<PAGE> 1
Filed Pursuant to Rule 424(b)2
Registration No. 333-56867
PROSPECTUS SUPPLEMENT
(To Prospectus dated July 31, 1998)
USX LOGO
USX CORPORATION
$300,000,000
6.65% Notes due 2006
Interest payable February 1 and August 1
ISSUE PRICE: 99.779%
The Notes will mature on February 1, 2006. Interest will accrue from February 1,
1999. The Notes are not redeemable prior to their scheduled maturity. The Notes
will be issued in minimum denominations of $1,000 increased in multiples of
$1,000.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus Supplement or the Prospectus. Any
representation to the contrary is a criminal offense.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS THE COMPANY
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note 99.779% .625% 99.154%
- --------------------------------------------------------------------------------------------------------------
Total $299,337,000 $1,875,000 $297,462,000
- --------------------------------------------------------------------------------------------------------------
</TABLE>
The Notes will not be listed on any national securities exchange. Currently,
there is no public market for the Notes.
It is expected that delivery of the Notes will be made to investors on or about
February 1, 1999.
J.P. MORGAN & CO.
GOLDMAN, SACHS & CO.
SALOMON SMITH BARNEY
PNC CAPITAL MARKETS, INC.
January 27, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
The Company........................... S-3
Recent Developments................... S-5
Use of Proceeds....................... S-6
Selected USX Consolidated Financial
Data................................ S-7
Ratio of Earnings to Fixed Charges.... S-8
Description of the Notes.............. S-8
Underwriting.......................... S-12
Legal Matters......................... S-13
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
USX Corporation....................... 3
Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends........................... 4
Use of Proceeds....................... 4
Pending Transaction................... 4
Special Considerations................ 4
Management and Accounting Policies.... 7
Description of the Debt Securities.... 8
Description of Capital Stock.......... 16
Description of Warrants............... 25
Plan of Distribution.................. 26
Validity of Securities................ 26
Experts............................... 26
Appendix I--Summary of USX Common
Stock............................... A-1
</TABLE>
------------------------
ABOUT THIS PROSPECTUS SUPPLEMENT
- - You should read this Prospectus Supplement along with the accompanying
Prospectus. Both documents contain information you should consider when making
your investment decision.
- - You should rely only on the information provided or incorporated by reference
in this Prospectus Supplement and the accompanying Prospectus. We have not
authorized anyone else to provide you with additional information.
- - No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this Prospectus Supplement or the
accompanying Prospectus. You must not rely on any unauthorized information or
representations.
- - This Prospectus Supplement is an offer to sell only the notes offered hereby,
and only under circumstances and in jurisdictions where it is lawful to do so.
- - You should not assume that the information in this Prospectus Supplement or
the accompanying Prospectus is accurate as of any date other than the date on
the front of each document.
- - In the Prospectus Supplement, the "Company," "USX," "we," "us," and "our"
refer to USX Corporation or USX Corporation and its subsidiaries, as required
by the context.
- - The term "Marathon" means the Marathon Group and the term "U. S. Steel" means
the U. S. Steel Group. See "The Company" on page S-3. The term "Group" when
used in this Prospectus Supplement refers to the Marathon Group and/or the U.
S. Steel Group, as required by the context.
S-2
<PAGE> 3
THE COMPANY
The following discussion is a brief description of USX Corporation and is
qualified in its entirety by reference to the documents listed under
"Incorporation of Certain Documents by Reference" in the accompanying
Prospectus. You are encouraged to read the incorporated documents for a more
complete description of the Company.
USX CORPORATION
USX, a diversified company, engages principally in the energy business
through its Marathon Group and in the steel business through its U. S. Steel
Group.
- - Marathon Group -- Marathon Oil Company and certain other subsidiaries of USX
comprise the Marathon Group. The Marathon Group engages in worldwide
exploration and production of crude oil and natural gas; domestic refining,
marketing and transportation of petroleum products through Marathon Ashland
Petroleum LLC ("MAP"), of which 62% is owned by Marathon Oil Company; and
other energy related businesses.
- - U. S. Steel Group -- The U. S. Steel Group includes U. S. Steel, an integrated
steel producer which USX believes is the largest in the United States. The
principal business of the U. S. Steel Group is the production and sale of
steel products, coke and taconite pellets. U. S. Steel also engages in the
following related business activities: management of mineral resources,
domestic coal mining, engineering and consulting services, and real estate
development and management. A portion of U. S. Steel's activities are carried
out through joint ventures and partially owned companies.
Effective October 31, 1997, USX sold Delhi Gas Pipeline Corporation and
other subsidiaries of USX that comprised all of its Delhi Group.
USX has two classes of common stock outstanding:
- - USX-Marathon Group Common Stock ("Marathon Stock") and
- - USX-U. S. Steel Group Common Stock ("Steel Stock").
Each class of common stock is intended to provide the stockholders of that
class with a separate security reflecting the performance of the related Group.
Neither the Marathon Group nor the U. S. Steel Group is a legal entity. The
financial statements of the Marathon Group and the U. S. Steel Group separately
report the assets, liabilities (including contingent liabilities) and
stockholders' equity of USX attributed to the Marathon Group and the U. S. Steel
Group; however, that attribution does not affect legal title to the assets or
responsibility for the liabilities. The holders of either the Marathon Stock or
the Steel Stock are the owners of common stock of USX and are subject to all of
the risks associated with an investment in USX and all of USX's businesses and
liabilities.
The Notes will be unsecured obligations of USX and not of any segment,
Group or subsidiary of USX.
USX includes consolidated financial information in its periodic reports
required by the Securities Exchange Act of 1934, in its annual shareholder
reports and in other financial communications. The consolidated financial
statements of USX are supplemented with separate financial statements of the
Marathon Group and the U. S. Steel Group, together with the related Management's
Discussion and Analyses, descriptions of business and other financial and
business information to the extent such information is required to be presented
in the report being filed. The financial information of the Marathon Group and
the U. S. Steel Group, and the Delhi Group (prior to 1998), taken together,
includes all accounts which comprise the corresponding consolidated financial
information of USX.
S-3
<PAGE> 4
USX was incorporated in 1901 and is a Delaware corporation. Its principal
executive offices are located at 600 Grant Street, Pittsburgh, Pennsylvania
15219-4776 (telephone: (412) 433-1121).
Below is a three-year summary of financial highlights for USX and the
Groups. The 1998 data has been derived from unaudited financial data.
The 1998 Marathon Group and USX data includes the results of operations
from Ashland Inc.'s refining, marketing and transportation ("Ashland RM&T")
assets acquired by Marathon on January 1, 1998 in exchange for a 38% interest in
MAP. Therefore, certain 1998 financial measures such as revenues, income from
operations and assets are not comparable to prior periods.
<TABLE>
<CAPTION>
INCOME FROM NET ASSETS
REVENUES(A)(B) OPERATIONS(B)(C) INCOME AT YEAR-END
-------------- ---------------- ------ -----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Marathon Group
1996......................................... $16,394 $1,296 $664 $10,151
1997......................................... 15,754 932 456 10,565
1998......................................... 22,075 938 310 14,544
U. S. Steel Group
1996......................................... $ 6,670 $ 483 $273 $ 6,580
1997......................................... 6,941 773 452 6,694
1998......................................... 6,283 579 364 6,693
Adjustments for Discontinued Operations and
Eliminations(d)
1996......................................... $ (87) $ -- $ 6 $ 249
1997......................................... (107) -- 80 25
1998......................................... (23) -- -- (104)
Total USX Corporation
1996......................................... $22,977 $1,779 $943 $16,980
1997......................................... 22,588 1,705 988 17,284
1998......................................... 28,335 1,517 674 21,133
</TABLE>
- ---------------
(a) Consists of sales, dividend and affiliate income, gain on ownership change,
net gains on disposal of assets, gain on affiliate stock offering and other
income.
(b) Excludes amounts for the companies comprising the Delhi Group of USX (sold
in 1997; see footnote (d) below), which have been classified as discontinued
operations.
(c) Includes the following favorable (unfavorable) amounts: adjustments to the
inventory market valuation reserve for the Marathon Group of $(267) million
in 1998, $(284) million in 1997 and $209 million in 1996; gain on ownership
change in MAP of $245 million in 1998.
(d) Effective October 31, 1997, USX sold Delhi Gas Pipeline Corporation and
other subsidiaries of USX that comprised all of the Delhi Group.
S-4
<PAGE> 5
RECENT DEVELOPMENTS
TARRAGON ACQUISITION
In August 1998, Marathon completed its acquisition of Tarragon Oil and Gas
Limited ("Tarragon"), a Canadian exploration and production company. Tarragon
was subsequently renamed Marathon Canada Limited ("MCL"). The purchase price
included cash payments of $686 million, the assumption of $345 million in debt
and the issuance of approximately 878,000 exchangeable shares ("Exchangeable
Shares") valued at $29 million. The Exchangeable Shares were issued by a
Canadian subsidiary of Marathon Oil Company and are exchangeable solely into
Marathon Stock on a one-for-one basis. USX accounted for the acquisition using
the purchase method of accounting. MCL's operations have been included in the
Marathon Group's results of operations commencing August 12, 1998.
1998 UNAUDITED RESULTS
USX recorded a net loss of $10 million for fourth quarter 1998 and net
income of $674 million for full year 1998 compared to $271 million and $988
million for the same periods of 1997.
MARATHON GROUP recorded a net loss in fourth quarter 1998 of $86 million
which included the following special items: an unfavorable inventory market
valuation ("IMV") reserve adjustment, the write-off of several exploratory wells
which had been suspended pending further evaluation and favorable tax accrual
adjustments relating to foreign operations. The unfavorable aftertax effect of
these special items was $99 million. Fourth quarter 1997 net income was $38
million and included a $93 million unfavorable aftertax IMV reserve adjustment.
In addition to the effects of these special items, fourth quarter 1998 net
income decreased from 1997 primarily due to lower liquid hydrocarbon, natural
gas and refined product prices, partially offset by increased liquid hydrocarbon
and natural gas production and operating efficiencies resulting from the
formation of MAP.
Marathon Group recorded 1998 net income of $310 million which included the
following special items: an unfavorable IMV reserve adjustment, a change of
interest gain and transition charges relating to the formation of MAP, a natural
gas contract settlement gain, the write-off of several exploratory wells,
impairment of certain international investments and favorable tax accrual
adjustments. For the year 1998, the unfavorable aftertax effect of these special
items was $11 million. Full year 1997 recorded net income was $456 million, and
included a $179 million unfavorable aftertax IMV reserve adjustment. In addition
to the effects of these special items, 1998 net income decreased from 1997
primarily due to lower liquid hydrocarbon, natural gas and refined product
prices, partially offset by increased liquid hydrocarbon and natural gas
production and operating efficiencies resulting from the formation of MAP.
U. S. STEEL GROUP recorded fourth quarter 1998 net income of $76 million
which included the following special items: a $23 million aftertax reduction in
interest expense as a result of adjusting the carrying value of indexed debt and
a $6 million aftertax charge related to a voluntary early retirement program.
Fourth quarter 1997 net income of $152 million included a gain on the sale of a
plate mill and a reduction in interest expense related to indexed debt. The
favorable aftertax effect of these special items was $11 million. In addition to
the effects of these special items, fourth quarter 1998 net income was lower
than 1997 primarily due to an increase in imported steel and a decline in demand
for tubular products.
U. S. Steel Group recorded 1998 net income of $364 million which included
the following special items: favorable indexed debt adjustments, insurance
litigation recoveries, the charge for the early retirement program and a
S-5
<PAGE> 6
foreign tax adjustment. For the year 1998, the favorable aftertax effect of
these special items was $49 million. For the year 1997, U. S. Steel Group
recorded net income of $452 million. Special items in 1997, which totaled $35
million aftertax, included blast furnace insurance recoveries, the gain on the
plate mill sale, favorable indexed debt adjustments and unfavorable
environmental accrual adjustments. In addition to the effects of these special
items, 1998 net income was lower than 1997 primarily due to an increase in
imported steel and a decline in demand for tubular products.
USE OF PROCEEDS
USX will receive proceeds from this offering of $297,462,000. USX estimates
that its total expenses for the offering will be approximately $100,000. All of
the net proceeds will be used to reduce indebtedness, including borrowings under
USX's revolving credit agreement incurred to fund the acquisition of Tarragon.
