September 1, 1999
September 1, 1999
Dear :
USX Corporation (the "Corporation") recognizes that your contribution
to the growth and success of the Corporation will continue to be substantial and
desires to assure the Corporation of your continued employment. In this
connection, the Board of Directors of the Corporation (the "Board') recognizes
that, as is the case with many publicly-held corporations, the possibility of a
change in control may exist and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the departure or
distraction of management personnel to the detriment of the Corporation and its
stockholders.
Accordingly, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the Corporation's management, including yourself, to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a change in control of the Corporation.
In order to induce you to remain in the employ of the Corporation, the
Corporation agrees that you shall receive the severance benefits set forth in
this letter agreement ("Agreement") in the event your employment with the
Corporation is terminated subsequent to a "Change in Control of the
Corporation" (as defined in Section 2 hereof) under the circumstances described
below.
1. Term of Agreement. This Agreement will commence on the date
hereof and shall continue in effect until December 31, 2000; provided, however,
that commencing on January 1, 2001 and each January 1 thereafter, the term of
this Agreement shall automatically be extended for one additional year unless,
not later than September 1 of the preceding year, the Corporation shall have
given notice that it does not wish to extend this Agreement; provided, further,
if a Change in Control of the Corporation shall have occurred during the
original or extended term of this Agreement, this Agreement shall continue in
effect for a period of twenty-four (24) months beyond the month in which such
Change in Control of the Corporation occurred.
2. Change in Control of the Corporation.
(a) No benefits shall be payable hereunder unless there shall have
been a Change in Control of the Corporation, as set forth below. For purposes
of this Agreement, a "Change in Control of the Corporation" and "Change in
Control" shall mean a change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
whether or not the Corporation is then subject to such reporting requirement;
provided, that, without limitation, such a change in control shall be deemed to
have occurred if
(i) any person (as defined in Sections 13(d) and 14(d) of the
Exchange Act) (a "Person") is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing twenty percent (20%) or more of
the combined voting power of the Corporation's then outstanding voting
securities; provided, however, that for purposes of this Agreement the term
"Person" shall not include (A) the Corporation or any of its subsidiaries,
(B) a trustee or other fiduciary holding securities under an employee
benefit plan of the Corporation or any of its subsidiaries, (C) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (D) a corporation owned, directly or indirectly, by the
stockholders of the Corporation in substantially the same proportions as
their ownership of stock of the Corporation; or
(ii) the following individuals cease for any reason to constitute
a majority of the number of directors then serving: individuals who, on
the date hereof, constitute the Board and any new director (other than a
director whose initial assumption of office is in connection with an actual
or threatened election contest including but not limited to a consent
solicitation, relating to the election of directors of the Corporation)
whose appointment or election by the Board or nomination for election by
the Corporation's stockholders was approved by a vote of at least two-
thirds (2/3) of the directors then still in office who either were
directors on the date hereof or whose appointment, election or nomination
for election was previously so approved; or
(iii)there is consummated a merger or consolidation of the
Corporation or a subsidiary thereof with any other corporation, other than
a merger or consolidation which would result in the holders of the voting
securities of the Corporation outstanding immediately prior thereto holding
securities which represent immediately after such merger or consolidation
at least 50% of the combined voting power of the voting securities of the
entity surviving the merger or consolidation (or the parent of such
surviving entity), or the shareholders of the Corporation approve a plan of
complete liquidation of the Corporation, or there is consummated the sale
or other disposition of all or substantially all of the Corporation's
assets.
(b) You agree that, subject to the terms and conditions of this
Agreement, in the event of a Change in Control of the Corporation, you will
remain in the employ of the Corporation for a period of three (3) months from
the occurrence of such Change in Control of the Corporation; provided, however,
that if during such three-month period (i) your employment is involuntarily
terminated by the Corporation other than for Cause, or (ii) you terminate your
employment during such three-month period for Good Reason, you shall not be
required to remain in the Corporation's employ. The foregoing shall in no event
limit or otherwise affect your rights under any other provision of this
Agreement,
(c) For purposes of this Agreement, a "potential Change in Control of
the Corporation" shall be deemed to have occurred if
(i) the Corporation enters into an agreement, the consummation
of which would result in the occurrence of a Change in Control of the
Corporation;
(ii) any person (including the Corporation) publicly announces an
intention to take or to consider taking actions which if consummated would
constitute a Change in Control of the Corporation;
(iii)any Person, who is or becomes the beneficial owner, directly
or indirectly, of securities of the Corporation representing 9.5% or more
of the combined voting power of the Corporation's then outstanding
securities, increases his beneficial ownership of such securities by 5% or
more over the percentage so owned by such Person on the date hereof; or
(iv) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a potential Change in Control of the
Corporation has occurred.
