentures for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders of the Securities of such
series; provided, however, that no such supplemental indenture shall (a) extend
the fixed maturity of any Securities of any series, or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest
thereon, or reduce any premium payable upon the redemption thereof, or make any
change that adversely affects the right to convert any Securities of any series
or make any change in the subordination provisions that adversely affects the
rights of any Holders of any Securities of any series, without the consent of
the Holder of each Debenture so affected, or (b) reduce the aforesaid percentage
of Securities of such series, the Holders of which are required to consent to
any such supplemental indenture,
<PAGE>
42
without the consent of the Holders of each Security of any series then
outstanding and affected thereby. The Indenture also contains provisions
permitting the Holders of a majority in aggregate principal amount of the
Securities of any series at the time outstanding affected thereby, on behalf of
all of the Holders of the Securities of such series, to waive any past default
in the performance of any of the covenants contained in the Indenture, or
established pursuant to the Indenture with respect to such series, and its
consequences, except a default in the payment of the principal of or premium, if
any, or interest on any Securities of such series or a failure to convert any
Securities of such series in accordance with its terms upon an election by the
Holders thereof. Any such consent or waiver by the registered Holder of this
Convertible Debenture (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such Holder and upon all future Holders and owners
of this Convertible Debenture and of any Convertible Debenture issued in
exchange herefor or in place hereof (whether by registration of transfer or
otherwise), irrespective of whether or not any notation of such consent or
waiver is made upon this Convertible Debenture.
No reference herein to the Indenture and no provision of this
Convertible Debenture or of the Indenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this Convertible Debenture at the time and
place and at the rate and in the money to the extent herein prescribed.
As long as an Event of Default under Section 6.1 of the Base Indenture
or Section 8.1 of the Supplemental Indenture shall not have occurred and be
continuing, the Company shall have the right, at any time and from time to time
during the term of the Convertible Debentures, to defer payments of interest by
extending the interest payment period of the Convertible Debentures for a period
not exceeding 20 consecutive quarters (an "Extended Interest Payment Period")
during which Extended Interest Payment Period no interest shall be due and
payable on the Convertible Debentures; provided, that no Extended Interest
Payment Period may extend beyond the Maturity Date. To the extent permitted by
applicable law,interest, the payment of which has been deferred during an
Extended Interest Payment Period, shall bear interest thereon at the rate
specified for these Convertible Debentures, compounded quarterly for each
quarter of the Extended Interest Payment Period ("Compounded Interest"). Before
the termination of any such Extended Interest Payment Period, the Company may
further extend such Extended Interest Payment Period, provided, that such
Extended Interest Payment Period together with all such previous and further
extensions thereof shall not exceed 20 consecutive quarters, or extend beyond
the Maturity Date. At the end of the Extended Interest Payment Period, the
Company shall pay all interest then accrued and unpaid on the Convertible
Debentures, including any Additional Interest and Compounded Interest, that
shall be payable to the Holders of Convertible Debentures on the first record
date after the termination of the Extended Interest Payment Period. Upon the
termination of any such Extended Interest Payment Period and upon the payment of
all accrued and unpaid interest (including Compounded Interest to the extend
permitted by applicable law), the Company may commence a new Extended Interest
Payment Period. The Company may pay at any time all or any portion of the
interest accrued during an Extended Interest Payment Period, subject to the
requirements set forth in the Indenture.
<PAGE>
43
As provided in the Indenture and subject to certain limitations
therein set forth, this Convertible Debenture is transferable by the registered
Holder hereof on the Security Register of the Company, upon surrender of this
Convertible Debenture for registration of transfer at the office or agency of
the Trustee in the City and State of New York accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company or the
Trustee duly executed by the registered Holder hereof or his or her attorney
duly authorized in writing, and thereupon one or more new Convertible Debentures
of authorized denominations and for the same aggregate principal amount and
series will be issued to the designated transferee or transferees. No service
charge will be made for any such transfer, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
relation thereto.
