Exhibit 10(h)
August 31, 2001
[Title][FirstName][LastName]
[JobTitle]
[Company]
[Address1]
[City],[State][PostalCode]
Dear[Title][LastName]:
USX Corporation and its subsidiaries and affiliates (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(a) hereof), in connection with a "Potential Change in
Control of the Corporation" (as defined in Section 2(b) hereof), or under the
other circumstances described below.
Upon the separation of the steel and steel-related businesses of the
Corporation from its energy and energy related businesses (the "Separation"),
which is anticipated to occur on or about January 1, 2002, the steel and
steel-related businesses will be owned and operated by United States Steel
Corporation, which will be a separate, stand-alone, publicly traded company no
longer affiliated with the Corporation, and the energy and energy
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related businesses will continue to be owned and operated by the Corporation,
which, at the time of the Separation, will be renamed Marathon Oil Corporation.
If, in connection with the Separation you will be employed by United States
Steel Corporation, effective at that time: 1) United States Steel Corporation
will assume this Agreement, and will perform under the Agreement in the same
manner and to the same extent that the Corporation would be required to perform
if the Separation had not taken place; 2) United States Steel Corporation will
replace USX Corporation as the "Corporation," as that term is used in this
Agreement, except as otherwise required by context; and 3) USX Corporation will
no longer have any obligations under this Agreement. In the event that the
Separation does not occur, the obligations owed to you under this Agreement will
remain those of USX Corporation.
If you will not be employed by United States Steel Corporation in
connection with the Separation, the obligations owed to you under this Agreement
will remain those of the Corporation. However, in light of the name change,
effective as of the Separation, Marathon Oil Corporation will be the
"Corporation" as that term is used in this Agreement, except as otherwise
required by context. In the event that the Separation does not occur, this
Agreement will continue unchanged.
1. Term of Agreement. This Agreement will commence on the date hereof and
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shall continue in effect until December 31, 2002; provided, however, that
commencing on December 31, 2002 and each December 31 thereafter, the term of
this Agreement shall automatically be extended for one additional year unless,
not later than September 1 of that year, the Corporation shall have given notice
that it does not wish to extend this Agreement; provided, further that, if (a) a
Change in Control of the Corporation shall have occurred during the original or
extended term of this Agreement, the term of 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 and (b) if a Potential Change in
Control of the Corporation shall have occurred during the original or extended
term of this Agreement, then the term of this Agreement shall continue in effect
beginning on the date the Potential Change in Control occurs and shall not end
before the earlier of (i) the end of the month in which a Change in Control
occurs or (ii) the date the Board makes a good faith determination that the risk
of a Change in Control has terminated (the "Potential Change in Control
Period"). In the event the Potential Change in Control Period ends due to a
Change in Control, this Agreement shall continue in effect for a period of
twenty-four (24) months beyond the month in which such Change in Control
occurred.
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2. Change in Control and Potential Change in Control of the Corporation.
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(a) 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 such term is used 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 (not including in the amount of the securities
beneficially owned by such person any such securities acquired directly from the
Corporation or its affiliates) 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; and provided, further, however, that for purposes of this paragraph
(i), there shall be excluded any Person who becomes such a beneficial owner in
connection with an Excluded Transaction (as defined in paragraph (iii) below);
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 or recommended 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
recommended; or
(iii) there is consummated a merger or consolidation of the
Corporation or any direct or indirect subsidiary thereof with any other
corporation, other than a merger or consolidation (an
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"Excluded Transaction") which would result in the voting securities of the
Corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving corporation or any parent thereof) 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) immediately after such
merger or consolidation, 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) For purposes of this Agreement, a "Potential Change in Control of
the Corporation" and "Potential Change in Control" 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 becomes the beneficial owner, directly or
indirectly, of securities of the Corporation representing 15% or more of the
combined voting power of the Corporation's then outstanding securities (not
including in the amount of the securities beneficially owned by such Person any
such securities acquired directly from the Corporation or its affiliates); 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.