At January 27, 1999, the interest rate on amounts outstanding under the
revolving credit facility was 5.3625%. Affiliates of certain of the Underwriters
are lenders under USX's revolving credit agreement and will receive a portion of
the net proceeds of the offering. See "Underwriting" on page S-12.
S-6
<PAGE> 7
SELECTED USX CONSOLIDATED FINANCIAL DATA
You should read the following selected consolidated financial data of USX
in conjunction with the more detailed information and consolidated financial
statements included in USX's Annual Report on Form 10-K for the year ended
December 31, 1997 and the additional reports and documents also incorporated by
reference in the accompanying Prospectus. The data for the year ended December
31, 1998 has been derived from unaudited financial statements which, in the
opinion of management, reflect all adjustments necessary for a fair statement of
results for the period covered.
The 1998 data below includes the results of operations from Ashland RM&T
assets acquired by Marathon on January 1, 1998 in exchange for a 38% interest in
MAP. Therefore, certain 1998 financial measures such as revenues, income from
operations, capital expenditures and assets are not comparable to prior periods.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Revenues(a)(b)(c)................................ $19,055 $20,413 $22,977 $22,588 $28,335
Income from operations(b)........................ 1,174 726 1,779 1,705 1,517
Includes:
Inventory market valuation credits
(charges)................................. 160 70 209 (284) (267)
Gain on ownership change in MAP............. -- -- -- -- 245
Impairment of long-lived assets............. -- (675) -- -- --
Minority interest in income of MAP............... -- -- -- -- 249
Income from continuing operations................ $ 532 $ 217 $ 946 $ 908 $ 674
Income (loss) from discontinued operations....... (31) 4 6 80 --
Extraordinary loss............................... -- (7) (9) -- --
------- ------- ------- ------- -------
Net income(c).................................... 501 214 943 988 674
Noncash credit from exchange of preferred
stock.......................................... -- -- -- 10 --
Dividends on preferred stock..................... (31) (28) (22) (13) (9)
------- ------- ------- ------- -------
Net income applicable to common stocks........... $ 470 $ 186 $ 921 $ 985 $ 665
======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET AND CASH FLOW DATA
Capital expenditures--for year................... $ 1,033 $ 1,016 $ 1,168 $ 1,373 $ 1,580
Total assets..................................... 17,517 16,743 16,980 17,284 21,133
Capitalization:
Short-term obligations (including notes payable
and current maturities of long-term debt)... $ 79 $ 505 $ 434 $ 592 $ 216
Long-term debt due after one year.............. 5,521 4,472 3,859 2,932 3,920
Preferred stock of subsidiary.................. 250 250 250 250 250
Trust preferred securities(d).................. -- -- -- 182 182
Minority interest in Marathon Ashland Petroleum
LLC......................................... -- -- -- -- 1,590
Redeemable Delhi Stock(e)...................... -- -- -- 195 --
Preferred stock................................ 112 7 7 3 3
Common stockholders' equity.................... 4,190 4,321 5,015 5,397 6,402
------- ------- ------- ------- -------
Total capitalization...................... $10,152 $ 9,555 $ 9,565 $ 9,551 $12,563
======= ======= ======= ======= =======
</TABLE>
S-7
<PAGE> 8
- ---------------
(a) Consists of sales, dividend and affiliate income, gain on ownership change,
net gains on disposal of assets, gain on affiliate stock offering and other
income.
(b) Excludes amounts for the companies comprising the Delhi Group of USX (sold
in 1997), which have been classified as discontinued operations.
(c) The following unaudited pro forma data for USX includes the results of
operations of Tarragon for 1998 and 1997 and Ashland RM&T for 1997, giving
effect to the acquisitions as if they had been consummated at the beginning
of the years presented. The pro forma data is based on historical
information and does not necessarily reflect the actual results that would
have occurred nor is it necessarily indicative of future results of
operations.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1997 1998
------- -------
(IN MILLIONS)
<S> <C> <C>
Revenues.................................................... $30,167 $28,429
Net income (1).............................................. 989 643
</TABLE>
- ---------------
(1) Excluding the pro forma inventory market valuation reserve adjustment,
pro forma net income would have been $747 million for 1998 and $1,151
million for 1997. Reported net income, excluding the reported inventory
market valuation reserve adjustment, was $778 million for 1998 and
$1,167 million for 1997.
(d) Represents USX obligated mandatorily redeemable convertible preferred
securities of a subsidiary trust holding solely junior subordinated
convertible debentures of USX.
(e) On January 26, 1998, USX redeemed all of the shares of USX-Delhi Group
Common Stock.
RATIO OF EARNINGS TO FIXED CHARGES
TOTAL ENTERPRISE BASIS--UNAUDITED
CONTINUING OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges.......................... 2.18 1.62 3.90 4.11 3.47
==== ==== ==== ==== ====
</TABLE>
DESCRIPTION OF THE NOTES
GENERAL
The following description of the Notes supplements the description of the
general terms and provisions of Debt Securities discussed in "Description of the
Debt Securities" beginning on page 8 of the accompanying Prospectus. Capitalized
terms not otherwise defined in this Prospectus Supplement have the meanings
given to them in the accompanying Prospectus.
The Notes:
- - will be issued under the Indenture, dated as of March 15, 1993, between Chase
Manhattan Trust Company, National Association, as successor trustee to PNC
Bank, National Association (the "Trustee"), and USX (the "Indenture").
- - will be limited to $300 million aggregate principal amount and will mature on
February 1, 2006.
S-8
<PAGE> 9
- - will be issued only in book-entry form in denominations of $1,000 and integral
multiples thereof.
- - will bear interest at the rate per annum shown on the cover of this Prospectus
Supplement from February 1, 1999 or from the most recent Interest Payment Date
to which interest has been provided for or paid.
- - will bear interest payable semiannually on February 1 and August 1 of each
year, commencing August 1, 1999, to the person in whose name a Note (or any
predecessor Note) is registered at the close of business on January 15 or July
15, as the case may be, preceding the Interest Payment Date.
- - will not provide for any sinking fund.
- - will not be redeemable prior to their scheduled maturity.
- - will be subject to defeasance and covenant defeasance by USX if certain
conditions are satisfied (see "Description of the Debt
Securities--Satisfaction and Discharge; Defeasance and Covenant Defeasance" on
page 14 of the accompanying Prospectus.)
The covenants contained in the Indenture and the Notes would not
necessarily afford holders of the Notes protection in the event of a highly
leveraged or other transaction involving USX that may adversely affect holders
of the Notes.
BOOK-ENTRY SYSTEM
The Notes will be issued in the form of one or more fully registered global
securities (the "Global Securities") which will be deposited with, or on behalf
of, The Depository Trust Company, New York, New York (the "Depositary") and
registered in the name of the Depositary's nominee. Except as set forth below,
the Global Securities may be transferred, in whole and not in part, only to the
Depositary or a nominee of the Depositary.
The Depositary has advised USX and the Underwriters as follows: The
Depositary is a limited-purpose trust company organized under the laws of the
State of New York, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended. The Depositary was created to hold securities
of institutions that have accounts with the Depositary or its nominee
("participants") and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the need
for physical movement of securities certificates. The Depositary's participants
include securities brokers and dealers (including the Underwriters), banks,
trust companies, clearing corporations and certain other organizations, some of
whom (and/or their representatives) own the Depositary. Access to the
Depositary's book-entry system is also available to others such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly. The Depositary
agrees with and represents to its participants that it will administer its
book-entry system in accordance with its rules and bylaws and requirements of
law.
Upon the issuance of Global Securities, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the Notes represented by such Global Securities to the accounts of participants.
The accounts to be credited shall be designated by the Underwriters. Ownership
of beneficial interests in the Global Securities will be limited to participants
or persons that may hold interests through participants. Ownership of interests
in the Global Securities will be shown on, and the transfer of those ownership
interests will be effected only through, records maintained by the Depositary
(with respect to participants' interests) and such participants (with respect to
the owners of
S-9
<PAGE> 10
beneficial interests in the Global Securities through such participants). The
laws of some jurisdictions may require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such limits and
laws may impair the ability to transfer beneficial interests in the Global
Securities. See "Description of the Debt Securities--Book-Entry Securities" in
the Prospectus accompanying this Prospectus Supplement.
So long as the Depositary, or its nominee, is the registered holder and
owner of the Global Securities, the Depositary or such nominee, as the case may
be, will be considered the sole owner and holder of the related Notes for all
purposes of such Notes and for all purposes under the Indenture. Except as set
forth below, owners of beneficial interests in the Global Securities will not be
entitled to have the Notes represented by such Global Securities registered in
their names, will not receive or be entitled to receive physical delivery of
certificated Notes in definitive form and will not be considered to be the
owners or holders of any Notes under the Indenture or the Global Securities.
Accordingly, each person owning a beneficial interest in the Global Securities
must rely on the procedures of the Depositary and, if such person is not a
participant, on the procedures of the participant through which such person owns
its interests, to exercise any rights of a holder of Notes under the Indenture
or the Global Securities. USX understands that under existing industry practice,
in the event it requests any action of holders of Notes or an owner of a
beneficial interest in the Global Securities desires to take any action that the
Depositary, as the holder of the Global Securities, is entitled to take, the
Depositary would authorize the participants to take such action, and that the
participants would authorize beneficial owners owning through such participants
to take such action or would otherwise act upon the instructions of beneficial
owners owning through them.
Payment of principal and interest on Notes represented by the Global
Securities registered in the name of or held by the Depositary or its nominee
will be made to the Depositary or its nominee, as the case may be, as the
registered owner and holder of the Global Securities.
USX expects that the Depositary, upon receipt of any payment of principal
or interest in respect of the Global Securities, will immediately credit
participants' accounts with payment in amounts proportionate to their respective
beneficial interests in the principal amount of the Global Securities as shown
on the records of the Depositary. USX also expects that payments by participants
to owners of beneficial interests in the Global Securities held through such
participants will be governed by standing instructions and customary practices,
as is the case with securities held for the accounts of customers in bearer form
or registered in "street name", and will be the responsibility of such
participants. USX (including, without limitation, USX as paying agent and/or
securities registrar), the Trustee or any agent of USX or the Trustee will not
have any responsibility or liability for any aspect of the records relating to,
or payments made on account of, beneficial ownership interests in the Notes or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests or for any other aspect of the relationship
between the Depositary and its participants or the relationship between such
participants and the owners of beneficial interests in the Global Securities
owning through such participants. See "Description of the Debt Securities--
Book-Entry Securities" in the Prospectus accompanying this Prospectus
Supplement.
Unless and until they are exchanged in whole or in part for certificated
Notes in definitive form, the Global Securities may not be transferred except as
a whole by the Depositary to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary.
S-10
<PAGE> 11
A Global Security representing Notes is exchangeable for definitive Notes
in registered form, of like tenor and of an equal aggregate principal amount,
only if (a) the Depositary notifies USX that it is unwilling or unable to
continue as Depositary for such Global Security or the Depositary ceases to be a
clearing agency registered under the Exchange Act, (b) USX in its sole
discretion determines that such Global Security shall be exchangeable for
definitive Notes in registered form, or (c) there shall have occurred and be
continuing an Event of Default with respect to the Notes. Any Global Security
that is exchangeable pursuant to the preceding sentence shall be exchangeable in
whole for definitive Notes in registered form, of like tenor and of an equal
aggregate principal amount, and in authorized denominations. Such definitive
Notes shall be registered in the name or names of such person or persons as the
Depositary shall instruct the Trustee. It is expected that such instructions may
be based upon directions received by the Depositary from its participants with
respect to ownership of beneficial interests in such Global Security.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement by the purchasers of the Notes will be made in immediately
available funds. All payments by USX to the Depositary of principal and interest
will be made in immediately available funds.
The Notes will trade in the Depositary's settlement system until maturity,
and therefore the Depositary will require secondary trading activity in the
Notes to be settled in immediately available funds.
