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EXHIBIT 4.2
CDM:lw- 14778
LOAN AGREEMENT
LOAN AGREEMENT, dated as of _____________
between USX Corporation ("USX"), a Delaware
corporation and USX Capital LLC, a limited life company
organized under the laws of the Turks and Caicos
Islands ("Capital").
WHEREAS, Capital intends to issue its common
shares (the "Common Shares") to USX, and receive related
capital contributions from USX in an aggregate amount
of $_________ (the "Common Share Payments") and to
issue and sell _________ shares of Cumulative
Monthly Income Preferred Shares, Series A
(the "Preferred Shares") with a liquidation preference
(the "Liquidation Preference") of $25 per share;
WHEREAS, USX is guaranteeing the payment of
dividends on the Preferred Shares if and when declared
to the extent that there are sufficient funds legally
available therefor, the Redemption Price (as defined
in the Guarantee Agreement) and the Liquidation
Distribution (as defined in the Guarantee Agreement)
on the Preferred Shares all to the extent set forth
in the Payment and Guarantee Agreement,
dated __________________ (the "Guarantee");
WHEREAS, USX has asked Capital to make loans
to USX in an aggregate principal amount equal to
the sum of the aggregate Common Share Payments and
the aggregate Liquidation Preference of the
Preferred Shares issued and sold by Capital;
WHEREAS, Capital is willing to make such loans
to USX, on the terms and conditions hereinafter
stated;
WHEREAS, USX Capital Management Company ("Capital
Management"), an indirect, wholly-owned subsidiary of USX,
will be the Manager (as defined in the Articles of
Association of Capital) of Capital;
NOW, THEREFORE, USX and Capital hereby agree as
follows:
ARTICLE I
THE LOANS
Section 1.01. The Loans. Subject to the terms
and conditions herein, Capital agrees to make loans to
USX on the date hereof in an aggregate principal amount
of $_________. Such loans shall be referred to herein
as the "Loans".
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Section 1.02. Term of the Loans; Mandatory
Prepayment.
(a) If Capital redeems Preferred Shares
in accordance with the terms thereof, the Loans
pertaining to such Shares will become due and
payable in a principal amount equal to the
aggregate stated Liquidation Preference of the
Preferred Shares so redeemed, together with any and
all accrued interest thereon. Any payment pursuant
to this Section 1.02(a) shall be made prior to
12:00 noon, New York time, on the date fixed for such
redemption or at such other time on such earlier
date as Capital and USX shall agree.
(b) The entire principal amount of the
Loans shall become due and payable (together with
any accrued and unpaid interest thereon, including
Additional Interest (as defined in Section 2.02),
if any) on the earliest of the date that is the 50th
anniversary of the issuance of the Preferred Shares
or the date upon which Capital, USX or Capital
Management shall be dissolved, wound-up or liquidated.
Section 1.03. Optional Prepayment. USX shall
have the right to prepay the Loans, without premium
or penalty,
(i) in whole or in part (together with
any accrued but unpaid interest, including
Additional Interest, if any, on the portion
being prepaid) at any time following
_________________; and
(ii) in whole (together with all accrued
and unpaid interest, including Additional
Interest, if any, thereon) at any time if USX
is or would be required to pay any Additional
Interest on the entire amount of the Loans
or in part (together with all accrued and
unpaid interest, including Additional Interest
on the portion being prepaid) at any time if
USX is or would be required to pay Additional
Interest with respect to only a portion of
the Loans, provided that if a partial prepayment
would, through the corresponding partial redemption
required under the terms of the Preferred Shares,
result in a delisting of the Preferred Shares,
USX may, and may only, prepay the Loans in
whole. In no event, however, shall USX have the
right to prepay the Loans, or a portion thereof, under
this clause (ii) based on (a) a technical obligation
to pay Additional Interest because of a withholding
obligation to the extent USX would not incur any
significant penalties, interest or tax under the
Internal Revenue Code or applicable law if USX did
not withhold, or (b) a de minimis obligation to pay
Additional Interest. For purposes of the foregoing,
in the event that USX is advised by independent legal
counsel that more than an insubstantial risk exists
that USX will incur penalties, interest or tax under
the Internal Revenue Code or other applicable law if
it does not withhold, USX shall have the right to
repay the Loans, or a portion thereof, under this
clause (ii) unless the obligation to pay Additional
Interest if USX does so withhold is a de minimus
obligation.
