Marathon Oil Corporation - SEC Filing



<PAGE> 1

                                    FORM 10-Q

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549

(Mark One)

      [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
                                        
                  For the Quarterly Period Ended June 30, 1999
                                        
                                       or
                                        
      [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

           For the transition period from ------------ to ------------
                                        
                                        
                                 USX CORPORATION
--------------------------------------------------------------------------------
                                      ----
             (Exact name of registrant as specified in its charter)


           Delaware                  1-5153                 25-0996816
       ---------------            ------------         -------------------
       (State or other            (Commission             (IRS Employer
       jurisdiction of            File Number)         Identification No.)
        incorporation)

600 Grant Street, Pittsburgh, PA                            15219-4776
---------------------------------------                     ----------
(Address of principal executive offices)                    (Zip Code)

                                 (412) 433-1121
                         ------------------------------
                         (Registrant's telephone number,
                              including area code)


--------------------------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes..X..No.....

Common stock outstanding at July 31, 1999 follows:

               USX-Marathon Group       -  308,744,772 shares
               USX-U. S. Steel Group    -   88,369,055 shares


<PAGE> 2

                                 USX CORPORATION
                                  SEC FORM 10-Q
                           QUARTER ENDED June 30, 1999
                           ---------------------------

                                     INDEX                        Page
                                     -----                        ----

PART I - FINANCIAL INFORMATION

   A.  Consolidated Corporation


       Item 1. Financial Statements:

               Consolidated Statement of Operations                  4

               Consolidated Balance Sheet                            6

               Consolidated Statement of Cash Flows                  8

               Selected Notes to Consolidated
                 Financial Statements                                9

               Ratio of Earnings to Combined Fixed Charges
                 and Preferred Stock Dividends and Ratio of
                 Earnings to Fixed Charges                          21


       Item 2. Management's Discussion and Analysis of
                 Financial Condition and Results of
                 Operations                                         22


       Item 3. Quantitative and Qualitative Disclosures About
                 Market Risk                                        30

               Financial Statistics                                 32

   B.  Marathon Group


       Item 1. Financial Statements:

               Marathon Group Statement of Operations               33

               Marathon Group Balance Sheet                         34

               Marathon Group Statement of Cash Flows               35

               Selected Notes to Financial Statements               36


       Item 2. Marathon Group Management's Discussion and
                 Analysis of Financial Condition and
                 Results of Operations                              45


       Item 3. Quantitative and Qualitative Disclosures About
                 Market Risk                                        59

               Supplemental Statistics                              61

<PAGE> 3

                                 USX CORPORATION
                                  SEC FORM 10-Q
                           QUARTER ENDED June 30, 1999
                           ---------------------------

                                     INDEX                        Page
                                     -----                        ----

PART I - FINANCIAL INFORMATION (Continued)

   C.  U. S. Steel Group


       Item 1. Financial Statements:

               U. S. Steel Group Statement of Operations            62

               U. S. Steel Group Balance Sheet                      63

               U. S. Steel Group Statement of Cash Flows            64

               Selected Notes to Financial Statements               65


       Item 2. U. S. Steel Group Management's Discussion
                 and Analysis of Financial Condition
                 and Results of Operations                          72


       Item 3. Quantitative and Qualitative Disclosures About
                 Market Risk                                        83

               Supplemental Statistics                              85


PART II - OTHER INFORMATION



Item 1.        Legal Proceedings                                    86


Item 4.        Submission of Matters to a Vote of Security Holders  87


Item 5.        Other Information                                    88


Item 6.        Exhibits and Reports on Form 8-K                     89



<PAGE> 4


Part I - Financial Information

   A.  Consolidated Corporation

<TABLE>
<CAPTION>
                    USX CORPORATION AND SUBSIDIARY COMPANIES
                CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
                ------------------------------------------------

                                                Second Quarter    Six Months
                                                    Ended           Ended
                                                   June 30         June 30
(Dollars in millions)                            1999    1998    1999     1998
--------------------------------------------------------------------------------
<S>                                             <C>     <C>    <C>      <C>
REVENUES:
 Sales                                          $6,731  $7,182 $12,809  $14,082
 Dividend and affiliate income                      18      46      11       71
 Gain (loss) on disposal of assets                   9      30     (13)      44
 Gain on ownership change in Marathon Ashland
  Petroleum LLC                                      -      (2)      -      246
 Other income                                        8       4      13       17
                                                ------  ------  ------   ------
   Total revenues                                6,766   7,260  12,820   14,460
                                                ------  ------  ------   ------
COSTS AND EXPENSES:
 Cost of sales (excludes items shown below)      4,810   5,095   9,364   10,266
 Selling, general and administrative expenses       37      67      89      152
 Depreciation, depletion and amortization          301     281     609      628
 Taxes other than income taxes                   1,123   1,075   2,148    2,051
 Exploration expenses                               59      75     122      157
 Inventory market valuation credits                (66)     (3)   (415)     (28)
                                                ------  ------  ------   ------
   Total costs and expenses                      6,264   6,590  11,917   13,226
                                                ------  ------  ------   ------
INCOME FROM OPERATIONS                             502     670     903    1,234
Net interest and other financial costs              91      71     174      153
Minority interest in income of Marathon Ashland
 Petroleum LLC                                     112     158     257      212
                                                ------  ------  ------   ------
INCOME BEFORE INCOME TAXES AND
   EXTRAORDINARY LOSS                              299     441     472      869
Provision for estimated income taxes               110     143     173      301
                                                ------  ------  ------   ------
INCOME BEFORE EXTRAORDINARY LOSS                   189     298     299      568
Extraordinary loss on extinguishment of debt,
 net of income tax                                   -       -       5        -
                                                ------  ------  ------   ------
NET INCOME                                         189     298     294      568
Dividends on preferred stock                         3       3       5        5
                                                ------  ------  ------   ------
NET INCOME APPLICABLE TO COMMON STOCKS            $186    $295    $289     $563
                                                ======  ======  ======   ======






<FN>
Selected notes to financial statements appear on pages 9-20.
</TABLE>


<PAGE> 5

<TABLE>
<CAPTION>
                    USX CORPORATION AND SUBSIDIARY COMPANIES
          CONSOLIDATED STATEMENT OF OPERATIONS (Continued) (Unaudited)
                             INCOME PER COMMON SHARE
          ------------------------------------------------------------

                                                Second Quarter    Six Months
                                                    Ended           Ended
                                                   June 30         June 30
(Dollars in millions, except per share amounts)  1999    1998    1999     1998
--------------------------------------------------------------------------------
<S>                                            <C>     <C>     <C>      <C>
APPLICABLE TO MARATHON STOCK:

 Net income                                       $134    $162    $253     $345
   - Per share - basic and diluted                 .43     .56     .82     1.19

 Dividends paid per share                          .21     .21     .42      .42

 Weighted average shares, in thousands
   - Basic                                     309,054 289,591 309,041  289,220
   - Diluted                                   309,462 290,263 309,332  289,879

APPLICABLE TO STEEL STOCK:

 Income before extraordinary loss                  $52    $133     $41     $218
   - Per share - basic                             .60    1.53     .47     2.51
            - diluted                              .59    1.46     .47     2.41

 Extraordinary loss, net of income tax               -       -       5        -
   - Per share - basic and diluted                   -       -     .06        -

 Net income                                        $52    $133     $36     $218
   - Per share - basic                             .60    1.53     .41     2.51
            - diluted                              .59    1.46     .41     2.41

 Dividends paid per share                          .25     .25     .50      .50

 Weighted average shares, in thousands
   - Basic                                      88,387  86,953  88,378   86,777
   - Diluted                                    92,647  94,507  88,379   94,314

















<FN>
Selected notes to financial statements appear on pages 9-20.
</TABLE>


<PAGE> 6

<TABLE>
<CAPTION>
                    USX CORPORATION AND SUBSIDIARY COMPANIES
                     CONSOLIDATED BALANCE SHEET (Unaudited)
                    ----------------------------------------
                                        
                                     ASSETS
                                                     June 30    December 31
(Dollars in millions)                                  1999         1998
--------------------------------------------------------------------------------
<S>                                                  <C>           <C>
ASSETS

Current assets:
  Cash and cash equivalents                              $99          $146
  Receivables, less allowance for doubtful
   accounts of $8 and $12                              1,689         1,663
  Inventories                                          2,607         2,008
  Deferred income tax benefits                           218           217
  Other current assets                                   230           172
                                                      ------        ------
     Total current assets                              4,843         4,206

Investments and long-term receivables,
 less reserves of $3 and $10                           1,175         1,249
Property, plant and equipment, less accumulated
 depreciation, depletion and amortization of
 $16,632 and $16,238                                  12,723        12,929
Prepaid pensions                                       2,530         2,413
Other noncurrent assets                                  329           336
                                                      ------        ------
     Total assets                                    $21,600       $21,133
                                                      ======        ======


























<FN>
Selected notes to financial statements appear on pages 9-20.
</TABLE>


<PAGE> 7

<TABLE>
<CAPTION>
                    USX CORPORATION AND SUBSIDIARY COMPANIES
               CONSOLIDATED BALANCE SHEET (Continued) (Unaudited)
               --------------------------------------------------
                                        
                      LIABILITIES AND STOCKHOLDERS' EQUITY
                                                     June 30    December 31
(Dollars in millions)                                  1999         1998
--------------------------------------------------------------------------------
<S>                                                  <C>           <C>
LIABILITIES

Current liabilities:
  Notes payable                                         $149          $145
  Accounts payable                                     2,526         2,478
  Distribution payable to minority shareholder of
   Marathon Ashland Petroleum LLC                          -           103
  Payroll and benefits payable                           445           480
  Accrued taxes                                          301           245
  Accrued interest                                       103            97
  Long-term debt due within one year                      82            71
                                                      ------        ------
     Total current liabilities                         3,606         3,619

Long-term debt, less unamortized discount              4,059         3,920
Long-term deferred income taxes                        1,656         1,579
Employee benefits                                      2,858         2,868
Deferred credits and other liabilities                   726           720
Preferred stock of subsidiary                            250           250
USX obligated mandatorily redeemable convertible preferred
 securities of a subsidiary trust holding solely junior
 subordinated convertible debentures of USX              182           182

Minority interest in Marathon Ashland Petroleum LLC    1,744         1,590

STOCKHOLDERS' EQUITY

Preferred stock -
  6.50% Cumulative Convertible issued - 2,767,787 shares
  ($138 liquidation preference)                            3             3
Common stocks:
  Marathon Stock issued - 308,722,152 shares and
   308,458,835 shares                                    309           308
  Steel Stock issued - 88,368,566 shares and
   88,336,439 shares                                      88            88
  Securities exchangeable solely into Marathon Stock
   issued - 309,138 shares and 507,324 shares              -             1
Additional paid-in capital                             4,592         4,587
Deferred compensation                                     (1)           (1)
Retained earnings                                      1,582         1,467
Accumulated other comprehensive income (loss)            (54)          (48)
                                                      ------        ------
     Total stockholders' equity                        6,519         6,405
                                                      ------        ------
     Total liabilities and stockholders' equity      $21,600       $21,133
                                                      ======        ======


<FN>
Selected notes to financial statements appear on pages 9-20.
</TABLE>


<PAGE> 8

<TABLE>
<CAPTION>
                    USX CORPORATION AND SUBSIDIARY COMPANIES
                CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
                ------------------------------------------------

                                                        Six Months Ended
                                                            June 30
(Dollars in millions)                                  1999         1998
--------------------------------------------------------------------------------
<S>                                                      <C>         <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

OPERATING ACTIVITIES:
Net income                                              $294          $568
Adjustments to reconcile to net cash provided
 from operating activities:
  Extraordinary loss                                       5             -
  Minority interest in income of Marathon Ashland
   Petroleum LLC - net of distributions                   51            82
  Depreciation, depletion and amortization               609           628
  Exploratory dry well costs                              62            97
  Inventory market valuation credits                    (415)          (28)
  Pensions and other postretirement benefits            (116)         (101)
  Deferred income taxes                                   98           180
Gain on ownership change in Marathon Ashland
   Petroleum LLC                                           -          (246)
  (Gain) loss on disposal of assets                       13           (44)
  Changes in:
     Current receivables    - sold                        30             -
                            - operating turnover        (301)          236
Inventories                                             (221)         (193)
     Current accounts payable and accrued expenses       385             6
  All other - net                                        (33)          (96)
                                                      ------        ------
     Net cash provided from operating activities         461         1,089
                                                      ------        ------
INVESTING ACTIVITIES:
Capital expenditures                                    (685)         (686)
Disposal of assets                                       182            45
Restricted cash-withdrawals                               39           202
             - deposits                                  (26)         (390)
Affiliates -investments - net                             -            (71)
         - loans and advances                            (56)          (58)
         - repayments of loans and advances                -            63
All other - net                                           (3)           26
                                                      ------        ------
     Net cash used in investing activities              (549)         (869)
                                                      ------        ------
FINANCING ACTIVITIES:
Commercial paper and revolving credit
 arrangements - net                                     (51)          (121)
Other debt - borrowings                                  459           842
           - repayments                                 (195)         (100)
Common stock - issued                                      8            75
           - repurchased                                   -          (195)
Dividends paid                                          (179)         (170)
                                                      ------        ------
     Net cash provided from financing activities          42           331
                                                      ------        ------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                   (1)            -
                                                      ------        ------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS     (47)          551
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR           146            54
                                                      ------        ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD               $99          $605
                                                      ======        ======
Cash used in operating activities included:
  Interest and other financial costs paid (net of
   amount capitalized)                                 $(178)        $(144)
  Income taxes paid                                      (12)         (150)
<FN>
Selected notes to financial statements appear on pages 9-20.
</TABLE>


<PAGE> 9

                    USX CORPORATION AND SUBSIDIARY COMPANIES
               SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              ----------------------------------------------------
                                   (Unaudited)


     1.   The information furnished in these financial statements is unaudited
     but, in the opinion of management, reflects all adjustments necessary for a
     fair presentation of the results for the periods covered.  All such
     adjustments are of a normal recurring nature unless disclosed otherwise.
     These financial statements, including selected notes, have been prepared in
     accordance with the applicable rules of the Securities and Exchange
     Commission and do not include all of the information and disclosures
     required by generally accepted accounting principles for complete financial
     statements.  Certain reclassifications of prior year data have been made to
     conform to 1999 classifications.  Additional information is contained in
     the USX Annual Report on Form 10-K for the year ended December 31, 1998.

     2.   On March 31, 1999, USX irrevocably deposited with a trustee the entire
     5.5 million common shares it owned in RTI International Metals, Inc. (RTI).
     The deposit of the shares resulted in the satisfaction of USX's obligation
     under its 6-3/4% Exchangeable Notes (indexed debt) due February 1, 2000.
     Under the terms of the indenture, the trustee will exchange the RTI shares
     for the notes at maturity.  The notes are exchangeable for shares of RTI
     common stock on a variable basis up to one share per note depending on the
     market price of RTI common stock at maturity.  Ownership of any shares not
     required for satisfaction of the indexed debt will revert to USX.

          As a result of the above transaction, USX recorded in the first
     quarter of 1999 an extraordinary loss of $5 million, net of a $3 million
     income tax benefit, representing prepaid interest expense and the write-off
     of unamortized debt issue costs, and a pretax charge of $22 million,
     representing the difference between the carrying value of the investment in
     RTI and the carrying value of the indexed debt, which is included in gain
     (loss) on disposal of assets.  This transaction represents a noncash
     investing and financing activity of $56 million, which was the carrying
     value of the indexed debt at March 31, 1999.

          Additionally, a $13 million credit to adjust the indexed debt to
     settlement value at March 31, 1999, is included in net interest and other
     financial costs.

          In December 1996, USX had issued $117 million of notes indexed to the
     common share price of RTI.  At maturity, USX would have been required to
     exchange the notes for shares of RTI common stock, or redeem the notes for
     the equivalent amount of cash.  Since USX's investment in RTI was
     attributed to the U. S. Steel Group, the indexed debt was also attributed
     to the U. S. Steel Group.  USX had a 26% investment in RTI and accounted
     for its investment using the equity method of accounting.

     3.   Total comprehensive income for the second quarter of 1999 and 1998 was
     $185 million and $294 million, respectively, and $288 million and
     $565 million for the six months of 1999 and 1998, respectively.

<PAGE> 10

                    USX CORPORATION AND SUBSIDIARY COMPANIES
         SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         ---------------------------------------------------------------
                                   (Unaudited)


     4.   The Marathon Group's operations consists of three reportable operating
     segments: 1) Exploration and Production (E&P) - explores for and produces
     crude oil and natural gas on a worldwide basis; 2) Refining, Marketing and
     Transportation (RM&T) - refines, markets and transports crude oil and
     petroleum products, primarily in the Midwest and southeastern United States
     through Marathon Ashland Petroleum LLC (MAP); and 3) Other Energy Related
     Businesses (OERB).  OERB is an aggregation of two segments which fall below
     the quantitative reporting thresholds: 1) Natural Gas and Crude Oil
     Marketing and Transportation - markets and transports its own and third-
     party natural gas and crude oil in the United States; and 2) Power
     Generation - develops, constructs and operates independent electric power
     projects worldwide.  The U. S. Steel Group consists of one operating
     segment, U. S. Steel (USS).  USS is engaged in the production and sale of
     steel mill products, coke and taconite pellets.  USS also engages in the
     following related business activities:  the management of mineral
     resources, domestic coal mining, engineering and consulting services, and
     real estate development and management.  The results of segment operations
     are as follows:

<TABLE>
<CAPTION>
 
                                                 Total
                                                Marathon
(In millions)                E&P    RM&T   OERB Segments  USS  Total
--------------------------------------------------------------------------------
<S>                        <C>   <C>        <C> <C>    <C>    <C>
SECOND QUARTER 1999
Revenues:
 Customer                  $689  $4,637    $113 $5,439 $1,292 $6,731
 Intersegment (a)            34       4       6     44     -     44
 Intergroup (a)               4       -       4      8    11     19
 Equity in earnings (losses) of
   unconsolidated affiliates  3       4       5     12   (10)     2
 Other                       13      10       6     29    11     40
                           -----   -----   -----  ----- -----  -----
 Total revenues            $743  $4,655    $134 $5,532 $1,304 $6,836
                           =====   =====   =====  ===== =====  =====
Segment income (loss)       $124    $228     $19   $371   $(9)  $362
                           =====   =====   =====  ===== =====  =====
 
SECOND QUARTER 1998
Revenues:
 Customer                  $499  $4,928     $66 $5,493$1,689 $7,182
 Intersegment (a)            41       1       2     44     -     44
 Intergroup (a)               2       -       1      3     -      3
 Equity in earnings of
   unconsolidated affiliates  2       3       1      6    28     34
 Other                       20      11       3     34    16     50
                           -----   -----   -----  ----- -----  -----
 Total revenues            $564  $4,943     $73 $5,580 $1,733 $7,313
                           =====   =====   =====  =====  ====  =====
Segment income               $73    $397      $3   $473  $154   $627
                           =====   =====   =====  ===== =====  =====
<FN>
(a)Intersegment and intergroup sales and transfers were conducted on an arm's-
   length basis.
</TABLE>


<PAGE> 11

<TABLE>
<CAPTION>
                    USX CORPORATION AND SUBSIDIARY COMPANIES
         SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         ---------------------------------------------------------------
                                   (Unaudited)


     4.   (Continued)

                                                 Total
                                                Marathon
(In millions)                E&P    RM&T   OERB Segments  USS  Total
--------------------------------------------------------------------------------
<S>                      <C>     <C>       <C>  <C>     <C>    <C>
SIX MONTHS ENDED JUNE 30, 1999
Revenues:
 Customer                $1,261  $8,816    $195 $10,272 $2,537 $12,809
 Intersegment (a)            68       9      15      92     -      92
 Intergroup (a)               7       -       8      15    12      27
 Equity in earnings (losses) of
   unconsolidated affiliates  4       7      13      24   (33)    (9)
 Other                       19      16       9      44    21     65
                           -----   -----   -----  ----- -----  -----
 Total revenues          $1,359  $8,848    $240 $10,447 $2,537 $12,984
                           =====   =====   =====  ===== =====  =====
Segment income (loss)       $160    $273     $34   $467  $(68)  $399
                           =====   =====   =====  ===== =====  =====
</TABLE>


<TABLE>
<CAPTION>
 
SIX MONTHS ENDED JUNE 30, 1998
Revenues:
 <S>                     <C>     <C>       <C>  <C>     <C>    <C>
 Customer                $1,017  $9,520    $162 $10,699 $3,358 $14,057
 Intersegment (a)            84       2       4      90     -     90
 Intergroup (a)               6       -       4      10     -     10
 Equity in earnings of
   unconsolidated affiliates  1       6       6     13     43      56
 Other                       21      24       5     50     28      78
                           -----   -----   -----  ----- -----  -----
 Total revenues          $1,129  $9,552    $181 $10,862 $3,429 $14,291
                           =====   =====   =====  =====  ====  =====
Segment income              $197    $525     $17   $739  $260   $999
                           =====   =====   =====  ===== =====  =====
<FN>
(a)Intersegment and intergroup sales and transfers were conducted on an arm's-
   length basis.
</TABLE>


<PAGE> 12

                    USX CORPORATION AND SUBSIDIARY COMPANIES
         SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         ---------------------------------------------------------------
                                   (Unaudited)
                                        


     4.   (Continued)



    The following schedules reconcile segment revenues and income (loss) to
    amounts reported in the Marathon and U. S. Steel Groups' financial
    statements:

<TABLE>
<CAPTION>
                                                Marathon GroupU. S. Steel Group
                                                Second Quarter  Second Quarter
                                                    Ended           Ended
                                                   June 30         June 30
(In millions)                                    1999    1998    1999     1998
--------------------------------------------------------------------------------
<S>                                             <C>     <C>     <C>      <C>
Revenues:
 Revenues of reportable segments                $5,532  $5,580  $1,304   $1,733
 Items not allocated to segments:
  Loss on ownership change in MAP                    -      (2)      -        -
  Other                                             (7)      -       -        -
 Elimination of intersegment revenues              (44)    (44)      -        -
 Administrative revenues                             -      (4)      -        -
                                                ------  ------   -----    -----
   Total Group revenues                         $5,481  $5,530  $1,304   $1,733
                                                ======  ======  ======   ======

Income:
 Income (loss) for reportable segments            $371    $473     $(9)    $154
 Items not allocated to segments:
  Loss on ownership change in MAP                    -      (2)      -        -
  Administrative expenses                          (31)    (21)     (8)      (5)
  Pension credits                                    -       -     140       93
  Costs related to former business activities        -       -     (20)     (25)
  Inventory market valuation adjustments            66       3       -        -
  Other (a)                                         (7)      -       -        -
                                                ------  ------  ------   ------
   Total Group income from operations             $399    $453    $103     $217
                                                ======  ======  ======   ======
<FN>
(a)Represents for the Marathon Group in 1999, estimated loss on sale of
   Carnegie Natural Gas Company and affiliated subsidiaries (Carnegie).
</TABLE>


<PAGE> 13

<TABLE>
<CAPTION>
                    USX CORPORATION AND SUBSIDIARY COMPANIES
         SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         ---------------------------------------------------------------
                                   (Unaudited)
                                        

     4.   (Continued)
                                                Marathon GroupU. S. Steel Group
                                                  Six Months      Six Months
                                                    Ended           Ended
                                                   June 30         June 30
(In millions)                                    1999    1998    1999     1998
--------------------------------------------------------------------------------
<S>                                            <C>     <C>      <C>      <C>
Revenues:
 Revenues of reportable segments               $10,447 $10,862  $2,537   $3,429
 Items not allocated to segments:
  Gain on ownership change in MAP                    -     246       -        -
  Other                                            (23)     24     (22)       -
 Elimination of intersegment revenues              (92)    (90)      -        -
 Administrative revenues                             -      (1)      -        -
                                                ------  ------   -----    -----
   Total Group revenues                        $10,332 $11,041  $2,515   $3,429
                                                ======  ======  ======   ======

Income:
 Income (loss) for reportable segments            $467    $739    $(68)    $260
 Items not allocated to segments:
  Gain on ownership change in MAP                    -     246       -        -
  Administrative expenses                          (57)    (59)    (13)     (14)
  Pension credits                                    -       -     248      186
  Costs related to former business activities        -       -     (44)     (53)
  Inventory market valuation adjustments           415      28       -        -
  Other (a)                                        (23)    (99)    (22)       -
                                                ------  ------  ------   ------
   Total Group income from operations             $802    $855    $101     $379
                                                ======  ======  ======   ======
<FN>
(a)       Represents for the Marathon Group in 1999, loss on sale of Scurlock
     and Carnegie, and in 1998, international exploration and production
     property impairments, MAP transition charges and gas contract settlement.
     For the U. S. Steel Group in 1999, represents loss on investment in RTI
     stock used to satisfy indexed debt obligations.

</TABLE>

     5.   In the second quarter of 1999, MAP sold Scurlock Permian LLC
     (Scurlock), its crude oil gathering business, to Plains Marketing, L.P for
     $136 million.  During the first six months of 1999, MAP recorded a pretax
     loss of $16 million related to the sale.  Scurlock had been reported as
     part of the Marathon Group's refining, marketing and transportation
     operating segment.

    On June 1, 1999, the Marathon Group announced that it had signed a
    definitive agreement to sell Carnegie to Equitable Resources, Inc.  The
    transaction is expected to close later this year.  Carnegie is engaged in
    natural gas production, transmission, distribution, sales and storage
    activities in Pennsylvania and West Virginia.  At June 30, 1999, the net
    assets held for sale have been included in other current assets in the
    consolidated balance sheet.  During the second quarter of 1999, USX
    recorded an estimated pretax loss of $7 million related to the sale.
    Carnegie has been reported as part of the Marathon Group's other energy
    related businesses operating segment.
    

<PAGE> 14

                    USX CORPORATION AND SUBSIDIARY COMPANIES
         SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         ---------------------------------------------------------------
                                   (Unaudited)


     6.   The items below are included in both revenues and costs and expenses,
     resulting in no effect on income.

<TABLE>
<CAPTION>
                                                  (In millions)
                                        -------------------------------
                                                Second Quarter    Six Months
                                                    Ended           Ended
                                                   June 30         June 30
                                                 1999    1998    1999     1998
                                                 ----    ----    ----     ----
    <S>                                         <C>       <C>   <C>      <C>
    Consumer excise taxes on petroleum
      products and merchandise                  $1,003    $958  $1,916   $1,834
    Matching crude oil and refined product
      buy/sell transactions settled in cash        698     994   1,570    1,982
</TABLE>

     7.   Income from operations includes net periodic pension credits of $83
     million and $48 million in the second quarter of 1999 and 1998,
     respectively, ($128 million and $98 million in the first six months of 1999
     and 1998, respectively.)  These pension credits are primarily noncash and
     for the most part are included in selling, general and administrative
     expenses.

          In the second quarter of 1999, USX recognized a one-time pretax
     settlement gain of $35 million, related mainly to pension costs of
     employees who retired under the U. S. Steel Group 1998 voluntary early
     retirement program.  This noncash settlement gain is included in selling,
     general and administrative expenses.

     8.   The provision for estimated income taxes for the periods reported is
     based on tax rates and amounts which recognize management's best estimate
     of current and deferred tax assets and liabilities.

     9.   The method of calculating net income per share for the Marathon Stock
     and Steel Stock reflects the USX Board of Directors' intent that the
     separately reported earnings and surplus of the Marathon Group and the
     U. S. Steel Group, as determined consistent with the USX Restated
     Certificate of Incorporation, are available for payment of dividends on the
     respective classes of stock, although legally available funds and
     liquidation preferences of these classes of stock do not necessarily
     correspond with these amounts.  The financial statements of the Marathon
     Group and the U. S. Steel Group, taken together, include all accounts which
     comprise the corresponding consolidated financial statements of USX.

          Basic net income per share is calculated by adjusting net income for
     dividend requirements of preferred stock and is based on the weighted
     average number of common shares outstanding.

          Diluted net income per share assumes conversion of convertible
     securities for the applicable periods outstanding and assumes exercise of
     stock options, provided in each case, the effect is not antidilutive.

<PAGE> 15

                    USX CORPORATION AND SUBSIDIARY COMPANIES
         SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         ---------------------------------------------------------------
                                   (Unaudited)


     9.   (Continued)

<TABLE>
<CAPTION>
          COMPUTATION OF INCOME PER SHARE
                                              Second Quarter Ended
                                                    June 30
                                                     1999            1998
                                                Basic  Diluted  Basic   Diluted
--------------------------------------------------------------------------------
<S>                                            <C>     <C>     <C>      <C>
Marathon Group

Net income (millions)                             $134    $134    $162     $162
                                                ======  ======  ======   ======
Shares of common stock outstanding (thousands):
 Average number of common shares outstanding   309,054 309,054 289,591  289,591
 Effect of dilutive stock options                    -     408       -      672
                                                ------  ------  ------   ------
   Average common shares and dilutive effect   309,054 309,462 289,591  290,263
                                                ======  ======  ======   ======
Net income per share                              $.43    $.43    $.56     $.56
                                                ======  ======  ======   ======
U. S. Steel Group

Net income (millions):
 Net income                                        $55     $55    $136     $136
 Dividends on preferred stock                        3       3       3        -
                                                ------  ------  ------   ------
 Net income applicable to Steel Stock               52      52     133      136
 Effect of dilutive convertible securities           -       2       -        2
                                                ------  ------  ------   ------
   Net income assuming conversions                 $52     $54    $133     $138
                                                ======  ======  ======   ======
Shares of common stock outstanding (thousands):
 Average number of common shares outstanding    88,387  88,387  86,953   86,953
 Effect of dilutive securities:
  Trust preferred securities                         -   4,256       -    4,256
  Preferred stock                                    -       -       -    3,211
  Stock options                                      -       4       -       87
                                                ------  ------  ------   ------
   Average common shares and dilutive effect    88,387  92,647  86,953   94,507
                                                ======  ======  ======   ======
 Net income per share                             $.60    $.59   $1.53    $1.46
                                                ======  ======  ======   ======
</TABLE>


<PAGE> 16

                    USX CORPORATION AND SUBSIDIARY COMPANIES
         SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         ---------------------------------------------------------------
                                   (Unaudited)

     9.   (Continued)

<TABLE>
<CAPTION>
          COMPUTATION OF INCOME PER SHARE
                                                Six Months Ended
                                                    June 30
                                                     1999            1998
                                                Basic  Diluted  Basic   Diluted
--------------------------------------------------------------------------------
<S>                                           <C>     <C>     <C>      <C>
Marathon Group

Net income (millions)                             $253    $253    $345     $345
                                                ======  ======  ======   ======
Shares of common stock outstanding (thousands):
 Average number of common shares outstanding   309,041 309,041 289,220  289,220
 Effect of dilutive stock options                    -     291       -      659
                                                ------  ------  ------   ------
   Average common shares and dilutive effect   309,041 309,332 289,220  289,879
                                                ======  ======  ======   ======
Net income per share                              $.82    $.82   $1.19    $1.19
                                                ======  ======  ======   ======
U. S. Steel Group

Net income (millions):
 Income before extraordinary loss                  $46     $46    $223     $223
 Dividends on preferred stock                        5       5       5        -
 Extraordinary loss                                  5       5       -        -
                                                ------  ------  ------   ------
 Net income applicable to Steel Stock               36      36     218      223
 Effect of dilutive convertible securities           -       -       -        4
                                                ------  ------  ------   ------
   Net income assuming conversions                 $36     $36    $218     $227
                                                ======  ======  ======   ======
Shares of common stock outstanding (thousands):
 Average number of common shares outstanding    88,378  88,378  86,777   86,777
 Effect of dilutive securities:
  Trust preferred securities                         -       -       -    4,256
  Preferred stock                                    -       -       -    3,211
  Stock options                                      -       1       -       70
                                                ------  ------  ------   ------
   Average common shares and dilutive effect    88,378  88,379  86,777   94,314
                                                ======  ======  ======   ======
Per share:
 Income before extraordinary loss                 $.47    $.47   $2.51    $2.41
 Extraordinary loss                                .06     .06       -        -
                                                ------  ------  ------   ------
 Net income                                       $.41    $.41   $2.51    $2.41
                                                ======  ======  ======   ======
</TABLE>


<PAGE> 17

                    USX CORPORATION AND SUBSIDIARY COMPANIES
         SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         ---------------------------------------------------------------
                                   (Unaudited)


     10.  During 1997, Marathon Oil Company (Marathon) and Ashland Inc.
     (Ashland) agreed to combine the major elements of their refining, marketing
     and transportation (RM&T) operations.  On January 1, 1998, Marathon
     transferred certain RM&T net assets to MAP, a new consolidated subsidiary.
     Also on January 1, 1998, Marathon acquired certain RM&T net assets from
     Ashland in exchange for a 38% interest in MAP.  The acquisition was
     accounted for under the purchase method of accounting.  The purchase price
     was determined to be $1.9 billion, based upon an external valuation.  The
     change in Marathon's ownership interest in MAP resulted in a gain of $246
     million, which is included in the first six months 1998 revenues.

          Effective August 11, 1998, Marathon acquired Tarragon Oil and Gas
     Limited (Tarragon), a Canadian oil and gas exploration and production
     company.  Results for 1999 include the operations of Marathon Canada
     Limited, formerly known as Tarragon.

     11.  Inventories are carried at lower of cost or market.  Cost of
     inventories is determined primarily under the last-in, first-out (LIFO)
     method.

<TABLE>
<CAPTION>
                                                         (In millions)
                                                    ------------------------
                                                     June 30    December 31
                                                       1999         1998
                                                     -------    -----------

    <S>                                               <C>          <C>
    Raw materials                                       $840         $916
    Semi-finished products                               368          282
    Finished products                                  1,370        1,205
    Supplies and sundry items                            165          156
                                                      ------        ------
      Total (at cost)                                  2,743        2,559
    Less inventory market valuation reserve              136          551
                                                      ------        ------
      Net inventory carrying value                    $2,607       $2,008
                                                      ======        ======
</TABLE>

          The inventory market valuation reserve reflects the extent that the
     recorded LIFO cost basis of crude oil and refined products inventories
     exceeds net realizable value.  The reserve is decreased to reflect
     increases in market prices and inventory turnover and increased to reflect
     decreases in market prices.  Changes in the inventory market valuation
     reserve result in noncash charges or credits to costs and expenses.  For
     additional information, see discussion of results of operations in the
     Marathon Group's Management's Discussion and Analysis of Financial
     Condition and Results of Operations.

     12.  In 1997, USX sold its stock in Delhi Gas Pipeline Corporation and
     other subsidiaries of USX that comprised all of the Delhi Group.  The net
     proceeds of the sale of $195 million were used to redeem all shares of USX-
     Delhi Group Common Stock (Delhi Stock) and were distributed to the holders
     thereof on January 26, 1998.  After the redemption, 50,000,000 shares of
     Delhi Stock remain authorized but unissued.


<PAGE> 18

                    USX CORPORATION AND SUBSIDIARY COMPANIES
         SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         ---------------------------------------------------------------
                                   (Unaudited)


     13.  At June 30, 1999, USX had $400 million in borrowings against its
     $2,350 million long-term revolving credit agreement.

          At June 30, 1999, MAP had no borrowings against its $500 million
     revolving credit agreements with banks or its $190 million revolving credit
     agreement with Ashland.

          USX has a short-term credit agreement totaling $125 million at June
     30, 1999.  Interest is based on the bank's prime rate or London Interbank
     Offered Rate (LIBOR), and carries a facility fee of .15%.  Certain other
     banks provide short-term lines of credit totaling $150 million which
     require a .125% fee or maintenance of compensating balances of 3%.  At June
     30, 1999, there were no borrowings against these facilities.  USX had other
     outstanding short-term borrowings of $149 million.

          In the event of a change in control of USX, debt obligations totaling
     $3,571 million at June 30, 1999, may be declared immediately due and
     payable.

     14.  In the first quarter of 1999, USX issued $300 million in aggregate
     principal amount of 6.65% Notes due 2006.

          On March 31, 1999, USX extinguished $117 million of indexed debt,
     representing 6-3/4% Exchangeable Notes due February 1, 2000.  See Note 2
     for further discussion.

     15.  USX has an agreement (the program) to sell an undivided interest in
     certain accounts receivable of the U. S. Steel Group.  Payments are
     collected from the sold accounts receivable; the collections are reinvested
     in new accounts receivable for the buyers; and a yield, based on defined
     short-term market rates, is transferred to the buyers.  At June 30, 1999,
     the amount sold under the program that had not been collected was $350
     million, which will be forwarded to the buyers at the end of the agreement,
     or in the event of earlier contract termination.  If USX does not have a
     sufficient quantity of eligible accounts receivable to reinvest in for the
     buyers, the size of the program will be reduced accordingly.  The buyers
     have rights to a pool of receivables that must be maintained at a level of
     at least 115% of the program's size.  In the event of a change in control
     of USX, as defined in the agreement, USX may be required to forward
     payments collected on sold accounts receivable to the buyers.

     16.  USX is the subject of, or a party to, a number of pending or
     threatened legal actions, contingencies and commitments involving a variety
     of matters, including laws and regulations relating to the environment.
     Certain of these matters are discussed below.  The ultimate resolution of
     these contingencies could, individually or in the aggregate, be material to
     the consolidated financial statements.  However, management believes that
     USX will remain a viable and competitive enterprise even though it is
     possible that these contingencies could be resolved unfavorably.  See
     discussion of Liquidity in USX Consolidated Management's Discussion and
     Analysis of Financial Condition and Results of Operations.


<PAGE> 19

                    USX CORPORATION AND SUBSIDIARY COMPANIES
         SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         ---------------------------------------------------------------
                                   (Unaudited)


     16.  (Continued)

          USX is subject to federal, state, local and foreign laws and
     regulations relating to the environment.  These laws generally provide for
     control of pollutants released into the environment and require responsible
     parties to undertake remediation of hazardous waste disposal sites.
     Penalties may be imposed for noncompliance.  At June 30, 1999, and December
     31, 1998, accrued liabilities for remediation totaled $160 million and $145
     million, respectively.  It is not presently possible to estimate the
     ultimate amount of all remediation costs that might be incurred or the
     penalties that may be imposed.  Receivables for recoverable costs from
     certain states, under programs to assist companies in cleanup efforts
     related to underground storage tanks at retail marketing outlets, were $47
     million at June 30, 1999, and $41 million at December 31, 1998.

          For a number of years, USX has made substantial capital expenditures
     to bring existing facilities into compliance with various laws relating to
     the environment.  In the six months of 1999 and for the years 1998 and
     1997, such capital expenditures totaled $42 million, $173 million and $134
     million, respectively.  USX anticipates making additional such expenditures
     in the future; however, the exact amounts and timing of such expenditures
     are uncertain because of the continuing evolution of specific regulatory
     requirements.

          At June 30, 1999, and December 31, 1998, accrued liabilities for
     platform abandonment and dismantlement totaled $142 million and $141
     million, respectively.

          Guarantees by USX of the liabilities of affiliated entities totaled
     $218 million at June 30, 1999.  In the event that any defaults of
     guaranteed liabilities occur, USX has access to its interest in the assets
     of most of the affiliates to reduce losses resulting from these guarantees.
     As of June 30, 1999, the largest guarantee for a single affiliate was $131
     million.

          At June 30, 1999, USX's pro rata share of obligations of LOOP LLC and
     various pipeline affiliates secured by throughput and deficiency agreements
     totaled $163 million.  Under the agreements, USX is required to advance
     funds if the affiliates are unable to service debt.  Any such advances are
     prepayments of future transportation charges.

          Contract commitments to acquire property, plant and equipment and
     long-term investments at June 30, 1999, totaled $983 million compared
     with $812 million at December 31, 1998.


<PAGE> 20

                    USX CORPORATION AND SUBSIDIARY COMPANIES
         SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         ---------------------------------------------------------------
                                   (Unaudited)


     17.  On April 12, 1999, USX and Kobe Steel, Ltd. (Kobe Steel) announced
     that they had entered into a letter of intent with Blackstone Capital
     Partners II (Blackstone) to combine the steelmaking and bar producing
     assets of USS/Kobe Steel Company (USS/Kobe) with companies controlled by
     Blackstone, Republic Technologies International, Inc., Republic Engineered
     Steels, Inc. and Bar Technologies, Inc. (collectively Republic).  In
     addition, on August 6, 1999, USX agreed to a $15 million equity
     investment in Republic when the combination is consummated.  USX
     currently owns 50% of USS/Kobe and will own approximately 15% of
     Republic.  The seamless pipe business of USS/Kobe is excluded from this
     transaction and will continue to operate as a joint venture between USX
     and Kobe Steel.

    The transaction was subject to numerous conditions, including financing.
    As of the date of issuance of the accompanying financial statements, it was
    uncertain whether several of these conditions would be resolved and the
    transaction would be completed.  Due to these uncertainties, neither USX
    nor USS/Kobe recognized any financial effects of the transaction in the
    second quarter 1999.  On August 6, 1999, Republic received financing
    commitments sufficient to complete the transaction, which is scheduled to
    be closed on August 13, 1999.

    The estimated fair value of USX's investment in Republic, based upon
    preliminary information supplied by Republic, is approximately $80 million
    less than USX's carrying value of its investment in the steelmaking and bar
    producing assets of USS/Kobe.  Based on the resolution of the uncertainties
    and the anticipated closing of the transaction, USX expects to recognize an
    estimated impairment of $80 million in the third quarter of 1999.


<PAGE> 21

<TABLE>
<CAPTION>
                                 USX CORPORATION
                   RATIO OF EARNINGS TO COMBINED FIXED CHARGES
                          AND PREFERRED STOCK DIVIDENDS
                      TOTAL ENTERPRISE BASIS - (Unaudited)
           ----------------------------------------------------------
                                        
                                        

   Six Months Ended
       June 30                           Year Ended December 31
---------------------   -------------------------------------------------------

   1999        1998         1998        1997         1996        1995      1994
   ----        ----         ----        ----         ----        ----      ----
   <C>         <C>          <C>         <C>          <C>         <C>       <C>

   3.89        5.48         3.36        3.92         3.62        1.49      2.01
   ====        ====         ====        ====         ====        ====      ====
</TABLE>


<TABLE>
<CAPTION>


                                 USX CORPORATION
                       RATIO OF EARNINGS TO FIXED CHARGES
                      TOTAL ENTERPRISE BASIS - (Unaudited)
                -------------------------------------------------


   Six Months Ended
       June 30                           Year Ended December 31
---------------------   -------------------------------------------------------

   1999        1998         1998        1997         1996        1995      1994
   ----        ----         ----        ----         ----        ----      ----
   <C>         <C>          <C>         <C>          <C>         <C>       <C>
   4.00        5.67         3.47        4.11         3.90        1.62      2.18
   ====        ====         ====        ====         ====        ====      ====
</TABLE>


<PAGE> 22

                    USX CORPORATION AND SUBSIDIARY COMPANIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     USX Corporation ("USX") is a diversified company that is principally
engaged in the energy business through its Marathon Group and in the steel
business through its U. S. Steel Group. The following discussion should be read
in conjunction with the second quarter and first six months of 1999 USX
Consolidated Financial Statements and selected notes. For income per common
share amounts applicable to USX's two classes of common stock, USX-Marathon
Group Common Stock ("Marathon Stock") and USX-U. S. Steel Group Common Stock
("Steel Stock"), see Consolidated Statement of Operations - Income per Common
Share. For Group results, see Management's Discussion and Analysis of Financial
Condition and Results of Operations for the Marathon Group and the U. S. Steel
Group. For operating statistics, see Supplemental Statistics following

Management's Discussion and Analysis of Financial Condition and Results of
Operations for the respective Groups.

     Certain sections of Management's Discussion and Analysis include forward-
looking statements concerning trends or events potentially affecting USX. These
statements typically contain words such as "anticipates", "believes",
"estimates", "expects" or similar words indicating that future outcomes are
uncertain. In accordance with "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, these statements are accompanied by cautionary
language identifying important factors, though not necessarily all such factors,
that could cause future outcomes to differ materially from those set forth in
the forward-looking statements. For additional risk factors affecting the
businesses of USX, see Supplementary Data - Disclosures About Forward-Looking
Statements in the USX 1998 Form 10-K.

<PAGE> 23

                    USX CORPORATION AND SUBSIDIARY COMPANIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

Results of Operations
---------------------

     Revenues for the second quarter and the first six months of 1999 and 1998
are set forth in the following table:

<TABLE>
<CAPTION>
                                                Second Quarter    Six Months
                                                    Ended           Ended
                                                   June 30         June 30
(Dollars in millions)                            1999   1998     1999     1998
                                                ------  ------  ------   ------
<C>                                            <C>     <C>    <C>      <C>
Revenues
 Marathon Group                                 $5,481  $5,530 $10,332  $11,041
 U. S. Steel Group                               1,304   1,733   2,515    3,429
 Eliminations                                      (19)     (3)    (27)    (10)
                                                ------  ------ -------  -------
   Total USX Corporation revenues               $6,766  $7,260 $12,820  $14,460
Less:
 Excise taxes (a)(b)                             1,003     958   1,916    1,834
 Matching buy/sell transactions (a)(c)             698     994   1,570    1,982
                                                ------  ------  ------   ------
   Revenues excluding above items               $5,065  $5,308  $9,334  $10,644
                                                ======  ======  ======   ======
------
<FN>
(a)  Included in both revenues and costs and expenses for the Marathon Group and
     USX consolidated.
(b)  Consumer excise taxes on petroleum products and merchandise.
(c)  Matching crude oil and refined products buy/sell transactions settled in
     cash.
</TABLE>

     Revenues (excluding excise taxes and matching buy/sell transactions)
decreased by $243 million in the second quarter of 1999 as compared with the
second quarter of 1998, reflecting a decrease of $429 million for the
U. S. Steel Group offset by an increase of $202 million for the Marathon Group.
For the first six months of 1999 revenues decreased $1,310 million as compared
with the same period of 1998, reflecting decreases of $379 million for the
Marathon Group and $914 million for the U. S. Steel Group.

     For discussion of revenues by Group, see Management's Discussion and
Analysis of Financial Condition and Results of Operations for the Marathon Group
and the U. S. Steel Group.


<PAGE> 24

                    USX CORPORATION AND SUBSIDIARY COMPANIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     Income from operations for the second quarter and the first six months of
1999 and 1998 are set forth in the following table:

<TABLE>
<CAPTION>
                                               Second Quarter    Six Months
                                                    Ended           Ended
                                                   June 30         June 30
(Dollars in millions)                            1999   1998     1999     1998
                                                ------  ------  ------   ------
<S>                                               <C>     <C>     <C>    <C>
Reportable segments
 Marathon Group
  Exploration & production                        $124     $73    $160     $197
 Refining, marketing & transportation             228     397     273      525
 Other energy related businesses                   19       3      34       17
                                                  ----    ----    ----     ----
  Income for reportable segments - Marathon Group $371    $473    $467     $739
 U. S. Steel Group
  Income for reportable segment                     (9)    154     (68)     260
                                                   ---    ----    ----     ----
  Income for reportable segments - USX Corporation 362     627     399      999

Items not allocated to segments:
 Marathon Group                                     28     (20)    335      116
 U. S. Steel Group                                 112      63     169      119
                                                  ----    ----    ----     ----
   Total income from operations - USX Corporation $502    $670    $903   $1,234

</TABLE>

     Income for reportable segments decreased by $265 million in the second
quarter of 1999 as compared with the second quarter of 1998, reflecting
decreases of $102 million for the Marathon Group reportable segments and $163
million for U. S. Steel Group reportable segment. Income for reportable segments
in the first six months of 1999 decreased by $600 million compared with the
first six months of 1998, reflecting decreases of $272 million for the Marathon
Group reportable segments and $328 million for U. S. Steel Group reportable
segment.

     For discussion of income from operations see Management's Discussion and
Analysis of Financial Condition and Results of Operations for the Marathon Group
and the U. S. Steel Group.