You agree that, subject to the terms and conditions of this Agreement, in the
event of a potential Change in Control of the Corporation, you will remain in
the employ of the Corporation until the earliest of (i) a date which is six (6)
months from the occurrence of such potential Change in Control of the
Corporation, (ii) the termination by you of your employment by reason of your
death or Disability, as defined in Subsection 3(a), or (iii) a date which is
three (3) months from the occurrence of a Change in Control of the Corporation.
3. Termination Following a Change in Control of the Corporation. If
any of the events described in section 2(a) hereof constituting a Change in
Control of the Corporation shall have occurred, you shall be entitled to the
benefits provided in Section 4(d) hereof upon the termination of your employment
during the term of this Agreement unless such termination is (i) because of your
death or Disability, (ii) by the Corporation for Cause, (iii) by you other than
for Good Reason or (iv) on or after the date that you attain age sixty-five
(65). Notwithstanding the foregoing, if the Corporation shall have terminated
your employment at any time during the term of this Agreement for Cause, then
you shall be entitled only to the normal base salary and other employee benefits
provided in Section 4(b). In the event your employment with the Corporation is
terminated for any reason prior to the occurrence of a Change in Control, you
shall not be entitled to any benefits hereunder; provided, however, that if your
employment is terminated prior to a Change in Control without Cause at the
direction of a person who has entered into an agreement with the Corporation,
the consummation of which will constitute a Change in Control, your employment
shall be deemed to have terminated following a Change in Control. Your
entitlement to benefits under any of the Corporation's retirement plans will not
adversely affect your rights to receive payments hereunder.
(a) Disability. If, as a result of your incapacity due to
physical or mental illness which in the opinion of a licensed physician renders
you incapable of performing your assigned duties with the Corporation, you shall
have been absent from the full-time performance of your duties with the
Corporation for six (6) consecutive months, and within thirty (30) days after
written notice of termination is given you shall not have returned to the full-
time performance of your duties, the Corporation may terminate your employment
for "Disability."
(b) Cause. Termination by the Corporation of your employment
for "Cause" shall mean termination upon (i) the willful and continued failure by
you to substantially perform your duties with the Corporation (other than any
such failure resulting from termination by you for Good Reason), after a demand
for substantial performance is delivered to you that specifically identifies the
manner in which the Corporation believes that you have not substantially
performed your duties, and you have failed to resume substantial performance of
your duties on a continuous basis within fourteen (14) days of receiving such
demand, (ii) the willful engaging by you in conduct which is demonstrably and
materially injurious to the Corporation, monetarily or otherwise or (iii) your
conviction of a felony or conviction of a misdemeanor which impairs your ability
substantially to perform your duties with the Corporation. For purposes of this
Subsection, no act, or failure to act, on your part shall be deemed "willful"
unless done, or omitted to be done, by you not in good faith and without
reasonable belief that your action or omission was in the best interest of the
Corporation.