Prior to due presentment for registration of transfer of this
Convertible Debenture, the Company, the Trustee, any paying agent and the
Security Registrar may deem and treat the registered holder hereof as the
absolute owner hereof (whether or not this Convertible Debenture shall be
overdue and notwithstanding any notice of ownership or writing hereon made by
anyone other than the Security Registrar) for the purpose of receiving payment
of or on account of the principal hereof and premium, if any, and interest due
hereon and for all other purposes, and neither the Company nor the Trustee nor
any paying agent nor any Security Registrar shall be affected by any notice to
the contrary. No recourse shall be had for the payment of the principal of or
the interest on this Convertible Debenture, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture, against
any in corporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
Subject to and upon compliance with Article VII of the Supplemental
Indenture, the Holder of this Convertible Debenture has the right, exercisable
at anytime and prior to the close of business on (i) March 31, 2037 or, in the
case of a maturity advancement pursuant to Section 3.1 of the Supplemental
Indenture, on such advanced maturity date, or (ii) in the event this Convertible
Debenture is called for redemption, on the related redemption date, subject to
limited exceptions specified in the Supplemental Indenture, to convert the
principal amount hereof (or any portion thereof that is an integral multiple of
the Principal Amount of One Convertible Debenture) into that number of fully
paid and nonassessable shares of Steel Stock obtained by dividing the principal
amount of the Convertible Debentures to be converted by the Conversion Price in
effect on the Conversion Date. The initial Conversion Price is $46.25 per share
of Steel Stock. The Conversion Price is subject to adjustment as described in
the Indenture. All conversion price and conversion provision calculations shall
be made to the nearest 1/100 of a cent (with $.00005 being rounded upward) or to
the nearest 1/10,000 of a share (with .00005 of a share being rounded upward),
as the case may be.
To convert all or a portion of this Convertible Debenture, a Holder
must (a) complete and sign an irrevocable notice of election to convert
substantially in the form
<PAGE>
44
attached hereto and deliver such Conversion Notice to the Conversion Agent, (b)
surrender the Convertible Debenture to the Conversion Agent, (c) furnish
appropriate endorsements or transfer documents if required by the Conversion
Agent and (d) pay any transfer or similar tax, if required. Except as provided
below, accrued but unpaid interest shall not be paid in cash on Convertible
Debentures that are converted by a Holder into Steel Stock, nor shall such
accrued interest be converted into additional shares of Steel Stock, but such
accrued interest shall be deemed to be paid in full and then returned by the
Holder to the Company as partial consideration for the Steel Stock received upon
conversion. Holders of Convertible Debentures at the close of business on a
Regular Record Date shall be entitled to receive the interest payable on such
Convertible Debentures (except that holders of Convertible Debentures called for
redemption on a redemption date between such Regular Record Date and the
Interest Payment Date shall not be entitled to receive such interest on such
Interest Payment Date) on the corresponding Interest Payment Date
notwithstanding the conversion of such Convertible Debentures following such
Regular Record Date and prior to such Interest Payment Date. However,
Convertible Debentures surrendered for conversion during the period between the
close of business on any Regular Record Date and the opening of business on the
corresponding Interest Payment Date (except Convertible Debentures called for
redemption on a redemption date during such period) shall be accompanied by
payment of an amount equal to the interest payable on such Convertible
Debentures on such Interest Payment Date. A Holder of Convertible Debentures
on a Regular Record Date who (or whose transferee) tenders any such Convertible
Debentures for conversion into shares of Steel Stock on such Interest Payment
Date shall receive the interest payable by the Company on such Convertible
Debentures on such date, and the converting Holder need not include payment of
the amount of such interest upon surrender of Convertible Debentures for
conversion. The Company shall make no payment or allowance for dividends on the
shares of Steel Stock issued upon conversion.
No fractional shares will be issued upon conversion but a cash payment
shall be made by the Company in lieu of such fractional interest. The
outstanding principal amount of any Convertible Debenture shall be reduced by
the principal amount thereof converted into shares of Steel Stock or other
shares of common stock of the Company.
The Company's delivery upon conversion of the fixed number of shares
of Steel Stock or other shares of common stock of the Company into which the
Convertible Debentures are convertible (together with cash in lieu of fractional
shares) shall be deemed to satisfy the Company's obligation to pay the principal
amount at the Maturity Date of the portion of Convertible Debentures so
converted and any unpaid interest (including Compounded Interest) accrued on
such Convertible Debentures at the time of such conversion.
The Convertible Debentures of this series are issuable only in
registered form without Coupons in denominations of the Principal Amount of One
Convertible Debenture and any integral multiple thereof. IF THE CONVERTIBLE
DEBENTURE IS TO BE A GLOBAL DEBENTURE, SUBSTITUTE THE FOLLOWING FOR THE PREVIOUS
SENTENCE: This Global Debenture is exchangeable for Convertible Debentures in
definitive form only under certain limited circumstances set forth in the
Indenture. Convertible
<PAGE>
45
Debentures of this series so issued are issuable only in registered form without
Coupons in denominations of the Principal Amount of One Convertible Debenture
and any integral multiple thereof. As provided in the Indenture and subject to
certain limitations therein set forth, Convertible Debentures of this series are
exchangeable for a like aggregate principal amount of Convertible Debentures of
this series of a different authorized denomination, as requested by the Holder
surrendering the same.
All terms used in this Convertible Debenture that are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE
AND THE CONVERTIBLE DEBENTURES WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS
THEREOF.