<PAGE> 25

                    USX CORPORATION AND SUBSIDIARY COMPANIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     Net interest and other financial costs for the second quarter and first six
months of 1999 and 1998 are set forth in the following table:

<TABLE>
<CAPTION>
     
                                               Second Quarter     Six Months
                                                    Ended           Ended
                                                   June 30         June 30
(Dollars in millions)                            1999   1998     1999     1998
                                                ------  ------  ------   ------
<S>                                                <C>     <C>    <C>      <C>
Net interest and other financial costs             $91     $71    $174     $153
Less:
 Favorable (unfavorable) adjustment to carrying
  value of indexed debt (a)                          -       -      13       (4)
                                                 -----  ------  ------   ------
   Net interest and other financial costs
     adjusted to exclude above item                $91     $71    $187     $149
                                                 =====  ======  ======   ======
------
<FN>
(a)  For discussion, see Note 2 to the USX Consolidated Financial Statements.
</TABLE>

     Adjusted net interest and other financial costs increased by $20 million in
the second quarter of 1999 and $38 million in the first six months of 1999 as
compared with the same periods of 1998, due primarily to increased costs
resulting from higher average debt levels and lower interest income.

     Provisions for estimated income taxes of $110 million and $173 million for
the second quarter and the first six months of 1999 were based on tax rates and
amounts that recognize management's best estimate of current and deferred tax
assets and liabilities.  The U. S. Steel Group's provision for estimated income
taxes for the second quarter and first six months of 1998 included a $9 million
favorable foreign tax adjustment as a result of a favorable resolution of
foreign tax litigation.

     Extraordinary loss on extinguishment of debt of $5 million, net of a $3
million income tax benefit, in the first six months of 1999 represents prepaid
interest expense and the write-off of unamortized debt issue costs resulting
from the satisfaction of USX's obligation of its indexed debt in the first
quarter of 1999. For further discussion, see Note 2 to the USX Consolidated
Financial Statements.

     Net income was $189 million for the second quarter of 1999, a decrease of
$109 million from the second quarter of 1998 reflecting decreases of $28 million
for the Marathon Group and $81 million for the U. S. Steel Group.  Net income
was $294 million for the first six months of 1999, a decrease of $274 million as
compared with the first six months of 1998, reflecting decreases of $92 million
for the Marathon Group and $182 million for the U. S. Steel Group.

<PAGE> 26

                    USX CORPORATION AND SUBSIDIARY COMPANIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

Dividends to Stockholders
-------------------------
     On July 27, 1999, the USX Board of Directors (the "Board") declared
dividends of 21 cents per share on Marathon Stock and 25 cents per share on
Steel Stock, payable September 10, 1999, to stockholders of record at the close
of business on August 18, 1999. The Board also declared a dividend of $0.8125
per share on USX's 6.50% Cumulative Convertible Preferred Stock, payable
September 30, 1999, to stockholders of record at the close of business on August
31, 1999.

     On July 27, 1999, Marathon Oil Canada Limited, an indirect subsidiary of
Marathon Oil Company, declared a dividend of CDN $0.3178 per share on its non-
voting Exchangeable Shares, payable September 10, 1999, to stockholders of
record at the close of business on August 18, 1999.

Cash Flows
----------
     Cash and cash equivalents totaled $99 million at June 30, 1999, compared
with $605 million at June 30, 1998, a decrease of $506 million reflecting a $510
million decrease for the Marathon Group offset by a $4 million increase for the
U. S. Steel Group.  The decrease for the Marathon Group was primarily the result
of a temporary change in excise tax payment patterns in 1998 that reversed
later in the year.

     Net cash provided from operating activities totaled $461 million in the
first six months of 1999, a $628 million decrease from the first six months of
1998, reflecting a $510 million decrease for the Marathon Group and a $118
million decrease for the U. S. Steel Group. The decrease for the Marathon Group
mainly reflected lower profitability, unfavorable working capital changes and an
increase from the previous period in the amount distributed by MAP to Ashland.

     Capital expenditures for property, plant and equipment in the first six
months of 1999 were $685 million compared with $686 million for the first six
months of 1998. For further details, see USX Corporation - Financial Statistics,
following Management's Discussion and Analysis of Financial Condition and
Results of Operations.

     Loans and advances to affiliates were $56 million in the first six months
of 1999 compared with $58 million in the first six months of 1998.  Cash
outflows in both periods mainly reflected funding by the Marathon Group to
equity affiliates for capital projects, primarily the Sakhalin II project in
Russia.

     Repayments of loans and advances from affiliates were $63 million in the
first six months of 1998 as a result of repayments by Sakhalin Energy Investment
Company, Ltd. of advances made by the Marathon Group in conjunction with the
Sakhalin II project in Russia.

     Contract commitments to acquire property, plant and equipment and long-term
investments at June 30, 1999, totaled $983 million compared with $812 million at
December 31, 1998.  The increase was primarily due to the pending acquisition
of certain Ultramar Diamond Shamrock refining, marketing and transportation.

     USX's total long-term debt, preferred stock of subsidiary, USX obligated
preferred securities of a subsidary trust and notes payable, totaled $4,722
million at June 30, 1999, up $154 million from December 31, 1998 primarily due
to the issuance of the 6.65% Notes due 2006 and an increase in commercial paper
issuances partially offset by repayments on revolving credit agreements and the
settlement of the indexed debt.


<PAGE> 27

                    USX CORPORATION AND SUBSIDIARY COMPANIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------
Liquidity
---------
     At June 30, 1999, USX had $400 million of borrowings against its $2,350
million long-term revolving credit agreement and $149 million of borrowings
against other short-term lines.  There were no borrowings against the MAP
revolving credit agreements at June 30, 1999.

     USX management believes that its short-term and long-term liquidity is
adequate to satisfy its obligations as of June 30, 1999, and to complete
currently authorized capital spending programs. Future requirements for USX's
business needs, including the funding of capital expenditures, debt maturities
for the balance of 1999 and years 2000 and 2001, and any amounts that may
ultimately be paid in connection with contingencies (which are discussed in Note
16 to the USX Consolidated Financial Statements), are expected to be financed by
a combination of internally generated funds, proceeds from the sale of stock,
borrowings and other external financing sources.

     USX management's opinion concerning liquidity and USX's ability to avail
itself in the future of the financing options mentioned in the above forward-
looking statements are based on currently available information.  To the extent
that this information proves to be inaccurate, future availability of financing
may be adversely affected.  Factors that could affect the availability of
financing include the performance of each Group (as measured by various factors
including cash provided from operating activities), the state of worldwide debt
and equity markets, investor perceptions and expectations of past and future
performance, the overall U.S. financial climate, and, in particular, with
respect to borrowings, by levels of USX's outstanding debt and credit ratings by
rating agencies.

Environmental Matters, Contingencies and Commitments
----------------------------------------------------
     USX has incurred and will continue to incur substantial capital, operating
and maintenance, and remediation expenditures as a result of environmental laws
and regulations. To the extent these expenditures, as with all costs, are not
ultimately reflected in the prices of USX's products and services, operating
results will be adversely affected. USX believes that domestic competitors of
the U. S. Steel Group and substantially all the competitors of the Marathon
Group are subject to similar environmental laws and regulations. However, the
specific impact on each competitor may vary depending on a number of factors,
including the age and location of its operating facilities, marketing areas,
production processes and the specific products and services it provides.

     USX has been notified that it is a potentially responsible party ("PRP") at
41 waste sites under the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA") as of June 30, 1999. In addition, there are 19 sites
where USX has received information requests or other indications that USX may be
a PRP under CERCLA but where sufficient information is not presently available
to confirm the existence of liability. There are also 140 additional sites,
excluding retail gasoline stations, where remediation is being sought under
other environmental statutes, both federal and state, or where private parties
are seeking remediation through discussions or litigation. Of these sites, 17
were associated with properties conveyed to MAP by Ashland for which Ashland has
retained liability for all costs associated with remediation. At many of these
sites,

<PAGE> 28

                    USX CORPORATION AND SUBSIDIARY COMPANIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

USX is one of a number of parties involved and the total cost of remediation, as
well as USX's share thereof, is frequently dependent upon the outcome of
investigations and remedial studies. USX accrues for environmental remediation
activities when the responsibility to remediate is probable and the amount of
associated costs is reasonably determinable. As environmental remediation
matters proceed toward ultimate resolution or as additional remediation
obligations arise, charges in excess of those previously accrued may be
required.

     In October 1998, the National Enforcement Investigations Center and Region
V of the United States Environmental Protection Agency ("EPA")conducted a multi-
media inspection of MAP's Detroit refinery.  Subsequently, in November 1998,
Region V conducted a multi-media inspection of MAP's Robinson refinery.  These
inspections covered compliance with the Clean Air Act (New Source Performance
Standards, Prevention of Significant Deterioration, and the National Emission
Standards for Hazardous Air Pollutants for Benzene), the Clean Water Act (Permit
exceedances for the Waste Water Treatment Plant), reporting obligations under
the Emergency Planning and Community Right to Know Act and the handling of
process waste. Thus far, MAP has been served with two Notices of Violation
("NOV") and two Findings of Violation in connection with the multi-media
inspection at its Detroit refinery, and a NOV as a result of the inspection at
its Robinson refinery.  MAP can contest the factual and the legal basis for the
allegations prior to the EPA taking enforcement action.  At this time, it is not
known when complete findings on the results of these multi-media inspections
will be issued.


     USX is the subject of, or a party to, a number of pending or threatened
legal actions, contingencies and commitments involving a variety of matters,
including laws and regulations relating to the environment (see Note 16 to the
USX Consolidated Financial Statements for a discussion of certain of these
matters). The ultimate resolution of these contingencies could, individually or
in the aggregate, be material to the USX Consolidated Financial Statements.
However, management believes that USX will remain a viable and competitive
enterprise even though it is possible that these contingencies could be resolved
unfavorably. See discussion of Liquidity herein.

Outlook
-------
     See Outlook in Management's Discussion and Analysis of Financial Condition
and Results of Operations for the Marathon Group and the U. S. Steel Group.

Year 2000 Readiness Disclosure
------------------------------
     See Year 2000 Readiness Disclosure in Management's Discussion and Analysis
of Financial Condition and Results of Operations for the Marathon Group and the
U. S. Steel Group.

<PAGE> 29

                    USX CORPORATION AND SUBSIDIARY COMPANIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------


Accounting Standard
-------------------
     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities".  This new standard requires recognition of
all derivatives as either assets or liabilities at fair value.  This new
standard may result in additional volatility in both current period earnings and
other comprehensive income as a result of recording recognized and unrecognized
gains and losses resulting from changes in the fair value of derivative
instruments.  At adoption this new standard requires a comprehensive review of
all outstanding derivative instruments to determine whether or not their use
meets the hedge accounting criteria.  Upon adoption, there may be derivative
instruments employed by USX that do not meet all of the designated hedge
criteria and they will be reflected in income on a mark-to-market basis.  Based
upon the strategies currently used by USX and the level of activity related to
forward exchange contracts and commodity-based derivative instruments in recent
periods, USX does not anticipate the effect of adoption to have a material
impact on either financial position or results of operations.  The effective
date of SFAS No. 133 was amended by SFAS No. 137.  USX plans to adopt the
standard effective January 1, 2001, as required.
                                        

<PAGE> 30

                    USX CORPORATION AND SUBSIDIARY COMPANIES
                          QUANTITATIVE AND QUALITATIVE
                          DISCLOSURES ABOUT MARKET RISK
                    -----------------------------------------
                                        
Management Opinion Concerning Derivative Instruments
--------------------------------------
     USX utilizes derivative instruments principally in hedging activities,
whereby gains and losses are generally offset by price changes in the underlying
commodity. Recently, the Marathon Group's risk management policy was expanded to
include the use of derivative instruments for certain nonhedging and trading
activities.  These instruments will be marked-to-market each period and the
related income or loss will be included in income from operations.  Management
believes that use of derivative instruments along with risk assessment
procedures and internal controls does not expose USX to material risk.  The use
of derivative instruments could materially affect USX's results of operations in
particular quarterly or annual periods.  However, management believes that use
of derivative instruments will not have a material adverse effect on financial
position or liquidity.


Commodity Price Risk and Related Risks
--------------------------------------
     Sensitivity analysis of the incremental effects on pretax income of
hypothetical 10% and 25% changes in commodity prices for open derivative
commodity instruments as of June 30, 1999 are provided in the following
table(a):

<TABLE>
<CAPTION>
                                                      Incremental Decrease
                                                        in Pretax Income
                                                    Assuming a Hypothetical
                                                       Price Change of(a)
(Dollars in millions)                                  10%          25%
--------------------------------------------------------------------------------
<S>                                                    <C>          <C>
Derivative Commodity Instruments
Marathon Group (b) (c)
    Crude oil (price increase) (d)                     $21.8        $56.9
    Natural gas (price decrease) (d)                     9.6         24.8
    Refined products (price increase) (d)                 .1           .2

U. S. Steel Group
    Natural gas (price decrease) (d)                    $2.5         $6.3
    Zinc (price decrease) (d)                            3.0          7.6
    Tin (price decrease) (d)                              .4           .7
    Nickel (price decrease) (d)                           .1           .2
<FN>
      (a)  Gains and losses on derivative commodity instruments are generally
      offset by price changes in the underlying commodity.  Effects of these
      offsets are not reflected in the sensitivity analyses.  Amounts reflect
      the estimated incremental effect on pretax income of hypothetical 10% and
      25% changes in closing commodity prices for each open contract position
      at June 30, 1999. Marathon Group and U. S. Steel Group management
      evaluate their portfolios of derivative commodity instruments on an
      ongoing basis and add or revise strategies to reflect anticipated market
      conditions and changes in risk profiles.  Changes to the portfolios
      subsequent to June 30, 1999, would cause future pretax income effects to
      differ from those presented in the table.
</TABLE>


<PAGE> 31

                    USX CORPORATION AND SUBSIDIARY COMPANIES
                          QUANTITATIVE AND QUALITATIVE
                          DISCLOSURES ABOUT MARKET RISK
                    -----------------------------------------
      (b)  The number of net open contracts varied throughout second quarter
      1999, from a low of 2,476 contracts at June 30, 1999, to a high of 34,199
      contracts at April 16, 1999, and averaged 25,914 for the quarter.  The
      derivative commodity instruments used and hedging positions taken also
      varied throughout second quarter 1999, and will continue to vary in the
      future.  Because of these variations in the composition of the portfolio
      over time, the number of open contracts, by itself, cannot be used to
      predict future income effects.
      (c)  The calculation of sensitivity amounts for basis swaps assumes that
      the physical and paper indices are perfectly correlated.  Gains and
      losses on options are based on changes in intrinsic value only.
      (d)  The direction of the price change used in calculating the
      sensitivity amount for each commodity reflects that which would result in
      the largest incremental decrease in pretax income when applied to the
      derivative commodity instruments used to hedge that commodity.

Interest Rate Risk
------------------
     As of June 30, 1999, the discussion of USX's interest rate risk has not
changed materially from that presented in Quantitative and Qualitative
Disclosures About Market Risk included in USX's 1998 Form 10-K.

Foreign Currency Exchange Rate Risk
-----------------------------------
     As of June 30, 1999, the discussion of USX's foreign currency exchange rate
risk has not changed materially from that presented in Quantitative and
Qualitative Disclosures About Market Risk included in USX's 1998 Form 10-K.

Equity Price Risk
-----------------

     USX was subject to equity price risk resulting from its issuance in
December 1996 of $117 million of 6 3/4% Exchangeable Notes due February 1, 2000
("indexed debt").  However, on March 31, 1999, USX irrevocably deposited with a
trustee the entire 5.5 million shares it owned in RTI. The deposit of shares
resulted in the satisfaction of USX's obligation under the indexed debt. Under
the terms of the indenture, the trustee will exchange the RTI shares for the
notes at maturity. USX is no longer exposed to any negative risks associated
with changes in the value of RTI common stock. For further discussion, see Note
2 to the USX Consolidated Financial Statements.

Safe Harbor
-----------
     USX's Quantitative and Qualitative Disclosures About Market Risk include
forward-looking statements with respect to management's opinion about risks
associated with USX's use of derivative instruments. These statements are based
on certain assumptions with respect to market prices and industry supply and
demand for crude oil, natural gas, refined products, steel products and certain
raw materials. To the extent that these assumptions prove to be inaccurate,
future outcomes with respect to USX's derivative usage may differ materially
from those discussed in the forward-looking statements.

<PAGE> 32

<TABLE>
<CAPTION>
                                 USX CORPORATION
                        FINANCIAL STATISTICS (Unaudited)
                        --------------------------------


                                                Second Quarter    Six Months
                                                    Ended           Ended
                                                   June 30         June 30
                                                --------------  --------------
(Dollars in millions)                            1999    1998    1999     1998
------------------------------------------------------------------------------------
<S>                                             <C>     <C>    <C>      <C>
REVENUES

 Marathon Group                                 $5,481  $5,530 $10,332  $11,041
 U. S. Steel Group                               1,304   1,733   2,515    3,429
 Eliminations                                      (19)    (3)     (27)    (10)
                                               ------- ------- -------  -------
   Total                                        $6,766  $7,260 $12,820  $14,460


INCOME FROM OPERATIONS

 Marathon Group                                   $399    $453    $802     $855
 U. S. Steel Group                                 103     217     101      379
                                                ------  ------  ------  ------
   Total                                          $502    $670    $903   $1,234




CASH FLOW DATA
--------------

CAPITAL EXPENDITURES

 Marathon Group                                   $336    $331    $532     $550
 U. S. Steel Group                                  74      79     153      136
                                                ------  ------  ------   ------
   Total                                          $410    $410    $685     $686


INVESTMENTS (RETURNS) & OTHER AFFILIATE ACTIVITY - NET

 Marathon Group                                    $37   $(22)    $56        $3
 U. S. Steel Group                                   -       -       -       63
                                                ------  ------  ------   ------
    Total                                          $37   $(22)    $56       $66




</TABLE>


<PAGE> 33

Part I - Financial Information (Continued):

   B.  Marathon Group

<TABLE>
<CAPTION>
                        MARATHON GROUP OF USX CORPORATION
                       STATEMENT OF OPERATIONS (Unaudited)
                       -----------------------------------

                                                Second Quarter    Six Months
                                                    Ended           Ended
                                                   June 30         June 30
(Dollars in millions, except per share amounts)  1999    1998    1999     1998
--------------------------------------------------------------------------------
<S>                                            <C>     <C>     <C>      <C>
REVENUES:
 Sales                                          $5,447  $5,496 $10,287  $10,733
 Dividend and affiliate income                      28      18      44       28
 Gain (loss) on disposal of assets                  (1)     13     (11)      16
 Gain on ownership change in Marathon Ashland
  Petroleum LLC                                      -      (2)      -      246
 Other income                                        7       5      12       18
                                                ------  ------  ------   ------
   Total revenues                                5,481   5,530  10,332   11,041
                                                ------  ------  ------   ------
COSTS AND EXPENSES:
 Cost of sales (excludes items shown below)      3,669   3,662   7,074    7,385
 Selling, general and administrative expenses      132     120     254      251
 Depreciation, depletion and amortization          222     209     459      479
 Taxes other than income taxes                   1,066   1,014   2,036    1,942
 Exploration expenses                               59      75     122      157
 Inventory market valuation credits                (66)     (3)   (415)     (28)
                                                ------  ------  ------   ------
   Total costs and expenses                      5,082   5,077   9,530   10,186
                                                ------  ------  ------   ------
INCOME FROM OPERATIONS                             399     453     802      855
Net interest and other financial costs              71      49     146      103
Minority interest in income of Marathon Ashland
 Petroleum LLC                                     112     158     257      212
                                                ------  ------  ------   ------
INCOME BEFORE INCOME TAXES                         216     246     399      540
Provision for estimated income taxes                82      84     146      195
                                                ------  ------  ------   ------
NET INCOME                                        $134    $162    $253     $345
                                                ======  ======  ======   ======
MARATHON STOCK DATA:
 Net income per share
   - Basic and diluted                            $.43    $.56    $.82    $1.19

 Dividends paid per share                          .21     .21     .42      .42

 Weighted average shares, in thousands
   - Basic                                     309,054 289,591 309,041  289,220
   - Diluted                                   309,462 290,263 309,332  289,879




<FN>
Selected notes to financial statements appear on pages 36-44.
</TABLE>


<PAGE> 34

<TABLE>
<CAPTION>
                        MARATHON GROUP OF USX CORPORATION
                            BALANCE SHEET (Unaudited)
                        ---------------------------------
                                        
                                                     June 30    December 31
(Dollars in millions)                                  1999         1998
--------------------------------------------------------------------------------
<S>                                                  <C>           <C>
ASSETS

Current assets:
  Cash and cash equivalents                              $79          $137
  Receivables, less allowance for doubtful
   accounts of $3 and $3                               1,296         1,277
  Inventories                                          1,839         1,310
  Deferred income tax benefits                            81            80
  Other current assets                                   230           172
                                                      ------        ------
     Total current assets                              3,525         2,976

Investments and long-term receivables                    652           603
Property, plant and equipment, less accumulated
 depreciation, depletion and amortization of
 $10,557 and $10,299                                  10,224        10,429
Prepaid pensions                                         203           241
Other noncurrent assets                                  301           295
                                                      ------        ------
     Total assets                                    $14,905       $14,544
                                                      ======        ======
LIABILITIES

Current liabilities:
  Notes payable                                         $132          $132
  Accounts payable                                     1,940         1,980
  Payroll and benefits payable                           130           150
  Distribution payable to minority shareholder of
   Marathon Ashland Petroleum LLC                          -           103
  Accrued taxes                                          173            99
  Accrued interest                                        92            87
  Long-term debt due within one year                      67            59
                                                      ------        ------
     Total current liabilities                         2,534         2,610

Long-term debt, less unamortized discount              3,568         3,456
Long-term deferred income taxes                        1,482         1,450
Employee benefits                                        542           553
Deferred credits and other liabilities                   411           389
Preferred stock of subsidiary                            184           184

Minority interest in Marathon Ashland Petroleum LLC    1,744         1,590

COMMON STOCKHOLDERS' EQUITY                            4,440         4,312
                                                      ------        ------
     Total liabilities and common
         stockholders' equity                        $14,905       $14,544
                                                      ======        ======


<FN>
Selected notes to financial statements appear on pages 36-44.
</TABLE>


<PAGE> 35

<TABLE>
<CAPTION>
                        MARATHON GROUP OF USX CORPORATION
                       STATEMENT OF CASH FLOWS (Unaudited)
                       -----------------------------------
                                                        Six Months Ended
                                                            June 30
(Dollars in millions)                                  1999         1998
--------------------------------------------------------------------------------
<S>                                                    <C>           <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

OPERATING ACTIVITIES:
Net income                                              $253          $345
Adjustments to reconcile to net cash provided from
 operating activities:
  Minority interest in income of Marathon Ashland
   Petroleum LLC - net of distributions                   51            82
  Depreciation, depletion and amortization               459           479
  Exploratory dry well costs                              62            97
  Inventory market valuation credits                    (415)          (28)
  Pensions and other postretirement benefits              27             6
  Deferred income taxes                                   49            91
Gain on ownership change in Marathon
   Ashland Petroleum LLC                                   -          (246)
  (Gain) loss on disposal of assets                       11           (16)
  Changes in:
     Current receivables                                (265)          161
Inventories                                             (151)         (160)
     Current accounts payable and accrued expenses       333           105
  All other - net                                        (77)          (69)
                                                      ------        ------
     Net cash provided from operating activities         337           847
                                                      ------        ------
INVESTING ACTIVITIES:
Capital expenditures                                    (532)         (550)
Disposal of assets                                       178            30
Restricted cash -withdrawals                              39             4
             - deposits                                  (20)         (387)
Affiliates - investments - net                            -             (8)
         - loans and advances                            (56)          (58)
         - repayments of loans and advances                -            63
All other - net                                            -            13
                                                      ------        ------
     Net cash used in investing activities              (391)         (893)
                                                      ------        ------
FINANCING ACTIVITIES:
Increase in Marathon Group's portion of USX
 consolidated debt                                       119           292
Specifically attributed debt-  borrowings                140           379
                        - repayments                    (140)            -
Marathon Stock issued                                      8            50
Dividends paid                                          (130)         (122)
                                                      ------        ------
     Net cash provided from (used in)
        financing activities                              (3)          599
                                                      ------        ------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                   (1)            -
                                                      ------        ------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS     (58)          553
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR           137            36
                                                      ------        ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD               $79          $589
                                                      ======        ======
Cash used in operating activities included:
  Interest and other financial costs paid (net of
   amount capitalized)                                 $(136)        $(105)
  Income taxes paid, including settlements with the
   U. S. Steel Group                                      (7)         (136)
<FN>
Selected notes to financial statements appear on pages 36-44.
</TABLE>


<PAGE> 36

                        MARATHON GROUP OF USX CORPORATION
                     SELECTED NOTES TO FINANCIAL STATEMENTS
                     --------------------------------------
                                   (Unaudited)
                                        

     1.   The information furnished in these financial statements is unaudited
     but, in the opinion of management, reflects all adjustments necessary for a
     fair presentation of the results for the periods covered.  All such
     adjustments are of a normal recurring nature unless disclosed otherwise.
     These financial statements, including selected notes, have been prepared in
     accordance with the applicable rules of the Securities and Exchange
     Commission and do not include all of the information and disclosures
     required by generally accepted accounting principles for complete financial
     statements.  Certain reclassifications of prior year data have been made to
     conform to 1999 classifications.  Additional information is contained in
     the USX Annual Report on Form 10-K for the year ended December 31, 1998.

     2.   The financial statements of the Marathon Group include the financial
     position, results of operations and cash flows for the businesses of
     Marathon Oil Company (Marathon) and certain other subsidiaries of USX, and
     a portion of the corporate assets and liabilities and related transactions
     which are not separately identified with ongoing operating units of USX.
     These financial statements are prepared using the amounts included in the
     USX consolidated financial statements.  Corporate amounts reflected in
     these financial statements are determined based upon methods which
     management believes to be reasonable.  The accounting policies applicable
     to the preparation of the financial statements of the Marathon Group may be
     modified or rescinded in the sole discretion of the Board of Directors of
     USX (Board), although the Board has no present intention to do so.  The
     Board may also adopt additional policies depending on the circumstances.

          Although the financial statements of the Marathon Group and the U. S.
     Steel Group separately report the assets, liabilities (including contingent
     liabilities) and stockholders' equity of USX attributed to each such Group,
     such attribution of assets, liabilities (including contingent liabilities)
     and stockholders' equity between the Marathon Group and the U. S. Steel
     Group for the purpose of preparing their respective financial statements
     does not affect legal title to such assets and responsibility for such
     liabilities.  Holders of USX-Marathon Group Common Stock (Marathon Stock)
     and USX-U. S. Steel Group Common Stock (Steel Stock) are holders of common
     stock of USX and continue to be subject to all the risks associated with an
     investment in USX and all of its businesses and liabilities.  Financial
     impacts arising from one Group that affect the overall cost of USX's
     capital could affect the results of operations and financial condition of
     the other Group.  In addition, net losses of either Group, as well as
     dividends or distributions on any class of USX Common Stock or series of
     Preferred Stock and repurchases of any class of USX Common Stock or series
     of Preferred Stock at prices in excess of par or stated value, will reduce
     the funds of USX legally available for payment of dividends on both classes
     of Common Stock.  Accordingly, the USX consolidated financial information
     should be read in connection with the Marathon Group financial information.


<PAGE> 37

                        MARATHON GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


     2.   (Continued)

          The financial statement provision for estimated income taxes and
     related tax payments or refunds have been reflected in the Marathon Group
     and the U. S. Steel Group financial statements in accordance with USX's tax
     allocation policy for such groups.  In general, such policy provides that
     the consolidated tax provision and related tax payments or refunds are
     allocated between the Marathon Group and the U. S. Steel Group for group
     financial statement purposes, based principally upon the financial income,
     taxable income, credits, preferences and other amounts directly related to
     the respective groups.

          The provision for estimated income taxes for the Marathon Group is
     based on tax rates and amounts which recognize management's best estimate
     of current and deferred tax assets and liabilities.  Differences between
     the combined interim tax provisions of the Marathon and U. S. Steel Groups
     and USX consolidated are allocated to each group based on the relationship
     of the individual group provisions to the combined interim provisions.

     3.   The Marathon Group's total comprehensive income for the second quarter
     of 1999 and 1998 was $134 million and $160 million, respectively, and $255
     million and $344 million for the six months of 1999 and 1998, respectively.

     4.   In the second quarter of 1999, Marathon Ashland Petroleum LLC (MAP)
     sold Scurlock Permian LLC (Scurlock), its crude oil gathering business, to
     Plains Marketing, L.P for $136 million.  During the first six months of
     1999, MAP recorded a pretax loss of $16 million related to the sale.
     Scurlock had been reported as part of the Marathon Group's refining,
     marketing and transportation operating segment.

    On June 1, 1999, the Marathon Group announced that it had signed a
    definitive agreement to sell Carnegie Natural Gas Company and affiliated
    subsidiaries (Carnegie) to Equitable Resources, Inc.  The transaction is
    expected to close later this year.  Carnegie is engaged in natural gas
    production, transmission, distribution, sales and storage activities in
    Pennsylvania and West Virginia.  At June 30, 1999, the net assets held for
    sale have been included in other current assets in the balance sheet.
    During the second quarter of 1999, the Marathon Group recorded an estimated
    pretax loss of $7 million related to the sale.  Carnegie has been reported
    as part of the Marathon Group's other energy related businesses operating
    segment.

     5.   The Marathon Group's operations consists of three reportable operating
     segments: 1) Exploration and Production (E&P) - explores for and produces
     crude oil and natural gas on a worldwide basis; 2) Refining, Marketing and
     Transportation (RM&T) - refines, markets and transports crude oil and
     petroleum products, primarily in the Midwest and southeastern United States
     through MAP; and 3) Other Energy Related Businesses (OERB).  OERB is an
     aggregation of two segments which fall below the quantitative reporting
     thresholds: 1) Natural Gas and Crude Oil Marketing and Transportation -
     markets and transports its own and third-party natural gas and crude oil in
     the United States; and 2) Power Generation - develops, constructs and
     operates independent electric power projects worldwide.  The results of
     segment operations are as follows:

<PAGE> 38

                        MARATHON GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


     5.   (Continued)

<TABLE>
<CAPTION>
                                                                         Total
(In millions)                                    E&P     RM&T    OERB   Segments
--------------------------------------------------------------------------------
<S>                                               <C>   <C>       <C>    <C>
SECOND QUARTER 1999
Revenues:
 Customer                                         $689  $4,637    $113   $5,439
 Intersegment (a)                                   34       4       6       44
 Intergroup (a)                                      4       -       4        8
 Equity in earnings of
  unconsolidated affiliates                          3       4       5       12
 Other                                              13      10       6       29
                                                ------  ------  ------   ------
   Total revenues                                 $743  $4,655    $134   $5,532
                                                ======  ======  ======   ======
Segment income                                    $124    $228     $19     $371
                                                ======  ======  ======   ======

SECOND QUARTER 1998
Revenues:
 Customer                                         $499  $4,928     $66   $5,493
 Intersegment (a)                                   41       1       2       44
 Intergroup (a)                                      2       -       1        3
 Equity in earnings of
  unconsolidated affiliates                          2       3       1        6
 Other                                              20      11       3       34
                                                ------  ------  ------   ------
   Total revenues                                 $564  $4,943     $73   $5,580
                                                ======  ======  ======   ======
Segment income                                     $73    $397      $3     $473
                                                ======  ======  ======   ======
<FN>
(a)  Intersegment and intergroup sales and transfers were conducted on an arm's-
    length basis.

</TABLE>


<PAGE> 39

                        MARATHON GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


     5.   (Continued)


<TABLE>
<CAPTION>
                                                                         Total
(In millions)                                    E&P     RM&T    OERB   Segments
--------------------------------------------------------------------------------
<S>                                             <C>     <C>       <C>   <C>
SIX MONTHS ENDED JUNE 30, 1999
Revenues:
 Customer                                       $1,261  $8,816    $195  $10,272
 Intersegment (a)                                   68       9      15       92
 Intergroup (a)                                      7       -       8       15
 Equity in earnings of
  unconsolidated affiliates                          4       7      13       24
 Other                                              19      16       9       44
                                                ------  ------  ------   ------
   Total revenues                               $1,359  $8,848    $240  $10,447
                                                ======  ======  ======   ======
Segment income                                    $160    $273     $34     $467
                                                ======  ======  ======   ======

SIX MONTHS ENDED JUNE 30, 1998
Revenues:
 Customer                                       $1,017  $9,520    $162  $10,699
 Intersegment (a)                                   84       2       4       90
 Intergroup (a)                                      6       -       4       10
 Equity in earnings of
  unconsolidated affiliates                          1       6       6       13
 Other                                              21      24       5       50
                                                ------  ------  ------   ------
   Total revenues                               $1,129  $9,552    $181  $10,862
                                                ======  ======  ======   ======
Segment income                                    $197    $525     $17     $739
                                                ======  ======  ======   ======
<FN>
(a)  Intersegment and intergroup sales and transfers were conducted on an arm's-
    length basis.
</TABLE>


<PAGE> 40

                        MARATHON GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


     5.   (Continued)



    The following schedules reconcile segment revenues and income to amounts
    reported in the Marathon Group financial statements:

<TABLE>
<CAPTION>
                                                      Second Quarter Ended
                                                            June 30
(In millions)                                          1999         1998
--------------------------------------------------------------------------------
<S>                                                   <C>           <C>
Revenues:
  Revenues of reportable segments                     $5,532        $5,580
  Items not allocated to segments:
   Loss on ownership change in MAP                         -            (2)
   Other                                                  (7)            -
  Elimination of intersegment revenues                   (44)          (44)
  Administrative revenues                                  -            (4)
                                                      ------        ------
     Total Group revenues                             $5,481        $5,530
                                                      ======        ======

Income:
  Income for reportable segments                        $371          $473
  Items not allocated to segments:
   Loss on ownership change in MAP                         -            (2)
   Administrative expenses                               (31)          (21)
   Inventory market valuation adjustments                 66             3
   Other (a)                                              (7)            -
                                                      ------        ------
     Total Group income from operations                 $399          $453
                                                      ======        ======
<FN>
(a)Represents estimated loss on sale of Carnegie.
</TABLE>


<PAGE> 41

                        MARATHON GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


     5.   (Continued)

<TABLE>
<CAPTION>
                                                        Six Months Ended
                                                            June 30
(In millions)                                          1999         1998
--------------------------------------------------------------------------------
<S>                                                  <C>           <C>
Revenues:
  Revenues of reportable segments                    $10,447       $10,862
  Items not allocated to segments:
   Gain on ownership in MAP                                -           246
   Other                                                 (23)           24
  Elimination of intersegment revenues                   (92)          (90)
  Administrative revenues                                  -            (1)
                                                      ------        ------
     Total Group revenues                            $10,332       $11,041
                                                      ======        ======

Income:
  Income for reportable segments                        $467          $739
  Items not allocated to segments:
   Gain on ownership in MAP                                -           246
   Administrative expenses                               (57)          (59)
   Inventory market valuation adjustments                415            28
   Other (a)                                             (23)          (99)
                                                      ------        ------
     Total Group income from operations                 $802          $855
                                                      ======        ======
<FN>
(a)Represents in 1999, loss on sale of Scurlock and Carnegie, and in 1998,
   international exploration and production property impairments, MAP
   transition charges and gas contract settlement.
</TABLE>


     6.   The items below are included in both revenues and costs and expenses,
     resulting in no effect on income.

<TABLE>
<CAPTION>
                                                  (In millions)
                                        -------------------------------
                                                Second Quarter    Six Months
                                                    Ended           Ended
                                                   June 30         June 30
                                                 1999    1998    1999     1998
                                                 ----    ----    ----     ----
    <S>                                         <C>       <C>   <C>      <C>
    Consumer excise taxes on petroleum
      products and merchandise                  $1,003    $958  $1,916   $1,834
    Matching crude oil and refined product
      buy/sell transactions settled in cash        698     994   1,570    1,982
</TABLE>

PAGE> 42

                        MARATHON GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


     7.   The method of calculating net income per common share for the Marathon
     Stock and Steel Stock reflects the Board's intent that the separately
     reported earnings and surplus of the Marathon Group and the U. S. Steel
     Group, as determined consistent with the USX Restated Certificate of
     Incorporation, are available for payment of dividends on the respective
     classes of stock, although legally available funds and liquidation
     preferences of these classes of stock do not necessarily correspond with
     these amounts.

          Basic net income per share is based on the weighted average number of
     common shares outstanding.

          Diluted net income per share assumes conversion of convertible
     securities for the applicable periods outstanding and assumes exercise of
     stock options, provided in each case, the effect is not antidilutive.

          See Note 9 of the Notes to USX Consolidated Financial Statements for
     the computation of income per share.

     8.   Inventories are carried at the lower of cost or market.  Cost of
     inventories of crude oil and refined products is determined under the last-
     in, first-out (LIFO) method.

<TABLE>
<CAPTION>
                                                         (In millions)
                                                    ------------------------
                                                     June 30    December 31
                                                       1999         1998
                                                   -----------  -----------
    <S>                                               <C>          <C>
    Crude oil and natural gas liquids                   $712         $731
    Refined products and merchandise                   1,153        1,023
    Supplies and sundry items                            110          107
                                                      ------        ------
      Total (at cost)                                  1,975        1,861
    Less inventory market valuation reserve              136          551
                                                      ------        ------
      Net inventory carrying value                    $1,839       $1,310
                                                      ======        ======
</TABLE>

          The inventory market valuation reserve reflects the extent that the
     recorded LIFO cost basis of crude oil and refined products inventories
     exceeds net realizable value.  The reserve is decreased to reflect
     increases in market prices and inventory turnover and increased to reflect
     decreases in market prices.  Changes in the inventory market valuation
     reserve result in noncash charges or credits to costs and expenses.  For
     additional information, see discussion of results of operations in the
     Marathon Group's Management's Discussion and Analysis of Financial
     Condition and Results of Operations.

     9.   At June 30, 1999, accounts payable includes an estimated income tax
     payable to the U. S. Steel Group of $24 million, determined in accordance
     with the tax allocation policy discussed in Note 2.

PAGE> 43

                        MARATHON GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)
                                        


     10.  During 1997, Marathon and Ashland Inc. (Ashland) agreed to combine the
     major elements of their refining, marketing and transportation (RM&T)
     operations.  On January 1, 1998, Marathon transferred certain RM&T net
     assets to MAP, a new consolidated subsidiary.  Also on January 1, 1998,
     Marathon acquired certain RM&T net assets from Ashland in exchange for a
     38% interest in MAP.  The acquisition was accounted for under the purchase
     method of accounting.  The purchase price was determined to be
     $1.9 billion, based upon an external valuation.  The change in Marathon's
     ownership interest in MAP resulted in a gain of $246 million, which is
     included in the first six months 1998 revenues.

          Effective August 11, 1998, Marathon acquired Tarragon Oil and Gas
     Limited (Tarragon), a Canadian oil and gas exploration and production
     company.  Results for 1999 include the operations of Marathon Canada
     Limited, formerly known as Tarragon.

     11.  USX is the subject of, or a party to, a number of pending or
     threatened legal actions, contingencies and commitments relating to the
     Marathon Group involving a variety of matters, including laws and
     regulations relating to the environment.  Certain of these matters are
     discussed below.  The ultimate resolution of these contingencies could,
     individually or in the aggregate, be material to the Marathon Group
     financial statements.  However, management believes that USX will remain a
     viable and competitive enterprise even though it is possible that these
     contingencies could be resolved unfavorably to the Marathon Group.  See
     discussion of Liquidity in USX Consolidated Management's Discussion and
     Analysis of Financial Condition and Results of Operations.

          The Marathon Group is subject to federal, state, local and foreign
     laws and regulations relating to the environment.  These laws generally
     provide for control of pollutants released into the environment and require
     responsible parties to undertake remediation of hazardous waste disposal
     sites.  Penalties may be imposed for noncompliance.  At June 30, 1999, and
     December 31, 1998, accrued liabilities for remediation totaled $59 million
     and $48 million, respectively.  It is not presently possible to estimate
     the ultimate amount of all remediation costs that might be incurred or the
     penalties that may be imposed.  Receivables for recoverable costs from
     certain states, under programs to assist companies in cleanup efforts
     related to underground storage tanks at retail marketing outlets, were $47
     million at June 30, 1999, and $41 million at December 31, 1998.

          For a number of years, the Marathon Group has made substantial capital
     expenditures to bring existing facilities into compliance with various laws
     relating to the environment.  In the first six months of 1999 and for the
     years 1998 and 1997, such capital expenditures totaled $29 million, $124
     million and $81 million, respectively.  The Marathon Group anticipates
     making additional such expenditures in the future; however, the exact
     amounts and timing of such expenditures are uncertain because of the
     continuing evolution of specific regulatory requirements.


<PAGE> 44

                        MARATHON GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


     11.  (Continued)

         At June 30, 1999, and December 31, 1998, accrued liabilities for
    platform abandonment and dismantlement totaled $142 million and $141
    million, respectively.

          Guarantees by USX and its consolidated subsidiaries of the liabilities
     of an affiliated entity of the Marathon Group totaled $131 million at June
     30, 1999, and December 31, 1998.

          At June 30, 1999, the Marathon Group's pro rata share of obligations
     of LOOP LLC and various pipeline affiliates secured by throughput and
     deficiency agreements totaled $163 million.  Under the agreements, the
     Marathon Group is required to advance funds if the affiliates are unable to
     service debt.  Any such advances are prepayments of future transportation
     charges.

          The Marathon Group's contract commitments to acquire property, plant
     and equipment and long-term investments at June 30, 1999, totaled $861
     million compared with $624 million at December 31, 1998.



<PAGE> 45

                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     The Marathon Group includes Marathon Oil Company ("Marathon") and certain
other subsidiaries of USX Corporation ("USX"), which are engaged in worldwide
exploration and production of crude oil and natural gas; domestic refining,
marketing and transportation of petroleum products primarily through Marathon
Ashland Petroleum ("MAP"), owned 62% by Marathon; and other energy related
businesses.  Net income and related per share amounts are net of Ashland Inc.'s
38% minority interest in MAP's income.  The Management's Discussion and Analysis
should be read in conjunction with the Marathon Group's Financial Statements and
Notes to Financial Statements.  The discussion of Results of Operations should
be read in conjunction with the Supplemental Statistics provided on page 61.

     Certain sections of Management's Discussion and Analysis include forward-
looking statements concerning trends or events potentially affecting the
businesses of the Marathon Group.  These statements typically contain words such
as "anticipates", "believes", "estimates", "expects", "targets", "scheduled" or
similar words indicating that future outcomes are uncertain.  In accordance with
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995, these statements are accompanied by cautionary language identifying
important factors, though not necessarily all such factors, that could cause
future outcomes to differ materially from those set forth in forward-looking
statements.  For additional risk factors affecting the businesses of the
Marathon Group, see Supplementary Data - Disclosures About Forward-Looking
Statements in the USX Annual Report on Form 10-K for the year ended December 31,
1998.

<PAGE> 46
                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

Results of Operations
---------------------
     Revenues for the second quarter and first six months of 1999 and 1998 are
summarized in the following table:

<TABLE>
<CAPTION>
                                                Second Quarter    Six Months
                                                    Ended           Ended
                                                   June 30         June 30
(Dollars in millions)                            1999    1998    1999     1998
                                                -----   -----   -----    -----
<S>                                            <C>     <C>    <C>      <C>
Exploration & production ("E&P")                 $743    $564  $1,359   $1,129
Refining, marketing & transportation            4,655   4,943   8,848    9,552
Other energy related businesses                   134      73     240      181
                                                ------  ------  ------   ------
     Revenues of reportable segments           $5,532  $5,580 $10,447  $10,862

Items not allocated to segments:
Gain on ownership change in MAP                    -     (2)       -       246
Other (a)                                         (7)     -      (23)       24
Elimination of intersegment revenues             (44)    (44)    (92)     (90)
Administrative revenues                            -      (4)      -       (1)
                                               ------  ------  ------   ------
     Total Group revenues                      $5,481  $5,530 $10,332  $11,041
                                               ======  ======  ======   ======
</TABLE>

Items included in both revenues and costs and expenses, resulting in no effect
on income:

<TABLE>
<CAPTION>
<S>                                            <C>       <C>   <C>      <C>
Consumer excise taxes on petroleum
  products and merchandise                     $1,003    $958  $1,916   $1,834
Matching crude oil and refined product
  buy/sell transactions settled in cash           698     994   1,570    1,982

---------
<FN>
(a)Represents in 1999, loss on sale of Scurlock and Carnegie, and in 1998, a
   gas contract settlement.
</TABLE>

     E&P revenues increased by $179 million in the second quarter of 1999 from
the comparable prior-year period.  The increase primarily reflected increased
domestic liquid hydrocarbon prices and volumes.  For the first six months of
1999, E&P revenues increased by $230 million from the prior-year period due to
higher domestic liquid hydrocarbon volumes and prices and international gas
volumes, partially offset by lower worldwide natural gas prices.

     Refining, marketing and transportation revenues decreased by $288 million
in the second quarter of 1999 from the comparable prior-year period.  The
decrease primarily reflected the loss of revenues from Scurlock Permian LLC,
partially offset by higher volumes of refined product sales, increased refined
product prices and higher merchandise sales.  For the first six months of 1999,
refining, marketing and transportation revenues decreased by $704 million from
the prior-year period primarily due to the factors discussed previously, except
for refined product prices, which decreased.  Merchandise sales increased by $52
million and $108 million from last year's second quarter and first six months,
respectively.


<PAGE> 47
                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     Other energy related businesses revenues increased by $61 million in the
second quarter of 1999 from the comparable prior-year period.  For the first six
months of 1999, revenues increased by $59 million from the prior-year period.
The increase in both periods primarily reflected increased oil and gas resale
activity and higher equity earnings from increased pipeline throughput.

     Income from operations for the second quarter and first six months of 1999
and 1998 are set forth in the following table:

<TABLE>
<CAPTION>
                                                Second Quarter    Six Months
                                                    Ended           Ended
                                                   June 30         June 30
(Dollars in millions)                            1999    1998    1999     1998
                                                -----   -----   -----    -----
<S>                                               <C>     <C>    <C>      <C>
E&P
 Domestic                                         $93     $41    $131     $115
 International (a)                                 31      32      29       82
                                                ------  ------  ------   ------
   Income for E&P reportable segment              124      73     160      197
Refining, marketing & transportation              228     397     273      525
Other energy related businesses (b)                19       3      34       17
                                                ------  ------  ------   ------
     Income for reportable segments              $371    $473    $467     $739

Items not allocated to segments:
 Administrative expenses (c)                      $(31)   $(21)   $(57)    $(59)
 IMV reserve adjustment (d)                        66       3     415       28
 Estimated loss on sale of assets (e)               (7)     -      (23)      -
 Gain on ownership change & trans. charges-MAP (f)  -       (2)     -      223
 E&P int'l impairment & dom. contract settlement (g)-       -       -       (76)
                                                ------  ------  ------   ------
     Total Group income from operations          $399    $453    $802     $855
                                                ======  ======  ======   ======
--------
<FN>
(a)Where applicable, second quarter and six months 1999 results include
   Marathon Canada Limited, formerly Tarragon Oil and Gas Limited, which was
   acquired by Marathon on August 11, 1998.
(b)Includes domestic natural gas and crude oil marketing and transportation,
   and power generation.
(c)Includes the portion of the Marathon Group's administrative costs not
   charged to the operating segments and the portion of USX corporate general
   and administrative costs allocated to the Marathon Group.
(d)The inventory market valuation ("IMV") reserve reflects the extent to which
   the recorded LIFO cost basis of crude oil and refined products inventories
   exceeds net realizable value.  See Note 8 to the Marathon Group Financial
   Statements.
(e)For additional information regarding the loss on the sale of Scurlock
   Permian LLC and the estimated loss on the sale of Carnegie Natural Gas
   Company and affiliated subsidiaries, see Note 4 to the Marathon Group
   Financial Statements.
(f)The gain on ownership change and one-time transition charges relate to the
   formation of MAP.  For additional discussion of the gain on ownership change
   in MAP, see Note 10 to the Marathon Group Financial Statements.
(g)This represents a write-off of certain non-revenue producing international
   investments and the gain from the resolution of contract disputes with a
   purchaser of the Marathon Group's natural gas production from certain
   domestic properties.
</TABLE>


<PAGE> 48
                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     Income for reportable segments in the second quarter of 1999 declined by
$102 million from last year's second quarter, due primarily to lower refined
product margins, partially offset by higher domestic liquid hydrocarbon prices
and production and increased refined product sales volumes.  Income for
reportable segments in the first six months of 1999 decreased by $272 million
from the first six months of 1998, due primarily to lower refined product
margins and lower natural gas prices, partially offset by increased domestic
liquid hydrocarbon production and higher domestic liquid hydrocarbon prices.