(c) Good Reason. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, the occurrence after a Change in
Control of the Corporation of any one or more of the following:
(i) the assignment to you of duties inconsistent with your
position immediately prior to the Change in Control or a reduction or alteration
in the nature of your position, duties, status or responsibilities from those in
effect immediately prior to the Change in Control;
(ii) a reduction by the Corporation in your base salary as
in effect on the date hereof (without regard to any temporary reduction effected
by the Corporation prior to a Change in Control) or as the same shall be
increased from time to time ("Base Salary") except for across-the-board
temporary salary reductions similarly affecting all senior executives of the
Corporation and all senior executives of any person in control of the
Corporation;
(iii) the Corporation's requiring you to be based at a
location in excess of seventy-five (75) miles from the location where you are
based immediately prior to the Change in Control;
(iv) the failure by the Corporation to continue in effect
any of the Corporation's employee benefit plans, programs, policies, practices
or arrangements in which you participate (or substantially equivalent successor
or replacement employee benefit plans, programs, policies, practices or
arrangements) or the failure by the Corporation to continue your participation
therein on substantially the same basis, both in terms of the amount of benefits
provided and the level of your participation relative to other participants, as
existed immediately prior to the Change in Control;
(v) the failure of the Corporation to obtain a satisfactory
agreement from any successor to the Corporation to assume and agree to perform
this Agreement, as contemplated in Section 5 hereof; and
(vi) any purported termination by the Corporation of your
employment that is not effected pursuant to a Notice of Termination satisfying
the requirements of subparagraph (d) below, and for purposes of this Agreement,
no such purported termination shall be effective. Your right to terminate your
employment pursuant to this Subsection shall not be affected by your incapacity
due to physical or mental illness. Your continued employment shall not
constitute consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
(d) Notice of Termination. Any termination by the Corporation
for Cause or by you for Good Reason shall be communicated by Notice of
Termination to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a written notice which shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(e) Date of Termination. "Date of Termination" shall mean the
date specified in the Notice of Termination where required or in any other case
upon ceasing to perform services to the Corporation; provided that if within
thirty (30) days after any Notice of Termination one party notifies the other
party that a dispute exists concerning the termination, the Date of Termination
shall be the date finally determined to be the Date of Termination, either by
mutual written agreement of the parties or by a binding and final arbitration
award.
4. Compensation Upon Termination or During Disability. Following a
Change in Control of the Corporation, as defined in Section 2 hereof, upon
termination of your employment or during a period of disability you shall be
entitled to the following benefits:
(a) During any period that you fail to perform your full-time
duties with the Corporation as a result of incapacity due to physical or mental
illness, you shall continue to receive your Base Salary at the rate in effect at
the commencement of any such period, until your employment is terminated
pursuant to Section 3(a) hereof. Thereafter, your benefits shall be determined
in accordance with the Corporation's retirement, insurance and other applicable
programs and plans then in effect.
(b) If your employment shall be terminated by the Corporation
for Cause or by you other than for Good Reason, the Corporation shall pay you
your full Base Salary through the Date of Termination at the rate in effect at
the time Notice of Termination is given or on the Date of Termination if no
Notice of Termination is required hereunder, plus all other amounts to which you
are entitled under any compensation plan of the Corporation at the time such
payments are due, and the Corporation shall have no further obligations to you
under this Agreement.
(c) If your employment terminates by reason of your death, your
benefits shall be determined in accordance with the Corporation's retirement,
survivor's benefits, insurance and other applicable programs and plans, then in
effect.
(d) If your employment by the Corporation shall be terminated
(i) by the Corporation other than for Cause or Disability or (ii) by you for
Good Reason, you shall be entitled to the benefits (the "Severance Payments")
provided below:
(A) the Corporation shall pay you your full Base
Salary through the Date of Termination at the rate in effect at the time
Notice of Termination is given, or the Date of Termination where no Notice
of Termination is required hereunder;
(B)the Corporation will pay as severance benefits to you,
not later than the fifth day following the Date of Termination, a lump sum
severance payment (the "Severance Payment") equal to the product of (1) a
fraction, the numerator of which is equal to the lesser of (x) thirty-six
(36) or (y) the number of full and partial months existing between the Date
of Termination and your sixty-fifth (65th) birthday and the denominator of
which is equal to twelve (12), and (2) the sum of (x) your annual Base
Salary in effect immediately prior to the occurrence of the circumstances
giving rise to such termination, and (y) the amount, if any, of the highest