S-11
<PAGE> 12
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, dated January 27, 1999, USX has agreed to sell to each of the
Underwriters named below, severally, and each of the Underwriters has severally
agreed to purchase, the principal amount of the Notes set forth opposite its
name below:
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT OF NOTES
- ----------- ---------------
<S> <C>
J.P. Morgan Securities Inc. ................................ $150,000,000
Goldman, Sachs & Co. ....................................... 60,000,000
Salomon Smith Barney Inc. .................................. 60,000,000
PNC Capital Markets, Inc. .................................. 30,000,000
------------
Total.................................................. $300,000,000
============
</TABLE>
Under the terms and conditions of the Underwriting Agreement, if the
Underwriters take any of the Notes, then the Underwriters are obligated to take
and pay for all of the Notes.
The Notes are a new issue of securities with no established trading market
and will not be listed on any national securities exchange. The Underwriters
have advised USX that they intend to make a market for the Notes, but they have
no obligation to do so and may discontinue market making at any time without
providing any notice. No assurance can be given as to the liquidity of any
trading market for the Notes.
The Underwriters initially propose to offer part of the Notes directly to
the public at the offering price described on the cover page and part to certain
dealers at a price that represents a concession not in excess of .375% of the
principal amount of the Notes. Any Underwriter may allow, and any such dealer
may reallow, a concession not in excess of .250% of the principal amount of the
Notes to certain other dealers. After the initial offering of the Notes, the
Underwriters may from time to time vary the offering price and other selling
terms.
USX has also agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute to payments which the Underwriters may be required to make in
respect of any such liabilities.
In connection with the offering of the Notes, the Underwriters may engage
in transactions that stabilize, maintain or otherwise affect the price of the
Notes. Specifically, the Underwriters may overallot in connection with the
offering of the Notes, creating a syndicate short position. In addition, the
Underwriters may bid for, and purchase, Notes in the open market to cover
syndicate short positions or to stabilize the price of the Notes. Finally, the
underwriting syndicate may reclaim selling concessions allowed for distributing
the Notes in the offering of the Notes, if the syndicate repurchases previously
distributed Notes in syndicate covering transactions, stabilization transactions
or otherwise. Any of these activities may stabilize or maintain the market price
of the Notes above independent market levels. The Underwriters are not required
to engage in any of these activities, and may end any of them at any time.
Expenses associated with this offering, to be paid by USX, are estimated to
be $100,000.
In the ordinary course of their respective businesses, the Underwriters and
their affiliates have engaged, and may in the future engage, in commercial
banking and/or investment banking transactions with USX and its affiliates.
Affiliates of J.P. Morgan Securities Inc., Salomon Smith Barney Inc. and PNC
Capital Markets, Inc. are lenders under USX's revolving credit agreement and
will receive a portion of the proceeds from this offering. Under the Conduct
S-12
<PAGE> 13
Rules of the National Association of Securities Dealers, Inc. (the "NASD"),
special considerations apply to a public offering of securities where more than
10% of the net proceeds thereof will be paid to a participating underwriter or
any of its affiliates. Since it is expected that more than 10% of the net
proceeds will be paid to affiliates of certain participating underwriters, this
offering is being conducted pursuant to Rule 2710(c)(8) of the NASD Conduct
Rules.
LEGAL MATTERS
The validity of the Notes offered hereby will be passed upon for USX by D.
D. Sandman, Esq., General Counsel, Secretary and Senior Vice President--Human
Resources & Public Affairs of USX or by J.A. Hammerschmidt, Esq., Assistant
General Counsel--Corporate and Assistant Secretary of USX. Messrs. Sandman and
Hammerschmidt, in their respective capacities as set forth above, are paid
salaries by USX, participate in various employee benefit plans offered by USX
and own common stock of USX. Mr. Sandman or Mr. Hammerschmidt will rely as to
matters of New York law on the opinion of Sullivan & Cromwell.
Sullivan & Cromwell, New York, New York, will pass upon the validity of the
Notes for the Underwriters.
S-13
<PAGE> 14
[This Page Intentionally Left Blank]
<PAGE> 15
USX CORPORATION
DEBT SECURITIES
PREFERRED STOCK
USX-MARATHON GROUP COMMON STOCK
USX-U.S. STEEL GROUP COMMON STOCK
WARRANTS
------------------------
USX Corporation ("USX") proposes to issue and offer from time to time (1)
unsecured debt securities of USX (the "Debt Securities"); (2) USX Corporation
Preferred Stock ("Preferred Stock"); (3) USX-Marathon Group Common Stock of USX
Corporation ("Marathon Stock"); (4) USX-U. S. Steel Group Common Stock of USX
Corporation ("Steel Stock"); (5) Warrants to purchase Debt Securities, Preferred
Stock, Marathon Stock or Steel Stock (the "Warrants"), or a combination of the
foregoing at an aggregate public offering price not exceeding $1,542,569,300 (or
the equivalent thereof in foreign denominated currency (or units based on or
related thereto) in the case of Debt Securities), at prices and on terms to be
determined at or prior to the time or times of sale. The Marathon Stock and
Steel Stock are together referred to as "Common Stock."
Specific terms of the securities in respect to which this Prospectus is
being delivered ("Offered Securities") shall be set forth in an accompanying
Prospectus Supplement, together with the terms of the offering of the Offered
Securities, the initial price thereof and net proceeds from the sale thereof.
All such Prospectus Supplement(s) shall also set forth with regard to the
particular Offered Securities, without limitation, the following: (1) in the
case of Debt Securities, the designation of each separate series and the
aggregate principal amount, maturity, interest rate, if any, whether fixed or
variable (or the manner of calculation thereof), redemption and sinking fund
provisions or other repayment obligations, currency in which denominated,
amounts determined by reference to an index, purchase price and any listing on a
securities exchange, (2) in the case of Preferred Stock, the designation, number
of shares offered, liquidation preference per share, dividend rate, dates on
which dividends are to be payable and dates from which dividends accrue, any
redemption or sinking fund provisions, any conversion features, and any listing
on a securities exchange, (3) in the case of Marathon Stock or Steel Stock, the
number of shares offered, the number of shares to be outstanding after the
offering, the price range and dividend history of the relevant stock and any
listing on a securities exchange, and (4) in the case of Warrants, the number
and terms thereof, the designation and the number of securities issuable upon
their exercise, the exercise price, the exercise time period, the terms of the
offering and sale thereof and any listing on a securities exchange.
USX may sell the Offered Securities to or through underwriters or directly
to other purchasers or through agents or through and to brokers or dealers
acting as underwriters who will be named in the accompanying Prospectus
Supplement(s) along with terms of the public offering, including the offering
price, the principal amounts, if any, to be purchased by underwriters, the
commission or discount to the underwriters and the amount of other expenses
attributable to the issuance and distribution of the Offered Securities.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is July 31, 1998.
<PAGE> 16
AVAILABLE INFORMATION
USX Corporation ("USX") is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by USX can be inspected and copied at
prescribed rates at the Public Reference Room of the Commission at 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, and at the public reference
facilities maintained by the Commission at 7 World Trade Center, Suite 1300, New
York, New York 10048, and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Documents filed by USX can also be inspected at the offices of the New
York Stock Exchange, Inc. (the "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 USX.
USX has filed a Registration Statement on Form S-3 (the "Registration
Statement") with the Commission pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Offered Securities. This
Prospectus does not contain all the information set forth in the Registration
Statement and the exhibits thereto, to which reference is hereby made.
Statements contained herein concerning the provisions of certain documents are
not necessarily complete, and in each instance reference is made to the copy of
such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety by
such reference.
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:
(a) Annual Report on Form 10-K for the year ended December 31, 1997.
(b) Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.
(c) Current Reports on Form 8-K dated January 1, February 27, March 5,
May 29 and July 13, 1998.
(d) The description of the Marathon Stock included in USX's Form 8
Amendment to a Registration Statement on Form 8-B filed on April 11,
1991.
(e) The description of Steel Stock included in USX's Form 8-A
Registration Statement filed on April 11, 1991.
(f) The Amended and Restated Rights Plan included in USX's Form 8
Amendment to Form 8-A Registration Statement filed on October 5, 1992.
All reports and other documents filed by USX pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the offering of the Offered Securities 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 or superseded, to
constitute a part of this Prospectus.
USX undertakes to provide without charge to each person to whom a
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the information incorporated by reference in this Prospectus,
other than exhibits to such information (unless such exhibits are specifically
incorporated by reference into the information that this Prospectus
incorporates). Requests for such copies should be directed to the Office of the
Corporate Secretary, USX Corporation, 600 Grant Street, Pittsburgh, Pennsylvania
15219-4776 (telephone: 412-433-4801).
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<PAGE> 17
USX CORPORATION
USX is a diversified company which is principally engaged in the energy
business through its Marathon Group, and in the steel business through its U. S.
Steel Group. The term "USX" when used herein refers to USX Corporation or USX
Corporation and its subsidiaries, as required by the context. The term "Group"
when used herein refers to the Marathon Group and/or the U. S. Steel Group, as
required by the context.
USX has two classes of common stock, USX--Marathon Group Common Stock
("Marathon Stock") and USX--U. S. Steel Group Common Stock ("Steel 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. Effective
October 31, 1997, USX sold Delhi Gas Pipeline Corporation and other subsidiaries
of USX that comprised all of the Delhi Group (the "Delhi Companies") and, on
January 26, 1998, redeemed all the outstanding USX-Delhi Group Common Stock.
The Marathon Group is comprised of Marathon Oil Company ("Marathon")
and certain other consolidated subsidiaries of USX which are engaged in
worldwide exploration and production of crude oil and natural gas; domestic
refining, marketing and transportation of petroleum products; and other
energy related businesses. During 1997, Marathon and Ashland Inc.
("Ashland") agreed to combine the major elements of their refining,
marketing and transportation ("RM&T") operations. On January 1, 1998,
Marathon transferred certain RM&T net assets to Marathon Ashland Petroleum
LLC ("MAP"), a new consolidated subsidiary. Also on January 1, 1998,
Marathon acquired certain RM&T net assets from Ashland in exchange for a
38% interest in MAP. Marathon Group revenues as a percentage of total USX
consolidated revenues were 69% in 1997, 71% in 1996 and 68% in 1995.
The U. S. Steel Group includes U. S. Steel, the largest steel producer
in the United States, 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,
and engineering and consulting services. Equity affiliates of the U. S.
Steel Group include Transtar Inc. and joint ventures, such as USS/Kobe
Steel Company, USS-POSCO Industries and PRO-TEC Coating Company. Other
businesses that are part of the U. S. Steel Group include real estate
development and management, and leasing and financing activities. U. S.
Steel Group revenues as a percentage of total USX consolidated revenues
were 31% in 1997, 29% in 1996 and 32% in 1995.
USX includes consolidated financial information in its periodic reports
required by the Exchange Act, in its annual shareholder reports and in other
financial communications. The consolidated financial statements are supplemented
with separate financial statements of the Marathon Group and the U. S. Steel
Group together with the related Management's Discussion and Analyses,
descriptions of business and other financial and business information to the
extent such information is required to be presented in the report being filed.
The financial information of the Marathon Group and the U. S. Steel Group and
certain financial information relating to the Delhi Group, taken together,
includes all accounts which comprise the corresponding consolidated financial
information of USX.
For consolidated financial reporting purposes, USX's reportable industry
segments correspond with its two Groups. The attribution of assets, liabilities
(including contingent liabilities) and stockholders' equity among the Marathon
Group and the U. S. Steel 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 Marathon Stock and Steel Stock
are holders of common stock of USX and continue to be subject to all of the
risks associated with an investment in USX and all of its businesses and
liabilities. Financial impacts arising from either of the Groups which affect
the overall cost of USX's capital could affect the results of operations and
financial condition of both Groups. In addition, net losses of either Group, as
well as dividends and distributions on either class of USX common stock or
series of any preferred stock and repurchases of either class of USX common
stock or any series of preferred stock at prices in excess of par or stated
value, will reduce funds of USX legally available for payment of dividends on
both classes of USX common stock. Accordingly, the USX consolidated financial
information should be read in connection with the Marathon Group and the U. S.
Steel Group financial information.
USX 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).
3
<PAGE> 18
RATIO OF EARNINGS TO FIXED CHARGES
AND RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(UNAUDITED)
CONTINUING OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31 YEAR ENDED DECEMBER 31
------------ ------------------------------------
1998 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges......... 4.95 4.11 3.90 1.62 2.18 (a)
==== ==== ==== ==== ==== ====
Ratio of earnings to combined fixed charges
and preferred stock dividends............ 4.77 3.92 3.62 1.49 2.01 (b)
==== ==== ==== ==== ==== ====
</TABLE>
- ---------
(a) Earnings did not cover fixed charges by $312 million for 1993.