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ARTICLE II
INTEREST
Section 2.01. Interest on the Loans. The Loans
shall bear interest at an annual rate equal to _____%
from the date they are made until maturity. Such
interest shall be payable on the last day of each
calendar month of each year commencing ___________.
In the event that any date on which interest is
payable on the Loans is not a Business Day,
then payment of the interest payable on such
date will be made on the next succeeding day
which is a Business Day (and without any interest
or other payment in respect of any such delay),
except that, if such Business Day is in the next
succeeding calendar year, such payment shall be
made on the immediately preceding Business Day,
in each case with the same force and effect as
if made on such date. A "Business Day" shall mean
any day other than a day on which banking institutions
in the City of New York are authorized or required
by law to close.
Section 2.02. Additional Interest. In
addition, if at any time following the date hereof
(a) Capital shall be required to pay
any Additional Amounts in respect of the Preferred
Shares pursuant to the terms thereof or
(b) USX shall be required to withhold or
deduct any amounts, for or on account of any taxes,
duties or governmental charges of whatever nature
imposed by the United States of America (or any
political subdivision thereof or therein), from the
interest payments to be made by USX on the Loans or
(c) Capital shall be required to pay,
with respect to its income derived from the
interest payments on the Loans, any amounts, for or
on account of any taxes, duties or governmental
charges of whatever nature imposed by the Turks and
Caicos Islands (or any political subdivision
thereof or therein), or any other taxing authority,
then, in any such case, USX will pay as interest
such additional amounts ("Additional Interest") as
may be necessary in order that the net amounts
received and retained by Capital after paying such
Additional Amounts, or after such withholding or
deduction or the payment of such taxes, duties,
assessments or governmental charges, as the case
may be, shall result in Capital's having such funds
as it would have had in the absence of the
obligation to pay such Additional Amounts, or such
withholding or deduction or the payment of such
taxes, duties, assessments or governmental charges,
as the case may be. The obligation to pay
Additional Interest under (b) above shall be
reduced proportionately to the extent that (x) USX
or Capital has notified holders of Preferred Shares
of the obligation to withhold taxes and requested
but not received from such holders declarations of
non-residence or other similar claim for exemption
and (y) such withholding or deduction would not
have been required had such declaration or similar
claim been received.
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Section 2.03. Extension of Interest Period.
Notwithstanding the provisions of Section 2.01 hereof,
USX shall have the right at any time or times during
the term of the Loans, so long as USX is not in
default in the payment of interest on the Loans, to
extend the interest payment period up to 18 months;
provided that at the end of such period USX shall pay
all interest which has accrued and not been paid together
with interest thereon at the rate specified for the
Loans to the extent permitted by applicable law;
provided, further, that, during any such extended
interest period neither USX, nor any majority-owned
subsidiary of USX, shall declare or pay any dividend
on, or redeem, purchase,acquire or make a liquidation
payment with respect to, any of its capital stock
or make any guarantee payments with respect to the
foregoing (other than (i) payments under the Guarantee
or (ii) dividends or guarantee payments to USX); and
provided further that any such extended interest period
may only be selected with respect to a Loan if an extended
interest period of identical length is simultaneously
selected for all Loans. Prior to the termination of any
such extended interest payment period, USX may further
extend the interest payment period, provided that such
extended interest payment period, together with all
such further extensions thereof, may not exceed
18 months. USX shall give Capital notice of its
selection of such extended interest payment period one
Business Day prior to the earlier of (i) the date
Capital declares the related dividend or (ii) the
date Capital is required to give notice of the record
or payment date of such related dividend to the
New York Stock Exchange or other applicable self-
regulatory organization or to holders of the Preferred
Shares, but in any event not less than two Business Days
prior to such record date. USX shall cause Capital to
give such notice of USX's selection of such extended
interest payment period to the holders of the
Preferred Shares.
ARTICLE III
PAYMENTS
Section 3.01. Method and Date of Payment.