     Worldwide E&P ("upstream") segment income in the second quarter of 1999
increased by $51 million from last year's second quarter.  Results in the first
six months of 1999 decreased by $37 million from the same period in 1998.

     Domestic E&P income in the second quarter of 1999 increased by $52 million
from last year's second quarter.  This increase was mainly due to higher liquid
hydrocarbon prices.  Results in the first six months of 1999 increased by $16
million from the same period in 1998.  The increase was primarily due to lower
exploration expense, increased liquid hydrocarbon and natural gas production and
increased liquid hydrocarbon prices, partially offset by lower natural gas
prices.

     International E&P income in the second quarter of 1999 decreased by $1
million from last year's second quarter.  Results in the first six months of
1999 decreased by $53 million from the same period in 1998.  This decrease was
mainly due to lower liquid hydrocarbon and natural gas production in Europe,
higher exploration expense and lower natural gas prices.

     Refining, marketing and transportation ("downstream") segment income in the
second quarter of 1999 decreased by $169 million from last year's second
quarter.  Results in the first six months 1999 decreased by $252 million from
the same period in 1998.  The decreases in both periods were mainly due to lower
refined product margins, partially offset by recognized mark-to-market
derivative gains from nonhedging activities, increased refined product sales
volumes and increased merchandise sales at Speedway SuperAmerica LLC.

     Other energy related businesses segment income in the second quarter of
1999 increased by $16 million from last year's second quarter.  Results in the
first six months of 1999 increased by $17 million from the same period in 1998.
The 1999 results included a reversal of abandonment accruals ($10 million)
resulting from revised cost estimates and higher equity earnings as a result of
increased pipeline throughput.

Items not allocated to segments

     Administrative expenses in the second quarter of 1999 increased by $10
million from last year's second quarter.  The increase was primarily due to
higher accruals for employee benefit plans.

     IMV reserve adjustment - When U. S. Steel Corporation acquired Marathon Oil
Company in March 1982, crude oil and refined product prices were at historically
high levels.  In applying the purchase method of accounting, the Marathon
Group's crude oil and refined product inventories were revalued by reference to
current prices at the time of acquisition, and this became the new LIFO cost
basis of the inventories.  Generally accepted accounting principles require that
inventories be carried at lower of cost or market.  Accordingly, the Marathon
Group has established an IMV reserve to reduce the cost basis of its inventories
to net realizable value.  Quarterly adjustments to the IMV reserve result in
noncash charges or credits to income from operations.
   

<PAGE> 49

                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     When Marathon acquired the crude oil and refined product inventories
associated with Ashland's RM&T operations on January 1, 1998, the Marathon Group
established a new LIFO cost basis for those inventories.  The acquisition cost
of these inventories lowered the overall average cost of the Marathon Group's
combined RM&T inventories.  As a result, the price threshold at which an IMV
reserve will be recorded has also been lowered.  This acquisition resulted in a
one-time reduction in the IMV reserve, yielding a net favorable IMV reserve
adjustment of $25 million in the first quarter of 1998.
   
   These adjustments affect the comparability of financial results from period
to period as well as comparisons with other energy companies, many of which do
not have such adjustments.  Therefore, the Marathon Group reports separately the
effects of the IMV reserve adjustments on financial results.  In management's
opinion, the effects of such adjustments should be considered separately when
evaluating operating performance.

     Net interest and other financial costs in the first six months of 1999
increased by $43 million from the comparable 1998 period, mainly due to
increased costs resulting from higher average debt levels and lower interest
income.

     The provision for estimated income taxes in the first six months of 1999
decreased by $49 million from the comparable 1998 period due to a decline in
income before taxes.

     Net income for the second quarter and first six months decreased by $28
million and $92 million, respectively, in 1999 from 1998, primarily reflecting
the factors discussed above.

Cash Flows
----------
     Net cash provided from operating activities was $337 million in the first
six months of 1999, compared with $847 million in the first six months of 1998.
The $510 million decrease mainly reflected lower profitability, unfavorable
working capital changes and distributions by MAP to Ashland of $206 million in
the first six months of 1999 as compared to $130 million in the comparable 1998
period.  The favorable working capital change reported in the first six months
of 1998 was due to a temporary change in excise tax payment patterns, which
reversed later in the year.

     Capital expenditures in the first six months of 1999 totaled $532 million,
compared with $550 million in the comparable 1998 period.  For additional
information regarding capital expenditures, refer to the Supplemental Statistics
on page 61.

     Cash from disposal of assets was $178 million in the first six months 1999,
compared with $30 million in the comparable 1998 period.  Proceeds in 1999 were
mainly from the sale of Scurlock Permian LLC and domestic production properties.


<PAGE> 50

                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     The net change in restricted cash was a net withdrawal of $19 million in
the first six months of 1999, compared to a net deposit of $383 million in the
comparable 1998 period.  The 1999 amount primarily represents net cash withdrawn
for the purchase of domestic production properties.  The 1998 amount primarily
represents the proceeds from a Cdn$550 million loan agreement Marathon entered
into to finance a portion of the Tarragon Oil and Gas Limited acquisition, which
were restricted to collateralize a loan and invested in short-term investments.

     Loans and advances to affiliates were $56 million in the first six months
of 1999, compared with $58 million in the comparable 1998 period.  Cash outflows
in both periods mainly reflected funding provided to equity affiliates for
capital projects, primarily the Sakhalin II project in Russia.

     Repayments of loans and advances to affiliates were $63 million in the
first six months of 1998 as a result of repayments by Sakhalin Energy Investment
Company, Ltd. of advances made by Marathon in conjunction with the Sakhalin II
project in Russia.

     Contract commitments for property, plant and equipment acquisitions and
long-term investments at June 30, 1999 totaled $861 million compared with $624
million at December 31, 1998. The increase was primarily due to the pending 
acquisition of certain Ultramar Diamond Shamrock refining, marketing and 
transportation assets.

     Financial obligations, which consist of the Marathon Group's portion of USX
debt and preferred stock of a subsidiary attributed to both groups, as well as
debt specifically attributed to the Marathon Group, increased by $119 million in
the first six months of 1999.  Financial obligations increased primarily because
capital expenditures and dividend payments exceeded cash from operating
activities and proceeds from asset sales.  These obligations were partially
funded by a reduction in cash of $58 million.

Derivative Instruments
----------------------
     See Quantitative and Qualitative Disclosure About Market Risk for
discussion of derivative instruments and associated market risk for the Marathon
Group.

Liquidity
---------
     For discussion of USX's liquidity and capital resources, see Management's
Discussion and Analysis of USX Consolidated Financial Condition, Cash Flows and
Liquidity.


<PAGE> 51

                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

Environmental Matters, Contingencies and Commitments
----------------------------------------------------
     The Marathon Group has incurred and will continue to incur substantial
capital, operating and maintenance, and remediation expenditures as a result of
environmental laws and regulations.  To the extent these expenditures, as with
all costs, are not ultimately reflected in the prices of the Marathon Group's
products and services, operating results will be adversely affected.  The
Marathon Group believes that substantially all of its competitors are subject to
similar environmental laws and regulations.  However, the specific impact on
each competitor may vary depending on a number of factors, including the age and
location of its operating facilities, marketing areas, production processes and
whether or not it is engaged in the petrochemical business, power business or
the marine transportation of crude oil and refined products.

     USX has been notified that it is a potentially responsible party ("PRP") at
16 waste sites related to the Marathon Group under the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") as of June 30,
1999.  In addition, there are 7 sites related to the Marathon Group where USX
has received information requests or other indications that USX may be a PRP
under CERCLA but where sufficient information is not presently available to
confirm the existence of liability.

     There are also 108 additional sites, excluding retail marketing outlets,
related to the Marathon Group where remediation is being sought under other
environmental statutes, both federal and state, or where private parties are
seeking remediation through discussions or litigation.  Of these sites, 17 were
associated with properties conveyed to MAP by Ashland for which Ashland has
retained liability for all costs associated with remediation.

     At many sites, USX is one of a number of parties involved and the total
cost of remediation, as well as USX's share thereof, is frequently dependent
upon the outcome of investigations and remedial studies.  The Marathon Group
accrues for environmental remediation activities when the responsibility to
remediate is probable and the amount of associated costs is reasonably
determinable.  As environmental remediation matters proceed toward ultimate
resolution or as additional remediation obligations arise, charges in excess of
those previously accrued may be required.



<PAGE> 52

                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     In October 1998, the National Enforcement Investigations Center and Region
V of the United States Environmental Protection Agency  ("EPA") conducted a
multi-media inspection of MAP's Detroit refinery.  Subsequently, in November
1998, Region V conducted a multi-media inspection of MAP's Robinson refinery.
These inspections covered compliance with the Clean Air Act (New Source
Performance Standards, Prevention of Significant Deterioration, and the National
Emission Standards for
Hazardous Air Pollutants for Benzene), the Clean Water Act (Permit exceedances
for the Waste Water Treatment Plant), reporting obligations under the Emergency
Planning and Community Right to Know Act and the handling of process waste.
Although MAP has been advised as to certain compliance issues regarding MAP's
Detroit refinery, it is not known when complete findings on the results of the
inspections will be issued.  Thus far, MAP has been served with two Notices of
Violation ("NOV") and two Findings of Violation in connection with the multi-
media inspection at its Detroit refinery, and a NOV as a result of the
inspection at its Robinson refinery.  MAP can contest the factual and the legal
basis for the allegations prior to the EPA taking enforcement action.  At this
time, it is not known when complete findings on the results of these multi-media
inspections will be issued.
     
     USX is the subject of, or a party to, a number of pending or threatened
legal actions, contingencies and commitments relating to the Marathon Group
involving a variety of matters, including laws and regulations relating to the
environment.  See Note 11 to the Marathon Group Financial Statements for a
discussion of certain of these matters.  The ultimate resolution of these
contingencies could, individually or in the aggregate, be material to the
Marathon Group Financial Statements.  However, management believes that USX will
remain a viable and competitive enterprise even though it is possible that these
contingencies could be resolved unfavorably to the Marathon Group.  See
discussion of Liquidity in USX Consolidated Management's Discussion and Analysis
of Financial Condition and Results of Operations.

Outlook
-------
     The outlook regarding the Marathon Group's upstream revenues and income is
largely dependent upon future prices and volumes of liquid hydrocarbons and
natural gas.  Prices have historically been volatile and have frequently been
affected by unpredictable changes in supply and demand resulting from
fluctuations in worldwide economic activity and political developments in the
world's major oil and gas producing and consuming areas.  Any significant
decline in prices could have a material adverse effect on the Marathon Group's
results of operations.  A prolonged decline in such prices could also adversely
affect the quantity of crude oil and natural gas reserves that can be
economically produced and the amount of capital available for exploration and
development.


<PAGE> 53

                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     Marathon's 1999 worldwide liquid hydrocarbon production is currently
estimated to average in the range of 215,000 to 220,000 barrels per day ("bpd").
Worldwide natural gas volumes for 1999 are expected to be approximately 1.35
billion cubic feet per day ("bcfpd").  These estimates reflect the anticipated
sale of Marathon fields in Egypt, as well as timing delays in both domestic and
international offshore developments.  Marathon expects liquid hydrocarbon
production to increase approximately seven percent annually in 2000 and 2001.
Natural gas volumes in 2000 are expected to be flat with 1999 and up
approximately four percent in 2001.  These projections are based on known
discoveries and do not include the impact of potential or future major
acquisitions, dispositions, or wildcat drilling.

     On July 16, 1999, Marathon agreed to sell its interests in two fields in
Egypt.  The transaction included a 50 percent interest in the Ashrafi oilfield
offshore in the southwest Gulf of Suez and a 25 percent interest in the El Qar'a
natural gas and condensate field in the Nile Delta.  Marathon's second quarter
production was about 6,000 bpd from the two fields.  The transaction is expected
to close in the third quarter of 1999 with an effective date of June 1, 1999.
The sale is subject to final approval by the Egyptian authorities, consents of
third parties and satisfaction of customary closing conditions.

     On July 5, 1999, oil production commenced from the Piltun-Astokhskoye field
offshore Sakahlin Island in the Russian Far East Region.  Marathon holds a 37.5%
interest in Sakhalin Energy Investment Company Ltd. ("Sakhalin Energy"), which
is the first enterprise to develop and produce oil and gas resources in Russia
under a production sharing agreement.  Production, limited to the ice-free
season of the year, is expected to reach 90,000 gross barrels of oil per day by
the start of the second producing season in 2000.

     On May 27, 1999, Marathon was awarded a 10 percent equity interest in
Blocks 31 and 32 offshore Angola.  The blocks, which are located approximately
90 miles northwest of Luanda in water depths between 5,400 and 9,200 feet, are
adjacent to Blocks 15 and 17 where major discoveries by others have been made.

     Marathon, bidding with others, was recently awarded three parcels offshore
Nova Scotia.  Marathon and its partners submitted high gross bids of $118
million with Marathon's share being approximately $39 million.  The high bids
represent exploration expenditures which will be made during the initial five
years of a nine-year license.  Marathon has a 30, 33.75 and 37.5 percent
interest in Parcels 11, 18 and 10, respectively and will be operator of Parcel
11.


<PAGE> 54

                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     The above discussion includes forward-looking statements with respect to
projected liquid hydrocarbon production levels and natural gas volumes for 1999,
2000 and 2001 and timing/levels of gross production for Sakhalin Energy.  These
statements are based on a number of assumptions, including (among others)
prices, amount of capital available for exploration and development, worldwide
supply and demand for petroleum products, regulatory constraints, reserve
estimates, production decline rates of mature fields, timing of commencing
production from new wells, timing and results of future development drilling,
reserve replacement rates, and other geological, operating and economic
considerations.  In addition, development of new production properties in
countries outside the United States may require protracted negotiations with
host governments and is frequently subject to political considerations, such as
tax regulations, which could adversely affect the
economics of projects.  To the extent these assumptions prove inaccurate and/or
negotiations and other considerations are not satisfactorily resolved, actual
results could be materially different than present expectations.

     Downstream income of the Marathon Group is largely dependent upon refining
crack spreads (the difference between light product prices and crude costs).
Refined product margins have been historically volatile and vary with the level
of economic activity in the various marketing areas, the regulatory climate and
the available supply of crude oil and refined products.

     On May 24, 1999, MAP signed an agreement with Ultramar Diamond Shamrock
("UDS") to purchase 179 UDS owned-and-operated convenience stores, 5 product
terminals and an assignment of supply contracts for about 240 branded UDS jobber
stations in Michigan.  Additionally, MAP will lease a sixth product terminal
from UDS.  The transaction is expected to close later this year.  This is a
forward-looking statement.  Some factors that could potentially affect the
timing of the UDS closing include (among others) receipt of government
approvals, consents of third parties and satisfaction of customary closing
conditions.

     On May 20, 1999, MAP reached an agreement with P.M.I. Comercio
Internacional, S.A. de C.V., (PMI), an affiliate of Petroleos Mexicanos,
(PEMEX), to purchase approximately 90,000 bpd of heavy Maya crude oil.  The
multi-year contract will begin upon completion of a 34,500 bpd delayed-coking
project planned for MAP's refinery in Garyville, Louisiana.  This work is
anticipated to be completed in fourth quarter 2001.  This is a forward-looking
statement.  Some factors that could potentially affect the completion of the
delayed-coking project include (among others) levels of cash flow from
operations, obtaining the necessary construction and environmental permits,
unforeseen hazards such as weather conditions and regulatory constraints.

     On August 3, 1999, Marathon announced a voluntary early retirement
incentive program.  Eligibility is extended to approximately 500 employees in
specific organizations and groups, which does not include MAP and Information
Technology employees.  Retirement effective dates under this program will be
November 1, 1999.

<PAGE> 55

                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

Year 2000 Readiness Disclosure
------------------------------
The Marathon Group is executing Year 2000 action plans which include:

*    prioritizing and focusing on those computerized and automated systems and
  processes ("systems") critical to the Marathon Group's operations in terms of
  material operational, safety, environmental and financial risk to the company.
*    allocating and committing appropriate resources to fix the problem.
*    developing detailed contingency plans for those systems critical to the
  operations in terms of material operational, safety, environmental and
  financial risk to the company.
*    communicating with, and aggressively pursuing, critical third parties to
  help ensure the Year 2000 readiness of their products and services through use
  of mailings, telephone contacts, and the inclusion of Year 2000 readiness
  language in purchase orders and contracts.
*    performing rigorous Year 2000 tests of critical systems.
*    participating in, and exchanging Year 2000 information with industry trade
  associations, such as the American Petroleum Institute ("API").
*    engaging qualified outside engineering and information technology
  consulting firms to assist in the Year 2000 inventory, assessment and
  readiness.

State of Readiness

     Information Technology (IT) systems are 96% ready as of June 30, 1999.  IT
systems are expected to be 100% ready by September 30, 1999 with minor
exceptions.  The exceptions identified currently are third party software
vendors whose upgrade schedules have been delayed until fourth quarter 1999.  In
these cases, contingency plans are scheduled to be in place by September 30,
1999 for the affected software to ensure there will be no significant business
impact.

     Inventorying of Non-Information Technology (Non-IT) systems and assessment
of these inventoried systems was 99% complete as of June 30, 1999.  Of the
inventory assessed, few systems require remediation.  Non-IT systems are
scheduled to be Year 2000 ready by the end of third quarter 1999.

     The following chart provides the percent of completion for the (i)
inventory of systems and processes that may be affected by the Year 2000 ("Y2K
Inventory"), (ii) analysis performed to determine the Year 2000 date impact of
inventoried systems and processes ("Y2K Impact Assessment") and (iii) overall
Year 2000 readiness of the Marathon Group's Year 2000 inventory ("Y2K Readiness
of Overall Inventory").  The percent of completion for Y2K Readiness of Overall
Inventory includes all inventory systems not date impacted, those systems
already Year 2000 ready and those corrected and made Year 2000 ready through the
renovation/replacement, testing and implementation activities; however, the
implementation of certain Year 2000 ready IT systems has been deferred until the
fourth quarter of 1999 due to third party software vendor upgrade schedules.

<PAGE> 56

<TABLE>
<CAPTION>
                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

                                                 Percent Completed

                                                                 Y2K
                                                         Y2K  Readiness
As of June 30, 1999                                     Impact    of
                                                 Y2K   Assess- Overall
                                              Inventory  ment Inventory
                                                ------  ------  ------
<S>                                               <C>     <C>      <C>
Information Technology                            100%    100%     96%
Non-Information Technology                         99%     99%     97%
</TABLE>

Third Parties

     Third parties include suppliers, customers and vendors. Contacts have been
made with critical third parties to determine if they will be able to provide
their services to the Marathon Group after the Year 2000. Third party vendors'
responses have been graded in order to rate their Y2K readiness.  Those with an
average or below average grade have been contacted directly by the appropriate
business units to discuss their Y2K readiness.  Using a Year 2000 ready test
environment, testing is underway on third party software to validate that it is
Year 2000 ready.  In addition, third party software that poses a risk to a
business unit is being included within the business unit's contingency plans.

The Costs to Address Year 2000 Issues

     Total costs incurred as of June 30, 1999, were $25 million, including $11
million of incremental costs.  The total estimated costs associated with Year
2000 readiness are expected to be $39 million, of which $20 million are
incremental costs.  This reflects a decrease of $3 million from the previously
reported estimate.

The Risks of the Company's Year 2000 Issues

     The most reasonably likely worst case Year 2000 scenario would be the
inability of critical third party suppliers, such as utility providers,
telecommunication companies, drilling equipment suppliers, platform suppliers,
crude oil suppliers and pipeline carriers, to continue providing their products
and services.  This could pose the greatest material operational, safety,
environmental and/or financial risk to the company. These critical third party
suppliers have generally indicated that they are or expect to be Year 2000 ready
in a timely manner.

     The lack of accurate and timely Year 2000 date impact information from
suppliers of automation and process control systems and processes is also a
concern.  Without quality information from suppliers, specifically on embedded
chip technology, some Year 2000 problems could go undetected until after January
1, 2000.  According to information received from suppliers of these systems,
oil and gas industry surveys and Marathon Group's own test results,
These  embedded systems do not appear to pose significant problems or involve
the possibility of major failures that could affect vital operations.

     An additional risk is the ability of some third party software vendors to
provide timely software upgrades to make their product Year 2000 ready.
Communication continues with these vendors to expedite the completion of
upgrades as much as possible.  Contingency plans are being developed in case
timely upgrades are not available.

<PAGE> 57

                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

     In a report issued February 24, 1999 by the United States Senate Special
Committee on the Year 2000 Technology Problem, the committee expressed concern
that many of the countries from which the United States imports oil are
significantly behind the United States in their Year 2000 remediation efforts
and oil production and transportation could be at some risk.  In 1998, 64% or
577,000 bpd of the crude oil processed by MAP's refineries was from foreign
sources and acquired primarily from various foreign national oil companies,
producing companies and traders.  Of this total, approximately 330,000 bpd was
acquired from the Middle East.  According to a report by the American Petroleum
Institute and a February 1999 report by the United States Department of Energy,
the four largest exporters of petroleum to the United States expect all critical
systems to be Year 2000 ready by the end of 1999. If any country is unable to
export oil, other countries may be able to increase production and exports.
According to the API report, in any event, import deliveries of oil would not
stop immediately as there is always crude oil en route to the United States.  In
addition, the United States government has a Strategic Petroleum Reserve to act
as a buffer to protect against temporary interruptions in foreign oil supplies.
The Marathon Group could be adversely affected by a disruption in supply if
alternate sources of supply are not available.

     In the initial review of assets to be acquired from UDS, Marathon
determined that certain facilities and systems may not be completely Y2K ready.
Once the transaction is closed, Marathon will undertake thorough Y2K inventory,
assessment and remediation (where necessary) of acquired facilities.  Marathon
expects this work can be completed by December 31, 1999.  If the closing is
delayed or if the required remediation is greater than expected, there is a risk
some of the acquired facilities may not be Y2K ready.  The completion
percentages in the chart on page 56 do not include UDS IT or Non-IT systems.

Contingency Planning

     Marathon Group business units are reviewing their written contingency plans
within their business units and with other business units with which they
interact.  Overall, contingency planning is 66% completed, which is slightly
ahead of schedule.  These plans are to be completed and tested, when practical,
by the end of third quarter 1999.  A multiple occurrence emergency response
drill for Year 2000 was conducted during the last week of July 1999.

     Planning is progressing with the year-end Marathon Group Year 2000
monitoring center.  Marathon will also be participating in the API Year 2000
monitoring center currently in development.  These centers will be used to track
and report the Y2K impact as each time zone rolls over to January 1, 2000.  As
Marathon Group business units and API member companies report problems and
related solutions, the information will be shared with other business units so
they can proactively prepare to deal with a similar situation.

     This discussion includes forward-looking statements of the Marathon Group's
efforts and management's expectations and costs relating to Year 2000 readiness.
The Marathon Group's ability to achieve Year 2000 readiness and the level of
incremental costs associated therewith, could be adversely impacted by, among
other things, the availability and cost of programming and testing resources,
vendors' ability to install or modify proprietary hardware and software and
unanticipated problems identified in the ongoing Year 2000 readiness review.
Also, the Marathon Group's ability to mitigate Year 2000 risks could be
adversely impacted by the effectiveness of contingency plans.


<PAGE> 58

                        MARATHON GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

Accounting Standard
--------------------
     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards  ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities".  This new standard requires recognition of
all derivatives as either assets or liabilities at fair value.  This new
standard may result in additional volatility in both current period earnings and
other comprehensive income as a result of recording recognized and unrecognized
gains and losses resulting from changes in the fair value of derivative
instruments.  At adoption this new standard requires a comprehensive review of
all outstanding derivative instruments to determine whether or not their use
meets the hedge accounting criteria.  Upon adoption, there may be derivative
instruments employed by USX that do not meet all of the designated hedge
criteria and they will be reflected in income on a mark-to-market basis.  Based
upon the strategies currently used by USX and the level of activity related to
forward exchange contracts and commodity-based derivative instruments in recent
periods, USX does not anticipate the effect of adoption to have a material
impact on either financial position or results of operations of the Marathon
Group.  The effective date of SFAS No. 133 was amended by SFAS No. 137.  USX
plans to adopt the standard effective January 1, 2001, as required.
     

<PAGE> 59

                        MARATHON GROUP OF USX CORPORATION
                          QUANTITATIVE AND QUALITATIVE
                          DISCLOSURES ABOUT MARKET RISK
                    -----------------------------------------
Management Opinion Concerning Derivative Instruments
--------------------------------------

USX utilizes derivative instruments principally in hedging activities, whereby
gains and losses are generally offset by price changes in the underlying
commodity.  Recently, the Marathon Group's risk management policy was expanded
to include the use of derivative instruments for certain nonhedging and trading
activities.  These instruments will be marked-to-market each period and the
related income or loss will be included in income from operations.  Management
believes that use of derivative instruments along with risk assessment
procedures and internal controls does not expose the Marathon Group to material
risk.  The use of derivative instruments could materially affect the Marathon
Group's results of operations in particular quarterly or annual periods.
However, management believes that use of derivative instruments will not have a
material adverse effect on financial position or liquidity.

Commodity Price Risk and Related Risks
--------------------------------------
     Sensitivity analysis of the incremental effects on pretax income of
hypothetical 10% and 25% changes in commodity prices for open derivative
commodity instruments as of June 30, 1999 are provided in the following
table(a):

<TABLE>
<CAPTION>
                                                      Incremental Decrease
                                                        in Pretax Income
                                                    Assuming a Hypothetical
                                                       Price Change of(a)
(Dollars in millions)                                  10%          25%
--------------------------------------------------------------------------------
<S>                                                   <C>          <C>
Derivative Commodity Instruments
Marathon Group (b) (c)
    Crude oil (price increase) (d)                     $21.8        $56.9
    Natural gas (price decrease) (d)                     9.6         24.8
    Refined products (price increase) (d)                 .1           .2
<FN>
      (a)  Gains and losses on derivative commodity instruments are generally
      offset by price changes in the underlying commodity.  Effects of these
      offsets are not reflected in the sensitivity analyses.  Amounts reflect
      the estimated incremental effect on pretax income of hypothetical 10% and
      25% changes in closing commodity prices for each open contract position
      at June 30, 1999. Marathon Group management evaluates its portfolio of
      derivative commodity instruments on an ongoing basis and adds or revises
      strategies to reflect anticipated market conditions and changes in risk
      profiles.  Changes to the portfolio subsequent to June 30, 1999 would
      cause future pretax income effects to differ from those presented in the
      table.
      (b)  The number of net open contracts varied throughout second quarter
      1999 from a low of 2,476 contracts at June 30, 1999, to a high of 34,199
      contracts at April 16, 1999, and averaged 25,914 for the quarter.  The
      derivative commodity instruments used and hedging positions taken also
      varied throughout second quarter 1999, and will continue to vary in the
      future.  Because of these variations in the composition of the portfolio
      over time, the number of open contracts, by itself, cannot be used to
      predict future income effects.
      (c)  The calculation of sensitivity amounts for basis swaps assumes that
      the physical and paper indices are perfectly correlated.  Gains and
      losses on options are based on changes in intrinsic value only.

<PAGE> 60

                        MARATHON GROUP OF USX CORPORATION
                          QUANTITATIVE AND QUALITATIVE
                          DISCLOSURES ABOUT MARKET RISK
                    -----------------------------------------

      (d)  The direction of the price change used in calculating the
      sensitivity amount for each commodity reflects that which would result in
      the largest incremental decrease in pretax income when applied to the
      derivative commodity instruments used to hedge that commodity.
</TABLE>

Interest Rate Risk
------------------
     As of June 30, 1999, the discussion of the Marathon Group's interest rate
risk has not changed materially from that presented in Quantitative and
Qualitative Disclosures About Market Risk included in USX's 1998 Form 10-K.

Foreign Currency Exchange Rate Risk
-----------------------------------
     As of June 30, 1999, the discussion of the Marathon Group's foreign
currency exchange rate risk has not changed materially from that presented in
Quantitative and Qualitative Disclosures About Market Risk included in USX's
1998 Form 10-K.

Equity Price Risk
-----------------

     As of June 30, 1999, the Marathon Group had no material exposure to equity
price risk.

Safe Harbor
-----------
     The Marathon Group's Quantitative and Qualitative Disclosures About Market
Risk include forward-looking statements with respect to management's opinion
about risks associated with the Marathon Group's use of derivative instruments.
These statements are based on certain assumptions with respect to market prices
and industry supply and demand for crude oil, natural gas and refined products.
To the extent that these assumptions prove to be inaccurate, future outcomes
with respect to the Marathon Group's derivative usage may differ materially from
those discussed in the forward-looking statements.

     

<PAGE> 61

<TABLE>
<CAPTION>
                        MARATHON GROUP OF USX CORPORATION
                       SUPPLEMENTAL STATISTICS (Unaudited)
                ------------------------------------------------

                                                Second Quarter    Six Months
                                                Ended June 30   Ended June 30
(Dollars in millions)                            1999(a)   1998    1999(a)  1998
--------------------------------------------------------------------------------
<S>                                            <C>     <C>     <C>      <C>
INCOME (LOSS) FROM OPERATIONS
 Exploration & Production ("E&P")
   Domestic                                       $93     $41    $131     $115
   International                                   31      32      29       82
                                                 -----   -----   -----    -----
     Income For E&P Reportable Segment            124      73     160      197
 Refining, Marketing & Transportation             228     397     273      525
 Other Energy Related Businesses(b)                19       3      34       17
                                                 -----   -----   -----    -----
       Income For Reportable Segments            $371    $473    $467      739

Items Not Allocated To Segments:
 Administrative Expenses                          $(31)   $(21)  $(57)     $(59)
 Inventory Market Val. Res. Adjustment             66       3     415       28
 Estimated Loss on Sale of Assets                   (7)     -     (23)       -
 Gain on Ownership Change & Trans. Charges - MAP     -      (2)     -       223
 E&P Int'l Impairment & Dom. Contract Settlement   -       -         -      (76)
                                                ------  ------  ------   ------
     Marathon Group Income From Operations       $399    $453    $802     $855

CAPITAL EXPENDITURES
 Exploration & Production                        $261    $256    $410     $423
 Refining, Marketing & Transportation              73      69     119      119
 Other (c)                                          2       6       3        8
                                                 -----   -----   -----    -----
     Total                                       $336    $331    $532     $550

EXPLORATION EXPENSE
 Domestic                                         $44     $54     $66      $92
 International (d)                                 15      21      56       65
                                                 -----   -----   -----    -----
     Total                                        $59     $75    $122     $157

INVESTMENTS(RETURNS) & OTHER AFFILIATE
   ACTIVITY-NET                                   $37    $(22)    $56       $3

OPERATING STATISTICS

Net Liquid Hydrocarbon Production (e):
     United States                              148.7   137.9   145.9    131.9
     Europe                                      34.6    45.6    34.3     43.0
     Other International                         29.8    13.8    30.4      9.8
                                               ------  ------  ------   ------
       Worldwide                                213.1   197.3   210.6    184.7

Net Natural Gas Production (f):
     United States                              741.8   723.2   755.5    735.6
     Europe (g)                                 346.9   402.8   373.1    428.0
     Other International                        171.0    12.7   180.2     12.9
                                               ------  ------ -------  -------
       Total Consolidated                      1259.7  1138.7  1308.8   1176.5
     Equity Affiliate                            35.6    36.6    35.6     39.6
                                              ------- ------- -------  -------
       Worldwide                               1295.3  1175.3  1344.4   1216.1

Average Equity Sales Prices (h):
 Liquid Hydrocarbons (per Bbl)
   Domestic                                    $13.56   $9.97  $11.41   $10.98
   International                                14.87   12.85   12.80    13.24
 Natural Gas (per Mcf)
   Domestic                                     $1.81   $1.87   $1.64    $1.89
   International                                 1.77    2.05    1.82     2.11

Crude Oil Refined (e)                           939.0   923.2   893.8    914.3
Refined Products Sold (e)                      1259.3  1178.9  1190.5   1160.8
Matching buy/sell volumes included in refined
       products sold (e)....................     56.0    32.1    47.1    39.8
--------------
<FN>
      (a)  Where applicable, second quarter and six months 1999 results include
      Marathon Canada Limited, formerly Tarragon Oil and Gas Limited, which was
      acquired by Marathon on August 11, 1998.
      (b)  Includes domestic natural gas and crude oil marketing and
      transportation, and power generation.
      (c)  Includes other energy related businesses and corporate capital
      expenditures.
      (d)  Six months ended June 30, 1998 includes $30 million for impairment
      in first quarter 1998.
      (e)  Thousands of barrels per day
      (f)  Millions of cubic feet per day
      (g)  Includes gas acquired for injection and subsequent resale of 16.1,
      17.8, 24.5 and 25.2 mmcfd in the second quarters and six months year-to-
      date 1999 and 1998, respectively.
      (h)  Prices exclude gains and losses from hedging activities.
</TABLE>


<PAGE> 62

Part I - Financial Information (Continued):

   C.  U. S. Steel Group

<TABLE>
<CAPTION>
                      U. S. STEEL GROUP OF USX CORPORATION
                       STATEMENT OF OPERATIONS (Unaudited)
                      ------------------------------------
                                                Second Quarter    Six Months
                                                    Ended           Ended
                                                   June 30         June 30
(Dollars in millions, except per share amounts)  1999    1998    1999     1998
--------------------------------------------------------------------------------
<S>                                             <C>     <C>     <C>      <C>
REVENUES:
 Sales                                          $1,303  $1,689  $2,549   $3,359
 Income (loss) from affiliates                     (10)     28     (33)      43
 Gain (loss) on disposal of assets                  10      17      (2)      28
 Other income (loss)                                 1      (1)      1       (1)
                                                ------  ------  ------   ------
   Total revenues                                1,304   1,733   2,515    3,429
                                                ------  ------  ------   ------
COSTS AND EXPENSES:
 Cost of sales (excludes items shown below)      1,160   1,436   2,317    2,891
 Selling, general and administrative
  expenses (credits)                               (95)    (53)   (165)     (99)
 Depreciation, depletion and amortization           79      72     150      149
 Taxes other than income taxes                      57      61     112      109
                                                ------  ------  ------   ------
   Total costs and expenses                      1,201   1,516   2,414    3,050
                                                ------  ------  ------   ------
INCOME FROM OPERATIONS                             103     217     101      379
Net interest and other financial costs              20      22      28       50
                                                ------  ------  ------   ------
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY LOSS   83     195       73    329
Provision for estimated income taxes                28      59      27      106
                                                ------  ------  ------   ------
INCOME BEFORE EXTRAORDINARY LOSS                    55     136      46      223
Extraordinary loss on extinguishment of debt,
 net of income tax                                   -       -       5        -
                                                ------  ------  ------   ------
NET INCOME                                          55     136      41      223
Dividends on preferred stock                         3       3       5        5
                                                ------  ------  ------   ------
NET INCOME APPLICABLE TO STEEL STOCK               $52    $133     $36     $218
                                                ======  ======  ======   ======
STEEL STOCK DATA:
 Income before extraordinary loss                  $52    $133     $41     $218
   - Per share - basic                             .60    1.53     .47     2.51
            - diluted                              .59    1.46     .47     2.41
 Extraordinary loss, net of income tax               -       -       5        -
   - Per share - basic and diluted                   -       -     .06        -
 Net income                                        $52    $133     $36     $218
   - Per share - basic                             .60    1.53     .41     2.51
            - diluted                              .59    1.46     .41     2.41

 Dividends paid per share                          .25     .25     .50      .50

 Weighted average shares, in thousands
   - Basic                                      88,387  86,953  88,378   86,777
   - Diluted                                    92,647  94,507  88,379   94,314

<FN>
Selected notes to financial statements appear on pages 65-71.
</TABLE>


<PAGE> 63

<TABLE>
<CAPTION>
                      U. S. STEEL GROUP OF USX CORPORATION
                            BALANCE SHEET (Unaudited)
                      ------------------------------------
                                        
                                                     June 30    December 31
(Dollars in millions)                                  1999         1998
--------------------------------------------------------------------------------
<S>                                                 <C>             <C>
ASSETS

Current assets:
  Cash and cash equivalents                              $20            $9
  Receivables, less allowance for doubtful
   accounts of $5 and $9                                 423           392
  Inventories                                            768           698
  Deferred income tax benefits                           176           176
                                                      ------        ------
     Total current assets                              1,387         1,275

Investments and long-term receivables,
 less reserves of $3 and $10                             620           743
Property, plant and equipment, less accumulated
 depreciation, depletion and amortization of
 $6,075 and $5,939                                     2,499         2,500
Prepaid pensions                                       2,327         2,172
Other noncurrent assets                                   51            59
                                                       -----        ------
     Total assets                                     $6,884        $6,749
                                                      ======        ======
LIABILITIES

Current liabilities:
  Notes payable                                          $17           $13
  Accounts payable                                       612           501
  Payroll and benefits payable                           315           330
  Accrued taxes                                          132           150
  Accrued interest                                        11            10
  Long-term debt due within one year                      15            12
                                                      ------        ------
     Total current liabilities                         1,102         1,016

Long-term debt, less unamortized discount                491           464
Long-term deferred income taxes                          174           129
Employee benefits                                      2,316         2,315
Deferred credits and other liabilities                   474           484
Preferred stock of subsidiary                             66            66
USX obligated mandatorily redeemable convertible preferred
 securities of a subsidiary trust holding solely junior
 subordinated convertible debentures of USX              182           182

STOCKHOLDERS' EQUITY
Preferred stock                                            3             3
Common stockholders' equity                            2,076         2,090
                                                      ------        ------
     Total stockholders' equity                        2,079         2,093
                                                      ------        ------
     Total liabilities and stockholders' equity       $6,884        $6,749
                                                      ======        ======
<FN>
Selected notes to financial statements appear on pages 65-71.
</TABLE>


<PAGE> 64

<TABLE>
<CAPTION>
                      U. S. STEEL GROUP OF USX CORPORATION
                       STATEMENT OF CASH FLOWS (Unaudited)
                      ------------------------------------
                                                        Six Months Ended
                                                            June 30
(Dollars in millions)                                  1999         1998
--------------------------------------------------------------------------------
<S>                                                      <C>           <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

OPERATING ACTIVITIES:
Net income                                               $41          $223
Adjustments to reconcile to net cash provided
 from operating activities:
  Extraordinary loss                                       5             -
  Depreciation, depletion and amortization               150           149
  Pensions and other postretirement benefits            (143)         (107)
  Deferred income taxes                                   49            89
  (Gain) loss on disposal of assets                        2           (28)
  Changes in:
     Current receivables         - sold                   30             -
                                 - operating turnover    (60)           94
Inventories                                              (70)          (33)
     Current accounts payable and accrued expenses        76          (116)
  All other - net                                         44           (29)
                                                      ------        ------
     Net cash provided from operating activities         124           242
                                                      ------        ------
INVESTING ACTIVITIES:
Capital expenditures                                    (153)         (136)
Disposal of assets                                         4            15
Restricted cash     -withdrawals                           -             3
             - deposits                                   (6)           (3)
Affiliates - investments - net                             -           (63)
All other - net                                           (3)           13
                                                      ------        ------
     Net cash used in investing activities              (158)         (171)
                                                      ------        ------
FINANCING ACTIVITIES:
Increase (decrease) in U. S. Steel Group's portion of USX
 consolidated debt                                       105           (47)
Specifically attributed debt repayments                  (11)           (3)
Steel Stock issued                                         -            25
Dividends paid                                           (49)          (48)
                                                      ------        ------
     Net cash provided from (used in)
      financing activities                                45           (73)
                                                      ------        ------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS      11            (2)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR             9            18
                                                      ------        ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD               $20           $16
                                                      ======        ======
Cash used in operating activities included:
  Interest and other financial costs paid (net of
   amount capitalized)                                  $(42)         $(39)
  Income taxes paid, including settlements with
   the Marathon Group                                     (5)          (14)

<FN>
Selected notes to financial statements appear on pages 65-71.
</TABLE>


<PAGE> 65

                      U. S. STEEL GROUP OF USX CORPORATION
                     SELECTED NOTES TO FINANCIAL STATEMENTS
                     --------------------------------------
                                   (Unaudited)
                                        
                                        
     1.   The information furnished in these financial statements is unaudited
     but, in the opinion of management, reflects all adjustments necessary for a
     fair presentation of the results for the periods covered.  All such
     adjustments are of a normal recurring nature unless disclosed otherwise.
     These financial statements, including selected notes, have been prepared in
     accordance with the applicable rules of the Securities and Exchange
     Commission and do not include all of the information and disclosures
     required by generally accepted accounting principles for complete financial
     statements.  Certain reclassifications of prior year data have been made to
     conform to 1999 classifications.  Additional information is contained in
     the USX Annual Report on Form 10-K for the year ended December 31, 1998.

     2.   The financial statements of the U. S. Steel Group include the
     financial position, results of operations and cash flows for all businesses
     of USX other than the businesses, assets and liabilities included in the
     Marathon Group and a portion of the corporate assets and liabilities and
     related transactions which are not separately identified with ongoing
     operating units of USX.  These financial statements are prepared using the
     amounts included in the USX consolidated financial statements.  Corporate
     amounts reflected in these financial statements are determined based upon
     methods which management believes to be reasonable.  The accounting
     policies applicable to the preparation of the financial statements of the
     U. S. Steel Group may be modified or rescinded in the sole discretion of
     the Board of Directors of USX (Board), although the Board has no present
     intention to do so.  The Board may also adopt additional policies depending
     on the circumstances.

          Although the financial statements of the U. S. Steel Group and the
     Marathon Group separately report the assets, liabilities (including
     contingent liabilities) and stockholders' equity of USX attributed to each
     such Group, such attribution of assets, liabilities (including contingent
     liabilities) and stockholders' equity between the U. S. Steel Group and the
     Marathon Group for purposes of preparing their respective financial
     statements does not affect legal title to such assets and responsibility
     for such liabilities.  Holders of USX-U. S. Steel Group Common Stock (Steel
     Stock) and USX-Marathon Group Common Stock (Marathon Stock) are holders of
     common stock of USX and continue to be subject to all the risks associated
     with an investment in USX and all of its businesses and liabilities.
     Financial impacts arising from one Group that affect the overall cost of
     USX's capital could affect the results of operations and financial
     condition of the other Group.  In addition, net losses of either Group, as
     well as dividends or distributions on any class of USX Common Stock or
     series of Preferred Stock and repurchases of any class of USX Common Stock
     or series of Preferred Stock at prices in excess of par or stated value,
     will reduce the funds of USX legally available for payment of dividends on
     both classes of Common Stock.  Accordingly, the USX consolidated financial
     information should be read in connection with the U. S. Steel Group
     financial information.

          The financial statement provision for estimated income taxes and
     related tax payments or refunds have been reflected in the U. S. Steel
     Group and the Marathon Group financial statements in accordance with USX's
     tax allocation policy for such groups.  In general, such policy provides
     that the consolidated tax provision and related tax payments or refunds are
     allocated


<PAGE> 66

                      U. S. STEEL GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


     2.   (Continued)

          between the U. S. Steel Group and the Marathon Group for group
     financial statement purposes, based principally upon the financial income,
     taxable income, credits, preferences and other amounts directly related to
     the respective groups.

          The provision for estimated income taxes for the U. S. Steel Group is
     based on tax rates and amounts which recognize management's best estimate
     of current and deferred tax assets and liabilities.  Differences between
     the combined interim tax provisions of the U. S. Steel and Marathon Groups
     and USX consolidated are allocated to each group based on the relationship
     of the individual group provisions to the combined interim provisions.

     3.   The U. S. Steel Group's total comprehensive income for the second
     quarter of 1999 and 1998 was $51 million and $134 million, respectively,
     and $33 million and $221 million for the six months of 1999 and 1998,
     respectively.

     4.   The U. S. Steel Group consists of one operating segment, U. S. Steel.
     U. S. Steel is engaged in the production and sale of steel mill products,
     coke and taconite pellets.  U. S. Steel also engages in the following
     related business activities:  the management of mineral resources, domestic
     coal mining, engineering and consulting services, and real estate
     development and management.  The results of segment operations are as
     follows:

<TABLE>
<CAPTION>
                                                      Second Quarter Ended
                                                            June 30
(In millions)                                          1999         1998
--------------------------------------------------------------------------------
<S>                                                   <C>           <C>
Revenues:
  Customer                                            $1,292        $1,689
  Intergroup (a)                                          11             -
  Equity in earnings (losses) of
       unconsolidated affiliates                        (10)            28
  Other                                                   11            16
                                                      ------        ------
     Total revenues                                   $1,304        $1,733
                                                      ======        ======
Segment income (loss)                                    $(9)         $154
                                                      ======        ======
<FN>
(a)  Intergroup sales and transfers were conducted on an arm's-length basis.
</TABLE>


<PAGE> 67

                      U. S. STEEL GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


     4.   (Continued)

<TABLE>
<CAPTION>
                                                        Six Months Ended
                                                            June 30
(In millions)                                          1999         1998
--------------------------------------------------------------------------------
<S>                                                   <C>           <C>
Revenues:
  Customer                                            $2,537        $3,358
  Intergroup (a)                                          12             -
  Equity in earnings (losses) of
    unconsolidated affiliates                           (33)            43
  Other                                                   21            28
                                                      ------        ------
     Total revenues                                   $2,537        $3,429
                                                      ======        ======
Segment income (loss)                                   $(68)         $260
                                                      ======        ======
<FN>
(a)  Intergroup sales and transfers were conducted on an arm's-length basis.
</TABLE>



          The following schedules reconcile segment revenue and income (loss) to
     amounts reported in the U. S. Steel Group's financial statements:


<TABLE>
<CAPTION>
                                                      Second Quarter Ended
                                                            June 30
(In millions)                                          1999         1998
--------------------------------------------------------------------------------
<S>                                                   <C>           <C>
Revenues of reportable segment and Group revenues     $1,304        $1,733
                                                      ======        ======

Income (loss) for reportable segment                     $(9)         $154
Items not allocated to segment:
  Administrative expenses                                 (8)           (5)
  Pension credits                                        140            93
  Costs related to former business activities            (20)          (25)
                                                      ------        ------
     Total Group income from operations                 $103          $217
                                                      ======        ======
</TABLE>


<PAGE> 68
                      U. S. STEEL GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)

<TABLE>
<CAPTION>
     4.   (Continued)
                                                        Six Months Ended
                                                            June 30
(In millions)                                          1999         1998
--------------------------------------------------------------------------------
<S>                                                   <C>           <C>
Revenues of reportable segment                        $2,537        $3,429
Loss on investment in RTI stock used to satisfy
 indexed debt obligations                                (22)            -
                                                      ------        ------
     Total Group revenues                             $2,515        $3,429
                                                      ======        ======

Income (loss) for reportable segment                    $(68)         $260
Items not allocated to segment:
  Administrative expenses                                (13)          (14)
  Pension credits                                        248           186
  Costs related to former business activities            (44)          (53)
  Loss on investment in RTI stock used to satisfy
   indexed debt obligations                              (22)            -
                                                      ------        ------
     Total Group income from operations                 $101          $379
                                                      ======        ======
</TABLE>

     5.   The method of calculating net income per common share for the Steel
     Stock and Marathon Stock reflects the Board's intent that the separately
     reported earnings and surplus of the U. S. Steel Group and the Marathon
     Group, as determined consistent with the USX Restated Certificate of
     Incorporation, are available for payment of dividends on the respective
     classes of stock, although legally available funds and liquidation
     preferences of these classes of stock do not necessarily correspond with
     these amounts.

          Basic net income per share is calculated by adjusting net income for
     dividend requirements of preferred stock and is based on the weighted
     average number of common shares outstanding.