(b) Earnings did not cover combined fixed charges and preferred stock dividends
by $356 million for 1993.
USE OF PROCEEDS
Unless otherwise indicated in the applicable Prospectus Supplement, USX
intends to use the net proceeds from the sale of the Offered Securities for
general corporate purposes, including, without limitation, the refunding of
outstanding long-term indebtedness and other financial obligations, interest
rate management, leveling of its debt maturity schedule, the financing and
re-financing of acquisitions, purchases of Common Stock, capital expenditures,
investments in subsidiaries and joint ventures, and working capital.
PENDING TRANSACTION
On June 20, 1998, Marathon Oil Company and Tarragon Oil and Gas Limited, an
Ontario Corporation, ("Tarragon") entered into an Arrangement Agreement, as
subsequently amended and restated, pursuant to which all issued and outstanding
common stock of Tarragon would be acquired by an indirect Canadian subsidiary of
Marathon Oil Company and holders thereof would receive, at their election, Cdn
$14.25 ($9.81, assuming an exchange rate of Cdn $'s to U.S. $'s of 0.6886) or
the economic equivalent in Exchangeable Shares to be issued by such Canadian
subsidiary. The Exchangeable Shares, when issued and outstanding, will be
exchangeable at any time into Marathon Stock on a one-for-one basis. The
aggregate cost of the Tarragon securities is estimated to be $750 million. The
transaction is subject to approval by the Ontario Court (General Division),
Ontario, Canada and is expected to be completed on or about August 11, 1998.
Filing of the financial information related to the acquisition of Tarragon by
Marathon is not required under the applicable sections of the Securities
Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended;
however, unaudited pro forma financial statements of the USX-Marathon Group, USX
Corporation and Tarragon were included in Tarragon's Information Circular used
in connection with solicitation of Tarragon's shareholders' approval of the
transaction contemplated in the Arrangement Agreement. Such unaudited pro forma
financial statements were filed on USX Corporation's Current Report on Form 8-K
dated July 13, 1998.
SPECIAL CONSIDERATIONS
CONSIDERATIONS RELATING TO COMMON STOCK
Stockholders of One Company; Financial Impacts from One Group Could Affect the
other Group
Although the financial statements of the Marathon Group and the U. S. Steel
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 between the Marathon Group and the U. S. Steel Group for
the purpose of preparing their respective financial
4
<PAGE> 19
statements does not affect legal title to such assets or responsibility for such
liabilities. Holders of Marathon Stock and Steel Stock are holders of common
stock of USX, and continue to be subject to all of the risks associated with an
investment in USX and all of its businesses and liabilities. Financial impacts
arising from one Group that affect the overall cost of USX's capital could
affect the results of operations and financial condition of the other Group. In
addition, net losses of either Group, as well as dividends and distributions on
either class of USX common stock or any series of Preferred Stock and
repurchases of either class of USX common stock or any series of Preferred
Stock, will reduce the funds of USX legally available for payment of dividends
on the Common Stock of both Groups. Accordingly, the USX consolidated financial
information should be read in connection with the Group financial information.
USX prepares and provides consolidated financial statements, as well as
financial statements of each Group, to the holders of the respective classes of
Common Stock. See "Management and Accounting Policies."
No Rights or Additional Duties With Respect to the Groups; Potential Conflicts
Holders of Marathon Stock and Steel Stock have only the rights of
stockholders of USX, and, except as described under "Description of Capital
Stock--Marathon Stock--Exchange and Redemption" and "--Voting" and under
"Description of Capital Stock--Steel Stock--Exchange and Redemption" and
"--Voting," holders of Common Stock are not provided any rights specifically
related to either 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 Marathon Stock and Steel Stock may
diverge or appear to diverge. Examples include the optional exchange of the
Steel Stock for Marathon Stock at the 10% premium; the determination of the
record date of any such exchange or for the redemption of any Steel Stock; the
establishing of the date for public announcement of the liquidation of USX; and
the commitment of capital between the Marathon Group and the U. S. Steel Group.
USX is not aware of any precedent involving the fiduciary duties of directors of
corporations having classes of common stock or separate classes or series of
capital stock the rights of which are defined by reference to specified
operations of the corporation. However, under the principles of Delaware law
referred to above and the "business judgment rule," absent abuse of discretion,
a good faith determination made by a disinterested and adequately informed USX
Board of Directors (the "Board") with respect to any matter having disparate
impacts upon holders of Marathon Stock and holders of Steel Stock would be a
defense to any challenge to such determination made by or on behalf of the
holders of either class of Common Stock.
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, USX 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 allocation of corporate expenses and other matters. See
"Management and Accounting Policies." 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.
Limited Separate Voting Rights
Holders of shares of Marathon Stock and Steel Stock vote together as a
single class on all matters as to which all USX common stockholders are entitled
to vote. Holders of Marathon Stock and Steel Stock will have no rights to vote
on matters as a separate Group except as described under "Description of Capital
Stock--Marathon Stock--Voting" and under "Description of Capital Stock--Steel
Stock--Voting" and in certain limited circumstances as currently provided under
Delaware law. Separate meetings for the holders of each class of Common Stock
will not be held. Accordingly, subject to certain exceptions, holders of shares
of
5
<PAGE> 20
Marathon Stock or shares of Steel Stock cannot bring a proposal to a vote of the
holders of Marathon Stock or holders of Steel Stock only, but are required to
bring any proposal to a vote of all holders of capital stock of USX entitled to
vote generally voting together as a single class.
The interests of the holders of the Marathon Stock and Steel 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 USX
Corporation Restated Certificate of Incorporation, as amended from time to time
(the "Certificate of Incorporation"), or Delaware law, the holders of one class
of Common Stock would have more than the number of votes required to approve any
such matter, the holders of that class 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
either class of Common Stock requires a separate vote of either such class.
Thus, it is possible that the holders of a majority of either class of Common
Stock could constitute a majority of the voting power of both classes of Common
Stock and approve the increase or decrease of the authorized amount of the other
class of Common Stock without the approval of the holders of such other class 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 will have a fluctuating vote per share based on time-weighted average
ratios of their Market Values (See "Description of Capital Stock"). Assuming
that the time-weighted averages of the Market Values of Marathon Stock and Steel
Stock were $33 and $32, respectively, the per share voting rights of Marathon
Stock and Steel Stock would be one vote and 0.970 votes per share, respectively.
If the Marathon Stock and the Steel Stock had such per share voting rights as of
June 30, 1998, the holders of Marathon Stock and Steel Stock would have
approximately 77% and 23%, respectively, of the total voting power of USX.
Management and Accounting Policies Subject to Change
Since 1991, USX 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. See "Management and
Accounting Policies." 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 Marathon Stock or Steel 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 USX. 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 Marathon Group and the U. S. Steel 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 USX management
would be required to seek control of the voting power representing all of the
outstanding capital stock of USX entitled to vote on such acquisition. See
"Limited Separate Voting Rights" above.
Because of fluctuations in the relative Market Values of shares of the
classes of Common Stock, the voting power of a particular stockholder may be
increased or decreased from that held at the time the stockholder acquired the
stock or from that held at the time of the previous vote. The fluctuating voting
powers of the classes of Common Stock may influence a purchaser interested in
acquiring and maintaining control of USX to acquire equivalent holdings in both
classes of Common Stock.
6
<PAGE> 21
Dividends and Earnings Per Share
The Board intends to declare and pay dividends on the Marathon Stock and
Steel 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
Marathon Stock will be payable out of legally available funds of USX (as defined
under Delaware law) and (b) dividends on Steel Stock will be payable out of the
lesser of (i) the Available Steel 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 Marathon Stock and the
Steel Stock reflects the Board's intent that the separately reported earnings
and surplus of the Marathon Group and the U. S. Steel 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
Common Stock are limited to legally available funds of USX, which are determined
on the basis of the entire Corporation. Distribution on the Marathon Stock and
the Steel Stock would be precluded by a failure to pay dividends on any series
of Preferred Stock. Net losses of either Group as well as dividends and
distributions on either class of Common Stock or any series of Preferred Stock
and repurchases of either class of Common Stock or any series of Preferred
Stock, will reduce the funds of USX legally available for payment of dividends
on both 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
preceding fiscal year. "Surplus" is the amount by which the total assets of the
corporation exceed total liabilities and capital. Capital for USX 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 USX's
option, for shares of Marathon Stock at a 10% premium. Any exchange of Steel
Stock for Marathon Stock would preclude holders of Steel Stock from retaining
their investment in a security reflecting USX's steel and other businesses that
constitute the U. S. Steel Group. See "Description of Capital Stock--Steel
Stock--Exchange and Redemption."
MANAGEMENT AND ACCOUNTING POLICIES
MANAGEMENT POLICIES
The Board has adopted certain policies with respect to the Marathon Group
and the U. S. Steel 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 between the groups only on an arm's-length basis and
(iii) treat funds generated by sale of Marathon Stock and Steel 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 Marathon Group
or the U. S. Steel Group, respectively, as the case may be.
7
<PAGE> 22
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 USX.
ACCOUNTING MATTERS AND POLICIES
USX prepares the Marathon Group and the U. S. Steel Group financial
statements in accordance with generally accepted accounting principles, and
these financial statements (and certain financial information relating to the
Delhi Group), taken together, comprise all of the accounts included in the
corresponding consolidated financial statements of USX. The financial statements
of the Marathon Group and the U. S. Steel 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 USX'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 USX. 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.
DESCRIPTION OF THE DEBT SECURITIES
The Debt Securities will be general unsecured obligations of USX and will
rank pari passu with the other general unsecured obligations of USX. The Debt
Securities will be issued under an Indenture, dated as of March 15, 1993,
between PNC Bank, National Association (the "Trustee") and USX (the
"Indenture"). A copy of the Indenture is filed as an exhibit to the Registration
Statement. The following summaries of certain provisions of the Indenture do not
purport to be complete and are qualified in their entirety by reference to the
provisions of the Indenture, which are incorporated by reference herein. Certain
capitalized terms used herein are defined in the Indenture. The Section numbers
referred to in the following summaries are references to relevant sections of
the Indenture.
GENERAL
The Indenture does not limit the principal amount of Debt Securities or
other indebtedness which may be issued thereunder from time to time by USX and
USX may in the future issue additional Debt Securities (in addition to those
offered hereby) under the Indenture. As of April 30, 1998, an aggregate
principal amount of $1.4 billion of Debt Securities had been issued, and were
outstanding under, the Indenture.
The Debt Securities of any Series may be issued in definitive form or, if
provided in the Prospectus Supplement relating thereto, may be represented in
whole or in part by a Global Security or Securities, registered in the name of a
Depositary designated by USX. Each Debt Security represented by a Global
Security is referred to herein as a "Book-Entry Security."
Debt Securities may be issued from time to time pursuant to this Prospectus
in an aggregate principal amount or initial public offering price of up to
$1,542,569,300 or the equivalent thereof in foreign denominated currency or
units based on or relating to foreign denominated currencies, including European
Currency Units ("ECU"), and will be offered independently or together on terms
determined by market conditions at the
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time of sale. The Debt Securities may be issued in one or more series with the
same or various maturities and may be sold at par, a premium or an original
issue discount. Debt Securities sold at an original issue discount may bear no
interest or interest at a rate which is below market rates.