<PAGE>
46
FORM OF ELECTION TO CONVERT
To: The Bank of New York
The undersigned Holder of this Convertible Debenture hereby
irrevocably exercises the option to convert this Convertible Debenture, or the
portion below designated, into Steel Stock of USX CORPORATION ("USX"), or any
other class of common stock of USX, as permitted by the Restated Certificate of
Incorporation of USX, in accordance with the terms of the Indenture referred to
in this Convertible Debenture, and directs that the shares issuable and
deliverable upon conversion, together with any check in payment for fractional
shares, be issued in the name of and delivered to the undersigned, unless a
different name has been indicated in the assignment below. If shares are to be
issued in the name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto.
Date:
in whole in part
Portion of principal amount of the Convertible Debenture to
be converted (the Principal Amount of One Convertible
Debenture or integral multiples thereof):
$
Signature (for conversion only)
Please Print or Typewrite Name and Address, Including Zip Code, and Social
Security or Other Identifying Number
Signature Guarantee:/(1)/
- ----------------------
/(1)/ Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Conversion Agent, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Conversion Agent in addition to, or in
substitution for, STAMP, all in accordance with the Securities and
Exchange Act of 1934, as amended.
<PAGE>
47
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Convertible Debenture to:
(Insert assignee's social security or tax identification number)
(Insert address and zip code of assignee) and irrevocably appoints agent to
transfer this Convertible Debenture on the books of the Trust. The agent may
substitute another to act for him or her.
Date:
Signature:
(Sign exactly as your name appears on the other side of this Convertible
Debenture)
Signature Guarantee:/(1)/
- ------------------
/(1)/ Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Debenture Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities and Exchange Act of
1934, as amended.
<PAGE>
Exhibit 4.8
[LOGO OF USX] Common Stock
[GRAPHIC OF THREE WORKERS STANDING IN FRONT OF A GLOBE OF THE WORLD]
Incorporated under the laws
of the State of Delaware
NUMBER SHARES
ZQ
This certificate if transferable CUSIP 90337T 10 1
in New York or Pittsburgh SEE REVERSE SIDE FOR CERTAIN DEFINITIONS
USX-U.S. Steel Group
This is to certify that
SPECIMEN
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE USX-U.S. STEEL GROUP COMMON STOCK
of USX Corporation transferable in person or by duly authorized attorney on the
books of the Corporation upon surrender of this certificate properly endorsed.
This certificate and the shares represented hereby are issued and shall be held
subject to all the provisions of the Restated Certificate of Incorportation of
the Corporation (a copy of which is on file in the Stock Transfer Department of
the Corporation), to all of which provisions each holder hereof by acceptance of
this certificate assents. This certificate is not valid unless countersigned by
the transfer agent and registered by the registrar.
In Witness Whereof, the Corporation has caused this certificate to be
signed by its duly authorized officers by use of their facsimile signatures.
CERTIFICATE OF STOCK
Registered
Mellon Bank, N.A. (Pittsburgh, PA)
Registrar, Countersigned: [logo]
Chairman of
By [logo] The Board of
Directors &
Secretary Chief Executive Officer
Authorized Signature [logo]
Transfer Agent
(USX Corporation, Pittsburgh, PA)
U000000 BANKNOTE CORPORATION OF AMERICA
<PAGE>
USX-U.S. STEEL GROUP
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Amended and Restated Rights Agreement (the ``Rights
Agreement'') between USX Corporation (the ``Company'') and Mellon Bank, N.A.
(the ``Rights Agent''), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal offices of the
Company. Under certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer be
evidenced by this certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on the date of mailing,
without charge promptly after receipt of a written request therefor. Under
certain circumstances set forth in the Rights Agreement, Rights issued to, or
held by, any Person who is, was or becomes an Acquiring Person or any Affiliate
or Associate thereof (as such terms are defined in the Rights Agreement),
whether currently held by or on behalf of such Person or by any subsequent
holder, may become null and void.
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS THE DESIGNATIONS, POWERS, PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF, WHICH
THE CORPORATION IS AUTHORIZED TO ISSUE AND THE QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS, INSOFAR AS THE SAME MAY HAVE
BEEN FIXED, AND A STATEMENT OF THE AUTHORITY OF THE BOARD OF DIRECTORS TO FIX
SUCH DESIGNATIONS AND OTHER TERMS NOT FIXED BY THE CERTIFICATE OF INCORPORATION
WITH RESPECT TO OTHER CLASSES OF STOCK OR SERIES THEREOF. ANY SUCH REQUEST MAY
BE MADE TO THE SECRETARY OF THE CORPORATION.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM-as tenants in common
TEN ENT-as tenants by the entireties
JT TEN-as joint tenants with right of
survivorship and not as tenants
in common
UNIF TRANS MIN ACT-.............Custodian............
(Cust) (Minor)
under Uniform Transfers to Minors
Act...............................
(State)
UNIF GIFT MIN ACT-..............Custodian..................
(Cust) (Minor)
under Uniform Gifts to Minors
Act................................
(State)
Additional abbreviations may also be used though not in the above list.