          Diluted net income per share assumes conversion of convertible
     securities for the applicable periods outstanding and assumes exercise of
     stock options, provided in each case, the effect is not antidilutive.

          See Note 9, of the Notes to USX Consolidated Financial Statements for
     the computation of income per share.

     6.   On March 31, 1999, USX irrevocably deposited with a trustee the entire
     5.5 million common shares it owned in RTI International Metals, Inc. (RTI).
     The deposit of the shares resulted in the satisfaction of USX's obligation
     under its 6-3/4% Exchangeable Notes (indexed debt) due February 1, 2000.
     Under the terms of the indenture, the trustee will exchange the RTI shares
     for the notes at maturity.  The notes are exchangeable for shares of RTI
     common stock on a variable basis up to one share per note depending on the
     market price of RTI common stock at maturity.  Ownership of any shares not
     required for satisfaction of the indexed debt will revert to USX.

          As a result of the above transaction, USX recorded in the first
     quarter of 1999 an extraordinary loss of $5 million, net of a $3 million
     income tax benefit, representing prepaid interest expense and the write-off
     of unamortized debt issue costs, and a pretax charge of $22 million,
     representing

<PAGE> 69

                      U. S. STEEL GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


     6.   (Continued)

          the difference between the carrying value of the investment in RTI and
     the carrying value of the indexed debt, which is included in gain (loss) on
     disposal of assets.  This transaction represents a noncash investing and
     financing activity of $56 million, which was the carrying value of the
     indexed debt at March 31, 1999.

          Additionally, a $13 million credit to adjust the indexed debt to
     settlement value at March 31, 1999, is included in net interest and other
     financial costs.

          In December 1996, USX had issued $117 million of notes indexed to the
     common share price of RTI.  At maturity, USX would have been required to
     exchange the notes for shares of RTI common stock, or redeem the notes for
     the equivalent amount of cash.  Since USX's investment in RTI was
     attributed to the U. S. Steel Group, the indexed debt was also attributed
     to the U. S. Steel Group.  USX had a 26% investment in RTI and accounted
     for its investment using the equity method of accounting.

     7.   Income from operations includes net periodic pension credits of $88
     million and $51 million in the second quarter of 1999 and 1998,
     respectively, ($141 million and $102 million in the first six months of
     1999 and 1998, respectively.)  These pension credits are primarily noncash
     and for the most part are included in selling, general and administrative
     expenses.

          In the second quarter of 1999, the U. S. Steel Group recognized a one-
     time pretax settlement gain of $35 million, related mainly to pension costs
     of employees who retired under the U. S. Steel Group 1998 voluntary early
     retirement program.  This noncash settlement gain is included in selling,
     general and administrative expenses.

     8.   Inventories are carried at the lower of cost or market.  Cost of
     inventories is determined primarily under the last-in, first-out (LIFO)
     method.

<TABLE>
<CAPTION>
                                                         (In millions)
                                                   -------------------------
                                                     June 30    December 31
                                                       1999          1998
                                                   -----------  -----------
    <S>                                                 <C>          <C>
    Raw materials                                       $128         $185
    Semi-finished products                               368          282
    Finished products                                    217          182
    Supplies and sundry items                             55           49
                                                        ----          ----
      Total                                             $768         $698
                                                        ====          ====
</TABLE>


<PAGE> 70
                      U. S. STEEL GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)

     9.   The U. S. Steel Group participates in an agreement (the program) to
     sell an undivided interest in certain accounts receivable.  Payments are
     collected from the sold accounts receivable; the collections are reinvested
     in new accounts receivable for the buyers; and a yield, based on defined
     short-term market rates, is transferred to the buyers.  At June 30, 1999,
     the amount sold under the program that had not been collected was $350
     million, which will be forwarded to the buyers at the end of the agreement,
     or in the event of earlier contract termination.  If the U. S. Steel Group
     does not have a sufficient quantity of eligible accounts receivable to
     reinvest in for the buyers, the size of the program will be reduced
     accordingly.  The buyers have rights to a pool of receivables that must be
     maintained at a level of at least 115% of the program size.  In the event
     of a change in control of USX, as defined in the agreement, the U. S. Steel
     Group may be required to forward payments collected on sold accounts
     receivable to the buyers.

     10.  At June 30, 1999, accounts receivable includes an estimated income tax
     receivable from the Marathon Group of $24 million, determined in accordance
     with the tax allocation policy discussed in Note 2.

     11.  USX is the subject of, or a party to, a number of pending or
     threatened legal actions, contingencies and commitments relating to the U.
     S. Steel Group involving a variety of matters including laws and
     regulations relating to the environment.  Certain of these matters are
     discussed below.  The ultimate resolution of these contingencies could,
     individually or in the aggregate, be material to the U. S. Steel Group
     financial statements.  However, management believes that USX will remain a
     viable and competitive enterprise even though it is possible that these
     contingencies could be resolved unfavorably to the U. S. Steel Group.  See
     discussion of Liquidity in USX Consolidated Management's Discussion and
     Analysis of Financial Condition and Results of Operations.

          The U. S. Steel Group is subject to federal, state and local laws and
     regulations relating to the environment.  These laws generally provide for
     control of pollutants released into the environment and require responsible
     parties to undertake remediation of hazardous waste disposal sites.
     Penalties may be imposed for noncompliance.  At June 30, 1999, and December
     31, 1998, accrued liabilities for remediation totaled $101 million and $97
     million, respectively.  It is not presently possible to estimate the
     ultimate amount of all remediation costs that might be incurred or the
     penalties that may be imposed.

          For a number of years, the U. S. Steel Group has made substantial

     capital expenditures to bring existing facilities into compliance with
     various laws relating to the environment.  In the first six months of 1999
     and for the years 1998 and 1997, such capital expenditures totaled $13
     million, $49 million and $43 million, respectively.  The U. S. Steel Group
     anticipates making additional such expenditures in the future; however, the
     exact amounts and timing of such expenditures are uncertain because of the
     continuing evolution of specific regulatory requirements.

<PAGE> 71

                      U. S. STEEL GROUP OF USX CORPORATION
               SELECTED NOTES TO FINANCIAL STATEMENTS (Continued)
               --------------------------------------------------
                                   (Unaudited)


     11.  (Continued)

          Guarantees by USX of the liabilities of affiliated entities of the U.
     S. Steel Group totaled $87 million at June 30, 1999.  In the event that any
     defaults of guaranteed liabilities occur, USX has access to its interest in
     the assets of the affiliates to reduce U. S. Steel Group losses resulting
     from these guarantees.  As of June 30, 1999, the largest guarantee for a
     single affiliate was $59 million.

          The U. S. Steel Group's contract commitments to acquire property,
     plant and equipment at June 30, 1999, totaled $122 million compared with
     $188 million at December 31, 1998.

     12.  On April 12, 1999, USX and Kobe Steel, Ltd. (Kobe Steel) announced
     that they had entered into a letter of intent with Blackstone Capital
     Partners II (Blackstone) to combine the steelmaking and bar producing
     assets of USS/Kobe Steel Company (USS/Kobe) with companies controlled by
     Blackstone, Republic Technologies International, Inc., Republic Engineered
     Steels, Inc. and Bar Technologies, Inc. (collectively Republic).  In
     addition, on August 6, 1999, USX agreed to a $15 million equity
     investment in Republic when the combination is consummated.  USX
     currently owns 50% of USS/Kobe and will own approximately 15% of
     Republic.  The seamless pipe business of USS/Kobe is excluded from this
     transaction and will continue to operate as a joint venture
     between USX and Kobe Steel.

    The transaction was subject to numerous conditions, including financing.
    As of the date of issuance of the accompanying financial statements, it was
    uncertain whether several of these conditions would be resolved and the
    transaction would be completed.  Due to these uncertainties, neither USX
    nor USS/Kobe recognized any financial effects of the transaction in the
    second quarter 1999.  On August 6, 1999, Republic received financing
    commitments sufficient to complete the transaction, which is scheduled to
    be closed on August 13, 1999.

    The estimated fair value of USX's investment in Republic, based upon
    preliminary information supplied by Republic, is approximately $80 million
    less than USX's carrying value of its investment in the steelmaking and bar
    producing assets of USS/Kobe.  Based on the resolution of the uncertainties
    and the anticipated closing of the transaction, USX expects to recognize an
    estimated impairment of $80 million in the third quarter of 1999.


<PAGE> 72
                      U. S. STEEL GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                 -----------------------------------------------

     The U. S. Steel Group includes U. S. Steel, which is engaged in the
production, transportation and sale of steel mill products, coke, and taconite
pellets; the management of mineral resources; domestic coal mining; real estate
development; and engineering and consulting services.  Certain business
activities are conducted through joint ventures and partially owned companies,
such as USS/Kobe Steel Company ("USS/Kobe"), USS-POSCO Industries ("USS-POSCO"),
PRO-TEC Coating Company ("PRO-TEC"), Transtar, Inc. ("Transtar"), Clairton 1314B
Partnership, and VSZ U. S. Steel, s. r.o.  Management's Discussion and Analysis
should be read in conjunction with the U. S. Steel Group's Financial Statements
and Notes to Financial Statements.  The discussion of Results of Operations
should be read in conjunction with the Supplemental Statistics provided on page
85.

     Certain sections of Management's Discussion and Analysis include forward-
looking statements concerning trends or events potentially affecting the
businesses of the U. S. Steel Group. These statements typically contain words
such as "anticipates," "believes," "estimates," "expects" or similar words
indicating that future outcomes are not known with certainty and subject to risk
factors that could cause these outcomes to differ significantly from those
projected. In accordance with "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, these statements are accompanied by cautionary
language identifying important factors, though not necessarily all such factors,
that could cause future outcomes to differ materially from those set forth in
forward-looking statements. For additional risk factors affecting the businesses
of the U. S. Steel Group, see Supplementary Data -- Disclosures About Forward-
Looking Statements in USX 1998 Form 10-K.

Results of Operations
---------------------
     Revenues for the second quarter and first six months of 1999 and 1998 are
set forth in the following table:

<TABLE>
<CAPTION>
                                               Second Quarter    Six Months
                                                    Ended           Ended
                                                   June 30         June 30
(Dollars in millions)                            1999   1998     1999     1998
                                                ------  ------  ------   ------

<S>                                             <C>     <C>     <C>      <C>
Sales                                           $1,303  $1,689  $2,549   $3,359
Income (loss) from affiliates                      (10)     28     (33)      43
Gain (loss) on disposal of assets                   10      17      (2)      28
Other income (loss)                                  1      (1)      1       (1)
                                                 -----   -----   -----    -----
 Total Revenues                                 $1,304  $1,733  $2,515   $3,429
</TABLE>

     Total revenues decreased by $429 million and $914 million in the second
quarter and first six months of 1999, respectively, compared with the same
periods in 1998.  The decreases primarily reflected lower average steel product
prices (prices decreased $53/ton and $46/ton in the second quarter and first six
months of 1999, respectively), lower shipment volumes (shipments decreased
309,000 tons and 861,000 tons in the second quarter and first six months of
1999, respectively), and lower income from affiliates.

<PAGE> 73

                      U. S. STEEL GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION
                  --------------------------------------------
                                        
     Income from operations for the U. S. Steel Group for the second quarter and
first six months of 1999 and 1998 is set forth in the following table:

<TABLE>
<CAPTION>
                                               Second Quarter    Six Months
                                                    Ended           Ended
                                                   June 30         June 30
(Dollars in millions)                             1999   1998     1999     1998
                                                ------  ------  ------   ------
<S>                                               <C>     <C>     <C>      <C>
Segment income (loss) for U. S. Steel
   Operations (a)                                 $(9)   $154    $(68)    $260
Items not allocated to segment:
 Pension credits                                   140      93     248      186
 Administrative expenses                            (8)     (5)    (13)     (14)
 Costs related to former business activities (b)   (20)    (25)    (44)     (53)
 Loss on investment in RTI stock used to satisfy
  indexed debt obligations (c)                       -       -     (22)       -
                                                 -----   -----   -----    -----
  Total Group income from operations              $103    $217    $101     $379
                                                 =====   =====   =====    =====
-----
<FN>
         (a) Includes income (loss) from the production and sale of steel mill
      products, coke and taconite pellets; the management of mineral resources;
      domestic coal mining; real estate development; and engineering and
      consulting services.
         (b) Includes the portion of postretirement benefit costs and certain
      other expenses principally attributable to former business units of the
      U. S. Steel Group.
         (c) For further details, see Note 6 to the U. S. Steel Group Financial
      Statements.
</TABLE>

Segment income for U. S. Steel operations

     Segment income for U. S. Steel operations decreased $163 million and $328
million in the second quarter and first six months of 1999, respectively,
compared with the same periods in 1998.  The decreases in segment income were
primarily due to lower average steel prices, lower shipments and lower income
from affiliates. Segment income for the first six months included a $10 million
charge for environmental accruals. Results in second quarter 1998 included a
favorable $30 million (net of charges and reserves) insurance litigation
settlement pertaining to the Gary (Ind.) Works No. 8 blast furnace explosion.

     Steel product prices and shipment volumes continue to be negatively
affected by the ongoing effects of steel imports, and the continued weakness in
tubular and plate markets.

Items not allocated to segment

     Pension credits associated with pension plan assets and liabilities
allocated to pre-1987 retirees, former businesses, and certain corporate
activities  are not included in segment income for U. S. Steel operations. These
pension credits, which are primarily noncash, totaled $140 million and $248
million in the second quarter and first six months of 1999, respectively,
compared to $93 million and $186 million in the same period in 1998.  Pension
credits in the second quarter and first six months of 1999 included $35 million
for a one-time favorable settlement primarily related to the 1998 voluntary
early retirement program for salaried employees completed during the second
quarter 1999.

     Pension credits, combined with pension costs included in segment income for
U. S. Steel operations, resulted in net pension credits of $88 million and $140

<PAGE> 74

                      U. S. STEEL GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION
                  --------------------------------------------
                                        
million in the second quarter and first six months of 1999, respectively,
compared to $48 million and $97 million in the same periods in 1998.  Future net
pension credits can be volatile depending upon the future marketplace
performance of plan assets, changes in actuarial assumptions regarding such
factors as a selection of a discount rate and rate of return on assets, changes
in the amortization levels of transition amounts or prior period service costs,
plan amendments affecting benefit payout levels and profile changes in the
beneficiary populations being valued.  Changes in any of these factors could
cause net pension credits to change. To the extent net pension credits decline
in the future, income from operations would be adversely affected. For
additional information on pensions, see the discussion of "Outlook" below.

     Net interest and other financial costs for the second quarter and first six
months of 1999 and 1998 are set forth in the following table:

<TABLE>
<CAPTION>
                                               Second Quarter    Six Months
                                                    Ended           Ended
                                                   June 30         June 30
(Dollars in millions)                            1999   1998     1999     1998
                                                ------  ------  ------   ------
<S>                                                <C>     <C>     <C>      <C>
Net interest and other financial costs             $20     $22     $28      $50
Less:
  Favorable (unfavorable) adjustments to
  carrying value of indexed debt (a)                 -       -      13       (4)
                                                 -----   -----   -----    -----
Net interest and other financial costs
 adjusted to exclude above item                    $20     $22     $41      $46
                                                 =====   =====   =====    =====
-----
<FN>

       (a) For discussion, see Note 6 to the U. S. Steel Group Financial
        Statements.
</TABLE>

      
     Adjusted net interest and other financial costs decreased by $2 million and
$5 million in the second quarter and first six months of 1999, respectively, as
compared with the same periods in 1998.

     The provision for estimated income taxes in the second quarter and first
six months of 1999 decreased compared to the same periods in 1998 due to a
decline in income from operations.  The provision for estimated income taxes for
the second quarter and first six months of 1998 included a $9 million favorable
foreign tax adjustment as a result of a favorable resolution of foreign tax
litigation.

     The extraordinary loss on extinguishment of debt of $5 million (net of $3
million income tax benefit) in the first six months of 1999 represents prepaid
interest expense and the write-off of unamortized debt issue costs resulting
from the satisfaction of USX's obligation of its indexed debt. For further
discussion, see Note 6 to the U. S. Steel Group Financial Statements.

     Net income decreased $81 million and $182 million in the second quarter and
first six months of 1999, respectively, compared to the same periods in 1998,
primarily reflecting the factors discussed above.

Operating Statistics
--------------------
     Second quarter and first six months of 1999 steel shipments of 2.5 million
tons and 4.9 million tons, decreased 11% and 15%, respectively, from the same

<PAGE> 75
                                        
                      U. S. STEEL GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION
                  --------------------------------------------
                                        
periods in 1998. Raw steel production in the second quarter of 1999 of 3.1
million tons, increased 7% from the same period in 1998. Raw steel production in
the first six months of 1999 of 5.8 million tons, decreased 3% from the same
period in 1998.  Raw steel capability utilization in the second quarter of 1999
averaged 96.9%, compared to 90.9% in the same period in 1998. Raw steel
capability utilization in the first six months of 1999 averaged 92.0%, compared
to 95.3% in the same period in 1998.  Steel shipments, production and raw steel
capability utilization in the first six months of 1999 continued to be
negatively impacted by the ongoing effects of steel imports and weak plate and
tubular markets.

Cash Flows
----------
     Net cash provided from operating activities in the first six months of 1999
was $124 million, compared with $242 million  in the same period in 1998.  The
first six months of 1998 included proceeds of $38 million for the insurance
litigation settlement pertaining to the 1995 Gary Works No. 8 blast furnace
explosion.  Excluding this item, net cash provided from operating activities
decreased $80 million due mainly to decreased profitability.

     Capital expenditures in the first six months of 1999 were $153 million,
compared with $136 million in the same period in 1998.  Contract commitments for
capital expenditures at June 30, 1999, totaled $122 million, compared with $188
million at year-end 1998.

     Net cash used in investments in equity affiliates in the first six months
of 1998 of $63 million primarily reflects funding for entry into a joint venture
in Slovakia with VSZ a.s.

     Financial obligations (excluding the noncash satisfaction of the indexed
debt) increased by $94 million in the first six months of 1999.  Financial
obligations consist of the U. S. Steel Group's portion of USX debt and preferred
stock of a subsidiary attributed to both groups, as well as debt and financing
agreements specifically attributed to the U. S. Steel Group.  The increase in
financial obligations resulted from capital expenditures and dividend payments
exceeding cash from operating activities.

Derivative Instruments
     See Quantitative and Qualitative Disclosures About Market Risk for
discussion of derivative instruments and associated market risk for U. S. Steel
Group.

Liquidity
     For discussion of USX's liquidity and capital resources, see Management's
Discussion and Analysis of USX Consolidated Financial Condition, Cash Flows and
Liquidity.

Environmental Matters, Litigation and Contingencies
---------------------------------------------------
     The U. S. Steel Group has incurred and will continue to incur substantial
capital, operating and maintenance, and remediation expenditures as a result of
environmental laws and regulations. In recent years, these expenditures have
been mainly for process changes in order to meet Clean Air Act obligations,
although ongoing compliance costs have also been significant. To the extent
these expenditures, as with all costs, are not ultimately reflected in the
prices of the U. S. Steel Group's products and services, operating results will
be adversely affected. The U. S. Steel Group believes that all of its domestic
competitors are subject to similar environmental laws and regulations. However,
the specific impact on each competitor may vary depending on a number of
factors, including the age and location of its operating facilities, marketing
areas, production processes and the specific products and services it provides.
To the extent that competitors are not

<PAGE> 76
                                        
                      U. S. STEEL GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION
                  --------------------------------------------
                                        
required to undertake equivalent costs in their operations, the competitive
position of the U. S. Steel Group could be adversely affected.

     USX has been notified that it is a potential responsible party (``PRP'') at
25 waste sites related to the U. S. Steel Group under the Comprehensive
Environmental Response, Compensation and Liability Act (``CERCLA'') as of June
30, 1999.  In addition, there are 12 sites related to the U. S. Steel Group
where USX has received information requests or other indications that USX may be
a PRP under CERCLA but where sufficient information is not presently available
to confirm the existence of liability or make any judgment as to the amount
thereof. There are also 32 additional sites related to the U. S. Steel Group
where remediation is being sought under other environmental statutes, both
federal and state, or where private parties are seeking remediation through
discussions or litigation. At many of these sites, USX is one of a number of
parties involved and the total cost of remediation, as well as USX's share
thereof, is frequently dependent upon the outcome of investigations and remedial
studies. The U. S. Steel Group accrues for environmental remediation activities
when the responsibility to remediate is probable and the amount of associated
costs is reasonably determinable. As environmental remediation matters proceed
toward ultimate resolution or as additional remediation obligations arise,
charges in excess of those previously accrued may be required.

     USX is the subject of, or a party to, a number of pending or threatened
legal actions, contingencies and commitments relating to the U. S. Steel Group
involving a variety of matters, including laws and regulations relating to the
environment, certain of which are discussed in Note 11 to the U. S. Steel Group
Financial Statements. The ultimate resolution of these contingencies could,
individually or in the aggregate, be material to the U. S. Steel Group Financial
Statements. However, management believes that USX will remain a viable and
competitive enterprise even though it is possible that these contingencies could
be resolved unfavorably to the U. S. Steel Group.

Outlook
-------
     Shipment volumes in the third quarter for U. S. Steel Group are expected to
be higher than second quarter 1999.  However, the favorable effects of increased
shipments are expected to be more than offset by lower price realizations due to
continued unfavorable product mix, including a substantial amount of semi-
finished sales, and continued weakness in plate and tubular markets.  The third
quarter will also be impacted by higher benefit costs associated with the
recently ratified labor contract and unfavorable manufacturing costs related to
planned outages.  In recent years, demand for steel in the United States has
been at high levels. Any weakness in the United States economy for capital goods
or consumer durables could further adversely impact U. S. Steel Group's product
prices and shipment levels.

     On June 25, 1999, U. S. Steel reached an agreement with the United Steel
Workers of America ("USWA") on a new five-year labor contract covering
approximately 14,500 employees effective August 1, 1999.  The union membership
ratified the contract on August 6, 1999.  The new labor contract, which includes
$2.00 in hourly wage increases phased in over the term of the agreement
beginning in 2000 as well as pension and other benefit improvements for active
and retired employees and spouses, will result in higher labor and benefit costs
for the U. S. Steel Group each year throughout the term of the contract.  Net
pension credits for the U. S. Steel Group are estimated to be reduced by
approximately $5 million per month beginning August 1, 1999 for the balance of
the year. As a result of the pension changes in the new labor contract, net
pension credits for 1999 are now expected to total approximately $225 million,
which includes the $35 million for the one-time favorable settlement recorded in
the second quarter of 1999.  Management believes that this agreement is
competitive with labor agreements reached by U. S. Steel's major domestic
integrated competitors and thus does not believe that U. S. Steel's competitive
position with regard to such other competitors will be materially affected.



<PAGE> 77
                                        
                      U. S. STEEL GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION
                  --------------------------------------------
                                        
     During the third quarter of 1999, a number of minor outages are planned at
various U. S. Steel Group facilities that in aggregate are expected to result in
higher manufacturing costs.

     Steel imports to the United States accounted for an estimated 25%, 30% and
24% of the domestic steel market in the first four months of 1999, and for the
years 1998 and 1997, respectively.  Steel imports of cut-to-length plate and
cold-rolled increased 28% and 22%, respectively, in the first four months of
1999, compared to the same period in 1998.

     On September 30, 1998, USX joined with 11 other producers, the USWA and the
Independent Steelworkers Union ("ISU") to file trade cases against Japan,
Russia, and Brazil.  Those filings contended that millions of tons of unfairly
traded hot-rolled carbon sheet products have caused serious injury to the
domestic steel industry through rapidly falling prices and lost business. In the
case against Japan, on April 28, 1999, the U.S. Department of Commerce
("Commerce"), announced final antidumping ("AD") duty determinations and, on
June 11, 1999, the U.S.  International Trade Commission ("ITC") announced its
final determination that the imports from Japan were injuring the domestic
industry.  The final AD order against Japan was issued on June 23, 1999.  In the
cases against Brazil, on July 7, 1999, Commerce announced final countervailing
("CVD") and AD duty determinations and, contemporaneously, announced that it had
entered into agreements with Brazil to
suspend the investigations.  In the case against Russia, on July 13, 1999,
Commerce announced final AD duty determinations and, contemporaneously,
announced that it had entered into an agreement with Russia to suspend the
investigation.  In addition, Commerce announced that it had also entered into a
comprehensive agreement concerning all steel product imports from Russia except
for plate products and hot-rolled products.  Plate products from Russia are
subject to a suspension agreement signed in 1997.  USX is evaluating whether to
appeal the recently announced suspension agreements with Brazil and Russia.

     On February 16, 1999, USX joined with four other producers and the USWA to
file trade cases against eight countries (Japan, South Korea, India, Indonesia,
Macedonia, the Czech Republic, France, and Italy) concerning imports of cut-to-
length plate products.  AD cases were filed against all the countries and CVD
duty cases were filed against six of the countries.  On April 2, 1999, the ITC
issued its preliminary determination that the domestic industry was being
injured or threatened with injury as the result of imports from six of the
countries.  The ITC determined that the volume of imports from Macedonia and the
Czech Republic were negligible and had declined in importance in the United
States market relative to the other countries.  On July 20, 1999, Commerce
announced preliminary AD and CVD duty determinations.  The preliminary injury
determination and the preliminary duty determinations are subject to further
investigation by the ITC and Commerce.

     On June 2, 1999, USX joined with eight other producers and the USWA and the
ISU to file trade cases against twelve countries (Argentina, Brazil, China,
Indonesia, Japan, Russia, South Africa, Slovakia, Taiwan, Thailand, Turkey, and
Venezuela) concerning imports of cold-rolled products.  AD cases were filed
against all the countries and CVD duty cases were filed against Brazil,
Indonesia, Thailand, and Venezuela.  On July 19, 1999, the ITC issued its
preliminary determination that the domestic industry was being injured or
threatened with injury as the result of imports from all of the countries.  The
ITC, by a divided vote, decided to discontinue the CVD investigations of
subsidized imports from Indonesia, Thailand, and Venezuela.  Commerce is
expected to announce preliminary duty determinations later in the year. These
cases are subject to further investigation by both the ITC and Commerce.

     On June 30, 1999, USX joined with four other producers and the USWA to file
trade cases against five countries (the Czech Republic, Japan, Mexico, Romania,
and

<PAGE> 78
                                        
                      U. S. STEEL GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION
                  --------------------------------------------
                                        
South Africa) concerning imports of large and small diameter carbon and alloy
standard, line, and pressure pipe.  On July 20, 1999, Commerce announced its
decision to initiate an investigation and the ITC's preliminary staff hearing
was conducted on July 21, 1999.  The ITC's preliminary injury determination is
expected to be announced in mid-August and, assuming a preliminary determination
of injury, Commerce is expected to announce preliminary duty determinations
later in the year.  Any preliminary injury determination and preliminary duty
determinations are subject to further investigation by the ITC and Commerce.

     USX intends to file additional antidumping and countervailing duty
petitions if unfairly traded imports adversely impact, or threaten to adversely
impact, the results of the U. S. Steel Group.

   The forgoing discussion includes statements concerning anticipated steel
pricing, product mix, and shipment levels are forward-looking and are based upon
assumptions as to future product demand, prices and mix, and levels of steel
production capability, production and shipments.  These forward-looking
statements can be affected by imports, domestic and international economies,
domestic production capacity, and customer demand. In the event these
assumptions prove to be inaccurate, actual results may differ significantly from
those presently anticipated.
     
   On April 12, 1999, USX and Kobe Steel, Ltd. (Kobe Steel) announced that they
had entered into a letter of intent with Blackstone Capital Partners II
(Blackstone) to combine the steelmaking and bar producing assets of USS/Kobe
Steel Company (USS/Kobe) with companies controlled by Blackstone, Republic
Technologies International, Inc., Republic Engineered Steels, Inc. and Bar
Technologies, Inc. (collectively Republic).  In addition, on August 6, 1999, USX
agreed to a $15 million equity investment in Repubic when the combination is
consummated.  USX currently owns 50% of USS/Kobe and will own approximately 15%
of Republic.  The seamless pipe business of USS/Kobe is excluded from this
transaction and will continue to operate as a joint venture between USX and Kobe
Steel.

     The transaction was subject to numerous conditions, including financing.
As of the date of the issuance of the accompanying financial statements, it was
uncertain whether several of these conditions would be resolved and the
transaction would be completed.  Due to these uncertainties, neither USX nor
USS/Kobe recognized any financial effects of the transaction in the second
quarter 1999.  On August 6, 1999, Republic received financing commitments
sufficient to complete the transaction, which is scheduled to be closed on
August 13, 1999.

     The estimated fair value of USX's investment in Republic, based upon
preliminary information supplied by Republic, is approximately $80 million less
than USX's carrying value of its investment in the steelmaking and bar producing
assets of USS/Kobe.  Based on the resolution of the uncertainties and the
anticipated closing of the transaction, USX expects to recognize an estimated
impairment of $80 million in the third quarter of 1999.  The statement with
respect to the amount of the estimated impairment is forward-looking and is
based on a number of assumptions including but not limited to fair value
determination of Republic, equity investment and asset allocation.  In the 
event these assumptions prove to be inaccurate, the actual impairment may differ
significantly from the amount presently anticipated. 

     If the transaction closes as anticipated, Republic has stated that it
expects to incur operating losses through 2000, which will include restructuring
charges associated with the consolidation of the combined operations.  USX will
recognize its share of any such losses under the equity method of accounting.
   

<PAGE> 79
                                        
                      U. S. STEEL GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION
                  --------------------------------------------

Year 2000 Readiness Disclosure
------------------------------
     A multi-functional Year 2000 task force continues to execute a preparedness
plan which addresses readiness requirements for business computer systems,
technical infrastructure, end-user computing, third parties, manufacturing,
environmental operations, systems products produced and sold, and dedicated R&D
test facilities. The U. S. Steel Group is executing a Year 2000 readiness plan
which includes:

  .       prioritizing and focusing on those computerized and automated systems
          and processes critical to the operations in terms of material safety,
          operational, environmental, quality and financial risk to the company.
  .       allocating and committing appropriate resources to fix the problem.
  .       communicating with, and aggressively pursuing, critical third parties
          to help ensure the Year 2000 readiness of their products and services
          through use of mailings, telephone contacts, on-site assessments and
          the inclusion of Year 2000 readiness language in purchase orders and
          contracts.
  .       performing rigorous Year 2000 tests of critical systems.
  .       participating in, and exchanging Year 2000 information with industry
          trade associations, such as the American Iron & Steel Institute,
          Association of Iron & Steel Engineers and the Steel Industry Systems
          Association.
  .       engaging qualified outside engineering and information technology
          consulting firms to assist in the Year 2000 impact assessment and
          readiness effort.

State of Readiness

     The Year 2000 inventory and date impact assessment activities for both
information technology (IT) and non-IT systems/processes within the U. S. Steel
Group are complete. IT systems/processes are 98% Year 2000 ready as of June 30,
1999, and the non-IT area is 99% ready.  Progress on achieving Year 2000
readiness for both critical and non-critical systems/processes is ahead of the
stated U. S. Steel Group objectives. All systems/processes for IT and non-IT are
targeted to be Year 2000 ready, including testing on the exchange of information
among systems/processes (integration testing), by the end of September, 1999.
There are several systems/processes which will be replaced and/or upgraded with
third-party Year 2000 ready products and services during the third quarter,
1999; however, implementation schedules have been established for such
systems/processes.

     The remaining Year 2000 efforts in 1999 will primarily focus on (1)
tracking and verifying the readiness of third parties critical to the business
operations, (2) reviewing the effectiveness of the contingency plans that have
been developed, (3) establishing Year 2000 crisis management command centers,
(4) preparing and communicating final plans to the workforce and affected
entities for the transition to the new century and (5) conducting the final
round of Year 2000 assessments by the internal audit team.


<PAGE> 80
                                        
                      U. S. STEEL GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION
                  --------------------------------------------

     The following table provides the percent of completion for the inventory of
systems and processes that may be affected by the year 2000 ("Y2K Inventory"),
the analysis performed to determine the Year 2000 date impact on inventoried
systems and processes ("Y2K Impact Assessment") and the year 2000 readiness of
the U. S. Steel Group`s year 2000 inventory ("Y2K Readiness of Overall
Inventory"). The percent of completion for Y2K Readiness of Overall Inventory
includes all inventory items not date impacted, those items already Year 2000
ready and those corrected and made Year 2000 ready through the
renovation/replacement, testing and implementation activities.

<TABLE>
<CAPTION>
                                                   Percent Completed
                                                                 Y2K
                                                         Y2K  Readiness
                                                        Impact    of
                                                 Y2K   Assess- Overall
As of June 30, 1999                           Inventory  ment Inventory
                                                ------  ------  ------
<S>                                               <C>     <C>      <C>
Information Technology                            100%    100%     98%
Non-Information Technology                        100%    100%     99%
</TABLE>

Third Parties

The U. S. Steel Group continues to review and track the Year 2000 readiness of
its third party relationships (including, but not limited to outside processors,
process control systems and hardware suppliers, telecommunication providers, and
transportation carriers) who are critical to its operations. The majority of
contacts have been made with critical third parties to determine if they will be
able to provide their products and services to the U. S. Steel Group after the
Year 2000. An aggressive follow-up process with those third parties not
responding or returning an unacceptable response is underway. Communications
with U. S. Steel Group's third parties is an on-going process which includes
mailings, telephone contacts and on-site visits. If it is determined that there
is a significant risk with a third party, an effort will be made to work with
those third parties to resolve the issue, or a new provider of the same products
or services will be investigated and secured. As of June 30, 1999, the U. S.
Steel Group has sent out approximately 900 inquiries and over 92% have
responded. Approximately 490 of these third parties are considered critical
vendors/suppliers or outside steel processors.  The response rate for the
critical third parties is at 100%.  Follow-up phone assessments have been made
on 74% (362) of the critical third parties. For over 95% of those assessed to
date, there is a medium to high level of assurance that the critical third
parties will be Year 2000 ready. In addition, on-site Year 2000 assessments have
also been made on several critical third parties to verify the effectiveness and
accuracy of their responses.  Other on-site assessments are planned, as
conditions warrant. Additional phone and/or on-site assessments of critical
third parties, as deemed necessary, are scheduled for completion by the end of
third quarter, 1999; however, plans are to continue to monitor the readiness of
critical third parties for the remainder of 1999.

<PAGE> 81
                                        
                      U. S. STEEL GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION
                  --------------------------------------------
                                        
The Costs to Address Year 2000 Issues

     The current estimated cost associated with Year 2000 readiness, is
approximately $29 million, which includes $16 million in incremental cost. Total
costs incurred as of June 30, 1999, were $19 million, including $8 million of
incremental costs. In the third quarter, the estimated costs will be re-
evaluated in consideration of the remaining project activities including the
present state of readiness, implementation of contingency plans, continued
monitoring of critical third parties, preparations and transition to the new
century, and internal assessments of Year 2000 readiness.

Year 2000 Risks to the Company

     The most reasonably likely worst case Year 2000 scenario would be the
inability of third party suppliers, such as utility providers, telecommunication
companies, outside processors, and other critical suppliers, to continue
providing
their products and services. This could pose the greatest material safety,
operational, environmental, quality and/or financial risk to the company.

     In addition, the lack of accurate and timely Year 2000 date impact
information from suppliers of automation and process control systems and
processes is a concern to the U. S. Steel Group. Without timely and reliable
information from suppliers, specifically on embedded chip technology, schedules
for attaining readiness can be impacted and some Year 2000 problems could go
undetected during the transition to the year 2000.

Contingency Planning

     Since no one can predict with certainty the outcome of this unprecedented
Year 2000 event, the U. S. Steel Group's primary strategy and defense against
Year 2000 related problems is to diligently continue to mitigate risks through
review and extensive testing of its critical systems/processes.  From a Year
2000 contingency planning perspective, contingency plans have been developed and
documented to provide continuity in the key business operations and corollary
customer service.  These plans were developed by contingency planning work
groups representing each business/producing location with an executive steering
committee overseeing the development process.
     
     The contingency planning strategies generally being employed include; (1)
idle or shut down facilities for a short duration (minutes/hours in most cases
as opposed to days) over the critical period during the change of the century to
protect personnel and safeguard equipment and facilities, (2) curtail the
processing of hot metal during the highest period of risk, (3) schedule extra
key personnel over the critical turn of the century period to prepare the
processing environment, to monitor conditions and to evaluate when it is safe to
resume normal operations, (4) procure auxiliary power generation for critical
functions with consideration to both the potential impact of Year 2000 and
extreme inclement weather conditions, (5) establish strategically located
command centers with appropriate communication facilities to collect and
disseminate important information and to activate emergency escalation
procedures, (6) review and adjust inventory levels as business conditions
dictate to provide continuity in customer service, and (7) continue to evaluate
the readiness of regular and alternate third party suppliers and service
providers to help assure the availability and continuity of critical products
and services.

     During the remainder of 1999, the contingency plans will be adjusted and
tested, as applicable, as business conditions warrant.

     This discussion includes forward-looking statements of the U. S. Steel
Group's efforts and management's expectations relating to Year 2000 readiness.
The Steel

<PAGE> 82

                      U. S. STEEL GROUP OF USX CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION
                  --------------------------------------------
                                        
Group's ability to achieve Year 2000 readiness and the level of incremental
costs associated therewith, could be adversely impacted by, among other things,
the
availability and cost of programming and testing resources, vendors' ability to
install or modify proprietary hardware and software and unanticipated problems
identified in the ongoing Year 2000 readiness review. Also, the U. S. Steel
Group's ability to mitigate Year 2000 risks could be adversely impacted by the
effectiveness of contingency plans.

Accounting Standard
--------------------
     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities".  This new standard requires recognition of
all derivatives as either assets or liabilities at fair value.  This new
standard may result in additional volatility in both current period earnings and
other comprehensive income as a result of recording recognized and unrecognized
gains and losses resulting from changes in the fair value of derivative
instruments.  At adoption this new standard requires a comprehensive review of
all outstanding derivative instruments to determine whether or not their use
meets the hedge accounting criteria.  Upon adoption, there may be derivative
instruments employed by USX that do not meet all of the designated hedge
criteria and they will be reflected in income on a mark-to-market basis.  Based
upon the strategies currently used by USX and the level of activity related to
forward exchange contracts and commodity-based derivative instruments in recent
periods, USX does not anticipate the effect of adoption to have a material
impact on either financial position or results of operations for the U. S. Steel
Group.  The effective date of SFAS No. 133 was amended by SFAS No. 137.  USX
plans to adopt the standard effective January 1, 2001, as required.

<PAGE> 83

                      U. S. STEEL GROUP OF USX CORPORATION
                          QUANTITATIVE AND QUALITATIVE
                          DISCLOSURES ABOUT MARKET RISK
                    -----------------------------------------

Commodity Price Risk and Related Risks
--------------------------------------
     Sensitivity analysis of the incremental effects on pretax income of
hypothetical 10% and 25% decreases in commodity prices for open derivative
commodity instruments as of June 30, 1999 are provided in the following
table(a):

<TABLE>
<CAPTION>
                                                      Incremental Decrease
                                                        in Pretax Income
                                                    Assuming a Hypothetical
                                                       Price Change of(a)
(Dollars in millions)                                  10%          25%
--------------------------------------------------------------------------------
<S>                                                     <C>          <C>
Derivative Commodity Instruments
U. S. Steel Group
    Natural gas (price decrease)                        $2.5         $6.3
    Zinc (price decrease)                                3.0          7.6
    Tin (price decrease)                                  .4           .7
    Nickel (price decrease)                               .1           .2

<FN>
      (a)  Gains and losses on derivative commodity instruments are generally
      offset by price changes in the underlying commodity.  Effects of these
      offsets are not reflected in the sensitivity analyses.  Amounts reflect
      the estimated incremental effect on pretax income of hypothetical 10% and
      25% changes in closing commodity prices for each open contract position
      at June 30, 1999. U. S. Steel Group management evaluates its portfolio of
      derivative commodity instruments on an ongoing basis and adds or revises
      strategies to reflect anticipated market conditions and changes in risk
      profiles.  Changes to the portfolio subsequent to June 30, 1999, would
      cause future pretax income effects to differ from those presented in the
      table.
</TABLE>


<PAGE> 84

                      U. S. STEEL GROUP OF USX CORPORATION
                          QUANTITATIVE AND QUALITATIVE
                          DISCLOSURES ABOUT MARKET RISK
                    -----------------------------------------

Interest Rate Risk
------------------
     As of June 30, 1999, the discussion of the U. S. Steel Group's interest
rate risk has not changed materially from that presented in Quantitative and
Qualitative Disclosures About Market Risk included in USX's 1998 Form 10-K.

Foreign Currency Exchange Rate Risk
-----------------------------------
     As of June 30, 1999, the U. S. Steel Group had no material exposure to
foreign currency exchange rate risk.

Equity Price Risk
-----------------
     USX was subject to equity price risk resulting from its issuance in
December 1996 of $117 million of 6 3/4% Exchangeable Notes due February 1, 2000
("indexed debt").  However, on March 31, 1999, USX irrevocably deposited with a
trustee the entire 5.5 million shares it owned in RTI. The deposit of shares
resulted in the satisfaction of USX's obligation under the indexed debt. Under
the terms of the indenture, the trustee will exchange the RTI shares for the
notes at maturity.  USX is no longer exposed to any negative risks associated
with changes in the value of RTI common stock. For further discussion, see Note
6 to the U.S. Steel Group Financial Statements.

Safe Harbor
-----------
     The U. S. Steel Group's Quantitative and Qualitative Disclosures About
Market Risk include forward-looking statements with respect to management's
opinion about risks associated with the U. S. Steel Group's use of derivative
instruments. These statements are based on certain assumptions with respect to
market prices and industry supply and demand for steel products and certain raw
materials. To the extent that these assumptions prove to be inaccurate, future
outcomes with respect to the U. S. Steel Group's hedging programs may differ
materially from those discussed in the forward-looking statements.



<PAGE> 85

<TABLE>
<CAPTION>
                       U.S. STEEL GROUP OF USX CORPORATION
                       SUPPLEMENTAL STATISTICS (Unaudited)
                       -----------------------------------

                                                Second Quarter    Six Months
                                                Ended June 30   Ended June 30
(Dollars in millions)                            1999    1998    1999     1998
--------------------------------------------------------------------------------
<S>                                             <C>     <C>     <C>      <C>
REVENUES                                        $1,304  $1,733  $2,515   $3,429

INCOME (LOSS) FROM OPERATIONS

 U. S. Steel Operations (a) (b)                    $(9)   $154    $(68)    $260
 Items not allocated to segment:
   Pension Credits (c)                             140      93     248      186
   Administrative Expenses                          (8)     (5)    (13)     (14)
   Cost related to former business activities (d)  (20)    (25)    (44)     (53)
   Loss on settlement of indexed debt with
     RTI International Metals, Inc. Stock            -       -     (22)       -
                                                  ----    ----    ----     ----
Total U. S. Steel Group                            103     217     101      379

PENSION COSTS INCLUDED IN U. S. STEEL OPERATIONS   $52     $45    $108      $89

CAPITAL EXPENDITURES                               $74     $79    $153     $136

OPERATING STATISTICS

 Average steel price per ton                      $424    $477    $430     $476
 Steel Shipments (e)                             2,548   2,857   4,929    5,790
 Raw Steel-Production (e)                        3,091   2,902   5,840    6,045
 Raw Steel-Capability Utilization (f)            96.9%   90.9%   92.0%    95.3%
 Total iron ore shipments (e)                    4,823   4,989   6,186    6,772

----------
<FN>
      (a)  Results in the first six months of 1999 included a $10 million
      charge for environmental accruals. Results in second quarter and the
      first six months of 1998 included approximately $30 million (net of
      related charges and reserves) for the settlement of litigation against
      company's property insurers to recover losses related to a 1995 explosion
      at the Gary Works No. 8 blast furnace.

      (b)  Includes the production and sale of steel products, coke and
      taconite pellets; domestic coal mining; the management of mineral
      resources; engineering and consulting services; and equity income from
      joint ventures and partially owned companies, such as USS/Kobe Steel
      Company, USS-POSCO Industries, PRO-TEC Coating Company, Transtar Inc.,
      and until March 31, 1999 RTI International Metals, Inc. (formerly RMI
      Titanium Company).  Also includes results of real estate development and
      management, and leasing and financing activities.

      (c)  Includes $35 million for a pension settlement gain primarily related
      to the early retirement program completed during the second quarter 1999.

      (d)  Includes other postretirement benefit costs and certain other
      expenses principally attributable to former business units of the U. S.
      Steel Group.

      (e)  Thousands of net tons

      (f)  Based on annual raw steel production capability of 12.8 million
      tons.
</TABLE>


<PAGE> 86


P
art II - Other Information
----------------------------


     Item 1. LEGAL PROCEEDINGS

          Marathon Group

               Posted Price Litigation

               The Marathon Group, alone or with other energy companies, has
          been named in a number of lawsuits in State and Federal courts
          alleging various causes of action related to crude oil royalty
          payments based on posted prices, including underpayment of royalty
          interests, underpayment of severance taxes, antitrust violations, and
          violation of the Texas common purchaser statue.  Plaintiffs in these
          actions include governmental entities and private entities or
          individuals, and some seek class action status.  All of these cases
          are in various states of preliminary activities.  No class
          certification has been determined as to Marathon in any case to date.

               During November 1997, Marathon and over twenty other defendants
          entered into a proposed class settlement agreement covering antitrust
          and contract claims from January 1, 1986, through September 30, 1997,
          excluding federal and Indian royalty claims, common purchaser claims
          and severance tax claims.  A new settlement agreement was filed with
          the U.S. District Court in Texas on June, 26, 1998, which replaces the
          November 1997 Settlement Agreement.  The new settlement agreement
          omits from the settlement class all State entities which receive
          royalty payments and only covers private claimants.  It will settle
          all private claims, subject to opt-outs, for a period from January 1,
          1986 to September 30, 1998.  The agreement was approved by the Court
          in April 1999.  The approval of the settlement has been appealed to
          the 5th Circuit Court of Appeals.

               Marathon and approximately 20 other oil companies have settled a
          claim by the state of Texas that the oil companies allegedly had
          violated Texas's common purchaser statute and underpaid royalties on
          oil produced from state lands.  Under the settlement, the companies
          will pay a total of $12.6 million.

               Multi-media

               In July, the U.S. Environmental Protection Agency ("EPA") served
          MAP with one Notice of Violation and two Findings of Violation in
          connection with its multimedia inspection of the Detroit Refinery.
          These informal action notices allege violations of the Michigan State
          Implementation Plan and the EPA New Source Performance Standards and
          National Emission Standards for Hazardous Air Pollutants for benzene.
          MAP has an opportunity to contest the factual and legal basis for the
          allegations prior to the EPA taking enforcement action.


     Other Environmental Cases
     
              In July 1999, Speedway SuperAmerica LLC was assessed a
          $112,000 penalty by the West Virginia Division of Environmental
          Protection for the Resource Conservation and Recovery Act violations
          including, among other things, the storing of ignitable and hazardous
          waste and failing to correctly label hazardous waste containers and
          properly characterize all waste.


<PAGE> 87


                    At the Robinson refinery the Department of Justice filed a
          civil complaint in February 1999, alleging violation of the Clean Air
          Act with respect to benzene releases at the Robinson refinery.


Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

               The annual meeting of stockholders was held April 27, 1999.  In
          connection with the meeting, proxies were solicited pursuant to the
          Securities Exchange Act.  The following are the voting results on
          proposals considered and voted upon at the meeting, all of which were
          described in the proxy statement.

     1.   All nominees for director listed in the proxy statement were elected.

     2.   PricewaterhouseCoopers LLP was elected as the independent accountants
          for 1999.  (For, 356,025,355; against, 683,304; abstained, 1,415,852).
     
     

<PAGE> 88

Part II - Other Information (Continued):
---------------------------


Item 5.  OTHER INFORMATION (Continued)

     
     Marathon Group
     
      SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION OF MARATHON OIL COMPANY
                               Supplementary Data
      ---------------------------------------------------------------------
                                   (Unaudited)


The following summarized consolidated financial information of Marathon Oil
Company, a wholly owned subsidiary of USX, is included in this Form 10-Q in
satisfaction of the reporting obligation of Marathon which has debt securities
registered under the Securities Exchange Act.  All such securities are
guaranteed by USX.