Reference is made to the Prospectus Supplement for the specific terms of
the Debt Securities offered hereby, including the following (to the extent
applicable to a particular series of Debt Securities): (i) designation,
aggregate principal amount, purchase price (expressed as a percentage of the
principal amount thereof), and denomination; (ii) date of maturity; (iii) if
other than currency of the United States, the currency or units based on or
relating to currencies for which Debt Securities may be purchased and in which
principal and any premium or interest will or may be payable; (iv) interest rate
or rates (or the manner of calculation thereof), if any; (v) the times at which
any such interest will be payable; (vi) the place or places where principal and
any premium and interest will be payable; (vii) any redemption or sinking fund
provisions or other repayment obligations and any remarketing arrangements
related thereto; (viii) any index used to determine the amount of payment of
principal of and any premium and interest on the Debt Securities; (ix) the
application, if any, of the defeasance provisions to the Debt Securities; (x) if
other than the principal amount thereof, the portion of the principal amount of
the Debt Securities which shall be payable upon declaration of acceleration of
the maturity thereof; (xi) if other than 100% of the principal amount thereof
plus accrued interest, the Change in Control Purchase Price or Prices applicable
to purchases of Debt Securities upon the occurrence of a Change in Control;
(xii) whether the Debt Securities will be issued in whole or in part in the form
of one or more Global Securities and, in such case, the Depositary for such
Global Securities; and (xiii) any other specific terms of the Debt Securities,
including any terms which may be required by or advisable under United States
laws or regulations.
Except with respect to Book-Entry Securities, Debt Securities may be
presented for exchange or registration of transfer, in the manner, at the places
and subject to the restrictions set forth in the Debt Securities and the
Prospectus Supplement. Such services will be provided without charge, other than
any tax or other governmental charge payable in connection therewith, but
subject to the limitations provided in the Indenture. For a description of
payments of principal of and any premium and interest on, and transfer of,
Book-Entry Securities, and exchanges of Global Securities representing
Book-Entry Securities, see "Book-Entry Securities" hereunder.
CERTAIN COVENANTS OF USX
Creation of Certain Liens
If USX or any Subsidiary of USX shall mortgage, pledge, encumber or subject
to a lien (hereinafter to "Mortgage" or a "Mortgage," as the context may
require) as security for any indebtedness for money borrowed (i) any blast
furnace facility or raw steel producing facility, or rolling mills which are a
part of a plant which includes such a facility, or (ii) any property capable of
producing oil or gas; and which, in either case, is located in the United States
and is determined to be a principal property by the Board of Directors of USX in
its discretion, USX will secure or will cause such Subsidiary to secure each
Series of the Debt Securities equally and ratably with all indebtedness or
obligations secured by the Mortgage then being given and with any other
indebtedness of USX or such Subsidiary then entitled thereto; provided, however,
that this covenant shall not apply in the case of: (a) any Mortgage existing on
the date of the Indenture (whether or not such Mortgage includes an
after-acquired property provision); (b) any Mortgage, including a purchase money
Mortgage, incurred in connection with the acquisition of any property (any
Mortgage incurred within 180 days after such acquisition or the completion of
construction shall be deemed to be in connection with such acquisition), the
assumption of any Mortgage previously existing on such acquired property or any
Mortgage existing on the property of any corporation when it becomes a
Subsidiary of USX; (c) any Mortgage on such property in favor of the United
States, or any State, or instrumentality of either, to secure partial, progress
or advance payments to USX or any Subsidiary of USX pursuant to the provisions
of any contract or any statute; (d) any Mortgage on such property in favor of
the United States, any State, or instrumentality of either, to secure borrowings
for the purchase or construction of the property Mortgaged; (e) any Mortgage in
connection with a sale or other transfer of oil or gas in place for a period of
time or in an amount such that the purchaser will realize therefrom a specified
amount of money or specified amount of minerals or any interest in
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property of the character commonly referred to as an "oil payment" or
"production payment"; (f) any Mortgage on any property arising in connection
with or to secure all or any part of the cost of the repair, construction,
improvement, alteration, exploration, development or drilling of such property
or any portion thereof; (g) any Mortgage on any pipeline, gathering system,
pumping or compressor station, pipeline storage facility, other pipeline
facility, drilling equipment, drilling platform, drilling barge, any movable
railway, marine or automotive equipment, gas plant, office building, storage
tank, or warehouse facility, any of which is located on any property included
under clause (ii) above; (h) any Mortgage on any equipment or other personal
property used in connection with any property included under clause (ii) above;
(i) any Mortgage on any property included under clause (ii) above arising in
connection with the sale of accounts receivable resulting from the sale of oil
or gas at the wellhead; or (j) any renewal of or substitution for any Mortgage
permitted under the preceding clauses. Notwithstanding the foregoing, USX may
and may permit its Subsidiaries to grant Mortgages or incur liens on property
covered by the restriction described above so long as the net book value of the
property so encumbered, together with all property subject to the restriction on
certain sale and leasebacks described below, does not at the time such Mortgage
or lien is granted exceed five percent (5%) of Consolidated Net Tangible Assets,
(as such term is defined in the Indenture). (Section 4.03)
"Consolidated Net Tangible Assets" means the aggregate value of all assets
of USX and its subsidiaries after deducting therefrom (a) all current
liabilities (excluding all long-term debt due within one year), (b) all
investments in unconsolidated subsidiaries and all investments accounted for on
the equity basis and (c) all goodwill, patent and trademarks, unamortized debt
discount and other similar intangibles (all determined in conformity with
generally accepted accounting principles and calculated on a basis consistent
with USX's most recent audited consolidated financial statements). (Section
1.01)
As of the date of this Prospectus, neither USX nor any subsidiary of USX
has any property referred to in either clause (i) or (ii) above and in the
following subsection "Limitations on Certain Sales and Leasebacks" which has
been determined by the Board of Directors of USX to be a principal property.
Limitations on Certain Sale and Leasebacks
USX will not, nor will it permit any Subsidiary to, sell or transfer (i)
any blast furnace facility or raw steel producing facility, or rolling mills
which are a part of a plant which includes such a facility, or (ii) any property
capable of producing oil or gas; and which, in either case, is located in the
United States and is determined to be a principal property by the Board of
Directors of USX in its discretion, with the intention of taking back a lease
thereof, provided, however, this covenant shall not apply if (a) the lease is to
a Subsidiary (or to USX in the case of a Subsidiary); (b) the lease is for a
temporary period by the end of which it is intended that the use of the property
by the lessee will be discontinued; (c) USX or a Subsidiary could, in accordance
with Section 4.03, heretofore described, Mortgage such property without equally
and ratably securing the Debt Securities; (d) the transfer is incident to or
necessary to effect any operating, farm out, farm in, unitization, acreage
exchange, acreage contributions, bottom hole or dry hole arrangements or pooling
agreement or any other agreement of the same general nature relating to the
acquisition, exploration, maintenance, development and operation of oil and gas
properties in the ordinary course of business or as required by regulatory
agencies having jurisdiction over the property; or (e) USX promptly informs the
Trustee of such sale, the net proceeds of such sale are at least equal to the
fair value (as determined by resolution adopted by the Board of Directors of
USX) of such property and USX within 180 days after such sale applies an amount
equal to such net proceeds (subject to reduction by reason of credits to which
USX is entitled, under the conditions specified in the Indenture) to the
retirement or in substance defeasance of funded debt of USX or a Subsidiary.
(Section 4.04)
Merger and Consolidation
USX will not merge or consolidate with any other corporation or sell or
convey all or substantially all of its assets to any person, firm or
corporation, except that USX may merge or consolidate with, or sell or convey
all or substantially all of its assets to, any other corporation, provided that
(i) USX shall be the continuing corporation or the successor corporation (if
other than USX, as the case may be) shall be a corporation organized and
existing under the laws of the United States of America or a State thereof and
such corporation
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shall expressly assume the due and punctual payment of the principal of and any
premium and interest on all the Debt Securities, according to their tenor, and
the due and punctual performance and observance of all of the covenants and
conditions of the Indenture to be performed by USX and (ii) USX or such
successor corporation, as the case may be, shall not, immediately after such
merger, consolidation, sale or conveyance, be in default in the performance of
any such covenant or condition and no event which with the lapse of time, the
giving of notice or both would constitute an Event of Default shall have
occurred and be continuing. (Section 11.01)
If upon any consolidation or merger of USX with or into any other
corporation, or upon any sale or conveyance of substantially all of the
properties of USX, or upon any acquisition by USX of all or any part of the
property of another corporation, any property owned immediately prior thereto
would thereupon become subject to any mortgage, lien, pledge, charge or
encumbrance, USX, prior to such event, will secure the Debt Securities (equally
and ratably with any other indebtedness of USX secured thereby) by a lien on all
of such property of USX, prior to all liens, charges and encumbrances other than
any theretofore existing thereon. (Section 11.03)
PURCHASE OF DEBT SECURITIES UPON A CHANGE IN CONTROL
In the event of any Change in Control (as defined below) of USX, each
holder of Debt Securities will have the right, at that holder's option, subject
to the terms and conditions of the Indenture, to require USX to become obligated
to purchase all of that holder's Debt Securities on the date that is 35 Business
Days after the occurrence of such Change in Control (the "Change in Control
Purchase Date") at a cash price equal to (i) unless otherwise specified in the
terms of such Debt Securities, 100% of the principal amount thereof, together
with accrued interest to such Change in Control Purchase Date (except that
interest installments due prior to such Change in Control Purchase Date will be
payable to the holders of such Debt Securities of record at the close of
business on the relevant record dates according to their terms and the
provisions of the Indenture), or (ii) such other price or prices as may be
specified in the terms of such Debt Securities (the "Change in Control Purchase
Prices"). (Section 4.07)
Within 15 Business Days after a Change in Control, USX is obligated to mail
to the Trustee and to all holders of Debt Securities of any Series at their
addresses shown in the Debt Security register (and to beneficial owners as
required by applicable law) a notice regarding the Change in Control, stating,
among other things: (i) the last date on which the Change in Control purchase
right may be exercised, (ii) the Change in Control Purchase Price, (iii) the
Change in Control Purchase Date, (iv) the name and address of the Paying Agent,
and (v) the procedures that holders must follow to exercise these rights. USX
will cause a copy of such notice to be published in a daily newspaper of
national circulation. (Section 4.07)
To exercise this right, a holder of Debt Securities of any Series must
deliver a Change in Control Purchase Notice to the Paying Agent for that Series
at its address set forth in USX's notice regarding the Change in Control at any
time prior to the close of business on the Change in Control Purchase Date. The
Change in Control Purchase Notice shall state (i) the certificate numbers of the
Debt Securities to be delivered by the holder thereof for purchase by USX and
(ii) that such Debt Securities are to be purchased by USX pursuant to the
applicable provisions of the Debt Securities and USX's notice regarding the
Change in Control. (Section 4.07)
Upon receipt by USX of the Change in Control Purchase Notice, the holder of
the Debt Security in respect of which such notice was given shall (unless such
notice is withdrawn as specified in the Indenture) thereafter be entitled to
receive solely the Change in Control Purchase Price with respect to such Debt
Security. Any Change in Control Purchase Notice may be withdrawn by the holder
of Debt Securities of any Series by a written notice of withdrawal delivered to
the Paying Agent for that Series at any time prior to the close of business on
the Change in Control Purchase Date. The notice of withdrawal shall state the
certificate numbers of the Debt Securities as to which the withdrawal notice
relates. (Section 4.08)
Payment of the Change in Control Purchase Price for a Debt Security of any
Series for which a Change in Control Purchase Notice has been delivered and not
withdrawn is conditioned upon delivery of such Debt Security (together with
necessary endorsements) to the Paying Agent for that Series at its address set
forth in
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USX's notice regarding the Change in Control, at any time (whether prior to, on
or after the Change in Control Purchase Date) after the delivery of such Change
in Control Purchase Notice. (Section 4.07) Payment of the Change in Control
Purchase Price for such Debt Security will be made promptly following the later
of the Change in Control Purchase Date or the time of delivery of such Debt
Security. (Section 4.08)
Under the Indenture, a "Change in Control" of USX is deemed to have
occurred at such time as (i) any "person" or "group" of persons (excluding USX,
any Subsidiary, any employee stock ownership plan or any other employee benefit
plan of USX) shall have acquired "beneficial ownership" (within the meaning of
Section 13(d) or 14(d) of the Exchange Act and the applicable rules and
regulations thereunder) of shares of Voting Stock representing at least 35% of
the outstanding Voting Power of USX, (ii) during any period of twenty-five
consecutive months, commencing before or after the date of the Indenture,
individuals who at the beginning of such twenty-five month period were directors
of USX (together with any replacement or additional directors whose election was
recommended by incumbent management of USX or who were elected by a majority of
directors then in office) cease to constitute a majority of the board of
directors of USX, or (iii) any person or group of related persons shall acquire
all or substantially all of the assets of USX; provided, that a Change in
Control shall not be deemed to have occurred pursuant to clause (iii) above if
USX shall have merged or consolidated with or transferred all or substantially
all of its assets to another corporation in compliance with the provisions of
Section 11.01 of the Indenture (relating to when USX may merge or transfer
assets) and the surviving or successor or transferee corporation is no more
leveraged than was USX immediately prior to such event. For purposes of this
definition, the term "leveraged" when used with respect to any corporation shall
mean the percentage represented by the total assets of that corporation divided
by its stockholders' equity, in each case determined and as would be shown in a
consolidated balance sheet of such corporation prepared in accordance with
generally accepted accounting principles in the United States of America. The
term "substantially all" in clause (iii) above has not been quantified for
purposes of defining Change in Control and, depending upon the factual
circumstances, there may be uncertainty as to when a Change in Control has
occurred for purposes of determining the rights of holders of Debt Securities
pursuant to this provision.