Each payment by USX of principal and interest
(including Additional Interest, if any) on the Loans
shall be made to Capital in lawful money of the
United States at such place and to such account as
may be designated by Capital.
Section 3.02. Set-off. Notwithstanding
anything to the contrary herein, USX shall have the
right to set off any payment it is otherwise
required to make hereunder with and to the extent
USX has theretofore made, or is concurrently on the
date of such payment making, a payment under the
Guarantee.
ARTICLE IV
SUBORDINATION
SECTION 4.01. Subordination. USX and Capital
covenant and agree that the Loans are subordinate and
junior in right of payment to all Senior
Indebtedness as provided herein. The term "Senior
Indebtedness" shall mean the principal, premium, if
any, and interest on
(i) all indebtedness of USX, whether
outstanding on the date hereof or hereafter
created, incurred or assumed, which is for
money borrowed, or evidenced by a note or
similar instrument given in connection with the
acquisition of any business properties or
assets, including securities,
(ii) any indebtedness of others of the
kinds described in the preceding clause (i) for
the payment of which USX is responsible or
liable (directly or indirectly, contingently
or otherwise) as guarantor or otherwise and
(iii) amendments, renewals, extensions
and refundings of any such indebtedness, unless
in any instrument or instruments evidencing or
securing such indebtedness or pursuant to which
the same is outstanding, or in any such
amendment, renewal, extension or refunding, it
is expressly provided that such indebtedness is
not superior in right of payment to the Loans.
The Senior Indebtedness shall continue to be
Senior Indebtedness and entitled to the benefits
of these subordination provisions irrespective of
any amendment, modification or waiver of any term
of the Senior Indebtedness or extension or renewal
of the Senior Indebtedness.
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In the event that
(i) USX shall default in the payment of
any principal, or premium, if any, or interest
on any Senior Indebtedness when the same
becomes due and payable, whether at maturity or
at a date fixed for prepayment or declaration
or otherwise or
(ii) an event of default occurs with
respect to any Senior Indebtedness permitting
the holders thereof to accelerate the maturity
thereof and written notice describing such
event of default and requesting commencement of
payment blockage on transactions as hereinafter
described is given to USX by the holders of
Senior Indebtedness, then unless and until such
default in payment and event of default shall
have been cured or waived or shall have ceased
to exist, no direct or indirect payment (in
cash, property, securities, by set-off or
otherwise) shall be made or agreed to be made
on account of the Loans or interest thereon or
in respect of any repayment, redemption,
retirement, purchase or other acquisition of
the Loans.
In the event of
(i) any insolvency, bankruptcy,
receivership, liquidation, reorganization,
readjustment, composition or other similar
proceeding relating to USX, its creditors or
its property,
(ii) any proceeding for the liquidation,
dissolution or other winding up of USX,
voluntary or involuntary, whether or not
involving insolvency or bankruptcy proceedings,
(iii) any assignment by USX for the
benefit of its creditors, or
(iv) any other marshalling of the assets
of USX,
all Senior Indebtedness shall first be paid in
full before any payment or distribution, whether
in cash, securities or other property, shall be
made by USX on account of the Loans. Any payment
or distribution, whether in cash, securities or
other property (other than securities of USX or
any other corporation provided for by a plan of
reorganization or a readjustment, the payment
of which is subordinate, at least to the extent
provided in these subordination provisions with
respect to the indebtedness evidenced by the
Loans, to the payment of all Senior Indebtedness
at the time outstanding and to any securities
issued in respect thereof under any such plan
of reorganization or readjustment), which
would otherwise (but for these subordination
provisions) be payable or deliverable in
respect of the Loans shall be paid or delivered
directly to the holders of Senior Indebtedness
in accordance with the priorities then existing
among such holders until all Senior
Indebtedness shall have been paid in full. No
present or future holder of any Senior
Indebtedness shall be prejudiced in the right
to enforce subordination of the indebtedness
constituting the Loans by any act or failure to
act on the part of USX.