annual bonus awarded to you under any annual bonus plan of the Corporation
in the three (3) years immediately preceding the Date of Termination;
(C) in lieu of shares of the class of common stock of
the Corporation ("Option Shares") issuable to you upon exercise of
outstanding options ("Options"), granted to you under any option or
incentive plan of the Corporation (which Options shall be cancelled upon
the making of the payment referred to below), you shall receive an amount
in cash equal to the product of (i) the higher of the closing price of
Option Shares reported on the New York Stock Exchange on the Date of
Termination or the highest per share price for Option Shares actually paid
in connection with any Change in Control of the Corporation, less the per
share exercise price of each Option held by you, times (ii) the number of
Option Shares covered by each such Option;
(D) for a twenty-four (24) month period after such
termination, the Corporation will arrange to provide you at the
Corporation's expense with life, disability, accident and health insurance
benefits substantially similar to those which you were receiving
immediately prior to the Notice of Termination; but benefits otherwise
receivable by you pursuant to this Subsection (D) shall be reduced to the
extent comparable benefits are actually received by you during the twenty-
four (24) month period following your termination, and any such benefits
actually received by you shall be reported to the Corporation;
(E) in addition to the retirement benefits to which
you are entitled under the United States Steel Corporation Plan for Non-
Union Employee Pension Benefits, the USX Corporation Non-Tax Qualified
Pension Plan, and the USX Corporation Executive Management Supplemental
Pension Program or any successor plan or similar plans (the "Pension
Plans") and the retiree medical, life and other similar benefits to which
you are entitled under the Corporation's welfare benefit plans or any
successor plan or plans thereto (the "Welfare Plans"), the Corporation
shall pay you not later than the fifth day following the Date of
Termination, a lump sum, in cash, equal to the actuarial equivalent of the
excess of (x) the retirement pension and the medical, life and other
benefits that would be payable to you if (i) you were terminated under
conditions that entitled you to the highest benefit available under the
Pension and Welfare Plans given your age, service and salary as of the Date
of Termination and (ii) you had been absent due to layoff for a one-year
period ending on the Date of Termination without regard to any amendment to
the Pension or Welfare Plans made subsequent to a Change in Control of the
Corporation and on or prior to the Date of Termination, which amendment
adversely affects in any manner the computation of retirement or welfare
benefits thereunder over (y) the retirement pension that you are entitled
to receive under the Pension Plans and the medical, life and other benefits
that you are entitled to receive under the Welfare Plans (for purposes of
this Subsection, "actuarial equivalent" shall be determined using the same
methods and assumptions utilized under the United States Steel Corporation
Plan for Non-Union Employee Pension Benefits immediately prior to the
Change in Control of the Corporation); and
(F) In addition to the benefits you are entitled to
under the USX Corporation Savings Fund Plan and/or the Marathon Thrift Plan
and the related supplemental savings plans ("Savings Plans"), the
Corporation shall pay you not later than the fifth day following the Date
of Termination, a lump sum, in cash, equal to the excess of (x) the amount
you would have been entitled to under the Savings Plans determined as if
you were fully vested thereunder on the Date of Termination, over (y) the
amount you are entitled to under the Savings Plans on the Date of
Termination.
(e) In the event that you become entitled to the Severance
Payments, if any of the Severance Payments or other portion of the Total
Payments (as defined below) will be subject to the tax (the "Excise Tax")
imposed by section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), the Corporation shall pay to you at the time specified in paragraph
(f), below, an additional amount (the "Gross-Up Payment") such that the net
amount retained by you, after deduction of any Excise Tax on the Severance
Payments and such other Total Payments and any federal, state and local income
tax, FICA-Health Insurance tax, and Excise Tax upon the payment provided for by
this paragraph, shall be equal to the Severance Payments and such other Total
Payments. For purposes of determining whether any of the payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) any other
payments or benefits received or to be received by you in connection with a
Change in Control of the Corporation or your termination of employment whether
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with the Corporation, any person whose actions result in a Change in
Control of the Corporation or any person affiliated with the Corporation or such
person (together with the Severance Payment, the "Total Payments") shall be
treated as "parachute payments" within the meaning of section 280G(b)(2) of the
Code, and all "excess parachute payments" within the meaning of section
280G(b)(1) shall be treated as subject to the Excise Tax, except to the extent
that in the opinion of tax counsel selected by the Corporation's independent
auditors and acceptable to you such other payments or benefits (in whole or in
part) do not constitute parachute payments, or such excess parachute payments
(in whole or in part) represent reasonable compensation for services actually
rendered within the meaning of section 280G(b)(4) of the Code in excess of the