For value received, hereby sell, assign and transfer into
-------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
PLEASE PRINT OR TYPE NAME AND ADDRESS OF ASSIGNEE
NAME
- --------------------------------------------------------------------------------
STREET
SHARES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
PLEASE PRINT OR TYPE NAME AND ADDRESS OF ASSIGNEE
NAME
- --------------------------------------------------------------------------------
STREET
SHARES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
PLEASE PRINT OR TYPE NAME AND ADDRESS OF ASSIGNEE
NAME
- --------------------------------------------------------------------------------
STREET
SHARES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
of the capital stock represented by the within Certificate and do hereby
irrevocably constitute and appoint
----------------------------------------------
Attorney to transfer the said stock on the books of the within-named
Corporation with full power of substitution in the premises.
Dated,
----------------------------
*
-------------------------------
*NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
SIGNATURE GUARANTEED
<PAGE>
DRAFT: March 25, 1997
----------------------
[Letterhead of Morris, Nichols, Arsht & Tunnell]
Exhibit 5.1
March 26, 1997
USX Capital Trust I
c/o USX Corporation
600 Grant Street
Pittsburgh, Pennsylvania 15219
Re: USX Capital Trust I
-------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel to USX Capital Trust I,
a Delaware statutory business trust (the "Trust"), in connection with certain
matters relating to the creation of the Trust and the proposed issuance of
Convertible Preferred Securities of the Trust to beneficial owners pursuant to
and as described in Registration Statement Nos. 333-23291 and 333-23291-01 (and
the Prospectus forming a part thereof) on Form S-4 filed with the Securities
and Exchange Commission on March 14, 1997, as amended by Pre-Effective
Amendment No. 1 thereto (as so amended, the "Registration Statement").
Capitalized terms used herein and not otherwise herein defined are used as
defined in the Amended and Restated Declaration of Trust of the Trust in the
form attached as an exhibit to the Registration Statement (the "Governing
Instrument").
In rendering this opinion, we have examined copies of the following
documents in the forms provided to us: the Certificate of Trust of the Trust as
filed in the Office of the Secretary of State of the State of Delaware (the
"State Office") on March 13, 1997 (the "Certificate"); a Declaration of Trust
of the Trust dated as of March 13, 1997 (the "Original Governing Instrument");
the Governing Instrument; the Multiple Series Indenture to be entered into
between the USX Corporation (the "Company") and The Bank of New York, as
Trustee (the "Base Indenture"); the Guarantee Agreement to be entered into by
the Company and The Bank of New York, as Trustee; the First Supplemental
Indenture, supplementing the Base Indenture, to be entered into between the
Company and The Bank of New York, as Trustee; the Dealer Manager Agreement
relating to the Convertible Preferred Securities among the Company, the Trust,
Goldman, Sachs & Co. and Merrill Lynch & Co. (the "Dealer Manager Agreement");
the Registration Statement; and a certificate of good standing of the Trust
obtained
<PAGE>
USX Capital Trust I
March 26, 1997
Page 2
as of a recent date from the State Office. In such examinations, we have assumed
the genuineness of all signatures, the conformity to original documents of all
documents submitted to us as drafts or copies or forms of documents to be
executed and the legal capacity of natural persons to complete the execution of
documents. We have further assumed for purposes of this opinion: (i) the due
formation or organization, valid existence and good standing of each entity
(other than the Trust) that is a party to any of the documents reviewed by us
under the laws of the jurisdiction of its respective formation or organization;
(ii) the due authorization, execution and delivery by, or on behalf of, each of
the parties thereto of the above-referenced documents (including, without
limitation, the due authorization, execution and delivery of the Governing
Instrument and the Dealer Manager Agreement prior to the first issuance of
Convertible Preferred Securities); (iii) that no event has occurred subsequent
to the filing of the Certificate that would cause a dissolution or liquidation
of the Trust under the Original Governing Instrument or the Governing
Instrument, as applicable; (iv) that the activities of the Trust have been and
will be conducted in accordance with the Original Governing Instrument or the
Governing Instrument, as applicable; (v) that each Person that will acquire
Convertible Preferred Securities in the "Exchange Offer" (as defined in
Registration Statement and as used herein, the "Exchange Offer"), will validly
tender shares of 6.50% Convertible Preferred Stock of the Company in exchange
therefor, that such shares of 6.50% Convertible Preferred Stock will be duly
accepted, and that such Person will duly receive Convertible Preferred
Securities Certificates in consideration thereof, all in accordance with the
terms and conditions of the Governing Instrument, Registration Statement and the
Dealer Manager Agreement and that the Convertible Preferred Securities are
otherwise issued and sold to the Convertible Preferred Securities Holders in
accordance with the terms, conditions, requirements and procedures set forth in
the Governing Instrument, the Registration Statement and the Dealer Manager
Agreement; (vi) that the Company, as Sponsor, will issue and exchange Debentures
in the same aggregate principal amount as the aggregate stated liquidation
amount of the Common Securities and the Convertible Preferred Securities to be
exchanged therefor in accordance with the terms and conditions of the Governing
Instrument, the Registration Statement and the Dealer Manager Agreement; and
(vii) that the documents examined by us are in full force and effect, express
the entire understanding of the parties thereto with respect to the subject
matter thereof and have not been modified, supplemented or otherwise amended,
except as herein referenced. We have not reviewed any documents other than those
identified above in connection with this opinion, and we have assumed that
there are not other documents that are contrary to or inconsistent with the
opinions expressed herein. No opinion is expressed with respect to the
requirements of, or compliance with, federal or state securities or blue sky
laws. We express no
<PAGE>
USX Capital Trust I
March 26, 1997
Page 3
opinion as to, and assume no responsibility for, the Registration Statement or
any other offering materials relating to the Convertible Preferred Securities.