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Senior Indebtedness shall not be deemed to have
been paid in full unless the holders thereof shall
have received cash, securities or other property
equal to the amount of such Senior Indebtedness
then outstanding. Upon the payment in full of all
Senior Indebtedness, Capital shall be subrogated to
all the rights of any holders of Senior
Indebtedness to receive any further payments or
distributions applicable to the Senior Indebtedness
until the Loans shall have been paid in full, and
such payments or distributions received by Capital,
by reason of such subrogation, of cash, securities
or other property which otherwise would be paid or
distributed to the holders of Senior Indebtedness,
shall, as between USX and its creditors other than
the holders of Senior Indebtedness, on the one
hand, and Capital, on the other, be deemed to be a
payment by USX on account of Senior Indebtedness,
and not on account of the Loans.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01. Representations and Warranties.
USX represents and warrants to Capital that:
(a) Good Standing. USX is a corporation
duly established and validly existing under the
laws of the State of Delaware, with power and
authority (corporate and other) to own its
properties and conduct its business as now being
conducted.
(b) Power and Authority. USX has full
power and authority to enter into this Agreement
and to incur and perform the obligations provided
for herein, all of which have been duly authorized
by all proper and necessary action.
(c) No Conflict. The execution and
delivery of this Agreement and the performance by USX
of all its obligations hereunder will not conflict
with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which USX is a party
or by which USX is bound or subject, nor will this
Agreement result in a violation of the provisions of
USX's Certificate of Incorporation or by-laws.
(d) Binding Agreement. This Agreement
constitutes the valid and legally binding
obligation of USX enforceable in accordance with
its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to
or affecting creditors' rights and to general
equity principles.
ARTICLE VI
COVENANTS
Section 6.01. Covenants. (a) USX agrees
(i) that it shall not declare or pay any dividend on,
or redeem, purchase, acquire or make a liquidation
payment with respect to, any of its capital stock,
or make any guarantee payments with respect to the
foregoing (other than payments under the Guarantee)
if at such time (a) there shall have occurred any
event that, with the giving of notice or the lapse of
time or both, would constitute an Event of Default
hereunder or (b) USX shall be in default with respect
to its payment or other obligations under the Guarantee
Agreement or under the Agreement as to Expenses and
Liabilities, dated as of January ___, 1994, between USX
and Capital or under the Keep Well Agreement, dated as of
January ____, 1994, between USX and Capital Management,
(ii) to maintain direct or indirect 100% ownership of
the Common Shares and any other shares of Capital other
than any series of the Preferred Shares, (iii) to cause
at least 21% of the total value of Capital and at least
21% of all interests in the capital, income, gain,
loss, deduction and credit of Capital to be represented
by Common Shares, (iv) not to voluntarily dissolve, wind-up
or liquidate Capital or Capital Management, (v) to cause
Capital Management to remain the Manager of Capital and
to timely perform all of its duties as Manager of Capital
(including the duty to declare and pay dividends on the
Preferred Shares), (vi) to use its reasonable efforts
to cause Capital to remain a limited life company and
otherwise continue to be treated as a partnership for
United States federal income tax purposes and
(vii) to at all times own directly or indirectly
all of the capital stock of Capital Management.
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(b) USX agrees that its obligations under this
Agreement will also be for the benefit of the holders
from time to time of Preferred Shares, and USX acknowledges
and agrees that such holders will be entitled to enforce
this Agreement directly against USX.