Notwithstanding the foregoing, a Change in Control will not be deemed to
have occurred by virtue of (i) USX, any Subsidiary of USX, any employee stock
ownership plan or any other employee benefit plan of USX or any such Subsidiary,
or any Person holding Voting Stock for or pursuant to the terms of any such
employee benefit plan, acquiring beneficial ownership of shares of Voting Stock,
whether representing 35% or more of the outstanding Voting Power of USX or
otherwise or (ii) any Person whose ownership of shares of Voting Stock
representing 35% or more of the outstanding Voting Power of USX results solely
from USX's calculation from time to time of the relative voting rights of
Marathon Stock and Steel Stock.
"Voting Stock" means stock of USX of any class or classes (however
designated) having ordinary voting power for the election of the directors of
USX, other than stock having such power only by reason of the happening of a
contingency. "Voting Power" means the total voting power represented by all
outstanding shares of all classes of Voting Stock. (Section 4.07)
In the event a Change in Control occurs, USX intends to comply with any
applicable securities laws or regulations, including any applicable requirements
of Rule 14e-1 under the Exchange Act. The Change in Control purchase feature of
the Debt Securities may in certain circumstances make more difficult or
discourage a takeover of USX. The Change in Control purchase feature, however,
is not the result of management's knowledge of any specific effort to accumulate
shares of Common Stock or to obtain control of USX by means of a merger, tender
offer, solicitation or otherwise, or part of a plan by management to adopt a
series of anti-takeover provisions. The Change in Control purchase feature is
similar to that contained in other debt offerings of USX as a result of
negotiations between USX and the underwriters thereof.
Except as described above, the Change in Control purchase feature does not
afford holders of the Debt Securities protection against possible adverse
effects of a reorganization, restructuring, merger or similar transaction
involving USX.
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Although USX's existing indebtedness does not limit USX's ability to
purchase Debt Securities, USX's ability to purchase Debt Securities in the
future may be limited by the terms of any then existing borrowing arrangements
and by its financial resources.
EVENTS OF DEFAULT
An Event of Default with respect to Debt Securities of any Series is
defined in the Indenture as being: (i) default in the payment of the principal
of or premium, if any, on any of the Debt Securities of such Series when due and
payable; (ii) default in the payment of interest on the Debt Securities of such
Series when due, continuing for 30 days; (iii) default in the payment of the
Change in Control Purchase Price of any of the Debt Securities of such Series as
and when the same shall become due and payable; (iv) default in the deposit of
any sinking fund payment with respect to any Debt Security of such Series when
due; (v) failure by USX in the performance of any other covenant or agreement in
the Debt Securities of such Series or in the Indenture continued for a period of
90 days after notice of such failure as provided in the Indenture; (vi) certain
events of bankruptcy, insolvency, or reorganization with respect to USX; or
(vii) any other Event of Default provided with respect to Debt Securities of
that Series. (Section 6.01)
USX is required annually to deliver to the Trustee officers' certificates
stating whether or not the signers have any knowledge of any default in the
performance by USX of certain covenants. (Section 4.06)
In case an Event of Default shall occur and be continuing with respect to
any Series, the Trustee or the holders of not less than 25% in principal amount
of the Debt Securities of such Series then outstanding may declare the Debt
Securities of such Series to be due and payable. (Section 6.01) The Trustee is
required to give holders of the Debt Securities of any Series written notice of
a default with respect to such Series as and to the extent provided by the Trust
Indenture Act. (Section 6.07)
If, however, at any time after the Debt Securities of such Series have been
declared due and payable, and before any judgment or decree for the moneys due
has been obtained or entered, USX shall pay or deposit with the Trustee amounts
sufficient to pay all matured installments of interest upon the Debt Securities
of such Series and the principal of all Debt Securities of such Series which
shall have become due, otherwise than by acceleration, together with interest on
such principal and, to the extent legally enforceable, on such overdue
installments of interest and all other amounts due under the Indenture shall
have been paid, and any and all defaults with respect to such Series under the
Indenture shall have been remedied, then the holders of a majority in aggregate
principal amount of the Debt Securities of such Series then outstanding, by
written notice to USX and the Trustee, may waive all defaults with respect to
such Series and rescind and annul the declaration that the Debt Securities of
such Series are due and payable. (Section 6.01) In addition, prior to any such
declaration that the Debt Securities of such Series are due and payable, the
holders of a majority in aggregate principal amount of the Debt Securities of
such Series may waive any past default and its consequences with respect to such
Series, except a default in the payment of the principal of or any premium or
interest on any Debt Securities of such Series. (Section 6.06)
The Trustee is under no obligation to exercise any of the rights or powers
under the Indenture at the request, order or direction of any of the holders of
Debt Securities, unless such holders shall have offered to the Trustee
reasonable security or indemnity. (Section 7.02) Subject to such provisions for
the indemnification of the Trustee and certain limitations contained in the
Indenture, the holders of a majority in aggregate principal amount of the Debt
Securities of each 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, with
respect to the Debt Securities of such Series. (Section 6.06)
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting USX and the Trustee to modify
the Indenture or enter into or modify any supplemental indenture without the
consent of the holders of the Debt Securities in regard to matters as shall not
adversely affect the interests of the holders of the Debt Securities, including,
without limitation, the following: (a) to evidence the succession of another
corporation to USX; (b) to add to the covenants of USX further covenants,
restrictions, conditions or provisions for the benefit or protection of the
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holders of any or all Series of Debt Securities or to surrender any right or
power conferred upon USX by the Indenture; (c) to cure any ambiguity or to
correct or supplement any provision of the Indenture (or supplements) which may
be defective or inconsistent with any other provision in the Indenture (or
supplements); 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 the Indenture as shall not adversely affect the
interests of the holders of the Debt Securities then outstanding; (d) to add to,
change or eliminate any of the provisions of the Indenture in respect of one or
more Series of Debt Securities thereunder, under certain conditions specified
therein; (e) to evidence the appointment of a successor trustee and to add to or
change provisions of the Indenture necessary to provide for or facilitate the
administration of the trusts under the Indenture by more than one trustee; (f)
to set forth the form and any terms of any Series of Debt Securities which USX
and the Trustee deem necessary or desirable to include in a supplemental
indenture; and (g) to add to or change any of the provisions of the Indenture to
such extent as shall be necessary or desirable to permit or facilitate the
issuance of Debt Securities in bearer form, registrable or not registrable as to
principal, and with or without interest coupons. USX and the Trustee may
otherwise modify the Indenture or any supplemental indenture with the consent of
the holders of not less than 66-2/3% in aggregate principal amount of each
Series of Debt Securities affected thereby at the time outstanding, except that
no such modifications shall (i) extend the fixed maturity of any Debt
Securities, or reduce the principal amount thereof or reduce the rate or extend
the time of payment of any premium or interest thereon, or change the currency
in which the Debt Securities are payable, without the consent of the holder of
each Debt Security so affected, or (ii) reduce the aforesaid percentage of Debt
Securities of any Series, the consent of the holders of which is required for
any such modifications or supplemental indenture, without the consent of the
holders of all Debt Securities affected thereby then outstanding. (Article Ten)
SATISFACTION AND DISCHARGE; DEFEASANCE AND COVENANT DEFEASANCE
The Indenture shall be satisfied and discharged if (i) USX shall deliver to
the Trustee all Debt Securities then outstanding for cancellation or (ii) all
Debt Securities shall have become due and payable or are to become due and
payable within one year and USX shall deposit an amount sufficient to pay the
principal, premium, if any, and interest to the date of maturity, provided that
in either case USX shall have paid all other sums payable under the Indenture.
(Section 12.01)
The Indenture provides, if such provision is made applicable to the Debt
Securities of a Series, that USX may elect either (A) to defease and be
discharged from any and all obligations with respect to any Debt Security of
such Series (except for the obligations to register the transfer or exchange of
such Debt Security, to replace temporary or mutilated, destroyed, lost or stolen
Debt Securities, to maintain an office or agency in respect of the Debt
Securities and to hold moneys for payment in trust) ("defeasance") or (B) to be
released from its obligations with respect to such Debt Security under Sections
4.03, 4.04, 4.07, 4.09, 11.01 and 11.03 of the Indenture (being the restrictions
described above under "Certain Covenants of USX" and USX's obligations described
under "Purchase of Debt Securities upon a Change in Control") and (ii) that
Sections 6.01(d), 6.01(e) (as to Sections 4.03, 4.04, 4.07, 4.09, 11.01 and
11.03) and 6.01(h), as described in clauses (iv), (v) and (vii) under "Events of
Default" above, shall not be deemed to be Events of Default under the Indenture
with respect to such Series ("covenant defeasance"), upon the deposit with the
Trustee (or other qualifying trustee), in trust for such purpose, of money
and/or Government Obligations (as defined) which through the payment of
principal and interest in accordance with their terms will provide money, in an
amount sufficient to pay the principal of (and premium, if any) and interest on
such Debt Security, on the scheduled due dates therefor. In the case of
defeasance, the holders of such Debt Securities are entitled to receive payments
in respect of such Debt Securities solely from such Trust. Such a trust may only
be established if, among other things, USX has delivered to the Trustee an
Opinion of Counsel (as specified in the Indenture) to the effect that the
holders of the Debt Securities affected thereby will not recognize income, gain
or loss for Federal income tax purposes as a result of such defeasance or
covenant defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such defeasance or covenant defeasance had not occurred. Such Opinion of
Counsel, in the case of defeasance under clause (A) above, must refer to and be
based upon a ruling of the Internal Revenue Service or a change in applicable
Federal income tax law occurring after the date of the Indenture. (Section
12.02)
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RECORD DATES
The Indenture provides that in certain circumstances USX or the Trustee may
establish a record date for determining the holders of outstanding Debt
Securities of a Series entitled to join in the giving of notice or the taking of
other action under the Indenture by the holders of the Debt Securities of such
Series.
BOOK-ENTRY SECURITIES
The following description of Book-Entry Securities will apply to any Series
of Debt Securities issued in whole or in part in the form of a Global Security
or Securities except as otherwise provided in the Prospectus Supplement relating
thereto.
Upon issuance, all Book-Entry Securities of like tenor and having the same
date of original issue will be represented by a single Global Security. Each
Global Security representing Book-Entry Securities will be deposited with, or on
behalf of, the Depositary, which will be a clearing agent registered under the
Exchange Act. The Global Security will be registered in the name of the
Depositary or a nominee of the Depositary.
Ownership of beneficial interest in a Global Security representing
Book-Entry Securities will be limited to institutions that have accounts with
the Depositary or its nominee ("participants") or persons that may hold
interests through participants. In addition, ownership of beneficial interests
by participants in such a Global Security will only be evidenced by, and the
transfer of that ownership interest will only be effected through, records
maintained by the Depositary or its nominee for such Global Security. Ownership
of beneficial interest in such a Global Security by persons that hold through
participants will only be evidenced by, and the transfer of that ownership
interest within such participant will only be effected through, records
maintained by such participant. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such laws may impair this ability to transfer beneficial
interests in such a Global Security.