As to any fact material to our opinion, other than those assumed, we have
relied without independent investigation on the above-referenced documents and
on the accuracy, as of the date hereof, of the matters therein contained.
Based on and subject to the foregoing, and limited in all respects to
matters of Delaware law, it is our opinion that:
1. The Trust is a duly created and validly existing business trust in good
standing as a business trust under the laws of the State of Delaware.
2. The Convertible Preferred Securities, upon issuance pursuant to the
Exchange Offer, will constitute validly issued and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
beneficial interests in the assets of the Trust.
3. Under the Delaware Business Trust Act, 12 Del. C. section 3801 et. seq.
------- --------
and the terms of the Governing Instrument, each Convertible Preferred Security
Holder of the Trust, in such capacity, will be entitled to the same limitation
of personal liability extended to stockholders of private corporations for
profit organized under the General Corporation Law of the State of Delaware;
provided, however, that we express no opinion with respect to the liability of
any Convertible Preferred Security Holder who is, was or may become a named
Trustee of the Trust. Notwithstanding the foregoing, we note that (a) pursuant
to Section 11.4 of the Governing Instrument, the Trust may withhold amounts
otherwise distributable to a Holder and pay over such amounts to the applicable
jurisdictions in accordance with federal, state and local law and any amount
withheld will be deemed to have been distributed to such Holder and (b) pursuant
to the Governing Instrument, Convertible Preferred Security Holders may be
obligated to make payments or provide indemnity or security under the
circumstances set forth therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name and reference to our opinion
under the heading "LEGAL MATTERS" in the Prospectus forming a part thereof. In
giving this consent, we do not thereby admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder. This opinion speaks only as of the date hereof and is
based on our understandings and assumptions as to present facts, and on our
review of the above-referenced documents and the application of Delaware law as
the same exist as
<PAGE>
USX Capital Trust I
March 26, 1997
Page 4
of the date hereof, and we undertake no obligation to update or supplement this
opinion after the date hereof for the benefit of any person or entity with
respect to any facts or circumstances that may hereafter come to our attention
or any changes in facts or law that may hereafter occur or take effect. This
opinion is intended solely for the benefit of the addressee hereof in connection
with the matters contemplated hereby and may not be relied on by any other
person or entity or for any other purpose without our prior written consent.
Very truly yours,
MORRIS, NICHOLS, ARSHT & TUNNELL
/s/ Morris, Nichols, Arsht & Tunnell
<PAGE>
USX Corporation John A. Hammmerschmidt
Law Department Assistant General Counsel
600 Grant Street Corporate & Assistant Secretary
Pittsburgh, PA 15219-4776
412 433 2922
Fax: 412 433 2015
EXHIBIT 5.2
March 26, 1997
[LOGO OF USX]
USX Corporation
600 Grant Street
Pittsburgh, Pennsylvania 15219-4776
USX Capital Trust I
101 Barclay Street
New York, New York 10286
Dear Sir or Madam:
I am Assistant General Counsel and Assistant Secretary of USX Corporation, a
Delaware Corporation (the "Company"). I, or attorneys acting under my
supervision, have acted as counsel to the Company, and USX Capital Trust I, a
Delaware statutory business trust (the "Trust" and, together with the Company,
the "Registrants") in connection with the preparation of the Registration
Statement on Form S-4 (File Nos. 333-23291 and 333-23291-01), as amended by
Pre-Effective Amendment No. 1 thereto (as amended, the "Registration
Statement"), filed jointly by the Registrants with the Securities and Exchange
Commission (the "SEC").
The Registration Statement relates to the offer and sale (the "Exchange Offer")
by the Company of 6.75% Convertible Quarterly Income Preferred Securities (the
"Trust Convertible Preferred Securities") of the Trust in exchange for
outstanding shares of the 6.50% Cumulative Convertible Preferred Stock (the
"6.50% Convertible Preferred Stock") of the Company. Certain capitalized terms
used herein and not otherwise defined have the meanings ascribed to them in the
Registration Statement.