(c) 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
and after the occurrence of such Change in Control of the Corporation; provided,
however, that if during such three-month period (A) your employment is
involuntarily terminated by the Corporation other than for Cause or (B) 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.
(d) 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
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earliest of (A) a date which is six (6) months from the occurrence of such
Potential Change in Control of the Corporation, (B) the termination of your
employment by reason of your death or Disability, as defined in Subsection 3(a),
or (C) a date which is three (3) months from and after the occurrence of a
Change in Control of the Corporation; provided, however, that if during any such
period (A) your employment is involuntarily terminated by the Corporation other
than for Cause or (B) you terminate your employment during any such 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.
(e) Notwithstanding anything to the contrary herein, the currently
contemplated tax-free spin-off of the steel and steel-related businesses of the
Corporation into a freestanding, publicly traded company and retention of the
energy and energy-related businesses (the "Restructuring") shall not constitute
a Change in Control nor shall events or actions in contemplation of the
Restructuring constitute a Potential Change in Control.
3. Termination Following a Change in Control or Potential Change in Control
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of the Corporation. If any of the events described in Section 2(a) hereof
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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). If your employment is terminated prior to a
Change in Control, if such termination is other than (i) because of your death
or Disability, (ii) by the Corporation for Cause, (iii) due to your voluntary
resignation, unless such resignation is for Good Reason or (iv) on or after the
date that you attain age sixty-five (65), and either you reasonably demonstrate
that such termination (I) was at the request of or as a result of actions by a
third party who has taken steps reasonably calculated to effect a Change in
Control or (II) occurs during a Potential Change in Control Period, then your
employment shall be deemed to have terminated following a Change in Control.
(a) Disability. If, as a result of your incapacity due to physical or
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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
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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
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"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 or any such failure
resulting from your incapacity due to physical or mental illness), 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
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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, or after and at the request of or as a result of actions by
a third party who has taken steps reasonably calculated to effect a Change in
Control or after the first day of but during a Potential Change in Control
Period (each an "Applicable Event"), of any one or more of the following:
(i) the assignment to you of duties inconsistent with your
position immediately prior to the Applicable Event or a reduction or alteration
in the nature of your position, duties, status or responsibilities from those in
effect immediately prior to the Applicable Event;
(ii) a reduction by the Corporation in your annualized and
monthly or semi-monthly rate of base salary (as increased to incorporate your
foreign service premium, if any) ("Base Salary") as in effect on the date hereof
or as the same shall be increased from time to time;
(iii) the Corporation's requiring you to be based at a location
in excess of fifty (50) miles from the location where you are based immediately
prior to the Applicable Event;
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(iv) the failure by the Corporation to continue, substantially as
in effect immediately prior to the Applicable Event, all of the Corporation's
employee benefit, incentive compensation, bonus, stock option and stock award
plans, programs, policies, practices or arrangements in which you participate
(or substantially equivalent successor 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 Applicable Event;
(v) the failure of the Corporation to obtain an agreement from
any successor to the Corporation to assume and agree to perform this Agreement,
as contemplated in Section 7 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. Your
determination of the existence of Good Reason shall be final and conclusive
unless such determination is not made in good faith and is made without
reasonable belief in the existence of Good Reason.
(d) Notice of Termination. Any termination by the Corporation for
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Cause or for Disability 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
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specified in the Notice of Termination, when such a notice is required, or in
any other case upon ceasing to perform services to the Corporation; provided,
however, 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 in an arbitration award that has been confirmed or enforced by a
final,
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nonappealable judgment of a court of competent jurisdiction. Until there
is a finally determined Date of Termination, your compensation (including your
Base Salary 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)
and benefits as in effect prior to the event asserted to have triggered a Notice
of Termination shall continue in effect.