Payment of principal of and any premium and interest on Book-Entry
Securities represented by any Global Security registered in the name of or held
by the Depositary or its nominee will be made to the Depositary or its nominee,
as the case may be, as the registered owners and holder of the Global Security
representing such Book-Entry Securities. None of USX, the Trustee or any agent
of USX or the Trustee will have any responsibility or liability for any aspect
of the Depositary's records or any participant's records relating to or payments
made on account of beneficial ownership interests in a Global Security
representing such Book-Entry Securities or for maintaining, supervising or
reviewing any of the Depositary's records or any participant's records relating
to such beneficial ownership interests. Payments by participants to owners of
beneficial interests in a Global Security held through such participants will be
governed by the Depositary's procedures, as is now the case with securities held
for the accounts of customers registered in "street name," and will be the sole
responsibility of such participants.
No Global Security may be transferred except as a whole by the Depositary
for such Global Security to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary.
A Global Security representing Book-Entry Securities of any Series is
exchangeable for definitive Debt Securities of such Series in registered form,
of like tenor and of an equal aggregate principal amount, only if (a) the
Depositary notifies USX that it is unwilling or unable to continue as Depositary
for such Global Security or the Depositary ceases to be a clearing agency
registered under the Exchange Act, (b) USX in its sole discretion determines
that such Global Security shall be exchangeable for definitive Debt Securities
in registered form, or (c) there shall have occurred and be continuing an Event
of Default with respect to the Debt Securities of that Series. Any Global
Security that is exchangeable pursuant to the preceding sentence shall be
exchangeable in whole for definitive Debt Securities in registered form, of like
tenor and of an equal aggregate principal amount, and in the authorized
denominations for that Series. Such definitive Debt Securities shall be
registered in the name or names of such person or persons as the Depositary
shall instruct the Trustee. It is expected that such instructions may be based
upon directions received by the Depositary from its participants with respect to
ownership of beneficial interests in such Global Security.
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Except as provided above, owners of beneficial interests in such Global
Security will not be entitled to receive physical delivery of Debt Securities in
definitive form and will not be considered the holders thereof for any purpose
under the Indenture, and no Global Security representing Book-Entry Securities
shall be exchangeable, except for another Global Security of like denomination
and tenor to be registered in the name of the Depositary or its nominee.
Accordingly, each person owning a beneficial interest in such Global Security
must rely on the procedures of the Depositary and, if such person is not a
participant, on the procedures of the participant through which such person owns
its interest, to exercise any rights of a holder under the Indenture. USX
understands that under existing industry practices, in the event that USX
requests any action of holders or an owner of a beneficial interest in such
Global Security desires to give or take any action that a holder is entitled to
give or take under the Indenture, the Depositary would authorize the
participants holding the relevant beneficial interests to give or take such
action, and such participants would authorize beneficial owners owning through
such participant to give or take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
CONCERNING THE TRUSTEE
PNC Bank, National Association is also trustee for Marathon Oil Company's
7% Monthly Interest Guaranteed Notes Due 2002, which are guaranteed by USX, for
fourteen series of obligations issued by various governmental authorities
relating to environmental projects at various USX facilities, for an aggregate
principal amount of $1.3 billion of debt securities issued by USX under an
Indenture between USX and the Trustee dated July 1, 1991 and for $1.4 billion of
Debt Securities which have heretofore been issued by USX under the Indenture.
USX and its subsidiaries maintain ordinary banking relationships, including
loans and deposit accounts, with PNC Bank, National Association and anticipate
that they will continue to do so.
DESCRIPTION OF CAPITAL STOCK
The following is a description of the terms of the capital stock of USX
included in 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 (the "Restated
Rights Agreement") between USX 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 is a part.
GENERAL
The authorized capital stock of USX consists of (i) 40 million shares of
preferred stock, without par value (the "Preferred Stock"), of which three
million shares are designated as 6.50% Cumulative Convertible Preferred Stock
("6.50% Convertible Preferred Stock") and eight million shares are designated as
Series A 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 June 30, 1998, there were 2,961,887 shares of 6.50% Convertible
Preferred Stock, 290,265,145 shares of Marathon Stock, 87,291,033 shares of
Steel Stock and no shares of USX-Delhi Group Common Stock issued and
outstanding. Effective January 26, 1998, all of the outstanding USX-Delhi Group
Common Stock was redeemed in connection with the sale of the Delhi Companies,
and therefore, such stock is not discussed further in this description of
Capital Stock. No shares of Series A Junior Preferred Stock are outstanding.
Additionally, there were 3,937,163 of the 6.75% Convertible Junior Subordinated
Debentures due 2037 outstanding as of June 30, 1998 convertible into 4,256,073
shares of Steel Stock, subject to adjustment in certain circumstances.
As used herein:
"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.
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"Marathon Group" means, at any time, (x) all businesses in which any
of Marathon Oil Company, Texas Oil & Gas Corp., Carnegie Natural Gas
Company and Apollo 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
USX-Delhi Group Common Stock), (y) all assets and liabilities of USX 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 and (z)
such businesses, assets and liabilities acquired by USX for the Marathon
Group after May 6, 1991, as determined by the Board to be included in the
Marathon Group.
"Market Value" of either 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 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 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" 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 National Association of Securities Dealers Automated
Quotations National Market System 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 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 USX in respect of such
Disposition, (ii) any taxes payable by USX in respect of any dividend or
redemption pursuant to a dividend or redemption paid to holders of Steel
Stock 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 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 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.
"U. S. Steel Group" means, at any time, all of the businesses in which
USX is or has been engaged, directly or indirectly, and all assets and
liabilities of USX, other than any businesses, assets or liabilities of the
Marathon Group if any shares of Marathon Stock are outstanding.
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 and as described in the
appropriate Prospectus Supplement (if any). The future issuance of Preferred
Stock may have the effect of delaying, deferring or preventing a change in
control of USX.
Holders of the 6.50% Convertible Preferred Stock are entitled to receive
cumulative dividends, to be declared and paid before declaration and payment of
dividend on USX's common stock, at the rate of 6.50% per annum. The 6.50%
Convertible Preferred Stock was not redeemable prior to April 1, 1996, except as
described below. On and after such date, the 6.50% Convertible Preferred Stock
is redeemable at the option of USX under certain circumstances, in whole or in
part, for cash, currently at a price of $51.625 per share, and at prices
declining annually on each April 1 to an amount equal to $50.00 per share on and
after April 1, 2003, plus, in each case, an amount equal to accrued and unpaid
dividends to the redemption date. If USX
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exchanges all of the outstanding Steel Stock for shares of a wholly owned
subsidiary of USX to which all of the assets and liabilities of the U. S. Steel
Group have been transferred, pays a dividend on or redeems shares of Steel Stock
with the Net Proceeds from the Disposition of all or substantially all of the
assets of the U. S. Steel Group, pays a dividend on, or USX or any of its
subsidiaries consummates a tender or exchange offer for, Steel Stock, and the
aggregate amount of such dividend or the consideration paid in such tender or
exchange offer is an amount equal to all or substantially all of the assets, the
6.50% Convertible Preferred Stock is required to be redeemed, in whole, for
$50.00 per share, plus dividends accrued and unpaid to the redemption date. The
6.50% Convertible Preferred Stock is required to be redeemed under certain other
limited circumstances. The 6.50% Convertible Preferred Stock will not be
entitled to the benefit of any sinking fund.
Shares of the 6.50% Convertible Preferred Stock are convertible at any time
at the option of the holder, unless previously redeemed, 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 in certain circumstances.
The holders of the 6.50% Convertible Preferred Stock have no vote except
certain class votes in limited circumstances. Upon the dissolution, liquidation
or winding-up of USX, the holders of the 6.50% Convertible Preferred Stock are
entitled to receive out of the assets of USX available for distribution to
stockholders, before any payment or distribution shall be made on Common Stock
or any other class of stock ranking junior to such series upon liquidation, the
amount of $50 per share plus all accrued and unpaid dividends thereon.
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 USX legally available therefor.
The Board may, in its sole discretion, declare and pay dividends
exclusively on the Marathon Stock, or exclusively on the Steel Stock, or on both
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 USX TO WHICH USX WOULD HAVE TRANSFERRED ALL OF THE ASSETS AND
LIABILITIES OF THE MARATHON GROUP.
At any time after the transfer of all the assets and liabilities of the
Marathon Group to a wholly-owned subsidiary of USX (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 USX legally
available therefor, exchange all of the outstanding shares of Marathon Stock for
all of the outstanding shares of the common stock of the Marathon Group
Subsidiary (the "Marathon Group Subsidiary Stock"), on a pro rata basis.
General Redemption Provisions: In the event of any exchange or redemption
of a class of Common Stock, USX shall cause to be given to each holder of such
Common Stock a notice stating (A) that shares of such Common 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 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 USX 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 shares 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
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exchanged or redeemed, at such holder's address as the same appears on the stock
transfer books of USX. 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 are to be
redeemed, such shares shall be redeemed by USX 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 USX 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.
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 USX shall specify certificates for such shares of
such class of Common Stock, properly endorsed or assigned for transfer (unless
USX shall waive such requirement). As soon as practicable after surrender of
certificates for shares of such class of Common Stock, USX 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, USX will issue and
deliver a new certificate for the shares of such class of Common Stock not
redeemed.
USX 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, USX 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,
USX 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 USX, 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 MARATHON STOCK SHALL HAVE ONE VOTE PER SHARE. SHARES OF
STEEL STOCK WILL, WHEN VOTING WITH THE OTHER CLASS OF COMMON STOCK (MARATHON
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 TO THE MARKET VALUE OF A
SHARE OF MARATHON STOCK.
Except as set forth below and under "Steel Stock--Voting," holders of both
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 both 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 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 and Y is the Market Value of the Marathon Stock. If shares of only
one class of Common Stock are outstanding, each share of that class shall have
one vote.
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Assuming that the time weighted averages of the Market Values of Marathon
Stock and Steel Stock were $33 and $32, respectively, the per share voting
rights of Marathon Stock and Steel Stock would be one vote and 0.970 votes per
share, respectively. If the Marathon Stock and the Steel Stock had such per
share voting rights as of June 30, 1998, the holders of Marathon Stock and Steel
Stock would have approximately 77% and 23%, respectively, of the total voting
power of USX.
In addition, the approval of the holders of at least 66-2/3% of the
outstanding Marathon Stock, voting as a separate class, shall be necessary for:
(i) the declaration or payment of any dividend, 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 sale, transfer, assignment or other
disposition (whether by merger, consolidation, sale or contribution of
assets or stock or otherwise) (a "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 Corporation other than the Marathon 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 USX.
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 class of Common Stock could
constitute a majority of the voting power of both classes and approve the
increase or decrease of the authorized amount of the 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 USX 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 USX, HOLDERS OF EITHER
CLASS OF COMMON STOCK WILL BE ENTITLED TO RECEIVE A PORTION OF THE FUNDS
DISTRIBUTABLE TO HOLDERS OF BOTH 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 BOTH CLASSES OF COMMON
STOCK.
The Certificate of Incorporation provides that, in the event of a
dissolution, liquidation or winding-up of USX, 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
USX or (2) the institution of any proceeding for the involuntary dissolution,
liquidation or winding-up of USX, (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 capitalization of such class of Common Stock and Y is the
aggregate market capitalization of both classes of Common Stock. For purposes of
the preceding sentence, "Market Capitalization" of any class of
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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.
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 on the Steel Stock may be declared and paid only out of the lesser of
(i) funds of USX legally available therefor and (ii) the Available Steel
Dividend Amount.
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 USX 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 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 SFAS No. 106 (including any amendments thereto) and any
cumulative effects of the adoption of SFAS No. 109 (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 USX.
The Available Steel Dividend Amount as of March 31, 1998 was at least
$3.094 billion, as calculated under the preceding clause (a)(i).
Although net income and stockholders' equity of the U. S. Steel Group was
reduced when USX 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 (as defined below) 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
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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 USX 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 USX
in determining Steel Net Income, see "Management and Accounting Policies."
The Board may, in its sole discretion, declare and pay dividends
exclusively on the Marathon Stock, or exclusively on the Steel Stock, or on both
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.
If USX transfers all the assets and liabilities of the U. S. Steel Group to
a wholly owned subsidiary of USX (the "U. S. Steel Group Subsidiary"), Steel
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 USX legally
available therefor, for all of the outstanding stock of the U. S. Steel Group
Subsidiary, on a pro rata basis on the same terms and conditions as on the
Marathon Stock.
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 USX
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 USX, directly or
indirectly, owns a majority equity interest), USX 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 USX
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 Disposition, 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 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 during such period.