I, or attorneys under my supervision, have examined and are familiar with
originals or copies of such documents, corporate records, and other instruments
as we have deemed necessary or appropriate in connection with this opinion,
including (1) the Registration Statement, (2) the Amended and Restated
Declaration of Trust of the Trust, in the form filed as an exhibit to the
Registration Statement, pursuant to which the Trust Convertible Preferred
Securities will be issued, (3) the Multiple Series Indenture (the "Base
Indenture") and First Supplemental Indenture (the "Supplemental Indenture" and,
together with the Base Indenture, the "Indenture") between the Company and The
Bank of New York, as trustee (the "Indenture Trustee"), in the form filed as an
exhibit to the Registration Statement, under which the Company will issue its
6.75% Convertible Junior Subordinated Debentures (the "Convertible Debentures")
to the Trust in exchange for the Trust Convertible Preferred Securities and all
of the common securities of the Trust (the Trust Convertible Preferred
Securities and the common securities together, the "Trust Securities"), (4) the
Guarantee Agreement (the "Guarantee Agreement") between the Company and The Bank
of New York, as trustee (the "Guarantee Trustee"), in the form filed as an
exhibit to the Registration Statement, pursuant to which the Company will
guarantee certain payment obligations of the Trust to the extent set forth
therein,
Marathon Group
U.S. Steel Group
Delhi Group
<PAGE>
USX Corporation
USX Capital Trust I
Page 2
March 26, 1997
[LOGO OF USX]
(5) the Certificate of Trust of the Trust as filed in the Office of the
Secretary of State of the State of Delaware on March 13, 1997 (the
"Certificate"), (6) the Declaration of Trust of the Trust dated as of March 13,
1997 as executed by the trustees of the Trust (the "Trustees"), (7) the Dealer
Manager Agreement (the "Dealer Manager Agreement") among the Company, the Trust,
Goldman, Sachs & Co., and Merrill Lynch & Co. in the form filed as an exhibit to
the Registration Statement, (8) the Restated Certificate of Incorporation of
the Company, as amended to the date hereof, (9) the Bylaws of the Company, as
amended to the date hereof, and (10) resolutions adopted to the date hereby by
the Board of Directors of the Company relating to, among other things, the
Registration Statement, the Exchange Offer, and the Agreement.
I am a member of the Bar of the Commonwealth of Pennsylvania. This opinion is
limited to the laws of the Commonwealth of Pennsylvania, the General Corporation
Law of the State of Delaware, and the laws of the United States. I do not
express any opinion as to the laws of any other jurisdiction or as to any other
laws of the State of Delaware. The Indenture, the Debentures, and Guarantee
Agreement each include a provision choosing the law of the State of New York as
the governing law. As to certain questions pertaining to New York law, we have
assumed that the law of the Commonwealth of Pennsylvania is identical to the law
of the State of New York insofar as New York law would be applicable to the
opinions expressed in paragraphs 1 and 2 below.
Based upon the foregoing and subject to the limitations expressed below, I am
of the opinion that:
1. The Convertible Debentures, when executed, authenticated, and delivered
to the Trust will be duly executed and issued and will constitute the valid and
legally binding obligations of the Company, enforceable against the Company in
accordance with its terms.
2. The Guarantee Agreement, when executed and delivered to the Guarantee
Trustee as contemplated by the Registration Statement, will be duly executed and
issued and will constitute the valid and legally binding obligation of the
Company, enforceable against the Company in accordance with its terms.
3. The shares of USX-U.S. Steel Group Common Stock, par value $1.00 per
share (the "Common Stock") of the Company into which the Trust Convertible
Preferred Securities and the Convertible Debentures are convertible will, upon
conversion and issuance of such shares pursuant to the Amended Declaration, in
the case of conversion of Trust Convertible Preferred Securities, or the
Indenture, in the case of conversion of the Convertible Debentures, be validly
issued, fully paid, and nonassessable shares of Common Stock of the Company.
The opinions expressed in paragraphs 1 and 2 above are subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and
other
<PAGE>
USX Corporation
USX Capital Trust I
Page 3
March 26, 1997
[LOGO OF
USX]
similar laws relating to or affecting creditor's rights generally,
and to general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
I consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me under the caption
"Legal Matters" in the prospectus forming a part of the Registration
Statement.