4. Compensation Upon Termination or During Disability. After an Applicable
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Event has occurred, if, during the term of this Agreement, your employment is
terminated or you are in a period of Disability the following shall be
applicable:
(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, your total compensation, including your Base Salary, bonus and any
benefits, will continue unaffected until either you return to the full-time
performance of your duties or your employment is terminated pursuant to Section
3(a) hereof. In the event you return to the full-time performance of your
duties, you shall continue to receive your full Base Salary and bonus plus all
other amounts to which you are entitled under any compensation or other employee
benefit plan of the Corporation without interruption. In the event your
employment is terminated pursuant to Section 3(a) hereof, 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 or benefit 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 is either terminated by the
Corporation (other than for Cause or Disability) or terminated by you for Good
Reason, you shall be entitled to the following benefits.
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(i) Accrued Compensation and Benefits. The Corporation shall
provide you:
(A) the compensation and benefits accrued through the Date of
Termination to the extent not theretofore provided;
(B) a lump sum cash amount equal to the value of your unused
vacation days accrued through the Date of Termination; and
(C) your normal post-termination compensation and benefits under
the Corporation's retirement, insurance and other compensation and benefit
plans as in effect immediately prior to the Date of Termination, or if more
favorable to you, immediately prior to the Applicable Event.
(ii) Lump Sum Severance Payment. The Corporation shall provide to
you a severance payment in the form of a cash lump sum distribution equal to
your Current Annual Compensation (as defined below) multiplied times three (3);
provided, however, that if you attain age 65 within three years of the Date of
Termination, your benefit will be limited to a pro rata portion of such benefit
based on a fraction equal to the number of full and partial months existing
between the Date of Termination and your sixty-fifth (65th) birthday divided by
36 months.
For purposes of this paragraph, the term "Current Annual Compensation"
shall mean the sum of:
(A) your Base Salary in effect immediately prior to the
occurrence of the circumstances giving rise to such termination or, if
higher, immediately prior to the Applicable Event; and
(B) an amount equal to the highest annual bonus awarded to you,
if any, under any annual bonus plan of the Corporation or its predecessor
in the three (3) years immediately preceding the Date of Termination or, if
higher, in the three (3) years immediately preceding the Applicable Event.
(iii) Continuation of Welfare Benefits. Subject to the benefits
offset described below, the Corporation will arrange to make available to you
life and health insurance benefits during the Welfare Continuation Period (as
defined below) that are substantially similar to those which you were receiving
under a Corporation-sponsored welfare benefit plan immediately prior to the Date
of Termination or, if more
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favorable to you, immediately prior to the Applicable Event. These benefits will
be provided at a cost to you that is no greater than the amount paid for such
benefits by active employees who participate in such Corporation-sponsored
welfare benefit plan or, if less, the amount paid for such benefits by you
immediately prior to the Applicable Event. The Welfare Continuation Period
extends from the Date of Termination for a period of thirty-six (36) months, or,
if earlier, until your 65th birthday.
The benefits otherwise receivable by you pursuant to this paragraph
(iii) shall be reduced to the extent comparable benefits are actually received
by you during the Welfare Continuation Period. For purposes of complying with
the terms of this offset, you are obligated to report to the Corporation the
amount of any such benefits actually received.
(iv) Retiree Medical and Life Benefits. The Corporation will
arrange to make available to you retiree life and health insurance benefits
determined as if under the Corporation's welfare benefit plans your actual
participation credit (or continuous service) and actual age as of the Date of
Termination were increased by the additional three years of service and age
provided in paragraph 4(d)(v)(A) below. If eligible for such coverage, you may
elect to commence participation in retiree medical benefits coverage at any time
following the expiration of the Welfare Continuation Period (or immediately
after the Date of Termination, if you satisfy the eligibility requirements
without taking into consideration the additional three years of service and
age).
Such retiree medical and life insurance coverage, if any, will be
provided by the entity that is your employer as of the Date of Termination. The
term "SSA" is defined to mean Speedway SuperAmerica LLC and its subsidiaries and
successors. The term "MAP" is defined to mean Marathon Ashland Petroleum LLC and
its subsidiaries, other than SSA, and successors. The term "Marathon" is defined
to mean Marathon Oil Corporation, Marathon Oil Company and their subsidiaries,
other than MAP and SSA, and successors. The term "Steel" is defined to mean
United States Steel LLC, United States Steel Corporation, and their subsidiaries
and successors.