<TABLE>
<CAPTION>
                                                  (In millions)
                                         -------------------------------
                                                Second Quarter    Six Months
                                                    Ended           Ended
                                                   June 30         June 30
                                                 1999    1998    1999     1998
                                                 ----    ----    ----     ----
INCOME DATA:
<S>                                             <C>     <C>    <C>      <C>
Revenues                                        $5,480  $5,524 $10,322  $11,026
Income from operations                             415     460     823      868
Net income                                         143     148     254      321
</TABLE>


<TABLE>
<CAPTION>
                                                         (In millions)
                                                    -----------------------
                                                     June 30    December 31
                                                       1999         1998
                                                     --------   -----------
BALANCE SHEET DATA:
<S>                                                  <C>           <C>
Assets:
Current assets                                        $5,093        $4,742
Noncurrent assets                                     11,286        11,420
                                                      ------        ------
Total assets                                         $16,379       $16,162
                                                      ======        ======

Liabilities and Stockholder's Equity:
Current liabilities                                   $2,430        $2,543
Noncurrent liabilities                                 9,353         9,428
Preferred stock of subsidiary                             10            17
Minority interest in consolidated subsidiary           1,744         1,590
Stockholder's equity                                   2,842         2,584
                                                     -------       -------
Total liabilities and stockholder's equity           $16,379       $16,162
                                                     =======       =======
</TABLE>


<PAGE> 89

Part II - Other Information (Continued):
----------------------------------------


   Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

   (a) EXHIBITS

               3.1  USX Restated Certificate of
                    Incorporation dated
                    May 1, 1999.................



               3.2  USX By-Laws, effective as of
                    May 1, 1999................


               4.1  Amended and Restated Rights
                    Agreement..................   Incorporated by reference
                                                  to USX's Form 8 Amendment to
                                                  Form 8-A filed on October 9,
                                                  1992 (File No. 1-5153).

               10(h) Amended and Restated Limited
                     Liability Agreement of Marathon
                     Ashland Petroleum LLC, dated as
                     of December 31, 1998.

               10(i) Amendment No. 1 dated as of
                     December 31, 1998, to the Put/Call
                     Registration Rights and Standstill
                     Agreement dated as of January 1, 1998
                     of Marathon Ashland Petroleum LLC.

               12.1  Computation of Ratio of Earnings to
                     Combined Fixed Charges and Preferred
                     Stock Dividends

               12.2  Computation of Ratio of Earnings to Fixed Charges

               27.   Financial Data Schedule


   (b) REPORTS ON FORM 8-K

           NONE


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned chief accounting officer thereunto duly authorized.

      USX CORPORATION


      By /s/ Kenneth L. Matheny
         Kenneth L. Matheny
          Vice President &
            Comptroller

August 13, 1999







                                                                    Exhibit 12.1

<TABLE>
<CAPTION>
                                        
                                 USX CORPORATION
           COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
                          AND PREFERRED STOCK DIVIDENDS
                      TOTAL ENTERPRISE BASIS - (Unaudited)
           ----------------------------------------------------------
                              (Dollars in Millions)
                                        
                                Six Months
                                  Ended           Year Ended December 31
                                 June 30     --------------------------------
                                1999   1998   1998   1997    1996   1995   1994
                                ----   ----   ----   ----    ----   ----   ----
<S>                           <C>    <C>    <C>    <C>     <C>     <C>   <C>
Portion of rentals
  representing interest         $49     $50   $105    $82     $78    $76    $83
Capitalized interest             20      23     46     31      11     13     58
Other interest and fixed
  charges                       168     150    328    312     382    452    456
Pretax earnings which would
  be required to cover
  preferred stock dividend
  requirements of parent          7       8     15     20      36     46     49
                                ----   ----   ----   ----    ----   ----   ----
Combined fixed charges
  and preferred stock
  dividends (A)                $244    $231   $494   $445    $507   $587   $646
                                ====   ====   ====   ====    ====   ====   ====
Earnings-pretax income
  with applicable
  adjustments (B)              $949   $1265  $1662  $1745   $1837   $877  $1300
                                ====   ====   ====   ====    ====   ====   ====

Ratio of (B) to (A)            3.89    5.48   3.36   3.92    3.62   1.49   2.01
                                ====   ====   ====   ====    ====   ====   ====
</TABLE>








                                                                    Exhibit 12.2

<TABLE>
<CAPTION>
                                                                                
                                                                                
                                 USX CORPORATION
                COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
                      TOTAL ENTERPRISE BASIS - (Unaudited)
                -------------------------------------------------
                              (Dollars in Millions)
                                        
                                Six Months
                                  Ended           Year Ended December 31
                                 June 30     --------------------------------
                                1999   1998   1998   1997    1996   1995   1994
                                ----   ----   ----  -----    ----   ----   ----
<S>                            <C>    <C>    <C>    <C>     <C>     <C>   <C>
Portion of rentals
  representing interest         $49     $50   $105    $82     $78    $76    $83
Capitalized interest             20      23     46     31      11     13     58
Other interest and fixed
  charges                       168     150    328    312     382    452    456
                                ----   ----   ----   ----    ----  -----   ----
Total fixed charges (A)        $237    $223   $479   $425    $471   $541   $597
                                ====   ====   ====   ====    ====   ====   ====
Earnings-pretax income
  with applicable
  adjustments (B)              $949   $1265  $1662  $1745   $1837   $877  $1300
                                ====   ====   ====   ====    ====   ====   ====
Ratio of (B) to (A)            4.00    5.67   3.47   4.11    3.90   1.62   2.18
                                ====   ====   ====   ====    ====   ====   ====
</TABLE>








<TABLE> <S> <C>

<ARTICLE> 5
<MULTIPLIER> 1,000,000
       
<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-END>                               JUN-30-1999
<CASH>                                              99
<SECURITIES>                                         0
<RECEIVABLES>                                     1697
<ALLOWANCES>                                         8
<INVENTORY>                                       2607
<CURRENT-ASSETS>                                  4843
<PP&E>                                           29355
<DEPRECIATION>                                   16632
<TOTAL-ASSETS>                                   21600
<CURRENT-LIABILITIES>                             3606
<BONDS>                                           4059
<PREFERRED-MANDATORY>                              182
<PREFERRED>                                          3
<COMMON>                                           397<F1>
<OTHER-SE>                                        6119
<TOTAL-LIABILITY-AND-EQUITY>                     21600
<SALES>                                          12809
<TOTAL-REVENUES>                                 12820
<CGS>                                            11917
<TOTAL-COSTS>                                    11917
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                 174
<INCOME-PRETAX>                                    472
<INCOME-TAX>                                       173
<INCOME-CONTINUING>                                299
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      5
<CHANGES>                                            0
<NET-INCOME>                                       294
<EPS-BASIC>                                        0<F2>
<EPS-DILUTED>                                        0<F3>
<FN>
<F1>Consists of Marathon Stock issued, $309; Steel Stock issued, $88.
<F2>Basic earnings per share applicable to Marathon Stock, $.82; Steel Stock,
$.41.
<F3>Diluted earnings per share applicable to Marathon Stock, $.82; Steel Stock,
$.41.
</FN>
        

</TABLE>





Exhibit 3.1








                                 USX Corporation

                                        
                                        
                                        
                                        
                                    Restated
                           Certificate of Incorporation
                                        
                                        
                                        
                                        
                                        
                                        
                     FILED IN OFFICE OF SECRETARY OF STATE,
                                STATE OF DELAWARE
                                        
                                        
                                        
                                        
                                        
                                   MAY 1, 1999
                                        
                                        
                                        
                                        
                                        
                                        
                                        


    Table of
   Contents



  Article First-Corporate Name        1
Article Second-Registered Office      1
Article Third-Corporate Purpose       1
Article Fourth-Capital Stock          1
Division I-Common Stock               1
1.                   Dividend Rights  1
2.           Exchange and Redemption  2
3.                     Voting Rights  7
4.                Liquidation Rights  9
5.                       Definitions  9
6.Determinations of the Board of Directors 12
Division II-Preferred Stock          12
Series A Junior Preferred Stock      13
6.50% Cumulative Convertible Preferred Stock 19
Article Fifth-Perpetual Existence    35
Article Sixth-Stockholder Liability  35
Article Seventh-Board of Directors   35
Article Eighth-By-laws               36
Article Ninth-Inspection of Accounts 36
Article  Tenth-Dividends and Debt Obligations 36
Article Eleventh-Director Liability  36
Article Twelfth-Power and Authority  36
Article   Thirteenth-Amendment of Certificate of Incorporation 37

       Restated
Certificate of Incorporation
          of
USX Corporation
(Originally incorporated under the name of U. S. 
Steel Company on September 10, 1965)

First:  The name of the Corporation (which is hereinafter
referred to as the "Corporation") is

USX Corporation

Second:
 Its registered office and place of business in the
State of Delaware is located at 1013 Centre Road, City of
Wilmington, County of New Castle.  The registered agent in
charge thereof upon whom process against the Corporation
may be served is the Prentice-Hall Corporation System, Inc.

Third:  The purposes of the Corporation are to engage in any 
lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware, and without 
limiting the foregoing to engage in integrated steel operations 
and to develop, mine, produce, manufacture, construct, transport,
buy, hold, sell and generally deal in products, materials, property,
both tangible and intangible, and services of all kinds.

Fourth:  The total number of shares of capital stock which the
Corporation shall have authority to issue is Eight Hundred Forty
Million (840,000,000), of which Forty Million (40,000,000) shares
shall be shares of Preferred Stock, without par value (hereinafter
called "Preferred Stock"), Five Hundred Fifty Million (550,000,000)
shares shall be shares of a class of common stock designated as
USX-Marathon Group Common Stock, par value $1.00 per share 
("Marathon Stock"), Two Hundred Million (200,000,000) shares shall
be shares of a class of common stock designated as USX-U.S. Steel
Group Common Stock, par value of $1.00 per share ("Steel Stock"),
and Fifty Million (50,000,000) shares shall be shares of a class of
common stock designated as USX-Delhi Group Common Stock, par value
$1.00 per share ("Delhi Stock").  The Marathon Stock, the Steel Stock
and the Delhi Stock shall hereinafter collectively be called the
"Common Stock".

DIVISION I

The powers and rights of the shares of each class of Common Stock,
and the qualifications, limitations or restrictions therof, are
as follows:

1.  Dividend Rights.  Subject to the express terms of any outstanding
series of Preferred Stock, dividends may be declared and paid upon each
class of the Common Stock upon the terms provided for below with respect
to each such class solely in the discretion of the Board of Directors:

(a)  Dividends on Marathon Stock.  Dividends on the Marathon Stock
may be declared and paid out of funds of the Corporation legally
available therfor.

(b)  Dividends on Steel Stock.  Dividends on the Steel Stock may be
declared and paid only out of the lesser of (i) funds of the Corporation
legally available therfor and (ii) the Available Steel Dividend Amount.

(c)  Dividends on Delhi Stock.  Dividends on the Delhi Stock may be
declared and paid only out of the lesser of (i) funds of the Corporation
legally available therfor and (ii) the Available Delhi Dividend Amount.

(d)  Discrimination Between Classes of Common Stock.  The Board of
Directors, subject to the provisions of Sections 1(a), 1(b), 1(c), may
in its sole discretion, declare and pay dividends exclusively on any
class or classes of Common Stock in equal or unequal amounts, 
notwithstanding the amounts of funds available for dividends on each
class, the respective voting and liquidation rights of each class, the
amount of prior dividends declared on each class or any other factor.
     2.  Exchange  and  Redemption. Shares of each class  of  Common  Stock  are
  subject  to  exchange  or  redemption, as the case  may  be,  upon  the  terms
  provided  below with respect to each such class; provided that no  such  class
  may  be exchanged or redeemed in its entirety if all of the other classes have
  been, or are at the time being, exchanged or redeemed in their entirety:
  
       (a) Exchange and Redemption of Marathon Stock.
     
           (i)  At  any  time on or after the date on which the Corporation  has
        transferred all of the assets and liabilities of the Marathon  Group  to
        a  wholly  owned  subsidiary of the Corporation  (the  ''Marathon  Group
        Subsidiary''),  the Board of Directors may, in its sole  discretion  and
        by  a majority vote of the directors then in office, provided that there
        are  funds  of the Corporation legally available therefor, declare  that
        all  of  the outstanding shares of Marathon Stock shall be exchanged  on
        an  Exchange  Date  set forth in a notice to holders of  Marathon  Stock
        pursuant  to  Section  2(d)(i), for all of  the  outstanding  shares  of
        common  stock  of  the Marathon Group Subsidiary, on a pro  rata  basis,
        each   of   which  shall,  upon  such  issuance,  be  fully   paid   and
        nonassessable.
        
           (ii)  After  any  Exchange  Date for Marathon  Stock,  any  share  of
        Marathon  Stock  that  is  issued  on  conversion  or  exercise  of  any
        Convertible  Securities shall, to the extent of funds of the Corporation
        legally  available therefor, immediately upon issuance pursuant to  such
        conversion  or  exercise and without any notice or any other  action  on
        the  part of the Corporation or its Board of Directors or the holder  of
        such share of Marathon Stock, be redeemed for $.01 in cash.
        
       (b) Exchange and Redemption of Steel Stock.
     
           (i)  In the event of the Disposition, in one transaction or a  series
        of  related transactions, by the Corporation of all or substantially all
        of  the  properties and assets of the U.S. Steel Group  (other  than  in
        connection  with  the  Disposition by the  Corporation  of  all  of  its
        properties  and  assets  in one transaction) to any  person,  entity  or
        group  (other  than (A) the holders of all outstanding shares  of  Steel
        Stock  on  a pro rata basis or (B) any person, entity or group in  which
        the   Corporation,  directly  or  indirectly,  owns  a  majority  equity
        interest), the Corporation shall, on or prior to the first Business  Day
        following  the 60th day following the consummation of such  Disposition,
        either:
        
             (A) subject to paragraph 1(b) above, declare and pay a dividend  in
           cash  and/or in securities or other property received as proceeds  of
           such Disposition to the holders of Steel Stock in an amount equal  to
           the Net Proceeds of such Disposition; or
           
             (B)  to  the extent that there are funds of the Corporation legally
           available  therefor, redeem the number of whole shares of outstanding
           Steel  Stock that has an aggregate average Market Value,  during  the
           ten-Business   Day  period  beginning  on  the  first  Business   Day
           following  such  consummation,  closest  to  the  value  of  the  Net
           Proceeds  of  such Disposition, for cash and/or securities  or  other
           property received as proceeds of such Disposition in an amount  equal
           to such Net Proceeds; or
           
             (C) exchange each outstanding share of Steel Stock for a number  of
           fully  paid and nonassessable shares of Marathon Stock or,  if  there
           are  no shares of Marathon Stock outstanding on the Exchange Date and
           shares  of Delhi Stock are then outstanding, of Delhi Stock equal  to
           110%  of  the  average daily ratio (calculated to  the  nearest  five
           decimal  places) of the Market Value of one share of Steel  Stock  to
           the  Market  Value of one share of Marathon Stock  or  one  share  of
           Delhi  Stock,  as  the  case  may be, during  such  ten-Business  Day
           period.
           
        For purposes of this Section 2(b)(i):
        
           (x)  as of any date, ''substantially all of the properties and assets
        of  the  U.S. Steel Group'' shall mean a portion of such properties  and
        assets  that  represents  at  least 80% of either  of  the  then-current
        market   value  of,  or  the  aggregate  revenues  for  the  immediately
        preceding  twelve  fiscal quarterly periods of the  Corporation  derived
        from, the properties and assets of the U.S. Steel Group as of such  date
        (excluding the properties and assets of any person, entity or  group  in
        which  the  Corporation,  directly  or  indirectly,  owns  less  than  a
        majority equity interest);
        
           (y)  if  immediately  after any event, the Corporation,  directly  or
        indirectly,  owns less than a majority equity interest  in  any  person,
        entity or group in which the Corporation, directly or indirectly,  owned
        a  majority equity interest immediately prior to the occurrence of  such
        event,  a  Disposition of all of the properties and assets of  the  U.S.
        Steel  Group  owned by such person, entity or group shall be  deemed  to
        have occurred; and
        
           (z) in the case of a Disposition of properties and assets in a series
        of  related transactions, such Disposition shall not be deemed  to  have
        been   consummated  until  the  consummation  of  the   last   of   such
        transactions.
        
           (ii)  The Board of Directors may, by a majority vote of the directors
        then  in office, at any time after a dividend or redemption pursuant  to
        clause  (A) or (B), respectively, of Section 2(b)(i), declare that  each
        of  the  remaining outstanding shares of Steel Stock shall be exchanged,
        on  an  Exchange  Date set forth in a notice to holders of  Steel  Stock
        pursuant   to  Section  2(d)(i),  for  a  number  of  fully   paid   and
        nonassessable  shares of Marathon Stock or, if there are  no  shares  of
        Marathon  Stock  outstanding on such Exchange Date and shares  of  Delhi
        Stock  are then outstanding, of Delhi Stock, equal to 110% of the Market
        Value  Ratio as of the fifth Business Day prior to the date such  notice
        is  mailed  to  such  holders. For purposes of the  preceding  sentence,
        ''Market  Value Ratio'', as of any date, shall mean the highest  of  the
        following  (calculated  to  the nearest five decimal  places):  (A)  the
        average  ratio  of S/X for the five-Business Day period ending  on  such
        date,  (B)  the  quotient of (1) the sum of (w) four times  the  average
        ratio  of S/X for the five-Business Day period ending on such date,  (x)
        three  times  the  average  ratio of S/X for the  next  preceding  five-
        Business  Day  period, (y) two times the average ratio of  S/X  for  the
        next  preceding  five-Business Day period and (z) the average  ratio  of
        S/X  for the next preceding five-Business Day period, divided by (2) ten
        and  (C)  if the dividend pursuant to clause (A) of Section 2(b)(i)  was
        declared  and paid or the redemption pursuant to (B) of Section  2(b)(i)
        was  made  prior  to  the  commencement of the most  recently  completed
        fiscal  quarter of the Corporation, the average ratio of  S/X  for  such
        fiscal quarter, where S is the Market Value of one share of Steel  Stock
        and  X  is the Market Value of one share of Marathon Stock or one  share
        of Delhi Stock, as the case may be.
        
           (iii)  At any time on or after the date on which the Corporation  has
        transferred  all of the assets and liabilities of the U.S.  Steel  Group
        (and  no  other  assets or liabilities) to a wholly owned subsidiary  of
        the  Corporation  (the ''U.S. Steel Group Subsidiary''),  the  Board  of
        Directors  may,  in its sole discretion and by a majority  vote  of  the
        directors  then  in  office,  provided  that  there  are  funds  of  the
        Corporation  legally  available  therefor,  declare  that  all  of   the
        outstanding  shares  of Steel Stock shall be exchanged  on  an  Exchange
        Date  set  forth  in  a  notice to holders of Steel  Stock  pursuant  to
        Section  2(d)(i), for all of the outstanding shares of common  stock  of
        the  U.S.  Steel Group Subsidiary, on a pro rata basis,  each  of  which
        shall, upon such issuance, be fully paid and nonassessable.
        
           (iv)  After  any  Exchange  Date or  Redemption  Date  on  which  all
        outstanding  Steel Stock was exchanged or redeemed, any share  of  Steel
        Stock  that  is  issued  on conversion or exercise  of  any  Convertible
        Securities  shall, immediately upon issuance pursuant to such conversion
        or  exercise and without any notice or any other action on the  part  of
        the  Corporation or its Board of Directors or the holder of  such  share
        of Steel Stock:
        
             (A) in the event the then-outstanding Steel Stock was exchanged for
           Marathon  Stock  or  Delhi Stock on such Exchange  Date  pursuant  to
           Section 2(b)(i) or 2(b)(ii), be exchanged for the kind and amount  of
           shares  of  capital stock and other securities and  property  that  a
           holder  of  such  Convertible Security would have  been  entitled  to
           receive  pursuant to the terms of such Convertible Security had  such
           terms  provided  that the conversion privilege in effect  immediately
           prior  to any exchange by the Corporation of any of its capital stock
           for  shares  of any other capital stock of the Corporation  would  be
           adjusted  so  that  the  holder  of  any  such  Convertible  Security
           thereafter  surrendered for conversion would be entitled  to  receive
           the  number of shares of capital stock of the Corporation  and  other
           securities  and  property he would have owned  immediately  following
           such  action had such Convertible Security been converted immediately
           prior thereto; or
           
             (B)  in the event the then-outstanding Steel Stock was redeemed  in
           whole  pursuant  to clause (B) of Section 2(b)(i)  or  exchanged  for
           common  stock of the U.S. Steel Group Subsidiary pursuant to  Section
           2(b)(iii),  be  redeemed, to the extent of funds of  the  Corporation
           legally available therefor, for $.01 in cash.
           
             The  provisions  of clause (A) of this Section 2(b)(iv)  shall  not
           apply  to  the extent that equivalent adjustments are otherwise  made
           pursuant to the provisions of such Convertible Securities.
           
       (c) Exchange and Redemption of Delhi Stock.
     
           (i)  In the event of the Disposition, in one transaction or a  series
        of  related transactions, by the Corporation of all or substantially all
        of  the  properties  and  assets  of the  Delhi  Group  (other  than  in
        connection  with  the  Disposition by the  Corporation  of  all  of  its
        properties  and  assets  in one transaction) to any  person,  entity  or
        group  (other  than (A) the holders of all outstanding shares  of  Delhi
        Stock  on  a pro rata basis or (B) any person, entity or group in  which
        the   Corporation,  directly  or  indirectly,  owns  a  majority  equity
        interest), the Corporation shall, on or prior to the first Business  Day
        following  the 60th day following the consummation of such  Disposition,
        either:
        
             (A) subject to paragraph 1(c) above, declare and pay a dividend  in
           cash  and/or in securities or other property received as proceeds  of
           such Disposition to the holders of Delhi Stock in an amount equal  to
           the  product  of  the  Delhi Fraction and the Net  Proceeds  of  such
           Disposition; or
           
             (B)  to  the extent that there are funds of the Corporation legally
           available  therefor, redeem the number of whole shares of outstanding
           Delhi  Stock that has an aggregate average Market Value,  during  the
           ten-Business   Day  period  beginning  on  the  first  Business   Day
           following  such consummation, closest to the value of the product  of
           the  Delhi  Fraction  and the Net Proceeds of such  Disposition,  for
           cash  and/or  securities or other property received  as  proceeds  of
           such Disposition in an amount equal to such product; or
           
             (C) exchange each outstanding share of Delhi Stock for a number  of
           fully  paid and nonassessable shares of Marathon Stock or,  if  there
           are  no  shares  of Marathon Stock outstanding on such Exchange  Date
           and  shares  of  Steel Stock are then outstanding,  of  Steel  Stock,
           equal  to 110% of the average daily ratio (calculated to the  nearest
           five  decimal places) of the Market Value of one share of Delhi Stock
           to  the  Market Value of one share of Marathon Stock or one share  of
           Steel  Stock,  as  the  case  may be, during  such  ten-Business  Day
           period.
           
        For purposes of this Section 2(c)(i):
        
           (x)  as of any date, ''substantially all of the properties and assets
        of  the Delhi Group'' shall mean a portion of such properties and assets
        that  represents at least 80% of either of the then-current market value
        of,  or  the  aggregate  revenues for the immediately  preceding  twelve
        fiscal   quarterly  periods  of  the  Corporation  derived   from,   the
        properties and assets of the Delhi Group as of such date (excluding  the
        properties  and  assets  of any person, entity or  group  in  which  the
        Corporation,  directly or indirectly, owns less than a  majority  equity
        interest);
        
           (y)  if  immediately  after any event, the Corporation,  directly  or
        indirectly,  owns less than a majority equity interest  in  any  person,
        entity or group in which the Corporation, directly or indirectly,  owned
        a  majority equity interest immediately prior to the occurrence of  such
        event,  a  Disposition of all of the properties and assets of the  Delhi
        Group  owned  by  such person, entity or group shall be deemed  to  have
        occurred; and
        
           (z) in the case of a Disposition of properties and assets in a series
        of  related transactions, such Disposition shall not be deemed  to  have
        been   consummated  until  the  consummation  of  the   last   of   such
        transactions.
        
           (ii)  The Board of Directors may, by a majority vote of the directors
        then  in office, at any time after a dividend or redemption pursuant  to
        clause  (A) or (B), respectively, of Section 2(c)(i), declare that  each
        of  the  remaining outstanding shares of Delhi Stock shall be exchanged,
        on  an  Exchange  Date set forth in a notice to holders of  Delhi  Stock
        pursuant   to  Section  2(d)(i),  for  a  number  of  fully   paid   and
        nonassessable  shares of Marathon Stock or, if there are  no  shares  of
        Marathon  Stock  outstanding on such Exchange Date and shares  of  Steel
        Stock  are then outstanding, of Steel Stock equal to 110% of the  Market
        Value  Ratio as of the fifth Business Day prior to the date such  notice
        is mailed to such holders.
        
           (iii) The Board of Directors may, by a majority vote of the directors
        then  in office, at any time declare that each of the outstanding shares
        of  Delhi Stock shall be exchanged, on an Exchange Date set forth  in  a
        notice  to  holders of Delhi Stock pursuant to Section  2(d)(i),  for  a
        number  of fully paid and nonassessable shares of Marathon Stock or,  if
        there  are  no  shares of Marathon Stock outstanding  on  such  Exchange
        Date,  of Steel Stock equal to 115% of the Market Value Ratio as of  the
        fifth  Business  Day prior to the date such notice  is  mailed  to  such
        holders.
        
           (iv)  For purposes of Section 2(c)(ii) and (iii), the ''Market  Value
        Ratio'',  as  of  any  date,  shall mean the highest  of  the  following
        (calculated  to the nearest five decimal places): (A) the average  ratio
        of  D/X  for the five-Business Day period ending on such date,  (B)  the
        quotient of (1) the sum of (w) four times the average ratio of  D/X  for
        the  five-Business Day period ending on such date, (x) three  times  the
        average  ratio of D/X for the next preceding five-Business  Day  period,
        (y)  two  times  the average ratio of D/X for the next  preceding  five-
        Business  Day  period  and (z) the average ratio of  D/X  for  the  next
        preceding  five-Business Day period, divided by (2) ten and (C)  if  the
        dividend  pursuant  to clause (A) of Section 2(c)(i)  was  declared  and
        paid  or  the  redemption pursuant to clause (B) of Section 2(c)(i)  was
        made  prior  to  the commencement of the most recently completed  fiscal
        quarter  of  the Corporation, the average ratio of D/X for  such  fiscal
        quarter, where D is the Market Value of one share of Delhi Stock  and  X
        is  the  Market  Value of one share of Marathon Stock or  one  share  of
        Steel Stock, as the case may be.
        
           (v)  At  any  time on or after the date on which the Corporation  has
        transferred  all of the assets and liabilities of the Delhi  Group  (and
        no  other  assets  or liabilities) to a wholly owned subsidiary  of  the
        Corporation  (the  ''Delhi Group Subsidiary''), the Board  of  Directors
        may,  in  its  sole discretion and by a majority vote of  the  directors
        then  in  office,  provided  that there are  funds  of  the  Corporation
        legally  available therefor, declare that all of the outstanding  shares
        of  Delhi  Stock shall be exchanged on an Exchange Date set forth  in  a
        notice  to  holders of Delhi Stock pursuant to Section  2(d)(i),  for  a
        number  of  outstanding  shares  of common  stock  of  the  Delhi  Group
        Subsidiary equal to the product of the Delhi Fraction and the number  of
        all  outstanding  shares of common stock of the Delhi Group  Subsidiary,
        on  a  pro rata basis, each of which shall, upon such issuance, be fully
        paid and nonassessable.
        
           (vi)  After  any  Exchange  Date or  Redemption  Date  on  which  all
        outstanding  Delhi Stock was exchanged or redeemed, any share  of  Delhi
        Stock  that  is  issued  on conversion or exercise  of  any  Convertible
        Securities  shall, immediately upon issuance pursuant to such conversion
        or  exercise and without any notice or any other action on the  part  of
        the  Corporation or its Board of Directors or the holder of  such  share
        of Delhi Stock:
        
             (A) in the event the then-outstanding Delhi Stock was exchanged for
           Marathon  Stock  or  Steel Stock on such Exchange  Date  pursuant  to
           Section  2(c)(i), 2(c)(ii) or 2(c)(iii), be exchanged  for  the  kind
           and  amount  of  shares  of capital stock and  other  securities  and
           property  that a holder of such Convertible Security would have  been
           entitled  to  receive  pursuant  to the  terms  of  such  Convertible
           Security  had  such terms provided that the conversion  privilege  in
           effect  immediately prior to any exchange by the Corporation  of  any
           of  its  capital stock for shares of any other capital stock  of  the
           Corporation  would  be  adjusted so  that  the  holder  of  any  such
           Convertible Security thereafter surrendered for conversion  would  be
           entitled  to  receive the number of shares of capital  stock  of  the
           Corporation  and  other securities and property he would  have  owned
           immediately following such action had such Convertible Security  been
           converted immediately prior thereto; or
           
             (B)  in the event the then-outstanding Delhi Stock was redeemed  in
           whole  pursuant  to clause (B) of Section 2(c)(i)  or  exchanged  for
           common  stock  of  the  Delhi Group Subsidiary  pursuant  to  Section
           2(c)(v),  be  redeemed,  to the extent of funds  of  the  Corporation
           legally available therefor, for $.01 in cash.
           
           The provisions of clause (A) of this Section 2(c)(vi) shall not apply
        to  the  extent that equivalent adjustments are otherwise made  pursuant
        to the provisions of such Convertible Securities.
        
        (d) General Exchange and Redemption Provisions.
        
           (i)  In  the  event of any exchange or redemption  pursuant  to  this
        Section  2  (other  than Section 2(a)(ii), 2(b)(iv), or  2(c)(vi)),  the
        Corporation  shall  cause to be given to each holder  of  the  class  of
        Common  Stock to be so exchanged or redeemed a notice stating  (A)  that
        shares of such class of Common Stock shall be exchanged or redeemed,  as
        the  case may be, (B) the Exchange Date or the Redemption Date,  (C)  in
        the  event of a partial redemption of Steel Stock or Delhi Stock, as the
        case may be, pursuant to clause (B) of Section 2(b)(i) or clause (B)  of
        Section  2(c)(i), respectively, the number of shares of Steel  Stock  or
        Delhi  Stock,  as  the case may be, to be redeemed,  (D)  the  kind  and
        amount  of  shares of capital stock or cash and/or securities  or  other
        property  to  be received by such holder with respect to each  share  of
        such class of Common Stock held by such holder, including details as  to
        the  calculation thereof, (E) the place or places where certificates for
        shares of such class of Common Stock, properly endorsed or assigned  for
        transfer (unless the Corporation shall waive such requirement),  are  to
        be  surrendered for delivery of certificates for shares of such  capital
        stock  or cash and/or securities or other property and (F) that, subject
        to  Section  2(d)(iv) hereof, dividends on such shares of  Common  Stock
        will  cease to be paid as of such Exchange Date or Redemption Date. Such
        notice  shall  be  sent by first-class mail, postage prepaid,  not  less
        than  30  nor more than 60 days prior to the Exchange Date or Redemption
        Date,  as  the case may be, and in any case to each holder of the  class
        of  Common  Stock to be exchanged or redeemed, at such holder's  address
        as  the  same  appears on the stock transfer books of  the  Corporation.
        Neither  the  failure  to mail such notice to any particular  holder  of
        such  class  of  Common Stock nor any defect therein  shall  affect  the
        sufficiency  thereof with respect to any other holder of such  class  of
        Common Stock.
        
           (ii)  If  less than all of the outstanding shares of Steel  Stock  or
        Delhi  Stock, as the case may be, are to be redeemed pursuant to  clause
        (B)  of  Section 2(b)(i) or clause (B) of Section 2(c)(i), respectively,
        such  shares  shall be redeemed by the Corporation pro  rata  among  the
        holders of such class of Common Stock or by such other method as may  be
        determined by the Board of Directors to be equitable.
        
           (iii)  The  Corporation shall not be required  to  issue  or  deliver
        fractional  shares  of  any class of capital  stock  or  any  fractional
        securities  to  any  holder  of  any class  of  Common  Stock  upon  any
        exchange,  redemption, dividend or other distribution pursuant  to  this
        Section 2. If more than one share of any class of Common Stock shall  be
        held  at the same time by the same holder, the Corporation may aggregate
        the  number  of  shares  of any class of capital  stock  that  shall  be
        issuable or the amount of securities that shall be deliverable  to  such
        holder  upon  any  exchange, redemption, dividend or other  distribution
        (including  any  fractions of shares or securities). If  the  number  of
        shares  of  any  class  of  capital stock or the  amount  of  securities
        remaining  to  be  issued or delivered to any holder  of  any  class  of
        Common  Stock is a fraction, the Corporation shall, if such fraction  is
        not  issued  or  delivered  to such holder, pay  a  cash  adjustment  in
        respect of such fraction in an amount equal to the fair market value  of
        such  fraction on the fifth Business Day prior to the date such  payment
        is  to  be  made. For purposes of the preceding sentence, ''fair  market
        value''  of any fraction shall be (i) in the case of any fraction  of  a
        share  of capital stock of the Corporation, the product of such fraction
        and  the Market Value of one share of such capital stock and (ii) in the
        case  of  any other fractional security, such value as is determined  by
        the Board of Directors.
        
           (iv)  No  adjustments in respect of dividends shall be made upon  the
        exchange  or  redemption  of any shares of any class  of  Common  Stock;
        provided,  however,  that if the Exchange Date or Redemption  Date  with
        respect  to any class of Common Stock shall be subsequent to the  record
        date  for  the  payment of a dividend or other distribution  thereon  or
        with  respect  thereto, the holders of shares of such  class  of  Common
        Stock at the close of business on such record date shall be entitled  to
        receive  the  dividend or other distribution payable on or with  respect
        to  such  shares on the date set for payment of such dividend  or  other
        distribution, notwithstanding the exchange or redemption of such  shares
        or  the Corporation's default in payment of the dividend or distribution
        due on such date.
        
           (v) Before any holder of shares of any class of Common Stock shall be
        entitled  to  receive certificates representing shares  of  any  capital
        stock  or  cash  and/or securities or other property to be  received  by
        such  holder  with respect to such shares of such class of Common  Stock
        pursuant  to this Section 2, such holder shall surrender at such  office
        as  the  Corporation shall specify certificates for such shares of  such
        class  of  Common  Stock,  properly endorsed or  assigned  for  transfer
        (unless  the  Corporation shall waive such requirement). The Corporation
        will  as  soon  as  practicable  after such  surrender  of  certificates
        representing  such shares of such class of Common Stock deliver  to  the
        person for whose account such shares of such class of Common Stock  were
        so   surrendered,   or   to   his  nominee  or  nominees,   certificates
        representing the number of whole shares of the kind of capital stock  or
        cash  and/or securities or other property to which he shall be  entitled
        as  aforesaid,  together  with any fractional  payment  contemplated  by
        Section  2(d)(iii).  If  less than all of the shares  of  any  class  of
        Common  Stock,  represented by any one certificate are to  be  redeemed,
        the  Corporation  shall  issue and deliver a  new  certificate  for  the
        shares of such class of Common Stock not redeemed.
        
           (vi)  From and after any applicable Exchange Date or Redemption Date,
        all  rights of a holder of shares of any class of Common Stock that were
        exchanged  or redeemed shall cease except for the right, upon  surrender
        of  the  certificates  representing such  shares  of  Common  Stock,  to
        receive  certificates  representing shares of the  kind  and  amount  of
        capital  stock  or  cash and/or securities or other property  for  which
        such  shares  were exchanged or redeemed, together with  any  fractional
        payment  contemplated by Section 2(d)(iii) and rights  to  dividends  as
        provided  in  Section  2(d)(iv).  No  holder  of  a  certificate,   that
        immediately  prior  to the applicable Exchange Date  for  any  class  of
        Common Stock represented shares of such class of Common Stock, shall  be
        entitled  to receive any dividend or other distribution with respect  to
        shares  of  any  kind of capital stock into which such class  of  Common
        Stock  was exchanged until surrender of such holder's certificate for  a
        certificate or certificates representing shares of such kind of  capital
        stock.  Upon  such  surrender, there shall be paid  to  the  holder  the
        amount of any dividends or other distributions (without interest)  which
        theretofore  became  payable with respect to a  record  date  after  the
        Exchange  Date, but that were not paid by reason of the foregoing,  with
        respect  to  the  number of whole shares of the kind  of  capital  stock
        represented  by  the  certificate  or  certificates  issued  upon   such
        surrender.  From  and  after an Exchange Date for any  class  of  Common
        Stock,  the  Corporation  shall,  however,  be  entitled  to  treat  the
        certificates  for  such class of Common Stock that  have  not  yet  been
        surrendered  for exchange as evidencing the ownership of the  number  of
        whole  shares of the kind or kinds of capital stock for which the shares
        of  such  class  of Common Stock represented by such certificates  shall
        have  been  exchanged,  notwithstanding the failure  to  surrender  such
        certificates.
        
           (vii)  The  Corporation will pay any and all  documentary,  stamp  or
        similar  issue or transfer taxes that may be payable in respect  of  the
        issue  or delivery of any shares of capital stock on exchange of  shares
        of  any  class  of  Common Stock pursuant hereto. The Corporation  shall
        not,  however, be required to pay any tax that may be payable in respect
        of  any  transfer involved in the issue and delivery of  any  shares  of
        capital  stock  in  a name other than that in which the  shares  of  the
        class  of  Common Stock so exchanged were registered, and no such  issue
        or  delivery  shall be made unless and until the person requesting  such
        issue  has  paid to the Corporation the amount of any such tax,  or  has
        established  to the satisfaction of the Corporation that  such  tax  has
        been paid.
        
     3. Voting Rights.
     
        (a) Except as provided in clauses (c), (d) or (e) below, the holders  of
     all  classes of Common Stock shall vote together as a single class  on  all
     matters  as to which holders of Common Stock are entitled to vote.  On  all
     matters  to  be  voted  on by the holders of all classes  of  Common  Stock
     together  as  a single class, (i) each outstanding share of Marathon  Stock
     shall  have  one  vote, (ii) each outstanding share of any other  class  of
     Common   Stock  shall  have  a  number  of  votes  equal  to  the  quotient
     (calculated to the nearest three decimal places), as of the fifth  Business
     Day  prior  to  the  applicable record date or as of any  other  applicable
     date,  of  (A) the sum of (1) four times the average ratio of X/Y  for  the
     five-Business  Day  period ending on such fifth  Business  Day,  (2)  three
     times  the  average  ratio of X/Y for the next preceding five-Business  Day
     period, (3) two times the average ratio of X/Y for the next preceding five-
     Business  Day  period  and  (4) the average  ratio  of  X/Y  for  the  next
     preceding  five-Business Day period, divided by (B) ten,  where  X  is  the
     Market  Value  of such class of Common Stock and Y is the Market  Value  of
     the  Marathon Stock or if there are no shares of Marathon Stock outstanding
     on  such  record  or  other applicable date or on any  of  the  twenty-five
     Business  Days  prior thereto, the sum of the Market Values  of  the  Steel
     Stock and of the Delhi Stock; provided that until the Delhi Stock has  been
     traded  regular way on the New York Stock Exchange for at least twenty-five
     Business  Days,  each outstanding share of the Delhi  Stock  shall  have  a
     number of votes equal to the ratio of A/B (calculated to the nearest  three
     decimal places), where A is the average of the high and low reported  sales
     prices of a share of the Delhi Stock on the New York Stock Exchange, and  B
     is  the  average of the high and low reported sales prices of  a  share  of
     Marathon  Stock  or, if there are no shares of Marathon Stock  outstanding,
     the  sum  of  the average of the high and low reported sales  prices  of  a
     share  of  the Steel Stock and a share of the Delhi Stock on such Exchange,
     in  each  case  on  the  Effective Date,  or  on  the  first  Business  Day
     thereafter on which shares of the Delhi Stock are traded on such  Exchange.
     If  shares of only one class of Common Stock are outstanding, each share of
     that class shall have one vote.
     
        (b)  Unless the vote or consent of a greater number of shares shall then
     be  required  by law, the vote or consent of the holders of a  majority  of
     all of the shares of any class of Common Stock then outstanding, voting  as
     a  separate  class,  shall  be  necessary  for  authorizing,  effecting  or
     validating the merger or consolidation of the Corporation into or with  any
     other  corporation if such merger or consolidation would  adversely  affect
     the  powers or special rights of such class of Common Stock either directly
     by  amendment  of this Restated Certificate of Incorporation or  indirectly
     by  requiring the holders of such class to accept or retain, in such merger
     or  consolidation,  anything other than (i) shares of such  class  or  (ii)
     shares  of  the surviving or resulting corporation having, in either  case,
     powers  and special rights identical to those of such class prior  to  such
     merger or consolidation.
     
        (c)  Unless the vote or consent of a greater number of shares shall then
     be  required by law, the vote or consent of the holders of at least  662/3%
     of  all of the shares of Steel Stock then outstanding, voting as a separate
     class, shall be necessary for:
     
           (i)  the declaration or payment of any dividend on, or the making  of
        any  other  payment or distribution with respect to any  shares  of  any
        other  class  of Common Stock, if such dividend, payment or distribution
        is  to  be  made with (A) proceeds from the Disposition of  any  of  the
        properties and assets of the U.S. Steel Group or (B) any portion  of  an
        equity  interest  in  a person, entity or group that  owns  any  of  the
        properties or assets of the U.S. Steel Group; or
        
           (ii)  the  use,  or  reservation for use, of any  proceeds  from  the
        Disposition  of  any  of the properties and assets  of  the  U.S.  Steel
        Group,  or any of the properties and assets acquired with such proceeds,
        in  any  business of the Corporation other than a business of  the  U.S.
        Steel Group;
        
     provided such vote shall not be required if such proceeds are loaned  at  a
     rate   or   rates  representative  of  actual  borrowings  and   short-term
     investments by the Corporation.
     
        (d)  Unless the vote or consent of a greater number of shares shall then
     be  required by law, the vote or consent of the holders of at least  662/3%
     of  all the shares of Marathon Stock then outstanding, voting as a separate
     class, shall be necessary for:
     
           (i)  the declaration or payment of any dividend on, or the making  of
        any  other  payment or distribution with respect to, any shares  of  any
        other  class  of Common Stock, if such dividend, payment or distribution
        is  to  be  made with (A) proceeds from the Disposition of  any  of  the
        properties  and assets of the Marathon Group or (B) any  portion  of  an
        equity  interest  in  a person, entity or group that  owns  any  of  the
        properties and assets of the Marathon Group; or
        
           (ii)  the  use,  or  reservation for use, of any  proceeds  from  the
        Disposition  of any of the properties and assets of the Marathon  Group,
        or  any of the properties and assets acquired with such proceeds, in any
        business  of  the  Corporation other than a  business  of  the  Marathon
        Group;
        
     provided  such vote shall not be required to the extent such  proceeds  are
     loaned  at  a rate or rates representative of actual borrowings and  short-
     term investments by the Corporation.
     
        (e)  Unless the vote or consent of a greater number of shares shall then
     be  required by law, the vote or consent of the holders of at least  662/3%
     of  all of the shares of Delhi Stock then outstanding, voting as a separate
     class, shall be necessary for:
     
           (i)  the declaration or payment of any dividend on, or the making  of
        any  other  payment or distribution with respect to any  shares  of  any
        other  class  of Common Stock, if such dividend, payment or distribution
        is  to  be  made with (A) proceeds from the Disposition of  any  of  the
        properties  and  assets  of the Delhi Group or (B)  any  portion  of  an
        equity  interest  in  a person, entity or group that  owns  any  of  the
        properties or assets of the Delhi Group; or
        
           (ii)  the  use,  or  reservation for use, of any  proceeds  from  the
        Disposition of any of the properties and assets of the Delhi  Group,  or
        any  of  the properties and assets acquired with such proceeds,  in  any
        business of the Corporation other than a business of the Delhi Group;
        
     provided such vote shall not be required if such proceeds are loaned  at  a
     rate   or   rates  representative  of  actual  borrowings  and   short-term
     investments by the Corporation.
     
        (f) The number of authorized shares of any class of Common Stock may  be
     increased  or  decreased (but not below the number of shares  thereof  then
     outstanding)  by  the affirmative vote of the holders of shares  of  Common
     Stock having a majority of the votes entitled to be cast by the holders  of
     all  classes  of Common Stock, voting together as provided for  in  Section
     3(a) and without a separate vote of the holders of any class.
     
  4.  Liquidation  Rights.  In  the  event of the  dissolution,  liquidation  or
  winding-up  of the Corporation, whether voluntary or involuntary, after  there
  shall have been paid or set apart for the holders of Preferred Stock the  full
  preferential  amounts  to  which  they  are  entitled,  the  holders  of   the
  outstanding shares of each class of Common Stock shall be entitled to  receive
  a  fraction of the funds of the Corporation remaining for distribution to  its
  stockholders, where such fraction is equal to the quotient of (A) the  sum  of
  (1)  four  times  the  average ratio of x/y for the five-Business  Day  period
  ending  on  the  Business Day prior to the date of the public announcement  of
  (I)  a voluntary dissolution, liquidation or winding-up by the Corporation  or
  (II)  the  institution  of  the  proceeding for the  involuntary  dissolution,
  liquidation  or  winding-up of the Corporation, (2) three  times  the  average
  ratio  of  x/y for the next preceding five-Business Day period, (3) two  times
  the  average ratio of x/y for the next preceding five-Business Day period  and
  (4)  the average ratio of x/y for the next preceding five-Business Day period,
  divided  by  (B) ten, where x is the Market Capitalization of  such  class  of
  Common  Stock, and y is the aggregate Market Capitalization of all classes  of
  Common   Stock.   For   purposes   of   the   preceding   sentence,   ''Market
  Capitalization''  of  any class of Common Stock on  any  day  shall  mean  the
  product of (i) the Market Value of such class of Common Stock on such day  and
  (ii)  the number of shares of such class of Common Stock outstanding  on  such
  day.
  
     5.  Definitions. As used in this Division I, the following terms shall have
  the  following meanings (with terms defined in the singular having  comparable
  meaning when used in the plural and vice versa), unless another definition  is
  provided or the context otherwise requires:
  
        ''Available Delhi Dividend Amount'', on any date, shall mean the product
     of  the Delhi Fraction and either (a) the greater of (i) an amount equal to
     (x)  $172.9  million, increased or decreased, as appropriate,  to  reflect,
     from  June  30,  1992,  (A) Delhi Net Income, (B) any  dividends  or  other
     distributions  declared  or  paid  with  respect  to,  or  repurchases   or
     issuances  of, any shares of Marathon Stock prior to the close of  business
     on  the date Delhi Stock is first issued attributed to the Delhi Group, (C)
     any  dividends or other distributions declared or paid with respect to,  or
     repurchases  or issuances of, any shares of Delhi Stock or  any  shares  of
     Preferred Stock attributed to the Delhi Group, (D) assets or properties  of
     the  Delhi Group that are no longer included as part of the Delhi Group  as
     a  result of any such dividend, distribution or repurchase pursuant to  the
     proviso  to the definition of ''Delhi Group'' and (E) any other adjustments
     to  stockholders'  equity  of  the Delhi  Group  made  in  accordance  with
     generally  accepted  accounting  principles,  less  (y)  the  sum  of   the
     aggregate  stated capital of all outstanding Preferred Stock attributed  to
     the  Delhi  Group  and  the  quotient of the aggregate  par  value  of  all
     outstanding Delhi Stock divided by the Delhi Fraction and (ii)  the  excess
     of  the fair market value of the net assets of the Delhi Group over the sum
     of  the  aggregate  stated  capital  of  all  outstanding  Preferred  Stock
     attributed to the Delhi Group, and the quotient of the aggregate par  value
     of  all  outstanding Delhi Stock divided by the Delhi Fraction, or  (b)  in
     case  there  shall be no such amount, an amount equal to Delhi  Net  Income
     (if  positive) for the fiscal year in which the dividend is declared and/or
     the preceding fiscal year.
     