Very truly yours,
/s/ John A. Hammerschmidt
John A. Hammerschmidt
<PAGE>
Exhibit 8.1
[LETTERHEAD OF MILLER & CHEVALIER]
USX Corporation
600 Grant Street
Pittsburgh, PA 15219-4776
USX Capital Trust I
600 Grant Street
Pittsburgh, PA 15219-4776
Re: USX Capital Trust I -- Trust Convertible Preferred Securities
Dear Sir or Madam:
We have reviewed the registration statement on Form S-4 dated as filed
with the Securities and Exchange Commission on March 14, 1997 (the
"Prospectus"), describing USX Corporation's offer to exchange Trust Convertible
Preferred Securities of USX Capital Trust I (the "Trust Convertible Preferred
Securities") for 6.50% Cumulative Convertible Preferred Stock of USX
Corporation.
This will confirm our opinions that (1) USX Capital Trust I (the "Trust")
will be treated as a "grantor trust" for federal income tax purposes under
existing law, and (2) although the matter is not free from doubt, the USX
Convertible Debentures issued to the Trust will be classified for federal income
tax purposes as indebtedness of USX under current law. It is further our opinion
that the consequences described under the heading "CERTAIN FEDERAL INCOME TAX
CONSIDERATIONS" in the Prospectus are the material United States federal income
tax consequences of the acquisition by exchange, ownership, and disposition of
the Trust Convertible Preferred Securities under present law and that the
descriptions contained under that heading are fair, complete, and accurate in
all material respects. Our opinions are subject to the qualifications stated in
the first paragraph under that heading.
We consent to the references to us and this opinion in the Prospectus.
Very truly yours,
MILLER & CHEVALIER, CHARTERED
/s/ Thomas W. Mahoney, Jr.
By:_________________________________
<PAGE>
Exhibit 23.1
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Amendment No. 1 to the Registration Statement on Form
S-4 of USX Corporation of our reports dated February 11, 1997 appearing on pages
U-3, M-3, S-3 and D-3 of USX Corporation's Annual Report on Form 10-K for the
year ended December 31, 1996. We also consent to the reference to us under the
heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
Pittsburgh, Pennsylvania
March 26, 1997
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby make, constitute and appoint Robert M.
Hernandez, Gretchen R. Haggerty, and Kenneth L. Matheny, or any one of them,
my true and lawful attorneys-in-fact to sign and execute for me and on my
behalf a registration statement to be filed by USX Corporation ("USX") with
the Securities and Exchange Commission in connection with the issuance of
preferred stock by a Special Purpose Entity in exchange for the 6.5%
Cumulative Convertible Preferred Stock issued by USX, and any and all
amendments to such registration statement to be filed with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended, in
such form as they or any one or more of them may approve, and to do any and
all other acts which said attorneys-in-fact may deem necessary or desirable to
enable USX Corporation to comply with said Act and the rules and regulations
thereunder.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 25th day of
February, 1997.
/s/ T. J. Usher
---------------------------------
Thomas J. Usher
<PAGE>
EXHIBIT 99.4
FORM OF LETTER TO CLIENTS
TENDER FOR
6.50% CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
USX CORPORATION
IN EXCHANGE FOR
6.75% CONVERTIBLE QUARTERLY INCOME PREFERRED SECURITIES
(CONVERTIBLE QUIPSSM* SECURITIES)
OF
USX CAPITAL TRUST I
To Our Clients:
We are enclosing herewith a Prospectus, dated , 1997 (the
"Prospectus"), of USX Corporation, a Delaware corporation ("USX"), and USX
Capital Trust I, a Delaware statutory business trust (the "Trust"), and a
related Letter of Transmittal (which, together with the Prospectus,
constitutes the "Exchange Offer") relating to the offer by USX to exchange
6.75% Convertible Quarterly Income Preferred Securities of the Trust,
representing preferred undivided beneficial ownership interests in the assets
of the Trust (the "Trust Convertible Preferred Securities"), for up to
6,700,000 of the 6,900,000 outstanding shares of USX's 6.50% Cumulative
Convertible Preferred Stock (the "6.50% Convertible Preferred Stock").
The Exchange Offer will be effected on the basis of one Trust Convertible
Preferred Security for each share of 6.50% Convertible Preferred Stock, in
each case validly tendered and accepted for exchange in the Exchange Offer,
and upon the terms and subject to the conditions set forth in the Prospectus,
dated , 1997 (the "Prospectus"), of USX and the Trust, and the related
Letter of Transmittal (which, together with the Prospectus, constitutes the
"Exchange Offer"). Shares of 6.50% Convertible Preferred Stock not accepted
for exchange because of proration will be returned.
The Trust Convertible Preferred Securities have an initial liquidation
amount of $50.00 per security. In general, the Trust Convertible Preferred
Securities will be convertible at any time following the first date of
issuance of any Trust Convertible Preferred Securities and prior to (i) the
close of business on March 31, 2037, unless in certain limited circumstances
the maturity of the 6.75% Convertible Junior Subordinated Debentures of USX
(the "Convertible Debentures") held by the Trust is shortened, in which case
the advanced maturity date or (ii) in the case of Trust Convertible Preferred
Securities called for redemption, on the related redemption date subject to
limited exceptions, at the option of the holder thereof, into shares of USX-
U.S. Steel Group Common Stock, par value $1.00 per share (the "Steel Stock").