(A) Marathon Welfare Benefit Plan. With respect to a Marathon
welfare benefit plan, the premium charged by the Corporation for retiree
medical coverage will be the lowest premium then in effect for any retiree
medical coverage under its welfare benefit plan or, if lower, the lowest
premium available thereunder immediately prior to the Applicable Event.
(B) Steel, MAP or SSA Welfare Benefit Plan. The additional three
years of continuous service and age provided in paragraph 4(d)(v)(A) below
shall be taken into
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consideration in determining your eligibility for retiree medical and life
insurance benefits under this Agreement.
If because of the recognition of the additional three years of
continuous service and age described above, your service and/or age meets
or exceeds the service and/or age specified in the appropriate Steel, MAP,
or SSA welfare benefit plan for eligibility for retiree medical or life
insurance coverage, the Corporation will provide you with an additional
lump sum severance payment equal to the lump sum value of the contributions
that the Corporation would have made on your behalf with respect to the
retiree medical and life (as if all such life insurance benefits were group
term life insurance benefits) benefits provided under the appropriate
Steel, MAP, or SSA welfare benefit plan. Such additional lump sum severance
benefit shall be in lieu of monthly Corporation contributions on your
behalf for retiree medical and life insurance coverage under a Steel, MAP,
or SSA welfare benefit plan. If you elect to participate in retiree medical
and life insurance coverage through the Corporation, you will be
responsible for the full costs of the program. The methods and assumptions
that existed under the appropriate Steel Pension Plans, MAP Pension Plans,
or SSA Pension Plans immediately prior to the Applicable Event for purposes
of determining a lump sum distribution shall be used for purposes of
determining the lump sum value of the Corporation contributions.
(v) Supplemental Retirement Benefit. In addition to the pension
benefits to which you are entitled (assuming Corporation consent, if necessary
for retirement prior to age 60) under the Corporation's defined benefit pension
plans, the Corporation shall provide to you a benefit (the "Supplemental
Retirement Benefit") equal to the difference between: (A) the lump sum value of
your Enhanced Pension Benefit (as defined in paragraph (A) below), and (B) the
lump sum value of your Actual Pension Benefit (as defined in paragraph (B)
below). The Supplemental Retirement Benefit shall be paid in the form of a lump
sum cash distribution. The methods and assumptions that existed under the
applicable Corporation pension plan (or plans) immediately prior to the
Applicable Event for purposes of determining a lump sum distribution shall be
used for purposes of determining the lump sum values in (A) and (B). In
determining the Enhanced Pension Benefit and the Actual Pension Benefit,
amendments to the Steel Pension Plans, the Marathon Pension Plans, the MAP
Pension Plans, and the SSA Pension Plans made subsequent to the Applicable Event
and on or prior to the Date of
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Termination, if any, shall be disregarded if they adversely affect in any manner
the computation of retirement benefits thereunder.
(A) Enhanced Pension Benefit. The amount of your Enhanced Pension
Benefit shall be equal to the Actual Pension Benefit for which you are
eligible under the Steel Pension Plans, the Marathon Pension Plans, the MAP
Pension Plans, and the SSA Pension Plans (as each is defined in paragraph
4(d)(v)(B) below) as of the Date of Termination, as adjusted to incorporate
the enhancements outlined in paragraphs (1) through (6) below. If you are
employed by Marathon, MAP or SSA as of the Date of Termination, the
enhancements outlined in this paragraph (A) shall be applied only to your
benefits under the Marathon Pension Plans, the MAP Pension Plans, or the
SSA Pension Plans in which you were an active participant as of the Date of
Termination. Otherwise, the enhancements shall be applied only to your
benefits under the Steel Pension Plans.
(1) Normal Retirement Benefit - Service. For purposes of
determining your monthly normal retirement benefit payable at
normal retirement age, service used in the formula(s) shall be
deemed to be equal to the sum of your actual service for benefit
accrual purposes plus three years. For this purpose, your actual
service shall be determined as of the Date of Termination.