        ''Available Steel Dividend Amount'', on any date, shall mean either  (a)
     the  greater  of  (i) an amount equal to (x) $2.244 billion,  increased  or
     decreased, as appropriate, to reflect (A) Steel Net Income from  the  close
     of  business on December 31, 1990, (B) any dividends or other distributions
     declared  or  paid  with respect to, or repurchases or  issuances  of,  any
     shares  of  common  stock of the Corporation after December  31,  1990  and
     prior  to the close of business on May 6, 1991 attributed to the U.S. Steel
     Group,  (C)  any  dividends or other distributions declared  or  paid  with
     respect  to, or repurchases or issuances of, any shares of Steel  Stock  or
     any  shares of Preferred Stock attributed to the U.S. Steel Group  and  (D)
     any  other adjustments to stockholders' equity of the U.S. Steel Group made
     in  accordance with generally accepted accounting principles, less (y)  the
     sum  of  the  aggregate par value of all outstanding Steel  Stock  and  the
     aggregate  stated capital of all outstanding Preferred Stock attributed  to
     the  U.S. Steel Group and (ii) the excess of the fair market value  of  the
     net  assets of the U.S. Steel Group over the sum of the aggregate par value
     of  all  outstanding Steel Stock and the aggregate stated  capital  of  all
     outstanding  Preferred Stock attributed to the U.S.  Steel  Group,  in  the
     case of each of clause (i) and clause (ii) increased by an amount equal  to
     any  effects  of  the  recognition of the transition  obligation  upon  the
     adoption  of  Statement of Financial Accounting Standards (SFAS)  No.  106,
     ''Employer's  Accounting for Postretirement Benefits Other than  Pensions''
     (including  any  amendments  thereto) and any  cumulative  effects  of  the
     adoption  of  SFAS No. 109, ''Accounting for Income Taxes'' (including  any
     amendments thereto) in the year of adoption or (b) in case there  shall  be
     no  such amount, an amount equal to Steel Net Income (if positive) for  the
     fiscal  year in which the dividend is declared and/or the preceding  fiscal
     year.
     
        ''Business Day'' shall mean each weekday other than any day on which any
     relevant  class  of  Common Stock is not traded on any national  securities
     exchange  or  the  National  Association of  Securities  Dealers  Automated
     Quotations National Market System or in the over-the-counter market.
     
        ''Convertible Securities'' shall mean any securities of the  Corporation
     that  are convertible into or evidence the right to purchase any shares  of
     any  class  of  Common Stock, pursuant to antidilution provisions  of  such
     securities or otherwise.
     
        The  ''Delhi  Fraction'' as of any date is a fraction the  numerator  of
     which  shall  be  the number of shares of Delhi Stock outstanding  on  such
     date  and  the denominator of which shall be initially 14,000,000  provided
     that  such  fraction shall in no event be greater than one. The denominator
     of  the  Delhi Fraction shall be adjusted from time to time as  appropriate
     to  reflect (i) subdivisions (by stock split or otherwise) and combinations
     (by  reverse  stock  split  or otherwise) of  the  Delhi  Stock  and  stock
     dividends  payable in shares of Delhi Stock to holders of Delhi  Stock  and
     other  reclassifications of Delhi Stock, (ii) the issuance of Delhi  Stock,
     the  proceeds  of  which  are  attributed to  the  Delhi  Group  and  (iii)
     repurchases by the Corporation of outstanding shares of Delhi Stock.
     
        ''Delhi  Group'' shall mean, (i) all of the businesses in which  any  of
     Delhi  Gas  Pipeline Corporation, The Nueces Company, Delhi  Gasmark,  Inc.
     (previously  Texas  Gasmark, Inc.), Tonkawa Gas Processing  Company,  Delhi
     Gas  Marketing  Corp.  (previously  TXO Gas  Marketing  Corp.),  Delhi  Gas
     Ventures  Corp. (previously TXO Gas Ventures Corp.), Red River Gas Pipeline
     Corporation,   Ozark   Gas   Pipeline  Corporation,   Sweetwater   Pipeline
     Corporation,  Western Gas Transmission, Inc., and Western  Gas  Corporation
     (or  any  of  their  predecessors or successors) is or  has  been  engaged,
     directly  or indirectly, (ii) all assets and liabilities of the Corporation
     to  the  extent attributed to any of such businesses, whether or  not  such
     assets  or  liabilities  are  or  were  assets  and  liabilities  of   such
     companies,  and (iii) such businesses, assets and liabilities  acquired  by
     the  Corporation  for  the  Delhi  Group as  determined  by  the  Board  of
     Directors to be included in the Delhi Group; provided that, from and  after
     any dividend or distribution with respect to any shares of Delhi Stock,  or
     any  repurchase  of  shares  of Delhi Stock from  holders  of  Delhi  Stock
     generally, the Delhi Group shall no longer include an amount of  assets  or
     properties  of the Delhi Group equal to the aggregate amount of  such  kind
     of  assets  or  properties  so paid in respect of  shares  of  Delhi  Stock
     multiplied by a fraction, the numerator of which is equal to one  less  the
     Delhi  Fraction  and  the  denominator of  which  is  equal  to  the  Delhi
     Fraction.  From  and after the date on which all of the outstanding  shares
     of  Steel  Stock  are exchanged for shares of Delhi Stock pursuant  to  any
     provision  of  Section 2, all of the businesses, assets and liabilities  of
     the U.S. Steel Group shall be included in the Delhi Group.
     
        ''Delhi  Group Subsidiary'' shall have the meaning set forth in  Section
     2(c)(v).
     
        ''Delhi  Net  Income'' shall mean the net income or loss  of  the  Delhi
     Group   determined   in  accordance  with  generally  accepted   accounting
     principles, including income and expenses of the Corporation attributed  to
     the  operations  of  the Delhi Group on a substantially  consistent  basis,
     including,   without  limitation,  corporate  administrative   costs,   net
     interest and other financial costs and income taxes.
     
        ''Disposition''  shall  mean  the sale, transfer,  assignment  or  other
     disposition  (whether  by merger, consolidation, sale  or  contribution  of
     assets or stock or otherwise) of properties or assets.
     
        ''Exchange Date'' shall mean any date fixed for an exchange of shares of
     any  class  of  Common Stock, as set forth in a notice to holders  of  such
     class of Common Stock pursuant to Section 2(d)(i).
     
        ''Marathon Group'' shall mean, at any time, (i) all of the businesses in
     which  any of Marathon Oil Company, Texas Oil & Gas Corp., Carnegie Natural
     Gas  Company  and  Apollo  Gas Company (or any  of  their  predecessors  or
     successors) is or has been engaged, directly or indirectly, other than  the
     businesses  of  the  Delhi Group after the date of the  first  issuance  of
     Delhi  Stock,  (ii)  all assets and liabilities of the Corporation  to  the
     extent attributed to any of such businesses, whether or not such assets  or
     liabilities are or were assets and liabilities of such companies,  (iii)  a
     proportionate  interest  in the business, assets  and  liabilities  of  the
     Delhi  Group  equal  to  one  less  the  Delhi  Fraction,  and  (iv)   such
     businesses,  assets,  and liabilities acquired by the Corporation  for  the
     Marathon  Group  after  May  6, 1991 and as  determined  by  the  Board  of
     Directors  to  be included in the Marathon Group; provided that,  from  and
     after  any  dividend or distribution with respect to any  shares  of  Delhi
     Stock,  or  any repurchase of shares of Delhi Stock from holders  of  Delhi
     Stock  generally, the Marathon Group shall include an amount of  assets  or
     properties  of the Delhi Group equal to the aggregate amount of  such  kind
     of  assets  or  properties  so paid in respect of  shares  of  Delhi  Stock
     multiplied by a fraction, the numerator of which is equal to one  less  the
     Delhi  Fraction  and  the  denominator of  which  is  equal  to  the  Delhi
     Fraction.  From  and after the date on which there are no shares  of  Steel
     Stock  outstanding  (other than as a result of an exchange  for  shares  of
     Delhi  Stock  pursuant  to  any  provision  of  Section  2),  all  of   the
     businesses,  assets  and  liabilities of the  U.S.  Steel  Group  shall  be
     included in the Marathon Group.
     
        ''Marathon  Group  Subsidiary'' shall have  the  meaning  set  forth  in
     Section 2(a)(i).
     
        ''Market Value'' of any class of capital stock of the Corporation on any
     Business  Day  shall  mean the average of the high and low  reported  sales
     prices  regular  way of a share of such class on such Business  Day  or  in
     case no such reported sale takes place on such Business Day the average  of
     the  reported closing bid and asked prices regular way of a share  of  such
     class  on  such Business Day, in either case on the New York Stock Exchange
     Composite  Tape, or if the shares of such class are not listed or  admitted
     to  trading  on  such  Exchange  on such Business  Day,  on  the  principal
     national  securities exchange in the United States on which the  shares  of
     such  class are listed or admitted to trading, or if not listed or admitted
     to  trading  on any national securities exchange on such Business  Day,  on
     the   National  Association  of  Securities  Dealers  Automated  Quotations
     National  Market System, or if the shares of such class are not  listed  or
     admitted to trading on any national securities exchange or quoted  on  such
     National  Market System on such Business Day, the average  of  the  closing
     bid  and  asked  prices  of a share of such class in  the  over-the-counter
     market  on  such  Business Day as furnished by any New York Stock  Exchange
     member  firm  selected  from time to time by the Corporation,  or  if  such
     closing  bid and asked prices are not made available by any such  New  York
     Stock  Exchange  member firm on such Business Day, the market  value  of  a
     share of such class as determined by the Board of Directors; provided  that
     (i)  for  purposes of determining the ratios set forth in Sections 2(b)(i),
     2(b)(ii),  2(c)(i), 2(c)(ii), 2(c)(iii), 3(a) and 4, the  ''Market  Value''
     of  any  share of any class of Common Stock on any day prior to the  ''ex''
     date  or  any similar date for any dividend or distribution paid or  to  be
     paid  with  respect  to such class of Common Stock (other  than  a  regular
     quarterly  cash  dividend or a dividend or distribution in shares  of  such
     class  of  Common Stock) shall be reduced by the fair market value  of  the
     per share amount of such dividend or distribution and (ii) for purposes  of
     determining  the  ratios set forth in Sections 2(b)(i), 2(b)(ii),  2(c)(i),
     2(c)(ii),  2(c)(iii) and 3(a), the ''Market Value'' of  any  share  of  any
     class  of  Common Stock on any day prior to (A) the effective date  of  any
     subdivision (by stock split or otherwise) or combination (by reverse  stock
     split or otherwise) of outstanding shares of such class of Common Stock  or
     (B)  the  ''ex'' date or any similar date for any dividend or  distribution
     with  respect to either such class of Common Stock in shares of such  class
     of   Common   Stock  shall  be  appropriately  adjusted  to  reflect   such
     subdivision,  combination, dividend or distribution. For  the  purposes  of
     the  foregoing clause (i) the Board of Directors shall determine  the  fair
     market value of any dividend or distribution.
     
        ''Net  Proceeds'', as of any date, from any Disposition of  any  of  the
     properties  and assets of the U.S. Steel Group or the Delhi Group,  as  the
     case  may be, shall mean an amount, if any, equal to the gross proceeds  of
     such  Disposition  after any payment of, or reasonable provision  for,  (i)
     any  taxes payable by the Corporation in respect of such Disposition,  (ii)
     any  taxes  payable  by  the  Corporation in respect  of  any  dividend  or
     redemption  pursuant  to  clause  (A) or  (B),  respectively,  of  Sections
     2(b)(i)  or  2(c)(i), respectively, (iii) any transaction costs, including,
     without  limitation, any legal, investment banking and accounting fees  and
     expenses  and  (iv)  any  liabilities  (contingent  or  otherwise)  of,  or
     allocated to, the U.S. Steel Group or the Delhi Group, as the case may  be,
     including,  without  limitation,  any  indemnity  obligations  incurred  in
     connection  with  the  Disposition. For purposes of  this  definition,  any
     properties  and assets of the Steel Group or the Delhi Group, as  the  case
     may  be,  remaining  after  such Disposition shall constitute  ''reasonable
     provision'' for such amount of taxes, costs and liabilities (contingent  or
     otherwise)  as  can  be supported by such properties  and  assets.  To  the
     extent  the  proceeds  of any Disposition include any securities  or  other
     property other than cash, the Board of Directors shall determine the  value
     of such securities or property.
     
        ''Redemption Date'' shall mean any date fixed for a redemption of shares
     of  any class of Common Stock, as set forth in a notice to holders of  such
     class of Common Stock pursuant to Section 2(d)(i).
     
        ''Steel Net Income'' shall mean the net income or loss of the U.S. Steel
     Group   determined   in  accordance  with  generally  accepted   accounting
     principles, including income and expenses of the Corporation attributed  to
     the  operations  of  the Steel Group on a substantially  consistent  basis,
     including,   without  limitation,  corporate  administrative   costs,   net
     interest and other financial costs and income taxes.
     
        ''U.S.  Steel Group'' shall mean, at any time, all of the businesses  in
     which  the Corporation is or has been engaged, directly or indirectly,  and
     all  assets  and liabilities of the Corporation, other than any businesses,
     assets  or  liabilities of the Marathon Group or the  Delhi  Group  if  any
     shares of Marathon Stock or Delhi Stock are outstanding.
     
        ''U.S.  Steel  Group Subsidiary'' shall have the meaning  set  forth  in
     Section 2(b)(iii).
     
     6. Determinations by the Board of Directors. Any determinations made by the
  Board  of Directors of the Corporation under any provision in this Division  I
  of  Article  Fourth  shall  be final and binding on all  stockholders  of  the
  Corporation.
  
  
                                   DIVISION II
                                        
   A  statement  of  the designations of the Preferred Stock or  of  any  series
thereof,  and the powers, preferences and relative, participating,  optional  or
other  special rights, and qualifications, limitations or restrictions  thereof,
or  of  the  authority  of  the  Board of Directors  to  fix  by  resolution  or
resolutions  such designations and other terms not fixed by the  Certificate  of
Incorporation, is as follows:

     1.  The  Preferred Stock may be issued in one or more series, from time  to
  time, with each such series to have such designation, powers, preferences  and
  relative,    participating,   optional   or   other   special   rights,    and
  qualifications, limitations or restrictions thereof, as shall  be  stated  and
  expressed  in  the resolution or resolutions providing for the issue  of  such
  series  adopted by the Board of Directors of the Corporation, subject  to  the
  limitations  prescribed by law and in accordance with the  provisions  hereof,
  the  Board of Directors being hereby expressly vested with authority to  adopt
  any  such  resolution or resolutions. The authority of the Board of  Directors
  with  respect  to  each such series shall include, but  not  limited  to,  the
  determination or fixing of the following:
  
           (i)  The distinctive designation and number of shares comprising such
        series,  which number may (except where otherwise provided by the  Board
        of  Directors  in creating such series) be increased or  decreased  (but
        not  below  the number of shares then oustanding) from time to  time  by
        like action of the Board of Directors;
        
           (ii) The dividend rate of such series, the conditions and times  upon
        which  such  dividends  shall  be  payable,  the  relation  which   such
        dividends  shall  bear to the dividends payable on any  other  class  or
        classes  of  stock or series thereof, or any other series  of  the  same
        class, and whether dividends shall be cumulative or non-cumulative;
        
           (iii)  The conditions upon which the shares of such series  shall  be
        subject  to  redemption  by the Corporation and the  times,  prices  and
        other  terms and provisions upon which the shares of the series  may  be
        redeemed;
        
           (iv) Whether or not the shares of the series shall be subject to  the
        operation of a retirement or sinking fund to be applied to the  purchase
        or  redemption of such shares and, if such retirement or sinking fund be
        established,  the  annual amount thereof and the  terms  and  provisions
        relative to the operation thereof;
        
           (v) Whether or not the shares of the series shall be convertible into
        or  exchangeable  for  shares of any other class  or  classes,  with  or
        without  par  value, or of any other series of the same class,  and,  if
        provision is made for conversion or exchange, the times, prices,  rates,
        adjustments,  and  other  terms and conditions  of  such  conversion  or
        exchange;
        
           (vi)  Whether  or  not  the shares of the series  shall  have  voting
        rights,  in addition to the voting rights provided by law, and,  if  so,
        subject  to  the  limitation hereinafter set forth, the  terms  of  such
        voting rights;
        
           (vii)  The  rights  of  the shares of the  series  in  the  event  of
        voluntary   or  involuntary  liquidation,  dissolution,  or   upon   the
        distribution of assets of the Corporation;
        
           (viii)  Any  other  powers, preferences and relative,  participating,
        optional  or  other special rights, and qualifications,  limitations  or
        restrictions  thereof, of the shares of such series,  as  the  Board  of
        Directors may deem advisable and as shall not be inconsistent  with  the
        provisions of this Certificate of Incorporation.
        
     2.  The  holders of shares of the Preferred Stock of each series  shall  be
  entitled  to receive, when and as declared by the Board of Directors,  out  of
  funds  legally available for the payment of dividends, dividends at the  rates
  fixed  by  the  Board of Directors for such series, and no  more,  before  any
  dividends,  other  than dividends payable in Common Stock, shall  be  declared
  and  paid, or set apart for payment, on the Common Stock with respect  to  the
  same dividend period.
  
     3. Whenever, at any time, dividends on the then outstanding Preferred Stock
  as  may  be  required with respect to any series outstanding shall  have  been
  paid  or  declared and set apart for payment on the then outstanding Preferred
  Stock,  and after complying with respect to any retirement or sinking fund  or
  funds  for any series of Preferred Stock, the Board of Directors may,  subject
  to  the  provisions of the resolution or resolutions creating  any  series  of
  Preferred  Stock,  declare  and pay dividends on the  Common  Stock,  and  the
  holders  of  shares  of  the Preferred Stock shall not be  entitled  to  share
  therein.
  
     4.  The  holders of shares of the Preferred Stock of each series  shall  be
  entitled  upon  liquidation or dissolution or upon  the  distribution  of  the
  assets  of  the Corporation to such preferences as provided in the  resolution
  or  resolutions creating such series of Preferred Stock, and no  more,  before
  any  distribution  of  the assets of the Corporation  shall  be  made  to  the
  holders of shares of the Common Stock.
  
     5. Except as otherwise provided by a resolution or resolutions of the Board
  of  Directors  creating  any  series of Preferred  Stock  or  by  the  General
  Corporation Law of Delaware, the holders of shares of the Common Stock  issued
  and  outstanding  shall  have and possess the exclusive  right  to  notice  of
  stockholders' meetings and the exclusive power to vote. The holders of  shares
  of  the Preferred Stock issued and outstanding shall, in no event, be entitled
  to  more  than one vote for each share of Preferred Stock held by them  unless
  otherwise required by law.
  
  
                  Terms of the Preferred Stocks are as follows:
                                        
                                        
     Series A Junior Preferred Stock
     
     Section  1.  Designation and Amount. This resolution shall  provide  for  a
  single  series of preferred stock, the designation of which shall be  ''Series
  A  Junior  Preferred  Stock'', without par value, and  the  number  of  shares
  constituting such series shall be Eight Million (8,000,000).
  
    Section 2. Dividends and Distributions.
  
        (A)  Subject  to  the prior and superior rights of the  holders  of  any
     shares  of any series of Preferred Stock ranking prior and superior to  the
     shares  of  Series A Junior Preferred Stock with respect to dividends,  the
     holders  of shares of Series A Junior Preferred Stock shall be entitled  to
     receive,  when, as and if declared by the Board of Directors out  of  funds
     legally  available for the purpose, quarterly dividends payable in cash  on
     the  first  day of March, June, September and December in each  year  (each
     such  date  being  referred  to  herein as a ''Quarterly  Dividend  Payment
     Date''), commencing on the first Quarterly Dividend Payment Date after  the
     first  issuance  of  a  share or fraction of a share  of  Series  A  Junior
     Preferred  Stock,  in  an amount per share (rounded to  the  nearest  cent)
     equal  to  the  greater of (a) $5.00 or (b) subject to  the  provision  for
     adjustment hereinafter set forth, 100 times the aggregate per share  amount
     of  all  cash  dividends,  and  100 times the aggregate  per  share  amount
     (payable  in  kind) of all non-cash dividends or other distributions  other
     than  a dividend payable in shares of Common Stock or a subdivision of  the
     outstanding  shares of Common Stock (by reclassification or otherwise),  to
     be  or  being declared on the Common Stock, par value $1.00 per  share,  of
     the  Corporation (the ''Common Stock'') with respect to the  same  dividend
     period.  If  the Quarterly Dividend Payment Date is a Saturday,  Sunday  or
     legal  holiday then such Quarterly Dividend Payment Date shall be the first
     immediately  preceding  calendar day which is not  a  Saturday,  Sunday  or
     legal  holiday.  In  the  event the Corporation shall  at  any  time  after
     October  10,  1989  (the  ''Rights  Declaration  Date'')  (i)  declare  any
     dividend  on Common Stock payable in shares of Common Stock, (ii) subdivide
     the  outstanding  Common  Stock, or (iii) combine  the  outstanding  Common
     Stock  into  a smaller number of shares, then in each such case the  amount
     to  which  holders  of  shares  of Series A  Junior  Preferred  Stock  were
     entitled  immediately prior to such event under clause (b) of the preceding
     sentence  shall  be adjusted by multiplying such amount by a  fraction  the
     numerator  of  which  is the number of shares of Common  Stock  outstanding
     immediately after such event and the denominator of which is the number  of
     shares  of  Common Stock that were outstanding immediately  prior  to  such
     event.
     
        (B)  The  Corporation shall declare a dividend or  distribution  on  the
     Series  A  Junior  Preferred  Stock  as provided  in  paragraph  (A)  above
     immediately  prior  to the time it declares a dividend or  distribution  on
     the  Common  Stock  (other  than a dividend payable  in  shares  of  Common
     Stock);  provided that, in the event no dividend or distribution  shall  be
     declared on the Common Stock with respect to a particular dividend  period,
     a  dividend of $5.00 per share on the Series A Junior Preferred Stock shall
     nevertheless  be  payable  on  such Quarterly Dividend  Payment  Date  with
     respect to such quarterly period.
     
        (C)  Dividends  shall begin to accrue and be cumulative  on  outstanding
     shares  of  Series  A  Junior Preferred Stock from the  Quarterly  Dividend
     Payment  Date next preceding the date of issue of such shares of  Series  A
     Junior  Preferred Stock, unless the date of issue of such shares  is  prior
     to  the record date for the first Quarterly Dividend Payment Date, in which
     case  dividends on such shares shall begin to accrue from the date of issue
     of  such  shares,  or  unless the date of issue  is  a  Quarterly  Dividend
     Payment  Date  or is a date after the record date for the determination  of
     holders of shares of Series A Junior Preferred Stock entitled to receive  a
     quarterly  dividend  and before such Quarterly Dividend  Payment  Date,  in
     either  of  which  events  such dividends shall  begin  to  accrue  and  be
     cumulative  from such Quarterly Dividend Payment Date. Accrued  but  unpaid
     dividends  shall not bear interest. Dividends paid on the shares of  Series
     A  Junior Preferred Stock in an amount less than the total amount  of  such
     dividends  at  the  time  accrued  and payable  on  such  shares  shall  be
     allocated pro rata on a share-by-share basis among all such shares  at  the
     time  outstanding.  The Board of Directors may fix a record  date  for  the
     determination  of  holders  of shares of Series A  Junior  Preferred  Stock
     entitled  to  receive  payment  of  a  dividend  or  distribution  declared
     thereon, which record date shall be no more than 30 days prior to the  date
     fixed  for  the payment thereof. Dividends in arrears may be  declared  and
     paid  at  any  time,  without reference to any Quarterly  Dividend  Payment
     Date,  to  holders of record on such date, not exceeding 45 days  preceding
     the payment date thereof, as may be fixed by the Board of Directors.
     
        (D)  Except  as hereinafter provided, no dividends shall be declared  or
     paid  or  set apart for payment on the shares of Series A Junior  Preferred
     Stock  for any period if the Corporation shall be in default in the payment
     of  any  dividends (including cumulative dividends, if applicable)  on  any
     shares  of Preferred Stock ranking, as to dividends, prior to the Series  A
     Junior   Preferred  Stock,  unless  the  same  shall  be  contemporaneously
     declared and paid.
     
        (E)  Dividends payable on the Series A Junior Preferred  Stock  for  the
     initial  dividend  period and for any period less  than  a  full  quarterly
     period, shall be computed on the basis of a 360-day year of 30-day months.
     
     Section  3.  Voting  Rights.  The holders of  shares  of  Series  A  Junior
  Preferred Stock shall have the following voting rights:
  
        (A)  Each  share  of Series A Junior Preferred Stock shall  entitle  the
     holder  thereof  to one vote on all matters submitted  to  a  vote  of  the
     stockholders  of the Corporation. The holders of Series A Junior  Preferred
     Stock  shall  be entitled to notice of all meetings of the stockholders  of
     the Corporation.
     
        (B) Except as otherwise provided herein or by law, the holders of shares
     of  Series  A  Junior Preferred Stock and the holders of shares  of  Common
     Stock  shall vote together as one class on all matters submitted to a  vote
     of stockholders of the Corporation.
     
        (C)  If,  on the date used to determine stockholders of record  for  any
     meeting  of  stockholders  for the election  of  directors,  a  default  in
     preference  dividends  on the Preferred Stock shall exist,  the  number  of
     directors constituting the Board of Directors of the Corporation  shall  be
     increased  by  two, and the holders of the Preferred Stock  of  all  series
     (whether  or  not the holders of such series of Preferred  Stock  would  be
     entitled  to  vote  for  the  election of  directors  if  such  default  in
     preference dividends did not exist), shall have the right at such  meeting,
     voting  together  as  a  single class without  regard  to  series,  to  the
     exclusion  of  the holders of Common Stock, to elect two directors  of  the
     Corporation  to  fill  such  newly  created  directorships.  Each  director
     elected  by  the  holders  of shares of Preferred Stock  (herein  called  a
     ''Preferred Director''), shall continue to serve as such director  for  the
     full  term for which he shall have been elected, notwithstanding that prior
     to  the  end of such term a default in preference dividends shall cease  to
     exist.  Any Preferred Director may be removed by, and shall not be  removed
     except  by, the vote of the holders of record of the outstanding shares  of
     Preferred  Stock,  voting  together as a single  class  without  regard  to
     series,  at a meeting of the stockholders, or of the holders of  shares  of
     Preferred  Stock,  called for the purpose. So long  as  a  default  in  any
     preference dividends on the Preferred Stock shall exist (i) any vacancy  in
     the  office  of a Preferred Director may be filled (except as  provided  in
     the  following  clause  (ii)) by an instrument in  writing  signed  by  the
     remaining  Preferred Director and filed with the Corporation  and  (ii)  in
     the  case  of  the removal of any Preferred Director, the  vacancy  may  be
     filled  by  the vote of the holders of the outstanding shares of  Preferred
     Stock,  voting together as a single class without regard to series, at  the
     same  meeting at which such removal shall be voted. Each director appointed
     as  aforesaid by the remaining Preferred Director shall be deemed, for  all
     purposes  hereof, to be a Preferred Director. Whenever the term  of  office
     of  the  Preferred  Directors  shall  end  and  no  default  in  preference
     dividends  shall exist, the number of directors constituting the  Board  of
     Directors  of the Corporation shall be reduced by two. For the purposes  of
     this  paragraph (C), a ''default in preference dividends'' on the Preferred
     Stock  shall be deemed to have occurred whenever the amount of accrued  and
     unpaid  dividends  upon  any  series  of  the  Preferred  Stock  shall   be
     equivalent  to  six  full  quarterly dividends  or  more,  and,  having  so
     occurred, such default shall be deemed to exist thereafter until, but  only
     until,  all accrued dividends on all shares of Preferred Stock of each  and
     every  series  then  outstanding shall have  been  paid  through  the  last
     Quarterly Dividend Payment Date.
     
     Section 4. Certain Restrictions.
     
        (A)  Whenever  quarterly dividends or other dividends  or  distributions
     payable  on  the Series A Junior Preferred Stock as provided in  Section  2
     are  in arrears, thereafter and until all accrued and unpaid dividends  and
     distributions,  whether  or  not declared, on shares  of  Series  A  Junior
     Preferred  Stock outstanding shall have been paid in full, the  Corporation
     shall not:
     
           (i)  declare  or  pay dividends on, make any other  distributions  on
        (other  than  a dividend in Common Stock or in any other  stock  of  the
        Corporation ranking junior to the Series A Junior Preferred Stock as  to
        dividends  and  upon liquidation, dissolution or winding  up  and  other
        than  as  provided in subparagraph (ii) of this section), or  redeem  or
        purchase  or  otherwise acquire for consideration (except by  conversion
        into  or  exchange for stock of the Corporation ranking  junior  to  the
        Series  A  Junior Preferred Stock as to dividends and upon  dissolution,
        liquidation  or winding up), any shares of stock ranking junior  (either
        as  to dividends or upon liquidation, dissolution or winding up) to  the
        Series A Junior Preferred Stock;
        
           (ii)  declare or pay dividends on or make any other distributions  on
        any  shares of stock ranking on a parity (either as to dividends or upon
        liquidation,  dissolution  or  winding up)  with  the  Series  A  Junior
        Preferred  Stock, except dividends paid ratably on the Series  A  Junior
        Preferred  Stock  and all stock ranking on a parity with  the  Series  A
        Junior  Preferred Stock as to dividends on which dividends  are  payable
        or  in  arrears in proportion to the total amounts to which the  holders
        of all such shares are then entitled;
        
           (iii)  redeem  or  purchase  or otherwise acquire  for  consideration
        shares of any stock ranking on a parity (either as to dividends or  upon
        liquidation,  dissolution  or  winding up)  with  the  Series  A  Junior
        Preferred  Stock, provided that the Corporation may at any time  redeem,
        purchase  or  otherwise  acquire shares of  any  such  parity  stock  in
        exchange  for shares of any stock of the Corporation ranking junior  (as
        to  dividends and upon dissolution, liquidation or winding  up)  to  the
        Series A Junior Preferred Stock;
        
           (iv)  purchase or otherwise acquire for consideration any  shares  of
        Series  A  Junior Preferred Stock, except in accordance with a  purchase
        offer  made in writing or by publication (as determined by the Board  of
        Directors)  to all holders of such shares upon such terms as  the  Board
        of  Directors,  after  consideration of the respective  annual  dividend
        rates  and  other  relative  rights and preferences  of  the  respective
        series  and classes, shall determine in good faith will result  in  fair
        and equitable treatment among the respective series or classes.
        
        (B)  The  Corporation shall not permit any subsidiary of the Corporation
     to  purchase or otherwise acquire for consideration any shares of stock  of
     the  Corporation unless the Corporation could, under paragraph (A) of  this
     Section  4, purchase or otherwise acquire such shares at such time  and  in
     such manner.
     
     Section 5. Reacquired Shares. Any shares of Series A Junior Preferred Stock
  purchased  or  otherwise acquired by the Corporation in any manner  whatsoever
  shall  be  retired and cancelled promptly after the acquisition  thereof.  All
  such  shares  shall  upon  their cancellation become authorized  but  unissued
  shares  of  Preferred Stock and may be reissued as part of  a  new  series  of
  Preferred  Stock to be created by resolution or resolutions of  the  Board  of
  Directors,  subject to the conditions and restrictions on issuance  set  forth
  herein.
  
     Section 6. Liquidation, Dissolution or Winding Up.
     
         (A)   In  the  event  of  any  voluntary  or  involuntary  liquidation,
     dissolution or winding up of the Corporation, the holders of the  Series  A
     Junior  Preferred  Stock shall be entitled to receive the  greater  of  (a)
     $100  per  share,  plus  accrued dividends to  the  date  of  distribution,
     whether  or not earned or declared, or (b) an amount per share, subject  to
     the  provision for adjustment hereinafter set forth, equal to 100 times the
     aggregate  amount to be distributed per share to holders  of  Common  Stock
     (the  ''Series  A  Liquidation Preference''). In the event the  Corporation
     shall  at  any  time  after the Rights Declaration  Date  (i)  declare  any
     dividend  on Common Stock payable in shares of Common Stock, (ii) subdivide
     the  outstanding Common Stock or (iii) combine the outstanding Common Stock
     into  a  smaller  number of shares, then in each such case  the  amount  to
     which  holders  of shares of Series A Junior Preferred Stock were  entitled
     immediately  prior to such event pursuant to clause (b)  of  the  preceding
     sentence  shall  be adjusted by multiplying such amount by a  fraction  the
     numerator  of  which  is the number of shares of Common  Stock  outstanding
     immediately after such event and the denominator of which is the number  of
     shares  of  Common Stock that were outstanding immediately  prior  to  such
     event.
     
        (B)  In  the  event,  however,  that there  are  not  sufficient  assets
     available  to permit payment in full of the Series A Liquidation Preference
     and the liquidation preferences of all other series of preferred stock,  if
     any,  which rank on a parity with the Series A Junior Preferred Stock, then
     such  remaining assets shall be distributed ratably to the holders of  such
     parity shares in proportion to their respective liquidation preferences.
     
     Section 7. Consolidation, Merger, etc. In case the Corporation shall  enter
  into any consolidation, merger, combination or other transaction in which  the
  shares  of  Common  Stock are exchanged for or changed  into  other  stock  or
  securities, cash and/or any other property, then in any such case  the  shares
  of  Series  A  Junior  Preferred Stock shall at the  same  time  be  similarly
  exchanged  or  changed in an amount per share (subject to  the  provision  for
  adjustment hereinafter set forth) equal to 100 times the aggregate  amount  of
  stock,  securities, cash and/or any other property (payable in kind),  as  the
  case may be, into which or for which each share of Common Stock is changed  or
  exchanged.  In  the event the Corporation shall at any time after  the  Rights
  Declaration  Date (i) declare any dividend on Common Stock payable  in  shares
  of  Common  Stock,  (ii)  subdivide the outstanding  Common  Stock,  or  (iii)
  combine the outstanding Common Stock into a smaller number of shares, then  in
  each such case the amount set forth in the preceding sentence with respect  to
  the  exchange or change of shares of Series A Junior Preferred Stock shall  be
  adjusted  by multiplying such amount by a fraction the numerator of  which  is
  the  number of shares of Common Stock outstanding immediately after such event
  and  the  denominator of which is the number of shares of  Common  Stock  that
  were outstanding immediately prior to such event.
  
     Section 8. Optional Redemption.
     
        (A)  The  Corporation shall have the option to redeem the whole  or  any
     part  of  the  Series A Junior Preferred Stock at any time on at  least  30
     days  notice  in accordance with the provisions of paragraph  (B)  of  this
     Section  8  at  a redemption price equal to, subject to the  provision  for
     adjustment hereinafter set forth, 100 times the ''current per share  market
     price''  of  the Common Stock on the date of the mailing of the  notice  of
     redemption, together with unpaid accumulated dividends to the date of  such
     redemption.  In the event the Corporation shall at any time  after  October
     10,  1989  (i)  declare any dividend on Common Stock payable in  shares  of
     Common  Stock, (ii) subdivide the outstanding Common Stock or (iii) combine
     the  outstanding Common Stock into a smaller number of shares, then in each
     such  case  the  amount  to  which holders of shares  of  Series  A  Junior
     Preferred  Stock were otherwise entitled immediately prior  to  such  event
     under  the preceding sentence shall be adjusted by multiplying such  amount
     by  a  fraction  the numerator of which is the number of shares  of  Common
     Stock  outstanding  immediately after such event  and  the  denominator  of
     which  is  the  number  of  shares of Common Stock  that  were  outstanding
     immediately prior to such event. The ''current per share market price''  on
     any  date shall be deemed to be the average of the closing price per  share
     of  such Common Stock for the 10 consecutive Trading Days (as such term  is
     hereinafter defined) immediately prior to such date. The closing price  for
     each  day  shall be the last sale price, regular way, or, in case  no  such
     sale  takes  place on such day, the average of the closing  bid  and  asked
     prices   regular  way,  in  either  cases  as  reported  in  the  principal
     consolidated  transaction  reporting  system  with  respect  to  securities
     listed  or  admitted to trading on the New York Stock Exchange or,  if  the
     Common  Stock  is not listed or admitted to trading on the New  York  Stock
     Exchange,  as reported in the principal consolidated transaction  reporting
     system  with  respect to securities listed or admitted to  trading  on  the
     principal national securities exchange on which the Common Stock is  listed
     or  admitted  to trading or, if the Common Stock is not listed or  admitted
     to  trading on any national securities exchange, the last quoted price  or,
     if  not  so quoted the average of the high bid and low asked prices in  the
     over-the-counter  market,  as  reported  by  the  National  Association  of
     Securities Dealers, Inc. Automated Quotations System (''NASDAQ'')  or  such
     other  system then in use or, if on any such date the Common Stock  is  not
     quoted  by any such organization, the average of the closing bid and  asked
     prices  as furnished by a professional market maker making a market in  the
     Common  Stock selected by the Corporation. If on such date no  such  market
     maker  is making a market in the Common Stock, the fair value of the Common
     Stock  on  such date as determined in good faith by the Board of  Directors
     of  the  Corporation shall be used. The term ''Trading Day'' shall  mean  a
     day  on  which  the  principal national securities exchange  on  which  the
     Common  Stock is listed or admitted to trading is open for the  transaction
     of  business or, if the Common Stock is not listed or admitted  to  trading
     on   any  national  securities  exchange,  a  Monday,  Tuesday,  Wednesday,
     Thursday  or Friday on which banking institutions in the State of New  York
     are not authorized or obligated by law or executive order to close.
     
        (B)  Whenever  shares  of  Series A Junior Preferred  Stock  are  to  be
     redeemed,  the  Corporation shall mail a notice (''Notice of  Redemption'')
     by  first-class mail, postage prepaid, to each holder of record  of  shares
     of  Series  A  Junior Preferred Stock to be redeemed and  to  the  transfer
     agent  for  the  Series A Junior Preferred Stock. The Notice of  Redemption
     shall be addressed to the holder at the address of the holder appearing  on
     the  stock  transfer books of the Corporation maintained  by  the  transfer
     agent  for  the  Series A Junior Preferred Stock. The Notice of  Redemption
     shall  include a statement of (i) the redemption date, (ii) the  redemption
     price, (iii) the number of shares of Series A Junior Preferred Stock to  be
     redeemed,  (iv)  the place or places where shares of the  Series  A  Junior
     Preferred Stock are to be surrendered for payment of the redemption  price,
     (v)  that  the dividends on the shares to be redeemed will cease to  accrue
     on  such redemption date, and (vi) the provision under which redemption  is
     made.  No  defect  in  the Notice of Redemption or in the  mailing  thereof
     shall  affect  the  validity  of  the  redemption  proceedings,  except  as
     required  by law. From the date on which a Notice of Redemption shall  have
     been  given as aforesaid and the Corporation shall have deposited with  the
     transfer agent for the Series A Junior Preferred Stock a sum sufficient  to
     redeem the shares of Series A Junior Preferred Stock as to which Notice  of
     Redemption  has been given, with irrevocable instructions and authority  to
     pay  the redemption price to the holders thereof, or if no such deposit  is
     made,  then  upon  such date fixed for redemption (unless  the  Corporation
     shall  default  in making payment of the redemption price), all  rights  of
     the  holders  thereof as stockholders of the Corporation by reason  of  the
     ownership  of  such  shares (except their right to receive  the  redemption
     price  thereof, but without interest), shall terminate including,  but  not
     limited  to,  their right to receive dividends, and such  shares  shall  no
     longer  be  deemed  outstanding.  The  Corporation  shall  be  entitled  to
     receive,  from  time to time, from the transfer agent for Series  A  Junior
     Preferred Stock the interest, if any, on such monies deposited with it  and
     the  holders  of  any shares so redeemed shall have no claim  to  any  such
     interest.  In case the holder of any shares so called for redemption  shall
     not  claim  the redemption price for his shares within one year  after  the
     date  of  redemption, the transfer agent for the Series A Junior  Preferred
     Stock  shall,  upon  demand,  pay  over  to  the  Corporation  such  amount
     remaining  on  deposit  and the transfer agent  for  the  Series  A  Junior
     Preferred  Stock shall thereupon be relieved of all responsibility  to  the
     holders  of  such  shares and such holder of the shares  of  the  Series  A
     Junior  Preferred  Stock so called for redemption shall look  only  to  the
     Corporation for the payment thereof.
     
        (C)  In  the  event that fewer than all the outstanding  shares  of  the
     Series  A  Junior Preferred Stock are to be redeemed, the number of  shares
     to  be  redeemed  shall  be determined by the Board of  Directors  and  the
     shares  to  be redeemed shall be determined by lot or pro rata  as  may  be
     determined  by  the Board of Directors or by any other  method  as  may  be
     determined  by  the  Board  of  Directors in  its  sole  discretion  to  be
     equitable.
     
        (D)  If  the  Corporation shall be in default  in  the  payment  of  any
     dividends (including cumulative dividends, if applicable) on any shares  of
     Preferred  Stock  ranking, as to dividends, prior to the  Series  A  Junior
     Preferred  Stock,  then  no shares of the Series A Junior  Preferred  Stock
     shall  be  redeemed  and  the Corporation shall not purchase  or  otherwise
     acquire any shares of the Series A Junior Preferred Stock.
     
     Section 9. Ranking.
     
        (A)  The Series A Junior Preferred Stock shall rank junior to all  other
     series  of the Corporation's Preferred Stock as to the payment of dividends
     and  the  distribution of assets upon liquidation, dissolution  or  winding
     up, unless the terms of any such series shall provide otherwise.
     
        (B)  For purposes of this resolution, any stock of any class or  classes
     of the Corporation shall be deemed to rank:
     
           (i)  prior  to  the  shares of the Series A Junior  Preferred  Stock,
        either  as to dividends or upon liquidation, dissolution or winding  up,
        if  the  holders  of  such class or classes shall  be  entitled  to  the
        receipt  of  dividends  or  of amounts distributable  upon  dissolution,
        liquidation  or  winding  up of the Corporation,  whether  voluntary  or
        involuntary,  as  the  case may be, in preference  or  priority  to  the
        holders  of  shares of the Series A Junior Preferred Stock. Each  holder
        of  any  share of the Series A Junior Preferred Stock, by his acceptance
        thereof,  expressly covenants and agrees that the rights of the  holders
        of  any shares of any other series of Preferred Stock of the Corporation
        to   receive   dividends  or  amounts  distributable  upon  dissolution,
        liquidation  or  winding  up of the Corporation,  whether  voluntary  or
        involuntary,  shall  be and hereby are expressly  prior  to  his  rights
        unless  in  the  case  of any particular series of Preferred  Stock  the
        certificate  or  other  instrument  creating  or  evidencing  the   same
        expressly  provides that the rights of the holders of such series  shall
        not be prior to the shares of the Series A Junior Preferred Stock; and
        
           (ii)  on a parity with shares of the Series A Junior Preferred Stock,
        either  as to dividends or upon liquidation, whether or not the dividend
        rates,  dividend payment dates or redemption or liquidation  prices  per
        share  or  sinking fund provisions, if any, be different from  those  of
        the  Series A Junior Preferred Stock, if the holders of such stock shall
        be  entitled  to  the  receipt of dividends or of amounts  distributable
        upon  dissolution, liquidation or winding up of the Corporation, whether
        voluntary  or  involuntary, as the case may be, in proportion  to  their
        respective  dividend rates or liquidation prices, without preference  or
        priority,  one over the other, as between the holders of such stock  and
        the holders of shares of the Series A Junior Preferred Stock; and
        
           (iii) junior to shares of the Series A Junior Preferred Stock, either
        as  to dividends or upon liquidation, if such class or classes shall  be
        Common  Stock  or  if  the  holders of shares of  the  Series  A  Junior
        Preferred Stock shall be entitled to receipt of dividends or of  amounts
        distributable  upon  dissolution,  liquidation  or  winding  up  of  the
        Corporation, whether voluntary or involuntary, as the case  may  be,  in
        preference  or  priority  to the holders of  shares  of  such  class  or
        classes.
        
     Section 10. Amendment. Except as otherwise set forth in this Certificate of
  Designation,  Preferences  and Rights with respect  to  the  Series  A  Junior
  Preferred  Stock, holders of Series A Junior Preferred Stock  shall  not  have
  any  special  powers and their consent shall not be required  for  taking  any
  corporate action, provided, however, that:
  
        (A)  Unless  the vote or consent of the holders of a greater  number  of
     shares  shall  then be required by law, the consent of the  holders  of  at
     least  662/3%  of all of the shares of the Series A Junior Preferred  Stock
     at  the time outstanding, given in person or by proxy, either in writing or
     by  a  vote  at  a meeting called for the purpose at which the  holders  of
     shares  of  the  Series A Junior Preferred Stock shall vote together  as  a
     separate   class,  shall  be  necessary  for  authorizing,   effecting   or
     validating the amendment, alteration or repeal of any of the provisions  of
     the  Restated Certificate of Incorporation or of any certificate amendatory
     thereof  or supplemental thereto (including any Certificate of Designation,
     Preferences  and Rights or any similar document relating to any  series  of
     Preferred  Stock)  so  as to affect adversely the powers,  preferences,  or
     rights,  of  this  Series A Junior Preferred Stock.  The  increase  of  the
     authorized  amount  of the Preferred Stock, or the creation,  authorization
     or  issuance  of any shares of any other class of stock of the  Corporation
     ranking  prior  to or on a parity with the shares of the  Series  A  Junior
     Preferred   Stock   as   to   dividends  or  upon   liquidation,   or   the
     reclassification of any authorized or outstanding stock of the  Corporation
     into  any  such  prior or parity shares, or the creation, authorization  or
     issuance  of any obligation or security convertible into or evidencing  the
     right  to  purchase any such prior or parity shares shall not be deemed  to
     affect  adversely the powers, preferences or rights of the Series A  Junior
     Preferred Stock.
     
     Section  11.  Fractional Shares. Series A Junior  Preferred  Stock  may  be
  issued  in  fractions of a share which shall entitle the holder, in proportion
  to  such  holder's  fractional  shares, to  exercise  voting  rights,  receive
  dividends, participate in distributions and to have the benefit of  all  other
  rights of holders of Series A Junior Preferred Stock.
  
  
    6.50% Cumulative Convertible Preferred Stock
         (Without Par Value)
  
     1.  Designation.  This  resolution shall provide for  a  single  series  of
  Preferred  Stock,  the  designation  of  which  shall  be  ''6.50%  Cumulative
  Convertible  Preferred  Stock'', without par value  (hereinafter  called  this
  ''Series''), and the number of authorized shares constituting this  Series  is
  3,000,000. Shares of this Series shall have a stated value of $1.00 per  share
  (which  shall  also  be  the  stated capital of each  share).  The  number  of
  authorized shares of this Series may be reduced by further resolution  adopted
  by  the Board of Directors and by the filing of a certificate pursuant to  the
  provisions  of  the General Corporation Law of the State of  Delaware  stating
  that  such  reduction  has been so authorized, but the  number  of  authorized
  shares of this Series shall not be so increased.
  
     2. Dividends.
     
        (a)  The  holders of shares of this Series shall be entitled to  receive
     dividends  payable in cash at a rate of 6.50% per annum per  share  on  the
     initial  liquidation preference of $50.00 per share. Such  dividends  shall
     be  cumulative from the date of original issue of such shares, and shall be
     payable,  when, as and if declared by the Board of Directors, out of  funds
     legally  available  for such purpose, on the last calendar  day  of  March,
     June,  September  and  December of each year,  commencing  June  30,  1993,
     except that if such date is a Saturday, Sunday or legal holiday, then  such
     dividend  shall be payable on the first immediately preceding calendar  day
     which is not a Saturday, Sunday or legal holiday.
     
        (b)  Each dividend on shares of this Series shall be paid to the holders
     of  record of such shares as they appear on the stock transfer books of the
     Corporation  on  such  record date, not exceeding  30  days  preceding  the
     payment  date  thereof,  as  shall be fixed  by  the  Board  of  Directors.
     Dividends  in arrears for any past dividend period or any part thereof  may
     be  declared  and  paid  at  any time, without  reference  to  any  regular
     dividend payment date, to holders of record on such date, not exceeding  45
     days  preceding the payment date thereof, as may be fixed by the  Board  of
     Directors.
     