The Trust Convertible Preferred Securities will otherwise have conversion
terms and will have optional redemption terms that are substantially the same
as the 6.50% Convertible Preferred Stock.
Please note that the Exchange Offer will expire at 12:00 midnight, New York
City time, on , 1997, unless extended (the "Expiration Date").
Consummation of the Exchange Offer is subject to (i) the condition that,
immediately after the acceptance for exchange of shares of 6.50% Convertible
Preferred Stock, there would be at least an aggregate of 400 record or
beneficial holders an aggregate of at least 1,000,000 Trust Convertible
Preferred Securities in order to satisfy New York Stock Exchange minimum
listing requirements (the "Minimum NYSE Distribution Condition"); (ii) receipt
of at least 3,450,000 validly tendered shares of 6.50% Convertible Preferred
Stock; and (iii) the condition (the "OID Condition") that USX reasonably
expects on the Expiration Date, based upon the terms of the Trust Convertible
Preferred Securities and the recent trading values of the 6.50% Convertible
Preferred Stock and the Steel Stock, that the Convertible Debentures will not
be issued with reportable original issue discount ("OID"). If the fair market
value of the Convertible Debentures (as measured by the fair market value of
the Trust
- --------
* QUIPS is a servicemark of Goldman, Sachs & Co.
<PAGE>
Convertible Preferred Securities) at the date of issuance does not exceed
$45.125, the Convertible Debentures would be treated as having been issued with
OID.
USX expressly reserves the right, in its sole discretion, to extend, amend or
modify the terms and conditions of the Exchange Offer (other than the Minimum
NYSE Distribution Condition and the OID Condition, which conditions may not be
waived by USX) in any manner, or to withdraw or terminate the Exchange Offer at
any time for any reason.
We are the holder of record of shares of 6.50% Convertible Preferred Stock
held by us for your account. A tender of such shares can be made only by us as
the record holder and pursuant to your instructions. The Letter of Transmittal
is furnished to you for your information only and cannot be used by you to
tender the shares of 6.50% Convertible Preferred Stock held by us for your
account.
We request instructions as to whether you wish to tender any or all of the
shares 6.50% Convertible Preferred Stock held by us for your account pursuant
to the terms and conditions of the Exchange Offer. Please so instruct us by
completing, executing, detaching, and returning to us the instruction form on
the detachable part hereof. An envelope to return your instructions to us is
enclosed. If you authorize tender of your shares of 6.50% Convertible Preferred
Stock, please forward to us your instructions in ample time to permit us to
submit a tender on your behalf prior to the Expiration Date. If you complete a
Letter of Transmittal, and have not indicated otherwise on the instruction
form, you will be deemed to have tendered the full number of shares of 6.50%
Convertible Preferred Stock held by us for your account.
Very truly yours,
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
TENDER FOR
6.50% CONVERTIBLE PREFERRED STOCK
OF
USX CORPORATION
IN EXCHANGE FOR
6.75% CONVERTIBLE QUARTERLY INCOME PREFERRED SECURITIES
OF
USX CAPITAL TRUST I
The undersigned acknowledges receipt of your letter enclosing the Prospectus,
dated , 1997, of USX and the Trust and a related Letter of Transmittal
relating to the Exchange Offer. This will instruct you to tender the number of
shares of 6.50% Convertible Preferred Stock indicated below held by you for the
account of the undersigned, pursuant to the terms and subject to the conditions
of the Exchange Offer, and confirm that you may make the representations
contained in the Letter of Transmittal on behalf of the undersigned.
<PAGE>
DESCRIPTION OF SECURITIES TO BE TENDERED
AGGREGATE
NUMBER OF SHARES
OF 6.50% CONVERTIBLE
PREFERRED STOCK HELD BY NUMBER OF SHARES
YOU FOR THE ACCOUNT OF 6.50% CONVERTIBLE
OF THE UNDERSIGNED PREFERRED STOCK TENDERED*
----------------------- -------------------------
- --------
*Unless otherwise indicated, the undersigned will be deemed to have tendered
the full number of shares of 6.50% Convertible Preferred Stock held for the
account of the undersigned.
[See Other Side]
<PAGE>
Please designate in the box below any Soliciting Dealer who solicited your
tender.
SOLICITED TENDERS
The undersigned represents that the Soliciting Dealer who solicited and
obtained this tender is:
Name of Firm: ____________________________________________________
(Please Print)
Name of Individual Broker or Financial Consultant: ______________
Identification Number (if known): _______________________________
Address: ________________________________________________________
(Include Zip Code)
SIGN HERE
------------------------------------------
Signature(s)
------------------------------------------
Please print name
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Date