If, immediately after any event, USX, directly or indirectly, owns less
than a majority equity interest in any person, entity or group in which USX,
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 USX
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
USX, 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 outstanding share of Steel Stock for a
number of shares of Marathon Stock equal to 110% of the Market Value Ratio as of
the
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<PAGE> 37
fifth Business Day prior to the date notice of such exchange is mailed to the
holders of Steel Stock. For purposes of the preceding sentence, "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 USX, 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.
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.
An exchange or redemption of Steel Stock for Marathon Stock would be made
on the same general terms and conditions as described above under "Marathon
Stock--Exchange and Redemption--General Provisions."
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.
The holders of shares of the Steel Stock have the voting rights described
above under the caption "Marathon Stock--Voting."
In addition, as is the case with the use of the proceeds from the
Disposition of any properties or assets of 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 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 USX 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 USX.
LIQUIDATION--IN THE EVENT OF THE LIQUIDATION OF USX, HOLDERS OF STEEL 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 STEEL STOCK TO THE AGGREGATE MARKET CAPITALIZATION OF BOTH
CLASSES OF COMMON STOCK.
In the event of a dissolution, liquidation or winding-up of USX, the
holders of shares of Steel Stock are entitled to receive funds in the amounts
described above under "Marathon Stock--Liquidation."
DETERMINATIONS BY BOARD
Any determinations made by the Board under the foregoing provisions will be
final and binding on all stockholders of USX.
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<PAGE> 38
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 USX.
STOCK TRANSFER AGENT AND REGISTRAR
USX maintains its own stock transfer department at the following address:
USX Corporation, Shareholders 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, 13th Floor, New York, NY 10021.
ChaseMellon Shareholder Services L.L.C., 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 between USX and Mellon
Bank, N.A., as Rights Agent.
Under the Restated Rights Agreement, the right (each a "Right") to purchase
from USX a unit consisting of one one-hundredth of a share (a "Unit") of Series
A Junior Preferred Stock, no par value (the "Junior Preferred Stock"), at a
purchase price of $120 in cash per Unit, subject to adjustment, is attached to
each share of Marathon Stock and Steel 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" and a Right attached to a share
of Steel Stock is hereinafter referred to as a "Steel 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
"Marathon Stock--Voting" and "Steel Stock--Voting" above. 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
USX of the relative voting power of Marathon Stock and Steel 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 or Steel
Stock, as the case may be (or in certain circumstances, cash, property, or other
securities of USX), having a value equal to two times the exercise price of the
Marathon Right or Steel Right, respectively. However, Rights are not exercisable
until such time as the Rights are no longer redeemable by USX as set forth
below.
In the event that, any time following the Stock Acquisition Date, (i) USX
is acquired in a merger or other business combination transaction in which USX
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 USX'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.
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<PAGE> 39
At any time until 15 days following the Stock Acquisition Date (subject to
extension), USX 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 and Steel Rights (other than Rights held by the Acquiring Person
and certain related parties) for shares of Marathon Stock and Steel Stock,
respectively, at an exchange ratio of one share of Marathon Stock for each
Marathon Right and one share of Steel Stock for each Steel 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, USX will
issue Marathon Rights on each share of Marathon Stock and Steel Rights on each
share of Steel Stock issued prior to the Rights distribution date so that all
such shares will have attached Rights.
A copy of the Restated Rights Agreement is available free of charge from
the Rights Agent by writing to Mellon Bank, N.A. at One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258, Attention: Corporate Trust Group.
DESCRIPTION OF WARRANTS
USX may issue Warrants for the purchase of Debt Securities, Preferred
Stock, Marathon Stock or Steel Stock (each a "USX Security," and together the
"USX Securities"). Warrants may be issued independently or together with any USX
Security offered by any Prospectus Supplement and may be attached to or separate
from any such USX Security. Each series of Warrants will be issued under a
separate warrant agreement (a "Warrant Agreement") to be entered into between
USX and a bank or trust company, as warrant agent (the "Warrant Agent"). The
Warrant Agent will act solely as an agent of USX in connection with the Warrants
and will not assume any obligation or relationship of agency or trust for or
with any holders or beneficial owners of Warrants. The following summary of
certain provisions of the Warrants does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the provisions of the
Warrant Agreement that will be filed with the SEC in connection with the
offering of such Warrants.
DEBT WARRANTS
The Prospectus Supplement relating to a particular issue of Warrants to
issue Debt Securities ("Debt Warrants") will describe the terms of such Debt
Warrants, including the following (if applicable): (a) the title of such Debt
Warrants; (b) the offering price for such Debt Warrants; (c) the aggregate
number of such Debt Warrants; (d) the designation and terms of the Debt
Securities purchasable upon exercise of such Debt Warrants; (e) the designation
and terms of the Debt Securities with which such Debt Warrants are issued and
the number of such Debt Warrants issued with each such Debt Security; (f) the
date from and after which such Debt Warrants and any Debt Securities issued
therewith will be separately transferable; (g) the principal amount of Debt
Securities purchasable upon exercise of a Debt Warrant and the price at which
such principal amount of Debt Securities may be purchased upon exercise (which
price may be payable in cash, securities, or other property); (h) the date on
which the right to exercise such Debt Warrants shall commence and the date on
which such right shall expire; (i) the minimum or maximum amount of such Debt
Warrants that may be exercised at any one time; (j) whether the Debt Warrants
represented by the Debt Warrant certificates, or Debt Securities that may be
issued upon exercise of the Debt Warrants, will be issued in registered or
bearer form; (k) information with respect to book-entry procedures; (l) the
currency or currency units in which the offering price and the exercise price
are payable; (m) a discussion of material United States federal income tax
considerations; (n) the redemption or call provisions applicable to such Debt
Warrants; and (o) any additional terms of the Debt Warrants, including terms,
procedures, and limitations relating to the exchange and exercise of such Debt
Warrants.
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<PAGE> 40
STOCK WARRANTS
The Prospectus Supplement relating to any particular issue of Warrants to
issue Preferred Stock, Marathon Stock or Steel Stock will describe the terms of
such Warrants, including the following (if applicable): (a) the title of such
Warrants; (b) the offering price for such Warrants; (c) the aggregate number of
such Warrants; (d) the designation and terms of the Preferred Stock, Marathon
Stock or Steel Stock purchasable upon exercise of such Warrants; (e) the
designation and terms of the USX Securities with which such Warrants are issued
and the number of such Warrants issued with each such USX Security; (f) the date
from and after which such Warrants and any USX Securities issued therewith will
be separately transferable; (g) the number of shares of Preferred Stock,
Marathon Stock or Steel Stock purchasable upon exercise of a Warrant and the
price at which such shares may be purchased upon exercise; (h) the date on which
the right to exercise such Warrants shall commence and the date on which such
right shall expire; (i) the minimum or maximum amount of such Warrants that may
be exercised at any one time; (j) the currency or currency units in which the
offering price and the exercise price are payable; (k) a discussion of material
United States federal income tax considerations; (l) the antidilution provisions
of such Warrants; (m) the redemption or call provisions applicable to such
Warrants; and (n) any additional terms of the Warrants, including terms,
procedures, and limitations relating to the exchange and exercise of such
Warrants.
PLAN OF DISTRIBUTION
USX may issue the Offered Securities to or through underwriters or directly
to purchasers, agents or dealers or through brokers. Offers to purchase Offered
Securities may be solicited directly by USX or brokers or dealers designated by
USX from time to time. Any such broker or dealer may be deemed to be an
underwriter as that term is defined in the Securities Act, and will be named in
the Prospectus Supplement, together with the compensation payable thereto by USX
in connection with the sale of the Offered Securities.
Underwriters, agents, brokers and dealers may be entitled under agreements
which may be entered into with USX to indemnification by USX against certain
civil liabilities, including liabilities under the Securities Act. Such
underwriters, agents, brokers and dealers may engage in transactions with, or
perform services for, USX in the ordinary course of business.
Also, USX may issue the Offered Securities in connection with acquisitions.
The Prospectus may be used in connection with the re-offering of the Offered
Securities by persons receiving such securities in connection with an
acquisition who may be deemed underwriters under the Securities Act of 1933.
Offered Securities may be issued in connection with the acquisition of
Tarragon. See "Pending Transaction." USX will bear the cost of registering any
such securities.
The place and time of delivery for the Offered Securities in respect of
which this Prospectus is delivered will be set forth in the accompanying
Prospectus Supplement.
VALIDITY OF SECURITIES
The validity of the issuance of the Offered Securities will be passed upon
for USX by D. D. Sandman, Esq., General Counsel, Secretary and Senior Vice
President--Human Resources & Public Affairs of USX or by J.A. Hammerschmidt,
Esq., Assistant General Counsel--Corporate and Assistant Secretary of USX.
Messrs. Sandman and Hammerschmidt, in their respective capacities as set forth
above, are paid salaries by USX, participate in various employee benefit plans
offered by USX and own common stock of USX.
EXPERTS
The consolidated financial statements of USX as of December 31, 1997 and
1996 and for each of the three years in the period ended December 31, 1997
incorporated in this Prospectus by reference to USX's Annual Report on Form 10-K
for the year ended December 31, 1997 have been so incorporated in reliance on
the reports of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
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<PAGE> 41
APPENDIX I
SUMMARY OF USX COMMON STOCK
The following summary is qualified in its entirety by the detailed
information appearing elsewhere in, or incorporated by reference in, this
Prospectus. Capitalized terms used in this summary have the respective meanings
ascribed to them elsewhere in this Prospectus.
<TABLE>
<CAPTION>
USX COMMON STOCK
---------------------------------------------------------------------------
USX-MARATHON GROUP USX-U. S. STEEL GROUP
COMMON STOCK COMMON STOCK
------------------ ---------------------
<S> <C> <C>
BUSINESS: Energy business. Steel and other businesses.
NUMBER OF SHARES
OUTSTANDING AS OF
JUNE 30, 1998: 290,265,145 87,291,033
VOTING RIGHTS: Except as otherwise described Except as otherwise described
herein, the Marathon Stock will vote herein, the Steel Stock will vote as
as a single class with the Steel a single class with the Marathon
Stock. The Marathon Stock will have Stock. Each share of Steel Stock
one vote per share. will have a variable number of votes
based upon the relative Market
Values of one share of Steel Stock
and one share of Marathon Stock, and
may have more than, less than or
exactly one vote per share.
DIVIDENDS: Dividends on the Marathon Stock will Dividends on the Steel Stock will be
be paid at the discretion of the paid at the discretion of the Board
Board based primarily upon the based primarily upon the long-term
long-term earnings and cash flow earnings and cash flow capabilities
capabilities of the Marathon Group, of the U. S. Steel Group, as well as
as well as on the dividend policies on the dividend policies of publicly
of publicly traded energy companies. traded steel companies. Dividends
Dividends will be payable out of all will be payable out of the lesser of
funds of USX legally available (i) all funds of USX legally
therefor. available therefor and (ii) the
Available Steel Dividend Amount.
EXCHANGE AND REDEMPTION: USX may exchange the Marathon Stock USX may exchange the Steel Stock for
for shares of a wholly owned shares of a wholly owned subsidiary
subsidiary that holds all the assets that holds all the assets and
and liabilities of the Marathon liabilities of the U.S. Steel Group.
Group.
If USX sells all or substantially
all of the properties and assets of
the U. S. Steel Group, USX must
either: (i) pay a special dividend
to holders of Steel Stock equal to
the Net Proceeds; or (ii) redeem
shares of Steel Stock having an
aggregate Market Value closest to
the value of the Net Proceeds for an
amount equal to the Net Proceeds; or
(iii) exchange each share of Steel
Stock for a number of shares of
Marathon Stock equal to 110% of the
ratio of the Market Values of one
share of Steel Stock to one share of
Marathon Stock.
LIQUIDATION: In the event of the liquidation of In the event of the liquidation of
USX, holders of Marathon Stock will USX, holders of Steel Stock will
share the funds, if any, remaining share the funds, if any, remaining
for distribution to common for distribution to common
stockholders with holders of Steel stockholders with holders of
Stock based upon the relative market Marathon Stock based upon the
capitalizations of each. relative market capitalizations of
each.
LISTING: NYSE under the symbol "MRO". NYSE under the symbol "X".
</TABLE>
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