        (c)  Except  as hereinafter provided, no dividends shall be declared  or
     paid  or  set  apart  for  payment on the Preferred  Stock  of  any  series
     ranking,  as  to dividends, on a parity with or junior to this  Series  for
     any  period unless full cumulative dividends have been or contemporaneously
     are  declared  and paid on this Series for all past dividend periods.  When
     dividends  are  not  paid in full, as aforesaid, upon the  shares  of  this
     Series  and  any other Preferred Stock ranking on a parity as to  dividends
     with  this  Series, all dividends declared upon shares of this  Series  and
     any  other  Preferred Stock ranking on a parity as to dividends  with  this
     Series  shall be declared pro rata so that the amount of dividends declared
     per  share on this Series and such other Preferred Stock shall in all cases
     bear  to each other the same ratio that accrued dividends per share on  the
     shares  of  this Series and such other Preferred Stock bear to each  other.
     Holders  of  shares of this Series shall not be entitled to any  dividends,
     whether  payable  in cash, property or stock, in excess of full  cumulative
     dividends,  as  herein provided, on this Series. No  interest,  or  sum  of
     money  in  lieu  of interest, shall be payable in respect of  any  dividend
     payment or payments on this Series which may be in arrears.
     
        (d)  So  long as any shares of this Series are outstanding, no  dividend
     (other  than  a  dividend  in Common Stock or in any  other  stock  of  the
     Corporation  ranking  junior  to  this Series  as  to  dividends  and  upon
     liquidation  and other than as provided in Section 2(c)) shall be  declared
     or  paid  or set aside for payment or other distribution declared  or  made
     upon  the Common Stock or any other stock of the Corporation ranking junior
     to  or  on  a  parity with this Series as to dividends or upon liquidation,
     nor  shall any Common Stock nor any other stock of the Corporation  ranking
     junior  to  or  on  a  parity with this Series  as  to  dividends  or  upon
     liquidation   be  redeemed,  purchased  or  otherwise  acquired   for   any
     consideration  (or any moneys be paid to or made available  for  a  sinking
     fund  for  the  redemption  of  any  shares  of  any  such  stock)  by  the
     Corporation  (except  by  conversion into or  exchange  for  stock  of  the
     Corporation  ranking  junior  to  this Series  as  to  dividends  and  upon
     liquidation)  unless, in each case, the full cumulative  dividends  on  all
     outstanding   shares   of   this   Series   shall   have   been   paid   or
     contemporaneously are declared and paid for all past dividend periods.
     
        (e)  Dividends  payable on this Series for each full quarterly  dividend
     period  shall be computed by dividing the annual dividend rate by four  and
     multiplying  by  the initial liquidation preference of  $50.00  per  share.
     Dividends  payable on this Series for any period shorter or longer  than  a
     full  quarterly dividend period, including for the initial dividend period,
     shall be computed on the basis of a 360-day year of twelve 30-day months.
     
     3.  Optional  Redemption; Provision for U.S. Steel  Group  Special  Events;
     Related Provisions.
     
        (a)  Except as provided in Section 3(b), the shares of this Series shall
     not  be redeemable by the Corporation prior to April 1, 1996. On and  after
     April  1,  1996, shares of this Series may, subject to the satisfaction  of
     the  condition  set  forth in the last sentence of this  Section  3(a),  be
     redeemed, in whole at any time or in part from time to time, at the  option
     of  the  Corporation, out of funds legally available for such purpose,  for
     cash  in  an amount equal to the following redemption prices per  share  if
     redeemed  during  the twelve-month period beginning April  1  of  the  year
     indicated below, upon giving notice as provided below:

<TABLE>
<CAPTION>
     
             Year           Redemption    Dollar
                              Price    Equivalent
                              (As a         
                          percentage of Per Share
                             initial        
                           liquidation
                           preference)
             <C>              <C>         <C>
             1996             104.55%     $52.275
             1997             103.90       51.950
             1998             103.25       51.625
             1999             102.60       51.300
             2000             101.95       50.975
             2001             101.30       50.650
             2002             100.65       50.325
             2003 and
              thereafter      100.00       50.000
                                   
</TABLE>

     
     and  thereafter at the initial liquidation preference of $50.00 per  share,
     plus,  in  each  case, an amount equal to all accrued and unpaid  dividends
     thereon to the date fixed for redemption. No shares of this Series  may  be
     redeemed  in accordance with this Section 3(a) if the Corporation shall  be
     advised  on  or  prior  to the related Redemption Date  by  either  Moody's
     Investors  Service,  Inc.  (''Moody's'') (provided  that  Moody's  is  then
     rating  the senior unsecured debt of the Corporation) or Standard &  Poor's
     Corporation  (''S&P'')  (provided  that  S&P  is  then  rating  the  senior
     unsecured debt of the Corporation) that such redemption would result in  an
     immediate  lowering by Moody's or S&P, as the case may be,  of  the  credit
     rating  on  the Corporation's senior unsecured debt from its then  existing
     level,  unless  the Corporation shall have received from  the  issuance  of
     common  stock of the Corporation, since the date which is two  years  prior
     to  the  related  Redemption Date, net proceeds in an aggregate  amount  at
     least  equal to the product of the initial liquidation preference of $50.00
     per share times the number of shares of this Series to be redeemed.
     
        (b)  (i) The shares of this Series shall be redeemed by the Corporation,
     in  whole, out of funds legally available for such purpose, for cash in  an
     amount  equal to the Redemption Price if any of the following  events  with
     respect  to  the  U.S.  Steel Group occur (such events,  collectively,  the
     ''U.S. Steel Group Special Events''):
     
           (A)  (1)  The Corporation exchanges all of the outstanding shares  of
        Steel  Stock  for all of the outstanding shares of common stock  of  the
        U.S.  Steel  Group  Subsidiary  (as provided  in  Section  2(b)(iii)  of
        Division  I  of  the  Certificate of Incorporation) (the  ''Steel  Group
        Subsidiary Exchange'') or (2) in the event of a Disposition  of  all  or
        substantially all of the properties and assets of the U.S. Steel  Group,
        the  Corporation  either  pays a dividend on  the  Steel  Stock  in,  or
        redeems  a number of shares of Steel Stock for, an amount equal  to  the
        Net  Proceeds of such Disposition (as provided in Section 2(b)(i)(A)  or
        Section  2(b)(i)(B), respectively, of Division I of the  Certificate  of
        Incorporation) (the ''Steel Group Disposition Dividend'' or the  ''Steel
        Group Disposition Redemption'', respectively); or
        
           (B) The Corporation pays a dividend on, or the Corporation or any  of
        its  Subsidiaries  consummates a tender offer  or  exchange  offer  for,
        shares  of Steel Stock and the aggregate amount of such dividend or  the
        consideration paid in such tender offer or exchange offer is  an  amount
        equal  to all or substantially all of the properties and assets  of  the
        U.S.  Steel  Group (the ''Steel Group Special Dividend'' or the  ''Steel
        Group  Tender  or  Exchange Offer'', respectively);  provided  that  the
        calculation of all or substantially all of the properties and assets  of
        the  U.S.  Steel Group shall be made without giving effect to any  money
        borrowed  by  the Corporation or any of its Subsidiaries  in  connection
        with  such dividend or tender offer or exchange offer, as the  case  may
        be.
        
     The  Redemption  Date  of shares of this Series pursuant  to  this  Section
     3(b)(i) shall be, if the applicable U.S. Steel Group Special Event  is  (I)
     the  Steel Group Subsidiary Exchange, the date of such exchange,  (II)  the
     Steel  Group Disposition Dividend or the Steel Group Special Dividend,  the
     date  such  dividend is paid, (III) the Steel Group Disposition Redemption,
     the  date  of  such redemption or (IV) the Steel Group Tender  or  Exchange
     Offer,  the  date  such  tender  offer or exchange  offer  is  consummated.
     Notwithstanding  anything  to  the  contrary  contained  in  this   Section
     3(b)(i),  any  redemption  pursuant  to  this  Section  3(b)(i)  shall   be
     conditioned  upon the actual exchange of Steel Stock for shares  of  common
     stock  of  the  U.S.  Steel Group Subsidiary, payment of  the  Steel  Group
     Disposition  Dividend  or the amount due as a result  of  the  Steel  Group
     Disposition  Redemption  (in  each case in the  required  kind  of  capital
     stock, cash, securities and/or other property), payment of the Steel  Group
     Special  Dividend or the consummation of the Steel Group Tender or Exchange
     Offer, as the case may be.
     
        (ii) The shares of this Series shall be redeemed by the Corporation,  in
      whole,  out  of funds legally available for such purpose, for cash  in  an
      amount  equal to the Redemption Price if following the Disposition of  all
      or  substantially  all  of the properties and assets  of  the  U.S.  Steel
      Group,  the Corporation exchanges all of the outstanding shares  of  Steel
      Stock for Marathon Stock (as provided in Section 2(b)(i)(C) of Division  I
      of  the Certificate of Incorporation) and, at any time subsequent to  such
      exchange,  any of the following events with respect to the Marathon  Group
      occur (such events, collectively, the ''Marathon Group Special Events''):
      
           (A)  The  Corporation  exchanges all of  the  outstanding  shares  of
        Marathon Stock for all of the outstanding shares of common stock of  the
        Marathon Group Subsidiary (as provided in Section 2(a)(i) of Division  I
        of  the  Certificate of Incorporation) (the ''Marathon Group  Subsidiary
        Exchange''); or
        
           (B) The Corporation pays a dividend on, or the Corporation or any  of
        its  Subsidiaries  consummates a tender offer  or  exchange  offer  for,
        shares  of  Marathon Stock and the aggregate amount of such dividend  or
        the  consideration  paid in such tender offer or exchange  offer  is  an
        amount  equal to all or substantially all of the properties  and  assets
        of  the  Marathon Group (the ''Marathon Group Special Dividend'' or  the
        ''Marathon  Group  Tender  or Exchange Offer'', respectively);  provided
        that  the calculation of all or substantially all of the properties  and
        assets of the Marathon Group shall be made without giving effect to  any
        money  borrowed  by  the  Corporation or  any  of  its  Subsidiaries  in
        connection with such dividend or tender offer or exchange offer, as  the
        case  may  be;  provided, further, that, at the time of the  payment  of
        such  dividend on, or the consummation of such tender or exchange  offer
        for,  Marathon Stock, there is another class of common stock, other than
        Marathon Stock, of the Corporation then outstanding.
        
     The  Redemption  Date  of shares of this Series pursuant  to  this  Section
     3(b)(ii)  shall be, if the applicable Marathon Group Special Event  is  (I)
     the  Marathon  Group Subsidiary Exchange, the date of such  exchange,  (II)
     the  Marathon  Group Special Dividend, the date such dividend  is  paid  or
     (III)  the  Marathon Group Tender or Exchange Offer, the date  such  tender
     offer  or  exchange offer is consummated. Notwithstanding anything  to  the
     contrary  contained  in this Section 3(b)(ii), any redemption  pursuant  to
     this  Section  3(b)(ii) shall be conditioned upon the  actual  exchange  of
     Marathon   Stock  for  shares  of  common  stock  of  the  Marathon   Group
     Subsidiary,  payment  of  the  Marathon  Group  Special  Dividend  or   the
     consummation of the Marathon Group Tender or Exchange Offer,  as  the  case
     may be.
     
        (c)  The  following general redemption provisions shall  apply,  as  the
     context  requires, to any redemption of any shares of this Series  pursuant
     to this Section 3:
     
           (i)  In the event that fewer than all the outstanding shares of  this
        Series are to be redeemed, the number of shares to be redeemed shall  be
        determined  by  the  Board of Directors and the shares  to  be  redeemed
        shall  be  determined  by lot or pro rata as may be  determined  by  the
        Board  of Directors or by any other method as may be determined  by  the
        Board  of  Directors  in its sole discretion to be  equitable,  provided
        that  the  Corporation may redeem any number of shares  of  this  Series
        owned  by holders whose aggregate holdings of such shares do not  exceed
        100 as may be specified by the Corporation.
        
           (ii)  In the event the Corporation shall redeem shares of this Series
        pursuant  to this Section 3, notice of such redemption shall  be  given,
        (x)  if  such  redemption  is  a result of the  Steel  Group  Tender  or
        Exchange  Offer or the Marathon Group Tender or Exchange Offer,  on  the
        date  of the public announcement of such tender offer or exchange  offer
        by  the  Corporation or any of its Subsidiaries, but in  any  event  not
        less  than  30  days prior to such redemption, and on the  date  of  the
        public announcement of any extension thereof, (y) if such redemption  is
        a  result  of  the Steel Group Disposition Dividend or the  Steel  Group
        Disposition  Redemption, on a date not less than 45 days  prior  to  the
        date  selected  by  the  Board of Directors  for  the  payment  of  such
        dividend  or  such redemption and (z) otherwise, on a date at  least  30
        days  but  not  more  than  60 days prior to the  date  fixed  for  such
        redemption  by  the Board of Directors, in each case to each  holder  of
        record  of  the shares of this Series to be redeemed. Such notice  shall
        be  given by first class mail, postage prepaid, at such holder's address
        as  the  same  appears on the stock transfer books of  the  Corporation.
        Neither  the  failure  to  mail, to any particular  holder,  any  notice
        required  by  this  Section 3(c)(ii) nor any defect therein  or  in  the
        mailing  thereof,  shall affect the sufficiency of  the  notice  or  the
        validity  of  the proceedings for redemption with respect to  any  other
        holder. Any notice which was mailed in the manner herein provided  shall
        be  conclusively  presumed to have been duly given on  the  date  mailed
        whether  or  not the holder receives the notice. Each such notice  shall
        state,  as  appropriate:  (A) the Redemption Date;  (B)  the  number  of
        shares  of this Series to be redeemed and, if fewer than all the  shares
        held by such holder are to be redeemed, the number of such shares to  be
        redeemed  from  such  holder; (C) the Redemption Price  to  be  paid  in
        respect  of  the redemption; (D) the place or places where  certificates
        for  such shares are to be surrendered for the payment of the Redemption
        Price;  (E)  the  then current Conversion Price and, if any  event  then
        known  to the Corporation will result in an adjustment to the Conversion
        Price  on  or  prior  to the Redemption Date, such  adjusted  Conversion
        Price  and the date of such adjustment; (F) if such redemption of shares
        of  this Series is the result of a U.S. Steel Group Special Event  or  a
        Marathon  Group Special Event, that such redemption is conditioned  upon
        the  occurrence  of  the applicable U.S. Steel Group  Special  Event  or
        Marathon Group Special Event and if that U.S. Steel Group Special  Event
        is  the  Steel Group Disposition Dividend or the Steel Group Disposition
        Redemption,  the  last date on which the shares of this  Series  may  be
        converted  into  shares  of  Steel Stock, determined  as  set  forth  in
        Section 4(a); and (G) that dividends on the shares of this Series to  be
        redeemed shall cease to accrue on the Redemption Date, provided that  if
        such  redemption of shares of this Series is the result of a U.S.  Steel
        Group  Special  Event or a Marathon Group Special Event, the  conditions
        to such redemption shall have been satisfied.
        
           (iii) Notice having been given as provided in Section 3(c)(ii),  from
        and  after  the  Redemption Date (unless default shall be  made  by  the
        Corporation in providing an adequate amount of money for the payment  of
        the  Redemption Price necessary to effect such redemption in  accordance
        with  the terms hereof) (A) except if the redemption is the result of  a
        U.S.  Steel  Group Special Event or a Marathon Group Special  Event  and
        the  conditions  to  such  redemption shall  not  have  been  satisfied,
        dividends  on  the shares of this Series so called for redemption  shall
        cease  to  accrue,  (B)  such shares shall no longer  be  deemed  to  be
        outstanding  and  (C) all rights of the holders thereof  as  holders  of
        shares of this Series shall cease (except the right to receive from  the
        Corporation  the  Redemption  Price,  without  interest  thereon,   upon
        surrender  and  endorsement of their certificates).  Upon  surrender  in
        accordance  with  said  notice of the certificates  for  any  shares  so
        redeemed  (properly  endorsed  or  assigned  for  transfer,  unless  the
        Corporation  shall  waive such requirement), such  shares  shall  be  so
        redeemed by the Corporation.
        
           (iv)  The  Corporation's obligation to provide an adequate amount  of
        money  for  the payment of the Redemption Price necessary to effect  any
        redemption  in accordance with this Section 3 shall be deemed  fulfilled
        if,  on or before the applicable Redemption Date, the Corporation  shall
        deposit  with a bank or trust company that has an office in the  Borough
        of  Manhattan, City of New York, and that has, or is an affiliate  of  a
        bank  or  trust  company that has, a capital and  surplus  of  at  least
        $50,000,000,  an  amount  of  money adequate  for  the  payment  of  the
        aggregate  Redemption Price necessary for such redemption in  accordance
        with  the  terms  hereof, in trust, with irrevocable  instructions  that
        such money be applied to the redemption of the shares of this Series  so
        called  for  redemption.  If such redemption  is  conditioned  upon  the
        payment  of  the  Steel Group Disposition Dividend  or  payment  of  the
        amount  due  as a result of the Steel Group Disposition Redemption,  the
        Corporation   shall  deposit  such  moneys  and  give  such  irrevocable
        instructions  in respect of such redemption, subject to the  payment  of
        such Steel Group Disposition Dividend or payment of the amount due as  a
        result  of such Steel Group Disposition Redemption, not later  than  the
        30th  day  prior  to the date selected by the Board for the  payment  of
        such  dividend on, or the redemption of, Steel Stock, but in  any  event
        prior  to  the  date  the Corporation declares such  dividend  or  gives
        notice  of  such  redemption,  each in  accordance  with  Section  2  of
        Division  I  of  the  Certificate of Incorporation.  No  interest  shall
        accrue  for  the benefit of the holders of shares of this Series  to  be
        redeemed  on any money so payable by the Corporation in respect  of  any
        redemption.  Subject to applicable escheat laws, any money unclaimed  at
        the  end  of two years from the related Redemption Date shall revert  to
        the  general funds of the Corporation, after which reversion the holders
        of  such  shares so called for redemption shall look only to the general
        funds  of  the Corporation for the payment of such money. In case  fewer
        than  all  the shares of this Series represented by any such certificate
        are  redeemed,  a  new  certificate shall  be  issued  representing  the
        unredeemed shares without cost to the holder thereof.
        
           (v)  Any  shares  of this Series which shall at any  time  have  been
        redeemed shall, upon the taking of any action required by law, have  the
        status  of  authorized but unissued shares of Preferred  Stock,  without
        designation  as to series until such shares are once more designated  as
        part of a particular series by the Board of Directors.
        
           (vi)  Notwithstanding the foregoing provisions  of  this  Section  3,
        unless  the full cumulative dividends on all outstanding shares of  this
        Series  shall have been paid or contemporaneously are declared and  paid
        for  all  past  dividend  periods, no shares of  this  Series  shall  be
        redeemed   unless   all   outstanding  shares   of   this   Series   are
        simultaneously  redeemed,  and the Corporation  shall  not  purchase  or
        otherwise  acquire  any shares of this Series; provided,  however,  that
        the  foregoing shall not prevent the purchase or acquisition  of  shares
        of  this  Series pursuant to a purchase or exchange offer  made  on  the
        same terms to holders of all outstanding shares of this Series.
        
     4.  Conversion or Exchange. Holders of shares of this Series shall have the
  right  to convert all or a portion of such shares into shares of Steel  Stock,
  as follows:
  
        (a)  Subject to and upon compliance with the provisions of this  Section
     4,  a  holder  of  shares  of this Series shall have  the  right,  at  such
     holder's  option, at any time, to convert such shares into  the  number  of
     fully  paid  and nonassessable shares of Steel Stock equal to the  quotient
     of  (i)  the  product of the initial liquidation preference for  shares  of
     this  Series of $50.00 per share for such shares times the number of shares
     of  this  Series to be converted, divided by (ii) the Conversion Price  (as
     in  effect on the date provided for in the last paragraph of Section  4(b))
     by  surrendering the certificates representing such shares to be converted,
     such  surrender to be made in the manner provided in accordance  with  this
     Section 4; provided that the right to convert shares of this Series  called
     for  redemption  pursuant  to Section 3 shall terminate  at  the  close  of
     business  on  the  related Redemption Date, unless  the  Corporation  shall
     default in making payment of any moneys payable upon such redemption  under
     Section  3 or, if the redemption of shares of this Series is the result  of
     a  Steel  Group  Special  Event  or a Marathon  Group  Special  Event,  the
     conditions  to  such  redemption  shall  not  have  been  satisfied;   and,
     provided,  further,  that  if  the  Corporation  has  given  notice  of   a
     redemption  pursuant to Section 3(c) which is conditioned on the occurrence
     of  the  Steel  Group Disposition Dividend or the Steel  Group  Disposition
     Redemption,  the right to convert shares of this Series shall terminate  on
     the  31st day prior to the date selected by the Board of Directors for such
     redemption.  Any  holder of any share or shares of  this  Series  may  only
     convert  whole  shares  of  this Series and the Corporation  shall  not  be
     obligated to issue any fractional shares of this Series.
     
        (b)  In order to exercise the conversion right, the holder of any shares
     of   this   Series   to  be  converted  shall  surrender  the   certificate
     representing  such shares, duly endorsed or assigned to the Corporation  or
     in  blank,  at  the  office of the Transfer Agent, accompanied  by  written
     notice  to  the Corporation that the holder thereof elects to convert  such
     shares  or  a  specified  portion thereof. Unless the  shares  issuable  on
     conversion  are  to be issued in the same name as the name  in  which  such
     shares   of  this  Series  are  registered,  any  shares  surrendered   for
     conversion  shall  be  accompanied  by instruments  of  transfer,  in  form
     satisfactory  to  the  Corporation, duly executed by  the  holder  or  such
     holder's  duly  authorized attorney and an amount  sufficient  to  pay  any
     transfer  or  similar  tax  (or  evidence reasonably  satisfactory  to  the
     Corporation demonstrating that such taxes have been paid).
     
        Holders  of shares of this Series at the close of business on  a  record
     date  for determining stockholders entitled to receive a dividend shall  be
     entitled   to  receive  the  dividend  payable  on  such  shares   on   the
     corresponding  dividend payment date (except that holders of shares  called
     for  redemption  on  a  Redemption Date between such record  date  and  the
     dividend  payment  date shall not be entitled to receive such  dividend  on
     such   dividend  payment  date)  notwithstanding  the  conversion   thereof
     following  such  dividend record date and prior to  such  dividend  payment
     date. However, shares of this Series surrendered for conversion during  the
     period  between the close of business on any dividend record date  and  the
     opening  of  business  on the corresponding dividend payment  date  (except
     shares called for redemption on a Redemption Date during such period)  must
     be  accompanied  by payment of an amount equal to the dividend  payable  on
     such  shares  on  such dividend payment date. A holder of  shares  of  this
     Series  on  a  dividend record date who (or whose transferee)  tenders  any
     such  shares  for  conversion into shares of  Steel  Stock  on  a  dividend
     payment  date will receive the dividend payable by the Corporation on  such
     shares  of  this  Series on such date, and the converting holder  need  not
     include  payment  of  the amount of such dividend upon  surrender  of  such
     shares  for  conversion. Except as provided above,  the  Corporation  shall
     make  no  payment  or allowance for unpaid dividends,  whether  or  not  in
     arrears, on converted shares or for dividends on the shares of Steel  Stock
     issued upon such conversion.
     
        As  promptly  as  practicable after the surrender  of  certificates  for
     shares  of this Series as aforesaid, the Corporation shall issue and  shall
     deliver  at such office to such holder, or on such holder's written  order,
     a  certificate or certificates for the number of full shares of Steel Stock
     issuable  upon  the  conversion  of such  shares  in  accordance  with  the
     provisions of this Section 4, and any fractional interest in respect  of  a
     share  of  Steel  Stock arising upon such conversion shall  be  settled  as
     provided in Section 4(c).
     
        Each  conversion shall be deemed to have been effected immediately prior
     to  the  close of business on the date on which the certificates for shares
     of  this Series shall have been surrendered and the notice referred  to  in
     the  third  preceding paragraph (and, if applicable, payment of  an  amount
     equal  to  the dividend payable on such shares as described in  the  second
     preceding  paragraph)  received by the Corporation as  aforesaid,  and  the
     person  or  persons in whose name or names any certificate or  certificates
     for  shares of Steel Stock shall be issuable upon such conversion shall  be
     deemed  to  have  become  the holder or holders of  record  of  the  shares
     represented thereby at such time on such date and such conversion shall  be
     at the Conversion Price in effect at such time on such date.
     
        (c)  No  fractional shares or scrip representing fractions of shares  of
     Steel  Stock or any other common stock of the Corporation shall  be  issued
     upon  conversion  of any share of this Series. Instead  of  any  fractional
     interest  in a share of Steel Stock or such other common stock  that  would
     otherwise  be  deliverable upon the conversion of a share of  this  Series,
     the  Corporation shall pay to the holder of such share an  amount  in  cash
     based  upon the Closing Price of Steel Stock or such other common stock  on
     the  Trading Day immediately preceding the date of conversion. If more than
     one  share  shall  be surrendered for conversion at one time  by  the  same
     holder,  the  number  of full shares of Steel Stock or  such  other  common
     stock  issuable upon conversion thereof shall be computed on the  basis  of
     the aggregate number of shares of this Series so surrendered.
     
        (d) The Conversion Price per share of Steel Stock shall be adjusted from
     time to time as follows:
     
           (i)  If the Corporation shall after the date on which shares of  this
        Series  are  initially issued (A) pay a dividend or make a  distribution
        on  any  class  of  its  capital stock in shares  of  Steel  Stock,  (B)
        subdivide  the outstanding Steel Stock into a greater number  of  shares
        or  (C)  combine  the outstanding Steel Stock into a smaller  number  of
        shares,  then the Conversion Price in effect at the opening of  business
        on  the  day  next  following the date fixed for  the  determination  of
        stockholders  entitled to receive such dividend or  distribution  or  at
        the  opening of business on the day next following the day on which such
        subdivision or combination becomes effective, as the case may be,  shall
        be  adjusted  so that the holder of any share of this Series  thereafter
        surrendered  for conversion shall be entitled to receive the  number  of
        shares  of  Steel Stock that such holder would have owned or  have  been
        entitled  to receive after the happening of any of the events  described
        above  had  such share been converted immediately prior  to  the  record
        date in the case of a dividend or distribution or the effective date  in
        the  case  of a subdivision or combination. An adjustment made  pursuant
        to  this  Section 4(d)(i) shall become effective immediately  after  the
        opening  of  business on the day next following the record date  (except
        as  provided  in Section 4(m)) in the case of a dividend or distribution
        and shall become effective immediately after the opening of business  on
        the  day  next following the effective date in the case of a subdivision
        or combination.
        
           (ii) If the Corporation shall issue after the date on which shares of
        this  Series  are  initially issued rights or warrants (other  than  any
        rights  or  warrants  (including  the Rights)  referred  to  in  Section
        4(d)(iii)  below) to all holders of Steel Stock entitling  them  (for  a
        period  expiring  within 45 days after the record date mentioned  below)
        to  subscribe for or purchase Steel Stock at a price per share less than
        the  Current  Market Price per share of Steel Stock on the  record  date
        for  the  determination of stockholders entitled to receive such  rights
        or  warrants,  then  the Conversion Price in effect at  the  opening  of
        business  on  the day next following such record date shall be  adjusted
        to  equal  the price determined by multiplying (I) the Conversion  Price
        in  effect immediately prior to the opening of business on the day  next
        following the date fixed for such determination by (II) a fraction,  the
        numerator  of  which  shall be the sum of (A) the number  of  shares  of
        Steel  Stock outstanding on the close of business on the date fixed  for
        such  determination  and  (B) the number of shares  that  the  aggregate
        proceeds  to  the  Corporation  from the  exercise  of  such  rights  or
        warrants  for  Steel Stock would purchase at such Current Market  Price,
        and  the  denominator of which shall be the sum of  (A)  the  number  of
        shares  of Steel Stock outstanding on the close of business on the  date
        fixed for such determination and (B) the number of additional shares  of
        Steel  Stock  offered  for  subscription or purchase  pursuant  to  such
        rights  or  warrants. Such adjustment shall become effective immediately
        after  the  opening  of business on the day next following  such  record
        date  (except as provided in Section 4(m)). In determining  whether  any
        rights  or warrants entitle the holders of Steel Stock to subscribe  for
        or  purchase shares of Steel Stock at less than the Current Market Price
        thereof,  there  shall be taken into account any consideration  received
        by  the  Corporation upon issuance and upon exercise of such  rights  or
        warrants,  the value of such consideration, if other than  cash,  to  be
        determined by the Board of Directors.
        
           (iii) If the Corporation shall distribute to all holders of the Steel
        Stock  any  shares  of  capital stock (other than common  stock  of  the
        Corporation),  evidences of indebtedness, cash or other  assets  of  the
        Corporation  (including securities, but excluding (w)  any  dividend  or
        distribution referred to in Section 4(d)(i), (x) any rights or  warrants
        referred  to in Section 4(d)(ii) or in the second or third paragraph  of
        this   Section   4(d)(iii),  (y)  any  dividend  or  distribution   paid
        exclusively  in  cash or (z) any stocks, securities  or  other  property
        received as a result of a transaction referred to in Section 4(f))  (any
        of   the  foregoing  being  hereinafter  referred  to  in  this  Section
        4(d)(iii)  as the ''Securities''), then in each such case the Conversion
        Price  shall be adjusted so that it shall equal the price determined  by
        multiplying (I) the Conversion Price in effect immediately prior to  the
        close   of  business  on  the  date  fixed  for  the  determination   of
        stockholders entitled to receive such distribution by (II)  a  fraction,
        the  numerator of which shall be the Current Market Price per  share  of
        the  Steel  Stock on the record date mentioned below less the then  fair
        market  value (as determined by the Board of Directors) of  the  portion
        of  the  Securities so distributed to one share of Steel Stock, and  the
        denominator of which shall be the Current Market Price per share of  the
        Steel  Stock  on the record date mentioned below. Such adjustment  shall
        become effective immediately at the opening of business on the day  next
        following   the  record  date  for  the  determination  of  stockholders
        entitled  to  receive such distribution (except as provided  in  Section
        4(m)).
        
        With  respect to the Amended and Restated Rights Agreement, dated as  of
     October  1, 1992 (as amended or otherwise modified from time to  time,  the
     ''Restated  Rights Agreement''), between the Corporation and  Mellon  Bank,
     N.A.  (terms used in this paragraph and not otherwise defined herein having
     the  meanings  set forth in the Restated Rights Agreement), the  Conversion
     Price  will  be  adjusted  only when the Rights issuable  pursuant  thereto
     become  exercisable after the Corporation's right of redemption  thereunder
     has  expired.  Subject to the foregoing, upon the later  to  occur  of  the
     Distribution Date and a Section 11(a)(ii) Event (the ''Adjustment  Date''),
     the  Conversion  Price  in  effect  at  the  opening  of  business  on  the
     Adjustment  Date  shall  be  adjusted to  equal  the  price  determined  by
     multiplying  such  Conversion Price by a fraction the  numerator  of  which
     shall be equal to the Current Market Price per share of the Steel Stock  on
     the  Trading  Day immediately prior to the Adjustment Date less  an  amount
     equal  to  the  quotient  of (x) the aggregate fair  market  value  on  the
     Adjustment  Date (as determined by the Board of Directors)  of  the  Rights
     distributed under the Restated Rights Agreement divided by (y)  the  number
     of  shares  of Steel Stock outstanding on such day prior to the  Adjustment
     Date  and  the  denominator of which shall be equal to such Current  Market
     Price  per share of the Steel Stock. Such adjustment shall become effective
     immediately  after the opening of business on the day next  following  such
     Adjustment Date.
     
        In  case  the  Corporation shall (other than pursuant  to  the  Restated
     Rights  Agreement)  distribute rights or warrants to purchase  Steel  Stock
     pro rata to all holders of Steel Stock which rights or warrants are not  at
     such  time  immediately exercisable but, upon the occurrence of a specified
     event  or  events  (''Exercise Trigger Date'') will become exercisable  and
     once  they  become exercisable will entitle, or upon the occurrence  of  an
     additional  specified  event  or  events  (''Price  Trigger  Date'')   will
     entitle,  the holder thereof to purchase Steel Stock at a price  per  share
     of  Steel  Stock less than the Current Market Price of the Steel  Stock  on
     the  Trading Day next succeeding the later of the Exercise Trigger Date  or
     the  Price Trigger Date (''Adjustment Trigger Date'') and there shall  have
     occurred such Adjustment Trigger Date, thus permitting the holders of  such
     rights  or  warrants irrevocably to exercise any exchange, subscription  or
     purchase  rights conferred by such rights or warrants at a price per  share
     of  Steel  Stock  less than such Current Market Price, then the  Conversion
     Price  in effect at the opening of business on the Adjustment Trigger  Date
     shall  be  adjusted  by multiplying (I) such Conversion  Price  by  (II)  a
     fraction,  the  numerator of which shall be equal  to  the  Current  Market
     Price per share of the Steel Stock on the Trading Day immediately prior  to
     the  Adjustment  Trigger Date less an amount equal to the quotient  of  (x)
     the  aggregate  fair  market value on the Adjustment Trigger  Date  of  the
     rights  or  warrants  so  distributed  (as  determined  by  the  Board   of
     Directors)  divided by (y) the number of shares of Steel Stock  outstanding
     on  such  day  prior to the Adjustment Trigger Date and the denominator  of
     which  shall be equal to such Current Market Price per share of  the  Steel
     Stock.  Such  adjustment  shall  become  effective  immediately  after  the
     opening  of  business  on  the day next following such  Adjustment  Trigger
     Date.
     
           (iv) If the Corporation shall, by dividend or otherwise, at any  time
        distribute  to  all  holders  of the Steel  Stock  cash  (excluding  any
        regular  quarterly dividend payable solely in cash,  any  cash  that  is
        distributed  as  part  of a distribution requiring  a  Conversion  Price
        adjustment  pursuant to Section 4(d)(iii) and cash that  is  distributed
        in  a  merger  or  consolidation to which Section 4(f)  applies)  in  an
        aggregate  amount that, together with (A) the aggregate  amount  of  any
        other  distributions to all holders of the Steel Stock made  exclusively
        in  cash  (to which this Section 4(d)(iv) would otherwise apply)  within
        the 12 months preceding the date of payment of such distribution and  in
        respect  of which no Conversion Price adjustment has been made  and  (B)
        all  Excess  Purchase  Payments  in respect  of  each  tender  offer  or
        exchange  offer  or other negotiated purchase for Steel Stock  concluded
        by  the  Corporation  or any of its Subsidiaries within  the  12  months
        preceding  the  date of payment of such distribution and in  respect  of
        which  no  Conversion Price adjustment has been made, exceeds an  amount
        equal to 121/2% of the product of the Current Market Price per share  of
        Steel  Stock  on  the date fixed for determination of holders  of  Steel
        Stock  entitled to receive such distribution times the number of  shares
        of  Steel  Stock  outstanding on such date, then  the  Conversion  Price
        shall  be  adjusted  so  that it shall equal  the  price  determined  by
        multiplying  (I)  such Conversion Price in effect immediately  prior  to
        the  Conversion  Price adjustment contemplated by this Section  4(d)(iv)
        by  (II)  a fraction the numerator of which shall be the Current  Market
        Price  per  share of the Steel Stock on the date fixed for determination
        of  holders  of  Steel Stock entitled to receive such distribution  less
        the  combined amount of such cash and such Excess Purchase  Payments  so
        distributed  applicable to one share of Steel Stock and the  denominator
        of  which  shall  be such Current Market Price per share  of  the  Steel
        Stock  on  such  date  of  determination. Such adjustment  shall  become
        effective immediately prior to the opening of business on the  day  next
        following the date fixed for such determination.
        
           (v)  In  case  a  tender offer or exchange offer or other  negotiated
        purchase made by the Corporation or any of its Subsidiaries for  all  or
        any  portion  of the Steel Stock shall be consummated, if the  aggregate
        amount  of  any Excess Purchase Payment, together with (A) the aggregate
        amount  of  any  distributions made to all holders of Steel  Stock  made
        exclusively  in  cash (excluding any regular quarterly dividend  payable
        solely  in  cash, any cash that is distributed as part of a distribution
        requiring  a  Conversion Price adjustment pursuant to Section  4(d)(iii)
        and  cash  that  is  distributed in a merger or consolidation  to  which
        Section  4(f)  applies) within the 12 months preceding the  consummation
        of  such  tender or exchange offer or other negotiated purchase  and  in
        respect  of which no Conversion Price adjustment has been made, and  (B)
        all  other  Excess  Purchase  Payments in  respect  of  each  tender  or
        exchange  offer  or other negotiated purchase for Steel Stock  concluded
        by  the  Corporation  or any of its Subsidiaries within  the  12  months
        preceding  the  consummation of such tender or exchange offer  or  other
        negotiated  purchase  and  in  respect  of  which  no  Conversion  Price
        adjustment  has  been made, exceeds an amount equal  to  121/2%  of  the
        product  of  the Current Market Price per share of Steel  Stock  on  the
        consummation  date of such tender or exchange offer or other  negotiated
        purchase  (any  such date, the ''Purchase Date'') times  the  number  of
        shares of Steel Stock outstanding (including any tendered, exchanged  or
        purchased  shares)  on  such Purchase Date, then  the  Conversion  Price
        shall  be  adjusted  so  that it shall equal  the  price  determined  by
        multiplying  (I)  such Conversion Price in effect immediately  prior  to
        such  Purchase Date by (II) a fraction, the numerator of which shall  be
        the  Current Market Price per share of the Steel Stock on such  Purchase
        Date  less the combined amount of Excess Purchase Payments and such cash
        so   distributed  applicable  to  one  share  of  Steel  Stock  and  the
        denominator  of which shall be such Current Market Price  per  share  on
        such  Purchase Date. Such adjustment shall become effective  immediately
        prior  to  the  opening  of  business on the  day  next  following  such
        Purchase Date.
        
           (vi)  The  Corporation  from time to time may reduce  the  Conversion
        Price  by  any  amount for any period of at least 20 business  days  (or
        such  other period as may then be required by applicable law),  provided
        that  the  Board of Directors shall have determined that such  reduction
        is  in  the  best  interests of the Corporation.  No  reduction  in  the
        Conversion  Price  pursuant  to  this  Section  4(d)(vi)  shall   become
        effective  unless the Corporation shall have mailed a notice,  at  least
        15  days  prior  to  the date on which such reduction  is  scheduled  to
        become  effective, to each holder of shares of this Series. Such  notice
        shall  be  given by first class mail, postage prepaid, at such  holder's
        address  as  the  same  appears  on the  stock  transfer  books  of  the
        Corporation. Such notice shall state the amount per share by  which  the
        Conversion  Price  will  be  reduced  and  the  period  for  which  such
        reduction will be in effect.
        
           (vii)  The  Corporation may make such reductions  in  the  Conversion
        Price,  in  addition to those required by Sections 4(d)(i) through  (v),
        as  the Board determines to be necessary in order that any event treated
        for  Federal income tax purposes as a dividend of stock or stock  rights
        will  not be taxable to the recipients; provided that any such reduction
        shall  not  be  effective until written evidence of the  action  of  the
        Board  authorizing such reduction shall be filed with the  Secretary  of
        the  Corporation and notice thereof shall have been given by first class
        mail,  postage prepaid, to each holder of shares of this Series at  such
        holder's address as the same appears on the stock transfer books of  the
        Corporation.
        
        (e)  No adjustment in the Conversion Price shall be required unless such
     adjustment would require a cumulative increase or decrease of at  least  1%
     in  such  price; provided, however, that any adjustments that by reason  of
     this Section 4(e) are not required to be made shall be carried forward  and
     taken  into account in any subsequent adjustment until made; and  provided,
     further, that any adjustment shall be required and made in accordance  with
     the  provisions of this Section 4 (other than this Section 4(e)) not  later
     than  such time as may be required in order to preserve the tax-free nature
     of  a  distribution to the holders of shares of Steel Stock  or  any  other
     common   stock   into  which  shares  of  this  Series   are   convertible.
     Notwithstanding  any other provisions of this Section  4,  the  Corporation
     shall  not  be  required  to make any adjustment of  any  Conversion  Price
     established  hereunder for the issuance of any shares of  common  stock  of
     the  Corporation (including Steel Stock) pursuant to any plan providing for
     the  reinvestment  of dividends or interest payable on  securities  of  the
     Corporation and the investment of additional optional amounts in shares  of
     such  common stock under such plan. All calculations under this  Section  4
     shall  be  made to the nearest 1/100 of a cent (with $.00005 being  rounded
     upward)  or  to  the nearest 1/10,000 of a share (with .00005  of  a  share
     being rounded upward), as the case may be.
     
        (f)  If  the Corporation shall be a party to any transaction  (including
     without  limitation  a  merger  or consolidation  of  the  Corporation  and
     excluding  any  transaction  as  to which  Sections  4(d)(i)  through  (vi)
     apply),  in each case as a result of which shares of Steel Stock  shall  be
     converted  into  the right to receive stock, securities or  other  property
     (including  cash or any combination thereof), (each of the foregoing  being
     referred  to herein as a ''Transaction''), each share of this Series  which
     is  not  converted  into the right to receive stock,  securities  or  other
     property   in   connection  with  such  Transaction  shall  thereafter   be
     convertible  into  the kind and amount of shares of stock,  securities  and
     other property (including cash or any combination thereof) receivable  upon
     the  consummation of such Transaction by a holder of that number of  shares
     or  fraction thereof of Steel Stock into which one share of this Series was
     convertible immediately prior to such Transaction, assuming such holder  of
     Steel Stock (i) is not a person with which the Corporation consolidated  or
     into  which the Corporation merged or which merged into the Corporation  or
     to  which  such  sale  or  transfer  was  made,  as  the  case  may  be  (a
     ''Constituent Person''), or an affiliate of a Constituent Person  and  (ii)
     failed  to  exercise his rights of election, if any,  as  to  the  kind  or
     amount  of stock, securities and other property (including cash) receivable
     upon  such  Transaction  (provided that if the kind  or  amount  of  stock,
     securities  and  other  property  (including  cash)  receivable  upon  such
     Transaction  is  not  the  same  for each  share  of  Steel  Stock  of  the
     Corporation  held immediately prior to such Transaction  by  other  than  a
     Constituent  Person or an affiliate thereof and in respect  of  which  such
     rights  of election shall not have been exercised (''non-electing share''),
     then  for  the purpose of this Section 4(f) the kind and amount  of  stock,
     securities  and  other  property  (including  cash)  receivable  upon  such
     Transaction by each non-electing share shall be deemed to be the  kind  and
     amount  so receivable per share by a plurality of the non-electing shares).
     The  Corporation shall not be a party to any Transaction unless  the  terms
     of  such  Transaction are consistent with the provisions  of  this  Section
     4(f)  and  it  shall  not  consent  or  agree  to  the  occurrence  of  any
     Transaction  until the Corporation has entered into an agreement  with  the
     other  party or parties to such transaction for the benefit of the  holders
     of  shares of this Series that will contain provisions enabling the holders
     of  such  shares that remain outstanding after such Transaction to  convert
     into  the  consideration  received  by  holders  of  Steel  Stock  at   the
     Conversion  Price  in  effect immediately prior to  such  Transaction.  The
     provisions  of  this  Section  4(f) shall  similarly  apply  to  successive
     Transactions.
     
        (g)  The  reclassification of common stock into  which  shares  of  this
     Series are then convertible into securities which include securities  other
     than   such   common  stock  (other  than  any  reclassification   upon   a
     consolidation or merger to which Section 4(f) applies), shall be deemed  to
     involve (i) a distribution of such securities other than such common  stock
     to  all  holders  of  such  common stock (and the effective  date  of  such
     reclassification  shall  be  deemed  to  be  ''the  date  fixed   for   the
     determination of stockholders entitled to receive such distribution'')  and
     (ii)  a  subdivision or combination, as the case may be, of the  number  of
     shares  of  such  common  stock  outstanding  immediately  prior  to   such
     reclassification   into  the  number  of  shares  of  such   common   stock
     outstanding  immediately  thereafter  (and  the  effective  date  of   such
     reclassification  shall  be  deemed  to  be  the  effective  date  of  such
     subdivision or combination).
     
        (h)  If  the Corporation shall, by dividend or otherwise, distribute  to
     all  holders  of  Steel  Stock or other class of common  stock  into  which
     shares  of  this Series are then convertible shares of common  stock  other
     than  Steel  Stock or any class of common stock into which shares  of  this
     Series   are  then  convertible,  each  share  of  this  Series  shall   be
     convertible,  in  addition to the number of shares of  Steel  Stock  and/or
     such  other  common  stock into which such share is then convertible,  into
     the number of shares of such other common stock receivable upon payment  of
     such  distribution to a holder of that number of shares or fraction thereof
     of  Steel  Stock or such other common stock into which one  share  of  this
     Series  was convertible immediately prior to the record date fixed for  the
     determination  of  stockholders  entitled  to  receive  such  distribution.
     Shares  of  this Series shall become so convertible immediately  after  the
     opening  of business on the day next following such record date (except  as
     provided  in  Section  4(m)).  In addition, a  Conversion  Price  shall  be
     established  with respect to such common stock in an amount  equal  to  the
     quotient  of (i) the initial liquidation preference of $50.00 per share  of
     this  Series  divided by (ii) the number of shares or fraction  thereof  of
     such  common stock that a holder of one share of Steel Stock or such  other
     common  stock  into which shares of this Series are then convertible  would
     be  entitled to receive on the payment date for such distribution from  and
     after  any  such date of determination of stockholders entitled to  receive
     such  distribution and, thereafter, Conversion Price adjustments as  nearly
     as  equivalent in type as may be practicable to the adjustments pursuant to
     Sections  4(d) through (f) which are to be made in respect of  Steel  Stock
     shall  be  made  in respect of shares of such common stock. Notwithstanding
     the  foregoing and the provisions of Section 4(d)(iii), if the  Corporation
     shall make such a distribution in common stock and, thereafter, all of  the
     shares  of  such  common stock cease to be outstanding, on  the  date  such
     shares  of  common  stock cease to be outstanding (x) the  shares  of  this
     Series shall cease to be convertible into shares of such common stock,  (y)
     a  distribution  of  shares of such common stock shall be  deemed  to  have
     occurred on such date and (z) the Conversion Price for the class of  common
     stock  upon which such distribution was made, or if no shares of such class
     are  then  outstanding  because shares of such  class  were  exchanged  for
     shares  of  another class of common stock, of such other  class  of  common
     stock,  shall  be adjusted in the manner set forth in Section 4(d)(iii)  to
     the   same  extent  as  if  shares  of  the  common  stock  in  which  such
     distribution  was  made were within the meaning of the term  ''Securities''
     in Section 4(d)(iii).
     
        (i)  After  the date, if any, on which all outstanding shares  of  Steel
     Stock  or  of any other common stock into which shares of this  Series  are
     then  convertible are exchanged for shares of another class of common stock
     (as  provided  in  the Certificate of Incorporation), each  share  of  this
     Series  shall thereafter be convertible into the number of shares  of  such
     other  class of common stock receivable upon such exchange by a  holder  of
     that  number of shares or fraction thereof of Steel Stock and/or such other
     common  stock  into which shares of this Series are then  convertible  into
     which  one share of this Series was convertible immediately prior  to  such
     exchange.  From  and after any such exchange, Conversion Price  adjustments
     as  nearly equivalent as may be practicable to the adjustments pursuant  to
     Sections  4(d)  through 4(h) which, prior to such exchange,  were  made  in
     respect of Steel Stock and/or such other common stock into which shares  of
     this  Series  are then convertible shall instead be made pursuant  to  such
     Sections  4(d)  through 4(h) in respect of shares of such  other  class  of
     common stock.
     