base amount within the meaning of section 280G(b)(3) of the Code, or are
otherwise not subject to the Excise Tax, (ii) the amount of the Total Payments
which shall be treated as subject to the Excise Tax shall be equal to the lesser
of (A) the total amount of the Total Payments or (B) the amount of excess
parachute payments within the meaning of section 280G(b)(1) (after applying
clause (i), above), and (iii) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Corporation's independent auditors
in accordance with the principles of sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up Payment, you shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be made
and state and local income taxes at the highest marginal rate of taxation in the
state and locality of your residence on the Date of Termination, net of the
maximum reduction in federal income taxes which could be obtained from deduction
of such state and local taxes. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at the time
of termination of your employment, you shall repay to the Corporation at the
time that the amount of such reduction in Excise Tax is finally determined the
portion of the Gross-Up Payment attributable to such reduction (plus the portion
of the Gross-Up Payment attributable to the Excise Tax, and federal and state
and local income tax , and FICA-Health Insurance tax imposed on the portion of
the Gross-Up Payment being repaid by you if such repayment results in a
reduction in Excise Tax or FICA-Health Insurance tax, and/or a federal and state
and local income tax deduction) plus interest on the amount of such repayment at
the rate provided in section 1274(b)(2)(B) of the Code. In the event that the
Excise Tax is determined to exceed the amount taken into account hereunder at
the time of the termination of your employment (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Corporation shall make an additional gross-up payment in
respect of such excess (plus any interest payable with respect to such excess)
at the time that the amount of such excess is finally determined.
(f) The payments provided for in paragraphs (d) and (e) above
shall be made not later than the fifth day following the Date of Termination;
provided, however, that if the amounts of such payments cannot be finally
determined on or before such day, the Corporation shall pay to you on such day
an estimate as determined in good faith by the Corporation of the minimum amount
of such payments and shall pay the remainder of such payments (together with
interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as
the amount thereof can be determined but in no event later than the thirtieth
day after the Date of Termination. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Corporation to you payable on the
fifth day after demand by the Corporation (together with interest at the rate
provided in section 1274(b)(2)(B) of the Code).
(g) The Corporation shall also pay to you all legal fees and
expenses incurred by you as a result of such termination of employment
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce any right or
benefit provided by this Agreement or in connection with any tax audit or
proceeding to the extent attributable to the application of section 4999 of the
Code to any payment or benefit provided hereunder).
(h) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or otherwise,
nor shall the amount of any payment provided for in this Section 4 be reduced by
any compensation earned by you as the result of employment by another employer
after the Date of Termination, or otherwise.
5. Successors; Binding Agreement.
(a) The Corporation will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation or of any
division or subsidiary thereof employing you to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Corporation would be required to perform it if no such succession had taken
place. Failure of the Corporation to obtain such assumption and agreement prior
to the effectiveness of any such succession shall be a breach of this Agreement
and shall entitle you to compensation from the Corporation in the same amount
and on the same terms as you would be entitled hereunder if you terminate your
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.
(b) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement, to your devisee, legatee or
other designee or, if there is not such designee, to your estate.
6. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement.
7. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by you and such officer as may be specifically designated
by the Board. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Delaware.
8. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
10. Claims and Arbitration. Any dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively by arbitration
in accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that you shall be entitled to seek specific
performance of your right to be paid until the Date of Termination during the
pendency of any dispute or controversy arising under or in connection with this
Agreement.
11. Entire Agreement. This Agreement supersedes any other agreement
or understanding between the parties hereto with respect to the issues that are
the subject matter of this Agreement.
12. Effective Date. This Agreement shall become effective as of the
date set forth above. If this letter sets forth our agreement on the subject
matter hereof, kindly sign and return to the Corporation the enclosed copy of
this letter which will then constitute our agreement on this subject.
Sincerely,
USX CORPORATION
By____________________________
Dan D. Sandman
General Counsel, Secretary
and Senior Vice President-
Human Resources & Public Affairs
Agreed to this ______ day of
September, 1999.
By_______________________