(2) Normal Retirement Benefit - Final Average Pay. For purposes
of determining your monthly normal retirement benefit payable at
normal retirement age, final average pay shall be calculated
using the sum of:
I. your Base Salary in effect immediately prior to the
occurrence of the circumstances giving rise to such
termination or, if higher, immediately prior to the
Applicable Event; and
II. if bonus is considered covered compensation under the
applicable pension plan, an amount equal to the highest
annual bonus awarded to you, if any, under any annual bonus
plan of the Corporation or its predecessor with respect to
the three
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(3) years immediately preceding the Date of Termination or,
if higher, the three (3) years immediately preceding the
Applicable Event (but not less than the amount of bonus
taken into account in your Actual Pension Benefit).
Final average pay taken into account for this paragraph shall not
be less than the amount of final average pay taken into account
in the determination of your Actual Pension Benefit.
(3) Early Commencement Factors - Enhanced Service and Age. For
purposes of determining the early commencement factors that apply
to your monthly normal retirement benefit, your service and age
shall be deemed equal to your actual service and age plus three
years of service and three years of age, respectively. For this
purpose, your actual service and actual age shall be determined
as of the Date of Termination. In addition, if you satisfy the
age and service requirements for a Rule-of-65, -70, or -80
retirement option under the pension rules applicable to the Steel
Pension Plans as of the Date of Termination (taking into
consideration the three years of age and service provided in this
paragraph), you shall be eligible for an immediate pension under
such retirement option in accordance with the terms of such
pension rules even though the leave of absence requirements have
not been satisfied.
(4) Full Vesting. Your accrued benefits under the Steel Pension
Plans, Marathon Pension Plans, the MAP Pension Plans, and the SSA
Pension Plans shall be deemed to be fully vested or, to the
extent not so vested, paid as an additional benefit under this
Agreement.
(5) Special SSA Provisions. If you are employed by SSA on the
Date of Termination:
I. the additional service credit under paragraph (1) above
shall be disregarded for purposes of calculating the accrued
benefit under the prior traditional defined benefit plan
formula under SSA's Pension Equity Plan which is otherwise
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applicable in determining the Enhanced Pension Benefit, but
shall be counted for early retirement eligibility and other
purposes; and
II. in calculating the Enhanced Pension Benefit related to the
pension equity formula under SSA's Pension Equity Plan, the
additional service credit under paragraph (1) above shall be
disregarded and instead you shall be deemed to have Pension
Equity Benefit accruals for three additional years following
the Date of Termination. The age and participation service
points for each deemed year of accrual shall be calculated
based on what your actual age and service would have been at
the end of each calendar year had you remained employed with
SSA.
(6) Determination of Age - All other purposes. Except as
specifically provided otherwise in this paragraph (A), your age,
as well as the age of your spouse, survivor, and/or co-pensioner,
used in the determination of the amount of benefits payable under
the applicable pension plan shall be determined using your age
and their actual ages as of the Date of Termination.
(B) Actual Pension Benefit. The amount of your Actual
Pension Benefit is determined as the sum of the monthly pension
benefits payable to you as of the Date of Termination under: =
(1) the tax-qualified defined benefit pension plans,
non-qualified defined benefit excess benefit plans, and
non-qualified top-hat or supplemental defined benefit plans
sponsored or maintained by Steel (or any successor plans or
similar plans) (the "Steel Pension Plans"), and
(2) the tax-qualified defined benefit pension plans,
non-qualified defined benefit excess benefit plans, and
non-qualified top-hat or supplemental defined benefit plans
sponsored or maintained by Marathon, MAP or SSA (or any successor
plans or similar plans) (the
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"Marathon Pension Plans," the "MAP Pension Plans," and the "SSA
Pension Plans," as applicable).