(c) USX agrees not to merge with or into another
entity, or permit another entity to merge with or into it,
and agrees not to sell, transfer or lease all or substantially
all of its assets to another entity unless: (i) at such
time no Event of Default hereunder has occurred and is
continuing, or would occur as a result of such merger, sale,
transfer or lease, and (ii) USX is the survivor of such merger
or the survivor of such merger or entity to which USX's assets
are sold, transferred or leased is an entity organized under
the laws of the United States or any state thereof and assumes
all of USX's obligations under this Agreement.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.01. Events of Default. If one or
more of the following events (each an "Event of
Default") shall occur and be continuing:
(a) default in the payment of any interest
on the Loans under this Agreement, including any Additional
Interest, when due for ten days (whether by virtue of the
provisions described under Article IV hereof or otherwise);
provided that a valid extension of the interest payment
period by USX pursuant to Section 2.03 hereof shall
not constitute a default in the payment of interest
for this purpose; or
(b) default in the payment of any principal
on the Loans under this Agreement when due (whether by
virtue of Article IV hereof or otherwise); or
(c) dissolution or winding up or
liquidation of Capital; or
(d) the bankruptcy, insolvency or
liquidation of USX; or
(e) the bankruptcy, insolvency or
liquidation of Capital Management; or
(f) the breach of any of the covenants
contained in Section 6.01 hereof, continued for 30 days
after notice to USX by any Preferred Shareholder;
then, provided that the holders of a majority in
liquidation preference of outstanding Preferred
Shares have been entitled to appoint a trustee,
then, in every such event, and at any time
thereafter during the continuance of such event,
Capital will have the right to declare the
principal of and the interest on the Loans
(including any Additional Interest and any
interest subject to an extension election)
and any other amounts payable hereunder to be
forthwith due and payable, whereupon the same
shall become and be forthwith due and payable,
without presentment, demand, protest or other
notice of any kind, all of which are hereby
expressly waived, anything in this Agreement to
the contrary notwithstanding. If an Event of
Default specified in subparagraph (c) or (d)
above shall have occurred, the principal of
and interest on the Loans and any other amounts
payable hereunder shall thereupon and concurrently
become due and payable without presentment, demand,
protest or other notice of any kind, all of which
are hereby expressly waived, anything in this
Agreement to the contrary notwithstanding. USX expressly
acknowledges that under the terms of the Preferred Shares,
the holders of the outstanding Preferred Shares shall in
certain circumstances have the right to appoint a trustee,
which trustee shall be authorized to exercise Capital's
creditor rights under this Agreement, and USX agrees to
cooperate with such Trustee.
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ARTICLE VIII
MISCELLANEOUS
Section 8.01. Notices. All notices hereunder
shall be deemed given by a party hereto if in
writing and delivered personally or by telegram or
facsimile transmission or by registered or
certified mail (return receipt requested) to the
other party at the following address for such party
(or at such other address as shall be specified by
like notice):
If to Capital, to:
USX Capital LLC
c/o USX Capital Management Company
5555 San Felipe Road
Houston, TX 77056
Attention:
If to USX, to:
USX Corporation
600 Grant Street
Pittsburgh PA 15219-4776
Attention: Vice President & Treasurer
Any notice given by mail or telegram or
facsimile transmission shall be effective when
received.
Section 8.02. Binding Effect. USX shall have
the right at all times to assign any of its rights
or obligations under this Agreement to a direct or
indirect wholly-owned subsidiary of USX; provided,
that, in the event of any such assignment, USX
shall remain jointly and severally liable for all
such obligations. Capital may not assign any of
its rights hereunder without the prior written
consent of USX. Subject to the foregoing, this
Agreement shall be binding upon and inure to the
benefit of USX and Capital and their respective
successors and assigns. Any assignment by USX or
Capital in contravention of this Section 8.02 shall
be null and void.
Section 8.03. Governing Law. EXCEPT AS TO
MATTERS RELATING TO THE AUTHORIZATION, EXECUTION
AND DELIVERY OF THIS AGREEMENT, WHICH SHALL BE
GOVERNED BY THE LAWS OF THE TURKS AND CAICOS
ISLANDS IN THE CASE OF CAPITAL, THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
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Section 8.04. Counterparts. This Agreement
may be executed in counterparts, each of which
shall be deemed an original, but all of which taken
together shall constitute one and the same
instrument.
Section 8.05. Amendments. This Agreement may
be amended by mutual consent of the parties in the
manner the parties shall agree; provided that, so
long as any of the Preferred Shares shall remain
outstanding, no such amendment shall be made, and
no termination of this Agreement shall occur,
without the prior consent of at least 66-2/3% of
the holders of the Preferred Shares, in writing or
at a duly constituted meeting of such holders,
unless and until the Loans and all accrued and
unpaid interest thereon (including Additional
Interest, if any) shall have been paid in full.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed by their
respective officers thereunto duly authorized as
of the day and year first above written.
USX CORPORATION
By _______________________________
G. R. Haggerty
Vice President & Treasurer
USX CAPITAL LLC
By USX Capital Management Company,
as Manager
By _______________________________
Treasurer