(vi) Supplemental Savings Benefit. In addition to the benefits
you are entitled to under the USX Corporation Savings Fund Plan for Salaried
Employees and/or the Marathon Oil Company Thrift Plan and the related
non-qualified supplemental savings plans ("Savings Plans"), the Corporation
shall provide to you in the form of a cash lump sum distribution a benefit equal
to the excess, if any, of:
(A) 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
(B) the amount you are entitled to under the Savings Plans on the Date
of Termination.
(vii) Timing. The payments provided for in this paragraph (d)
shall be made not later than the fifth day following the Date of Termination.
(e) The Corporation shall also pay to you all legal fees and expenses
incurred by you, as such legal fees and expenses are incurred, as a result of
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) or
otherwise.
(f) Other than as provided in Section 4(d)(iii), 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, including self-employment, after
the Date of Termination, or otherwise.
Page 16
5. Stock Awards Acceleration.
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(a) Upon a Change in Control, all outstanding options, restored
options, and stock appreciation rights granted to you under any option or
incentive plan of the Corporation shall be immediately fully vested and
immediately exercisable and shall remain so exercisable throughout their entire
original terms, and all restricted stock shall be immediately vested.
(b) If your employment is terminated prior to a Change in Control and
you are entitled to benefits under Section 4(d), as of the Date of Termination
all outstanding options, restored options, and stock appreciation rights granted
to you shall be immediately fully vested and immediately exercisable and shall
remain so exercisable throughout their entire original terms, and all restricted
stock shall be immediately vested. (c) The terms of this Section 5 shall amend
and supercede the terms of any other agreement or instrument relating to the
treatment of such outstanding options, restored options, stock appreciation
rights, and restricted stock upon or following an Applicable Event.
6. Additional Payment.
------------------
(a) Whether or not you become entitled to any benefits under Section 4
above, in the event that there is made any payment in the nature of compensation
to or for your benefit that would 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
(b) below, an additional amount (the "Gross-Up Payment") such that the net
amount retained by you shall be equal to the compensation and benefits you would
have received had there been no Excise Tax imposed. 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 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 or with any person whose actions
result in a Change in Control of the Corporation or with any person affiliated
with the Corporation or such person (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 reasonably acceptable to you and selected by the
accounting firm which, immediately prior to the Change in Control, served as the
Corporation's independent auditor (the "Auditor") such other payments or
benefits (in whole
Page 17
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
the Total Payments, including the value of any non-cash benefits or any deferred
payment or benefit, shall be determined by the Auditor in accordance with the
principles of section 280G 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 (or, if there is no Date of Termination, then on the
date of the Change in Control), 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 in calculating the Gross-Up Payment, 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 (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 penalty, interest or Excise
Taxes payable with respect to such excess) at the time that the amount of such
excess is finally determined, such that you retain the same amount of
compensation and benefits you would have received had there been no Excise Tax
imposed.
(b) The payments provided for in paragraph (a) above shall be made not
later than the fifth day following the Date of Termination (or, if there is no
Date of Termination, not later than the fifth day following the date of the
Change in Control); provided, however, that if the amounts of such payments
cannot be
Page 18
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 (or, if there is no Date of
Termination, not later than the thirtieth day after the date of the Change in
Control). 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).
7. 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 following an Applicable Event, 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 no such designee, to your estate.
8. Notice. For the purpose of this Agreement, notices and all other
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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.
Page 19
9. Miscellaneous. No provision of this Agreement may be modified, waived or
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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.
10. Validity. The invalidity or unenforceability of any provision of this
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Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
11. 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.
12. Claims and Arbitration.
----------------------
(a) 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.
(b) If you will be employed by United States Steel Corporation in
connection with the Separation previously referenced in this Agreement, or in
the event that the Separation does not occur, any such arbitration shall be held
in Pittsburgh, Pennsylvania. If you will not be employed by United States Steel
Corporation in connection with the Separation, following the Separation any such
arbitration will be held in Houston, Texas.
13. 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.
Page 20
14. 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 &
Senior Vice President-
Human Resources &
Public Affairs
Agreed to this day of
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, 2001
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By
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