       (j) Subject to the provisions of Section 4(k), if:
     
           (i) the Corporation takes any action that would require an adjustment
        of the Conversion Price pursuant to Sections 4(d) through (i); or
        
           (ii)  there  shall  be  any consolidation  or  merger  to  which  the
        Corporation  is  a party and for which approval of any  stockholders  of
        the  Corporation  is  required,  or the  sale  or  transfer  of  all  or
        substantially  all of the assets of the Corporation or  the  U.S.  Steel
        Group; or
        
           (iii)  there  shall  occur the voluntary or involuntary  liquidation,
        dissolution or winding up of the Corporation; or
        
           (iv)  the  Corporation or any of its Subsidiaries  shall  commence  a
        tender  offer or exchange offer for all or a portion of the  outstanding
        shares  of  Steel  Stock  (or shall amend any such  tender  or  exchange
        offer),
        
        then  the  Corporation shall cause to be filed with the  Transfer  Agent
        and shall cause to be mailed to the holders of shares of this Series  at
        their   addresses  as  shown  on  the  stock  transfer  books   of   the
        Corporation, as promptly as possible, but at least 15 days prior to  the
        earliest  applicable date hereinafter specified, a  notice  stating,  as
        applicable,  (A) the proposed record date for a dividend or distribution
        or  the  proposed  effective  date  of a  consolidation,  merger,  sale,
        transfer,  liquidation, dissolution or winding up, (B) the  date  as  of
        which  it  is  expected that holders of Steel Stock of record  shall  be
        entitled  to  exchange  their shares of Steel Stock  for  securities  or
        other  property,  if  any, deliverable upon such consolidation,  merger,
        sale,  transfer, liquidation, dissolution or winding up or (C) the  date
        on  which  such  tender or exchange offer commenced, the date  on  which
        such  tender  or exchange offer is scheduled to expire unless  extended,
        the  consideration offered and the other material terms thereof (or  the
        material  terms  of any amendment thereto). Failure to give  or  receive
        such  notice  or  any defect therein shall not affect  the  legality  or
        validity of the related transaction.
        
       (k) If the Corporation intends:
     
           (i)  to  effect a U.S. Steel Group Special Event or a Marathon  Group
        Special Event; or
        
           (ii) exchange shares of Steel Stock for Marathon Stock or Delhi Stock
        following  a  Disposition of all or substantially all of the  properties
        and assets of the U.S. Steel Group,
        
        then  the  Corporation shall cause to be filed with the  Transfer  Agent
        and shall cause to be mailed to the holders of shares of this Series  at
        their   addresses  as  shown  on  the  stock  transfer  books   of   the
        Corporation, not less than 45 days prior to the Steel Group  Disposition
        Dividend or the Steel Group Disposition Redemption and not less than  30
        days  prior  to any other U.S. Steel Group Special Event,  any  Marathon
        Group  Special Event or any such exchange of Steel Stock for  shares  of
        Marathon Stock or Delhi Stock, a notice stating, as applicable, (A)  the
        record  date  for any dividend that is a U.S. Steel Group Special  Event
        or  a Marathon Group Special Event, (B) the date on which any redemption
        or  exchange that is a U.S. Steel Group Special Event, a Marathon  Group
        Special  Event  or  an exchange of Steel Stock for  shares  of  Marathon
        Stock  or Delhi Stock is expected to become effective, and the  date  as
        of  which  it  is  expected that holders of record  of  Steel  Stock  or
        Marathon  Stock  shall  be entitled to exchange their  shares  of  Steel
        Stock  or Marathon Stock, respectively, for securities or other property
        deliverable  upon such redemption or exchange or (C) the date  on  which
        the  Steel  Group Tender or Exchange Offer or the Marathon Group  Tender
        or  Exchange  Offer commenced, the consideration offered and  the  other
        material   terms  thereof  (or  the  material  terms  of  any  amendment
        thereto).  In addition, from and after any exchange of Steel  Stock  for
        Delhi  Stock, effected in accordance with Section 2(b)(i) of Division  I
        of  the Certificate of Incorporation, the Corporation shall give similar
        notice of its intention to exchange Delhi Stock for shares of the  Delhi
        Group Subsidiary, if Steel Stock has been exchanged therefor, or to  pay
        a   dividend  on,  or  redeem  shares  of,  Delhi  Stock  following  the
        Disposition of all or substantially all of the properties and assets  of
        the  Delhi  Group.  Failure to give or receive any such  notice  or  any
        defect  therein shall not affect the legality or validity of the related
        transaction. In the event of any conflict between the notice  provisions
        of  this paragraph (k) and paragraph (j) above, the notice provisions of
        this paragraph (k) shall govern.
        
        (l)  Whenever  the Conversion Price is adjusted as herein provided,  the
     Corporation  shall  promptly  file with the  Transfer  Agent  an  officer's
     certificate  setting forth the Conversion Price after such  adjustment  and
     setting  forth  a  brief statement of the facts requiring such  adjustment,
     which certificate shall be prima facie evidence of the correctness of  such
     adjustment.  Promptly after delivery of such certificate,  the  Corporation
     shall  prepare a notice of such adjustment of the Conversion Price  setting
     forth  the  adjusted  Conversion  Price and  the  effective  date  of  such
     adjustment  and shall send such notice of such adjustment of the Conversion
     Price by first class mail, postage prepaid, to the holder of each share  of
     this  Series  at  such holder's address as the same appears  on  the  stock
     transfer books of the Corporation.
     
        (m)  In  any  case  in  which Section 4(d)  or  4(h)  provides  that  an
     adjustment  shall become effective on the day next following a record  date
     for  an event, the Corporation may defer until the occurrence of such event
     (A)  issuing to the holder of any share of this Series converted after such
     record  date and before the occurrence of such event the additional  shares
     of  Steel Stock or any other common stock of the Corporation issuable  upon
     such  conversion  by reason of the adjustment required by such  event  over
     and  above  the number of shares of Steel Stock or such other common  stock
     issuable  upon such conversion before giving effect to such adjustment  and
     (B)  paying  to  such  holder any amount in cash in lieu  of  any  fraction
     thereof pursuant to Section 4(c).
     
        (n)  For purposes of this Section 4, the number of shares of Steel Stock
     or  any other common stock of the Corporation at any time outstanding shall
     not  include  any  shares of Steel Stock or such other  common  stock  then
     owned  or held by or for the account of Corporation. The Corporation  shall
     not  pay  a dividend or make any distribution on shares of Steel  Stock  or
     such other common stock held in the treasury of the Corporation.
     
        (o) There shall be no adjustment of the Conversion Price in case of  the
     issuance  of  any stock of the Corporation in a reorganization, acquisition
     or  other  similar  transaction except as specifically set  forth  in  this
     Section  4.  If any action or transaction would require adjustment  of  any
     Conversion Price established hereunder pursuant to more than one  paragraph
     of  this  Section 4, only the adjustment which would result in the  largest
     reduction of such Conversion Price shall be made.
     
        (p) The Corporation covenants that it will at all times reserve and keep
     available,  free  from  preemptive rights, out  of  the  aggregate  of  its
     authorized  but  unissued shares of Steel Stock and/or, if  the  shares  of
     this   Series  are  then  convertible  into  other  common  stock  of   the
     Corporation, such other common stock, or its issued shares of  Steel  Stock
     or  such  other common stock, as the case may be, held in its treasury,  or
     both,  for  the purpose of effecting conversion of shares of  this  series,
     the  full  number  of  shares of Steel Stock or  such  other  common  stock
     deliverable  upon the conversion of all outstanding shares of  this  Series
     not  theretofore converted. For purposes of this Section 4(p),  the  number
     of  shares  of  Steel  Stock  or such other  common  stock  that  shall  be
     deliverable  upon the conversion of all outstanding shares of  this  Series
     shall  be  computed as if at the time of computation all  such  outstanding
     shares were held by a single holder.
     
     The  Corporation covenants that any shares of Steel Stock or  other  common
  stock  of  the  Corporation issued upon conversion of shares  of  this  Series
  shall be validly issued, fully paid and nonassessable.
  
     The  Corporation shall endeavor to list the shares of Steel Stock or  other
  common  stock  of the Corporation required to be delivered upon conversion  of
  shares  of  this Series, prior to such delivery, upon each national securities
  exchange, if any, upon which the outstanding Steel Stock or such other  common
  stock is listed at the time of such delivery.
  
     Prior  to  the  delivery of any securities that the  Corporation  shall  be
  obligated   to  deliver  upon  conversion  of  shares  of  this  Series,   the
  Corporation  shall  endeavor to comply with all federal  and  state  laws  and
  regulations thereunder requiring the registration of such securities with,  or
  any  approval  of  or  consent to the delivery thereof  by,  any  governmental
  authority.
  
        (q)  The Corporation will pay any and all documentary, stamp or  similar
     issue  or  transfer taxes payable in respect of the issue  or  delivery  of
     shares  of  Steel  Stock or other securities or property on  conversion  of
     shares  of  this  Series  pursuant  hereto;  provided,  however,  that  the
     Corporation  shall not be required to pay any tax that may  be  payable  in
     respect  of  any transfer involved in the issue or delivery  of  shares  of
     Steel  Stock or other securities or property in a name other than  that  of
     the  holder  of such shares to be converted and no such issue  or  delivery
     shall  be  made  unless  and  until the person  requesting  such  issue  or
     delivery  has  paid  to  the Corporation the amount  of  any  such  tax  or
     established, to the reasonable satisfaction of the Corporation,  that  such
     tax has been paid.
     
     5.  Voting.  The  shares of this Series shall not have any  voting  powers,
  either general or special, except that:
  
        (a)  Unless  the vote or consent of the holders of a greater  number  of
     shares  shall  then be required by law, the consent of the  holders  of  at
     least  662/3%  of all of the shares of this Series at the time outstanding,
     given  in  person or by proxy, either in writing or by a vote at a  meeting
     called for the purpose at which the holders of shares of this Series  shall
     vote  together  as  a separate class, shall be necessary  for  authorizing,
     effecting or validating the amendment, alteration or repeal of any  of  the
     provisions  of  the  Certificate of Incorporation  or  of  any  certificate
     amendatory  thereof or supplemental thereto (including any  Certificate  of
     Designation  and Terms or any similar document relating to  any  series  of
     Preferred  Stock)  so  as to affect adversely the powers,  preferences,  or
     rights,  of  this  Series.  The increase of the authorized  amount  of  the
     Preferred  Stock,  or the creation or authorization of any  shares  of  any
     other  class  of stock of the Corporation ranking prior to or on  a  parity
     with the shares of this Series as to dividends or upon liquidation, or  the
     reclassification of any authorized stock of the Corporation into  any  such
     parity  shares,  or  the creation or authorization  of  any  obligation  or
     security  convertible  into or evidencing the right to  purchase  any  such
     prior  or parity shares shall not be deemed to affect adversely the powers,
     preferences or rights of this Series.
     
        (b)  Unless  the vote or consent of the holders of a greater  number  of
     shares  shall  then be required by law, the consent of the  holders  of  at
     least  662/3% of all of the shares of this Series and all other  series  of
     Preferred  Stock ranking on a parity with shares of this Series, either  as
     to  dividends or upon liquidation, at the time outstanding, given in person
     or  by  proxy, either in writing or by a vote at a meeting called  for  the
     purpose  at  which  the  holders of shares of this Series  and  such  other
     series  of  Preferred Stock shall vote together as a single  class  without
     regard  to  series,  shall  be  necessary  for  authorizing,  effecting  or
     validating  the  issuance  of any shares of  any  class  of  stock  of  the
     Corporation  ranking prior to the shares of this Series as to dividends  or
     upon  liquidation, or the reclassification of any outstanding stock of  the
     Corporation  into any such prior shares, or the issuance of any  obligation
     or  security convertible into or evidencing the right to purchase any  such
     prior shares.
     
        (c)  Unless  the vote or consent of the holders of a greater  number  of
     shares  shall  then be required by law, the consent of the  holders  of  at
     least  a majority of all of the shares of this Series and all other  series
     of  Preferred  Stock  ranking on a parity with this Series,  either  as  to
     dividends or upon liquidation, at the time outstanding, given in person  or
     by  proxy,  either  in  writing or by a vote at a meeting  called  for  the
     purpose  at  which  the  holders of shares of this Series  and  such  other
     series  of  Preferred Stock shall vote together as a single  class  without
     regard  to  series,  shall  be  necessary  for  authorizing,  effecting  or
     validating the merger or consolidation of the Corporation into or with  any
     other  corporation if such merger or consolidation would  adversely  affect
     the  powers, preferences or rights of this Series or such other  series  of
     Preferred Stock or if, after such merger or consolidation, there  shall  be
     outstanding  any shares of any class of stock ranking prior to  the  shares
     of  this  Series as to dividends or upon liquidation or any  obligation  or
     security  convertible  into or evidencing the right to  purchase  any  such
     prior  shares  (except  such  stock,  securities  or  obligations  of   the
     Corporation as may have been outstanding immediately preceding such  merger
     or consolidation).
     
        (d)  If,  on the date used to determine stockholders of record  for  any
     meeting  of  stockholders  for the election  of  directors,  a  default  in
     preference  dividends  on the Preferred Stock shall exist,  the  number  of
     directors  constituting the Board of Directors shall be increased  by  two,
     and  the  holders of the Preferred Stock of all series (whether or not  the
     holders  of  such series of Preferred Stock would be entitled to  vote  for
     the  election of directors if such default in preference dividends did  not
     exist),  shall have the right at such meeting, voting together as a  single
     class  without regard to series, to the exclusion of the holders of  Common
     Stock  of  the  Corporation, to elect two directors of the  Corporation  to
     fill  such  newly  created  directorships. Each  director  elected  by  the
     holders   of  shares  of  Preferred  Stock  (herein  called  a  ''Preferred
     Director''),  shall continue to serve as such director for  the  full  term
     for  which  such  director  shall have been elected,  notwithstanding  that
     prior  to  the  end  of such term a default in preference  dividends  shall
     cease  to  exist. Any Preferred Director may be removed without  cause  by,
     and  shall not be removed without cause except by, the vote of the  holders
     of  record of the outstanding shares of Preferred Stock, voting together as
     a  single class without regard to series, at a meeting of the stockholders,
     or  of the holders of shares of Preferred Stock, called for the purpose. So
     long  as a default in any preference dividends on the Preferred Stock shall
     exist  (A) any vacancy in the office of a Preferred Director may be  filled
     (except  as  provided  in the following clause (B))  by  an  instrument  in
     writing  signed  by  the remaining Preferred Director and  filed  with  the
     Corporation and
       (B) in the case of the removal of any Preferred Director, the vacancy may
     be  filled  by  the  vote  of  the holders of  the  outstanding  shares  of
     Preferred  Stock,  voting  together as a single  class  without  regard  to
     series,  at  the  same meeting at which such removal shall be  voted.  Each
     director  appointed as aforesaid by the remaining Preferred Director  shall
     be  deemed,  for all purposes hereof, to be a Preferred Director.  Whenever
     the  term of office of the Preferred Directors shall end and no default  in
     preference dividends shall exist, the number of directors constituting  the
     Board  of  Directors  shall be reduced by two. For the purposes  hereof,  a
     ''default in preference dividends'' on the Preferred Stock shall be  deemed
     to  have occurred whenever the amount of accrued and unpaid dividends  upon
     any  series  of  the  Preferred  Stock shall  be  equivalent  to  six  full
     quarterly  dividends or more (whether or not consecutive), and,  having  so
     occurred, such default shall be deemed to exist thereafter until, but  only
     until,  all accrued dividends on all shares of Preferred Stock of each  and
     every  series  then outstanding shall have been paid for all past  dividend
     periods.
     
    6. Liquidation Rights.
  
        (a)  Upon the dissolution, liquidation or winding up of the Corporation,
     whether voluntary or involuntary, the holders of the shares of this  Series
     shall  be  entitled  to  receive  out of  the  assets  of  the  Corporation
     available   for  distribution  to  stockholders,  before  any  payment   or
     distribution  shall  be  made  on any class of  the  common  stock  of  the
     Corporation or on any other class of stock ranking junior to the  Preferred
     Stock  upon liquidation, the amount of $50 per share, plus a sum  equal  to
     all  dividends  (whether or not earned or declared) on such shares  accrued
     and unpaid thereon to the date of final distribution.
     
        (b)  Neither  the  sale, lease or exchange (for cash, shares  of  stock,
     securities  or  other  consideration)  of  all  or  substantially  all  the
     property  and assets of the Corporation nor the merger or consolidation  of
     the  Corporation  into  or  with any other corporation  or  the  merger  or
     consolidation of any other corporation into or with the Corporation,  shall
     be  deemed  to  be a dissolution, liquidation or winding up,  voluntary  or
     involuntary, for the purposes of this Section 6.
     
        (c) After the payment to the holders of the shares of this Series of the
     full  preferential amounts provided for in this Section 6, the  holders  of
     shares  of this Series as such shall have no right or claim to any  of  the
     remaining assets of the Corporation.
     
         (d)  In  the  event  the  assets  of  the  Corporation  available   for
     distribution  to the holders of shares of this Series upon any dissolution,
     liquidation  or  winding  up  of  the  Corporation,  whether  voluntary  or
     involuntary,  shall  be insufficient to pay in full all  amounts  to  which
     such  holders  are entitled pursuant to Section 6(a), no such  distribution
     shall  be  made on account of any shares of any other class  or  series  of
     Preferred  Stock  ranking on a parity with the shares of this  Series  upon
     such   dissolution,   liquidation  or  winding  up   unless   proportionate
     distributive  amounts  shall  be paid on account  of  the  shares  of  this
     Series, ratably, in proportion to the full distributable amounts for  which
     holders  of  all  such parity shares are respectively  entitled  upon  such
     dissolution, liquidation or winding up.
     
     7.  Ranking.  For purposes of this resolution, any stock of  any  class  or
  classes of the Corporation shall be deemed to rank:
  
        (a)  prior to the shares of this Series, either as to dividends or  upon
     liquidation, if the holders of such class or classes shall be  entitled  to
     the  receipt  of  dividends or of amounts distributable  upon  dissolution,
     liquidation  or  winding  up  of  the  Corporation,  whether  voluntary  or
     involuntary, as the case may be, in preference or priority to  the  holders
     of shares of this Series;
     
        (b)  on  a parity with the shares of this Series, either as to dividends
     or  upon  liquidation, whether or not the dividend rates, dividend  payment
     dates  or  redemption  or  liquidation prices per  share  or  sinking  fund
     provisions, if any, be different from those of this Series, if the  holders
     of  such  stock shall be entitled to the receipt of dividends or of amounts
     distributable  upon  dissolution,  liquidation  or  winding   up   of   the
     Corporation,  whether voluntary or involuntary, as  the  case  may  be,  in
     proportion  to  their  respective dividend  rates  or  liquidation  prices,
     without  preference or priority, one over the other, as between the holders
     of such stock and the holders of shares of this Series; and
     
        (c)  junior  to  shares of this Series, either as to dividends  or  upon
     liquidation,  if  such  class  or classes shall  be  the  Series  A  Junior
     Preferred  Stock issued by the Corporation pursuant to the Restated  Rights
     Agreement  or  if such class or classes shall be any class of common  stock
     of  the  Corporation or if the holders of shares of this  Series  shall  be
     entitled  to  receipt  of  dividends  or  of  amounts  distributable   upon
     dissolution,  liquidation  or  winding  up  of  the  Corporation,   whether
     voluntary or involuntary, as the case may be, in preference or priority  to
     the holders of shares of such class or classes.
     
     8. Determinations by the Board of Directors. Any determinations made by the
  Board  of  Directors of the Corporation under any provision of this Resolution
  shall  be  final and binding on all stockholders (including holders of  shares
  of this Series) of the Corporation.
  
     9.  Definitions. Unless otherwise defined herein, terms used  herein  shall
  have  the  meanings  assigned to them in Division  I  of  the  Certificate  of
  Incorporation and the following terms shall have the following meanings:
  
     ''Board of Directors'' or ''Board'' means, at any time, the duly elected or
  acting  board  of  directors  (or duly authorized committee  thereof)  of  the
  Corporation at such time.
  
      ''Certificate   of   Incorporation''  means  the  Corporation's   Restated
  Certificate  of Incorporation, as amended, supplemented or otherwise  modified
  from time to time.
  
     ''Closing Price'' of shares of any class of common stock of the Corporation
  for  any  day  shall mean the last reported sales price, regular way  on  such
  day,  or,  if  no  reported sale takes place on such day, the average  of  the
  reported  closing  bid and asked prices on such day, regular  way,  in  either
  case  as  reported on the New York Stock Exchange Composite Tape or,  if  such
  common  stock  is  not  listed or admitted to trading  on  the  NYSE,  on  the
  principal  national securities exchange on which such common stock  is  listed
  or  admitted  to  trading  or, if not listed or admitted  to  trading  on  any
  national securities exchange, on the National Market System of NASDAQ  or,  if
  such  common  stock is not quoted on such National Market System, the  average
  of  the  closing  bid  and  asked prices on such day in  the  over-the-counter
  market  as  reported by NASDAQ or, if closing bid and asked  prices  for  such
  common  stock  on  such day shall not have been reported through  NASDAQ,  the
  average  of the closing bid and asked prices on such day as furnished  by  any
  NYSE  member firm regularly making a market in such common stock selected  for
  such purpose by the Board of Directors.
  
     ''Conversion  Price'' means the conversion price per share of  Steel  Stock
  and/or  other shares of common stock of the Corporation into which  shares  of
  this  Series  are  convertible,  as  such Conversion  Price  may  be  adjusted
  pursuant  to Section 4. The initial conversion price per share of Steel  Stock
  will  be  $46.125  (equivalent to a conversion rate of 1.084 shares  of  Steel
  Stock for each share of this Series).
  
     ''Current  Market Price'' shall mean, with respect to any class  of  common
  stock  of the Corporation, the average of the daily Closing Prices of a  share
  of  such common stock during the five consecutive Trading Days selected by the
  Corporation  commencing not more than 20 Trading Days before, and  ending  not
  later  than, the date in question; provided, however, that (i) if  the  ''ex''
  date  for  any  event (other than the issuance or distribution requiring  such
  computation) that requires an adjustment to the Conversion Price  pursuant  to
  Sections  4(d)(ii) through (v) occurs on or after the 20th Trading  Day  prior
  to  the  day  in  question and prior to the ''ex'' date for  the  issuance  or
  distribution  requiring such computation, the Closing Price for  each  Trading
  Day  prior  to  the  ''ex'' date for such other event  shall  be  adjusted  by
  multiplying  such Closing Price by the same fraction by which  the  Conversion
  Price  is so required to be adjusted as a result of such other event, (ii)  if
  the  ''ex''  date  for  any  event (other than the  issuance  or  distribution
  requiring  such  computation) that requires an adjustment  to  the  Conversion
  Price  pursuant  to  Sections 4(d) (ii) through (v) occurs  on  or  after  the
  ''ex''  date  for the issuance or distribution requiring such computation  and
  on  or prior to the day in question, the Closing Price for each Trading Day on
  and  after  the  ''ex''  date  for  such other  event  shall  be  adjusted  by
  multiplying such Closing Price by the reciprocal of the fraction by which  the
  Conversion  Price  is  so required to be adjusted as a result  of  such  other
  event,  and  (iii)  if  the  ''ex''  date for  the  issuance  or  distribution
  requiring  such  computation  is on or prior to the  day  in  question,  after
  taking  into account any adjustment required pursuant to clause (ii)  of  this
  proviso,  the Closing Price for each Trading Day on or after such ''ex''  date
  shall  be  adjusted  by adding thereto the amount of any  cash  and  the  fair
  market  value on the day in question (as determined by the Board of  Directors
  in  a  manner consistent with any determination of such value for purposes  of
  Section  4(d)  (iii)  or  (iv)) of the evidences of  indebtedness,  shares  of
  capital  stock  or  assets being distributed applicable to one  share  of  the
  applicable  class  of  common stock of the Corporation  as  of  the  close  of
  business  on the day before such ''ex'' date. For purposes of this definition,
  the  term  ''ex''  date,  with respect to any class of  common  stock  of  the
  Corporation,  (i)  when  used with respect to any  issuance  or  distribution,
  means  the  first date on which such common stock trades regular way  on  such
  exchange  or in the relevant market from which the Closing Price was  obtained
  without  the  right to receive such issuance or distribution, (ii)  when  used
  with  respect  to  any  subdivision or combination of shares  of  such  common
  stock,  means the first date on which such common stock trades regular way  on
  such  exchange  or in such market after the time at which such subdivision  or
  combination becomes effective, and (iii) when used with respect to any  tender
  or  exchange  offer  means the first date on which such  common  stock  trades
  regular  way on such exchange or in such market after the expiration  time  of
  such tender or exchange offer.
  
     ''Excess  Purchase Payment'' means the excess, if any, of (A) the aggregate
  of  the  cash and the value (as determined by the Board of Directors)  of  all
  other  consideration paid by the Corporation or any of its  Subsidiaries  with
  respect  to  the  shares  of  the applicable class  of  common  stock  of  the
  Corporation  acquired  in  a  tender or exchange  offer  or  other  negotiated
  purchase  respectively, over (B) the product of the Current Market  Price  per
  share  of  such common stock times the number of shares of such  common  stock
  acquired in such tender or exchange offer or purchase .
  
     ''NASDAQ''  means  the  National Association of  Securities  Dealers,  Inc.
  Automated Quotations System or any successor thereto .
  
    ''NYSE'' means the New York Stock Exchange, Inc. or any successor thereto.
  
     ''Redemption  Date''  means any date on which the Corporation  redeems  any
  shares of this Series.
  
     ''Redemption Price'' means (i) with respect to any redemption  pursuant  to
  Section  3(a), the applicable amount set forth in such Section and  (ii)  with
  respect to any redemption pursuant to Section 3(b), an amount per share  equal
  to  the sum of the initial liquidation preference of $50.00 per share of  this
  Series,  plus an amount equal to all accrued and unpaid dividends  thereon  to
  the date fixed for redemption .
  
     ''Restated  Rights Agreement'' shall have the meaning given to  it  in  the
  second paragraph of Section
   4(d)(iii).
  
     ''Rights''  shall  mean the rights of the Corporation  which  are  issuable
  under  the  Corporation's  stockholder rights plan adopted  by  the  Board  of
  Directors,  the  terms and conditions of which are set forth in  the  Restated
  Rights  Agreement, or rights to purchase any capital stock of the  Corporation
  under any successor shareholder rights plan or plan adopted in replacement  of
  the Corporation's stockholder rights plan.
  
     ''Subsidiary'' means a corporation more than 50% of the outstanding  voting
  stock of which is owned, directly or indirectly, by the Corporation or by  one
  or  more  other  Subsidiaries. For the purposes of this  definition,  ''voting
  stock''  means  stock which ordinarily has voting power for  the  election  of
  directors,  whether at all times or only so long as no senior class  of  stock
  has such voting power by reason of any contingency.
  
     ''substantially all of the properties and assets of the U.S. Steel  Group''
  and  ''substantially all of the properties and assets of the Marathon  Group''
  shall  mean a portion of such properties and assets that represents  at  least
  80%  of  either of the then-current market value of, or the aggregate revenues
  for   the  immediately  preceding  twelve  fiscal  quarterly  periods  of  the
  Corporation  derived from, the properties and assets of the U.S.  Steel  Group
  or   the  Marathon  Group,  respectively,  as  of  such  date  (excluding  the
  properties  and  assets  of  any  person,  entity  or  group  in   which   the
  Corporation, directly or indirectly, owns less than a majority interest).
  
     ''Trading  Day'' shall mean, with respect to any class of common  stock  of
  the Corporation, any day on which such common stock is traded on the NYSE,  or
  if  such common stock is not listed or admitted to trading on the NYSE, on the
  principal  national securities exchange on which such common stock  is  listed
  or  admitted,  or  if  not  listed or admitted  to  trading  on  any  national
  securities exchange, on the National Market System of the NASDAQ, or  if  such
  common  stock is not quoted on such National Market System, in the  applicable
  securities market in which such common stock is traded.
  
     ''Transfer Agent'' means the Corporation, through its Shareholder  Services
  Department,  or  such  other  agent or agents of the  Corporation  as  may  be
  designated by the Board of Directors as the Transfer Agent for shares of  this
  Series.
  
  Fifth: The existence of the Corporation is to be perpetual.

   Sixth: The private property of the stockholders shall not be subject  to  the
payment of corporate debts to any extent whatever.

   Seventh: The number of directors of the Corporation shall be fixed from  time
to  time  by, or in the manner provided in, its by-laws and may be increased  or
decreased  as  therein provided; but the number thereof shall not be  less  than
three.

  The directors of the Corporation shall be divided into three classes: Class I,
Class  II and Class III. Each class shall consist, as nearly as may be possible,
of  one-third of the whole number of the Board of Directors. In the election  of
directors  at the 1984 annual meeting of the stockholders, the Class I directors
shall be elected to hold office for a term to expire at the first annual meeting
of  the stockholders thereafter; the Class II directors shall be elected to hold
office  for  a  term to expire at the second annual meeting of the  stockholders
thereafter;  and the Class III directors shall be elected to hold office  for  a
term  to expire at the third annual meeting of the stockholders thereafter,  and
in  the  case of each class, until their respective successors are duly  elected
and qualified. At each annual election held after the 1984 annual meeting of the
stockholders the directors elected to succeed those whose terms expire shall  be
identified as being of the same class as the directors they succeed and shall be
elected to hold office for a term to expire at the third annual meeting  of  the
stockholders  after  their election, and until their respective  successors  are
duly  elected and qualified. If the number of directors is changed, any increase
or  decrease  in  directors shall be apportioned among  the  classes  so  as  to
maintain all classes as equal in number as possible, and any additional director
elected to any class shall hold office for a term which shall coincide with  the
terms  of  the  other directors in such class and until his  successor  is  duly
elected and qualified.

  In the case of any increase in the number of directors of the Corporation, the
additional director or directors shall be elected by the Board of Directors.

   In the case of any vacancy in the Board of Directors from death, resignation,
disqualification  or other cause, a successor to hold office for  the  unexpired
portion  of the term of the director whose place shall be vacant, and until  the
election  of  his  successor, shall be elected by a majority  of  the  Board  of
Directors then in office, though less than a quorum.

  Directors of the Corporation may be removed only for cause.

  Eighth: The Board of Directors shall have power to adopt, amend and repeal the
by-laws  at  any regular or special meeting of the Board of Directors,  provided
that  notice of intention to adopt, amend or repeal the by-laws in whole  or  in
part  shall  have been included in the notice of meeting; or, without  any  such
notice, by a vote of two-thirds of the directors then in office.

  Stockholders may adopt, amend and repeal the by-laws at any regular or special
meeting  of the stockholders by an affirmative vote of two-thirds of the  shares
outstanding  and entitled to vote thereon, provided that notice of intention  to
adopt,  amend or repeal the by-laws in whole or in part shall have been included
in the notice of the meeting.

   Any  action  required  to be taken at any annual or special  meeting  of  the
stockholders of the Corporation, or any action which may be taken at any  annual
or special meeting of the stockholders or otherwise, may not be taken without  a
meeting,  prior  notice  and a vote, and stockholders may  not  act  by  written
consent.

  Ninth: The Board of Directors from time to time shall determine whether and to
what  extent,  and  at  what  times and places, and under  what  conditions  and
regulations, the accounts and books of the Corporation, or any of them, shall be
open  to  the inspection of the stockholders, and no stockholder shall have  any
right  to inspect any account or book or document of the Corporation, except  as
conferred  by  law  or  authorized  by  the  Board  of  Directors,  or  by   the
stockholders.

   Tenth:  The  directors may from time to time declare such dividends  as  they
shall deem advisable and proper, subject to the provisions of Article Fourth and
to  such  restrictions  as  may be imposed by law,  and  pay  the  same  to  the
stockholders at such times as they shall fix.

   The  Board of Directors shall have power to issue bonds, debentures, or other
obligations, either non-convertible or convertible into the Corporation's stock,
subject to the provisions of Article Fourth and upon such terms, in such  manner
and  under such conditions in conformity with law, as may be fixed by the  Board
of Directors prior to the issue of such bonds, debentures or other obligations.

   Eleventh:  No director shall be personally liable to the Corporation  or  its
stockholders  for  monetary damages for any breach of  fiduciary  duty  by  such
director as a director, except (i) for breach of the director's duty of  loyalty
to  the Corporation or its stockholders, (ii) for acts or omissions not in  good
faith  or  which involve intentional misconduct or a knowing violation  of  law,
(iii)  pursuant to Section 174 of the Delaware General Corporation Law, or  (iv)
for  any  transaction  from  which the director  derived  an  improper  personal
benefit.  No amendment to or repeal of this Article Eleventh shall apply  to  or
have  any  effect on the liability or alleged liability of any director  of  the
Corporation  for  or  with  respect to any acts or omissions  of  such  director
occurring prior to such amendment or repeal.

   Twelfth: The powers and authorities hereinbefore conferred upon the Board  of
Directors  are  in furtherance and not in limitation of those conferred  by  the
laws of the State of Delaware.

   Thirteenth: The Corporation reserves the right at any time and from  time  to
time  to  amend,  alter,  change  or  repeal any  provision  contained  in  this
Certificate of Incorporation in the manner now or hereafter prescribed  by  law;
and  all  rights preferences and privileges of whatsoever nature conferred  upon
stockholders, directors or any other persons whomsoever by and pursuant to  this
Certificate  of  Incorporation in its present form or as hereafter  amended  are
granted subject to the rights reserved in this Article.

  In Witness Whereof, this Restated Certificate of Incorporation, which restates
and  integrates  and does not further amend the provisions of the  Corporation's
Certificate  of  Incorporation, as heretofore amended  and  supplemented,  there
being  no  discrepancies  between those provisions and the  provisions  of  this
Restated Certificate of Incorporation, and having been duly adopted by the Board
of Directors of the Corporation in accordance with the provisions of Section 245
of  the  General Corporation Law of the State of Delaware, has been executed  on
the 1st day of May, 1999.

                                   USX CORPORATION
                                   
                                   
                                   

                                 /s/ T. J. Usher
                                 By: T. J. Usher
                                     Chairman of the Board
                                     of Directors
                                        
                                        
                                        
                                        





                                    











                                    
                             USX CORPORATION







                                    


                                 BY-LAWS















                               MAY 1, 1999










                                     BY-LAWS
                                       of
                                 USX CORPORATION
                                   May 1, 1999
                                        
                                   ARTICLE I.
                                  Stockholders.
                                        
    Section  1. Time and Place of Meetings of Stockholders. Unless the time  and
place  of  the  annual  meeting  of stockholders for  the  purpose  of  electing
directors  and  transacting such other business as may  be  brought  before  the
meeting are changed by the Board of Directors, as may be done from time to time,
provided  that all legal requirements for such change and notice to stockholders
are  observed, such annual meeting of stockholders of the Corporation  shall  be
held at 1013 Centre Road, City of Wilmington, County of New Castle, and State of
Delaware at 2 o'clock, p.m., on the last Tuesday in April in each year, if not a
legal holiday, and if a legal holiday, then on the next succeeding Tuesday which
is not a legal holiday.
    Special meetings of the stockholders may be called by the Board of Directors
to  be  held  at  such time and place and for such purpose or  purposes  as  are
specified in such call.
    Neither the annual meeting nor any special meeting of stockholders  need  be
held within the State of Delaware.
    Any  action  required to be taken at any annual or special  meeting  of  the
stockholders of the Corporation, or any action which may be
 taken at any  annual
or special meeting of the stockholders or otherwise, may not be taken without  a
meeting,  prior  notice  and a vote, and stockholders may  not  act  by  written
consent.
    Section 2. Notice of Meetings of Stockholders.  It shall be the duty of  the
Secretary to cause notice of each annual or special meeting to be mailed to  all
stockholders of record as of the record date as fixed by the Board of  Directors
for  the  determination of stockholders entitled to vote at such  meeting.  Such
notice  shall indicate briefly the action to be taken at such meeting and  shall
be  mailed to the stockholders at the addresses of such stockholders as shown on
the  books  of  the  Corporation at least 10 days but  not  more  than  60  days
preceding the meeting.
    Section  3.  Nomination  of Directors. Only persons  who  are  nominated  in
accordance  with  the  following procedures shall be eligible  for  election  as
directors.  Nomination for election to the Board of Directors of the Corporation
at  a  meeting of stockholders may be made by the Board of Directors or  by  any
stockholder  of  record of the Corporation entitled to vote  generally  for  the
election  of  directors at such meeting who complies with the notice  procedures
set  forth in this Section 3. Such nominations, other than those made by  or  on
behalf  of  the Board of Directors, shall be made by notice in writing delivered
or  mailed by first class United States mail, postage prepaid, to the Secretary,
and  received  not less than 45 days nor more than 75 days prior  to  the  first
anniversary  of  the  date  on  which the Corporation  first  mailed  its  proxy
materials  for  the  preceding year's annual meeting of stockholders;  provided,
however,  that if the date of the annual meeting is advanced more than  30  days
prior  to or delayed by more than 30 days after the anniversary of the preceding
year's  annual  meeting,  notice by the stockholder to  be  timely  must  be  so
delivered not later than the close of business on the later of (i) the 90th  day
prior  to  such annual meeting or (ii) the 10th day following the day  on  which
public announcement of the date of such meeting is first made. Such notice shall
set  forth  (a) as to each proposed nominee (i) the name, age, business  address
and,  if  known,  residence  address of each such nominee,  (ii)  the  principal
occupation  or employment of each such nominee, (iii) the number  of  shares  of
each  class of the capital stock of the Corporation which are beneficially owned
by each such nominee, and (iv) any other information concerning the nominee that
must  be  disclosed as to nominees in proxy solicitations pursuant to Regulation
14A  under  the  Securities  Exchange Act of 1934, as  amended  (including  such
person's written consent to be named as a nominee and to serve as a director  if
elected);  and  (b) as to the stockholder giving the notice  (i)  the  name  and
address, as they appear on the Corporation's books, of such stockholder and (ii)
the number of shares of each
class  of  the capital stock of the Corporation which are beneficially owned  by
such  stockholder. The Corporation may require any proposed nominee  to  furnish
such  other  information as may reasonably be required  by  the  Corporation  to
determine the eligibility of such proposed nominee to serve as a director of the
Corporation.
    The chairman of the meeting may, if the facts warrant, determine and declare
to  the  meeting that a nomination was not made in accordance with the foregoing
procedure, and if he should so determine, he shall so declare to the meeting and
the defective nomination shall be disregarded.
   Section 4. Notice of Business at Annual Meetings. At an annual meeting of the
stockholders, only such business shall be conducted as shall have been  properly
brought  before  the meeting. To be properly brought before an  annual  meeting,
business  must  be  (a) specified in the notice of meeting  (or  any  supplement
thereto)  given by or at the direction of the Board of Directors, (b)  otherwise
properly  brought  before the meeting by or at the direction  of  the  Board  of
Directors, or (c) otherwise properly brought before the meeting by a stockholder
of  record.  For business to be properly brought before an annual meeting  by  a
stockholder,  if  such  business relates to the election  of  directors  of  the
Corporation,  the procedures in Article I, Section 3 must be complied  with.  If
such  business  relates  to any other matter, the stockholder  must  have  given
timely notice thereof in writing to the Secretary. To be timely, a stockholder's
notice  must  be delivered to or mailed and received at the principal  executive
offices of the Corporation not less than 45 days nor more than 75 days prior  to
the  first  anniversary of the date on which the Corporation  first  mailed  its
proxy  materials  for  the  preceding year's  annual  meeting  of  stockholders;
provided, however, that if the date of the annual meeting is advanced more  than
30  days prior to or delayed by more than 30 days after the anniversary  of  the
preceding year's annual meeting, notice by the stockholder to be timely must  be
so  delivered not later than the close of business on the later of (i) the  90th
day prior to such annual meeting or (ii) the 10th day following the day on which
public  announcement of the date of such meeting is first made. A  stockholder's
notice  to  the  Secretary  shall set forth as to each  matter  the  stockholder
proposes  to  bring  before the annual meeting (a) a brief  description  of  the
business  desired to be brought before the annual meeting and  the  reasons  for
conducting  such  business at the annual meeting, (b) the name and  address,  as
they  appear  on  the  Corporation's books, of the  stockholder  proposing  such
business,  (c) the number of shares of each class of the capital  stock  of  the
Corporation  which  are  beneficially owned by  the  stockholder,  and  (d)  any
material  interest of the stockholder in such business. Notwithstanding anything
in  the  By-Laws to the contrary, no business shall be conducted at  any  annual
meeting except in accordance with the procedures set forth in this Section 4 and
in  Section  3 of this Article I and except that any stockholder proposal  which
complies  with  Rule  14a-8  of  the proxy rules (or  any  successor  provision)
promulgated under the Securities Exchange Act of 1934, as amended, and is to  be
included  in  the  Corporation's  proxy  statement  for  an  annual  meeting  of
stockholders shall be deemed to comply with the requirements of this Section 4.
    The  chairman  of  the  meeting shall, if the facts warrant,  determine  and
declare to the meeting that business was not properly brought before the meeting
in  accordance  with  the provisions of this Section 4,  and  if  he  should  so
determine,  the chairman shall so declare to the meeting that any such  business
not properly brought before the meeting shall not be transacted.
    Section 5. Quorum. At each meeting of the stockholders the holders  of  one-
third  of the voting power of the outstanding shares of stock entitled  to  vote
generally  at  the  meeting, present in person or represented  by  proxy,  shall
constitute  a  quorum,  unless the representation of a larger  number  shall  be
required by law, and, in that case, the representation of the number so required
shall constitute a quorum.
    Except as otherwise required by law, a majority of the voting power  of  the
shares of stock entitled to vote generally at a meeting and present in person or
by  proxy, whether or not constituting a quorum, may adjourn, from time to time,
without  notice other than by announcement at the meeting. At any such adjourned
meeting at which a quorum shall be present, any business may be transacted which
might have been transacted at the meeting as originally notified.
    Section  6.  Organization. The Chairman of the Board, or in his absence  the
Vice  Chairman  of  the Board designated by the Chairman of the  Board,  or  the
President in the order named, shall call meetings of the stockholders to  order,
and shall act as chairman of such meeting; provided, however, that the Board  of
Directors  may  appoint  any person to act as chairman of  any  meeting  in  the
absence of the Chairman of the Board.
    The  Secretary of the Corporation shall act as secretary at all meetings  of
the  stockholders;  but in the absence of the Secretary at any  meeting  of  the
stockholders the presiding officer may appoint any person to act as secretary of
the meeting.
    Section  7.  Voting. At each meeting of the stockholders, every  stockholder
shall  be  entitled to vote in person, or by proxy appointed  by  instrument  in
writing, subscribed by such stockholder or by his duly authorized attorney,  or,
to  the  extent  permitted by law, appointed by an electronic transmission,  and
delivered  to  the inspectors at the meeting; and he shall have  the  number  of
votes  for  each share of capital stock standing registered in his name  at  the
date  fixed  by  the Board of Directors pursuant to Section 4 of Article  IV  of
these  By-Laws  as  may  be  determined in  accordance  with  the  Corporation's
Certificate  of  Incorporation, or as may be provided  by  law.  The  votes  for
directors,  and, upon demand of any stockholder, or where required by  law,  the
votes upon any question before the meeting, shall be by ballot.
    At  least ten days before each meeting of the stockholders, a full, true and
complete  list,  in alphabetical order, of all of the stockholders  entitled  to
vote  at  such meeting, showing the address of each stockholder, and  indicating
the  class  and number of shares held by each, shall be furnished and held  open
for  inspection in such manner, as is required by law. Only the persons in whose
names shares of stock stand on the books of the Corporation at the date fixed by
the Board of Directors pursuant to Section 4 of Article IV of these By-Laws,  as
evidenced in the manner provided by law, shall be entitled to vote in person  or
by proxy on the shares so standing in their names.
    Prior  to  any  meeting, but subsequent to the date fixed by  the  Board  of
Directors  pursuant to Section 4 of Article IV of these By-Laws, any  proxy  may
submit  his  powers  of  attorney to the Secretary, or  to  the  Treasurer,  for
examination. The certificate of the Secretary, or of the Treasurer,  as  to  the
regularity of such powers of attorney, and as to the class and number of  shares
held  by  the  persons who severally and respectively executed  such  powers  of
attorney,  shall be received as prima facie evidence of the class and number  of
shares  represented by the holder of such powers of attorney for the purpose  of
establishing  the  presence of a quorum at such meeting and  of  organizing  the
same, and for all other purposes.
    Section 8. Inspectors. At each meeting of the stockholders, the polls  shall
be  opened and closed, the proxies and ballots shall be received and be taken in
charge,  and all questions touching the qualification of voters and the validity
of  proxies and the acceptance or rejection of votes, shall be decided by one or
more inspectors. Such inspector or inspectors shall be appointed by the Board of
Directors before the meeting. If for any reason any of the inspectors previously
appointed  shall fail to attend or refuse or be unable to serve,  inspectors  in
place  of  any  so  failing to attend or refusing or unable to serve,  shall  be
appointed in like manner.

                                   ARTICLE II.
                               Board of Directors.
                                        
    Section 1. Number, Classes and Terms of Office. The business and affairs  of
the  Corporation  shall be managed by or under the direction  of  the  Board  of
Directors.
   The number of directors shall be fixed from time to time by resolution of the
Board of Directors, but the number thereof shall not be less than three.
    The  directors of the Corporation shall be divided into three classes: Class
I,  Class  II  and  Class III. Each class shall consist, as  nearly  as  may  be
possible,  of  one-third of the whole number of the Board of Directors.  In  the
election of directors at the 1984 annual meeting of the stockholders, the  Class
I  directors shall be elected to hold office for a term to expire at  the  first
annual  meeting of the stockholders thereafter; the Class II directors shall  be
elected to hold office for a term to expire at the second annual meeting of  the
stockholders  thereafter; and the Class III directors shall be elected  to  hold
office  for  a  term to expire at the third annual meeting of  the  stockholders
thereafter, and in the case of each class, until their respective successors are
duly  elected and qualified. At each annual election held after the 1984  annual
meeting of the stockholders, the directors elected to succeed those whose  terms
expire  shall  be  identified as being of the same class as the  directors  they
succeed  and shall be elected to hold office for a term to expire at  the  third
annual meeting of the stockholders
after their election, and until their respective successors are duly elected and
qualified.  If the number of directors is changed, any increase or  decrease  in
directors  shall be apportioned among the classes so as to maintain all  classes
as equal in number as possible, and any additional director elected to any class
shall  hold office for a term which shall coincide with the terms of  the  other
directors in such class and until his successor is duly elected and qualified.
    In  the  case of any increase in the number of directors of the Corporation,
the  additional  director or directors shall be elected only  by  the  Board  of
Directors.
   Section 2. Vacancies. Except as otherwise provided by law, in the case of any
vacancy  in  the Board of Directors through death, resignation, disqualification
or other cause, a successor to hold office for the unexpired portion of the term
of  the  director  whose place shall be vacant, and until the  election  of  his
successor, shall be elected only by a majority of the Board of Directors then in
office, though less than a quorum.
    Section  3.  Removal. Directors of the Corporation may be removed  only  for
cause.
    Section  4.  Place  of Meetings, etc. The Board of Directors  may  hold  its
meetings,  and may have an office and keep the books of the Corporation  (except
as otherwise may be provided for by law) in such place or places in the State of
Delaware or outside of the State of Delaware, as the Board from time to time may
determine.
   Section 5. Regular Meetings. Regular meetings of the Board of Directors shall
be  held  at such times as may be fixed by resolution of the Board of Directors.
The  Secretary  shall give notice, as provided for special  meetings,  for  each
regular meeting.
   Section 6. Special Meetings. Special meetings of the Board of Directors shall
be  held whenever called by direction of the Chairman or a Vice Chairman of  the
Board, or the President, or a majority of the directors then in office.
    The  Secretary shall give notice of each special meeting by mailing the same
at  least  two  days before the meeting, or by telegraphing or  telexing  or  by
facsimile transmission of the same at least one day before the meeting, to  each
director;  but  such  notice  may be waived by any  director.  Unless  otherwise
indicated  in  the notice thereof, any and all business may be transacted  at  a
special  meeting. At any meeting at which every director shall be present,  even
though without any notice, any business may be transacted.
    Section  7.  Quorum.  A  majority of the total  number  of  directors  shall
constitute  a quorum for the transaction of business; but if at any  meeting  of
the  Board there be less than a quorum present, a majority of those present  may
adjourn the meeting from time to time.
    At any meeting of the Board of Directors all matters shall be decided by the
affirmative  vote  of a majority of directors then present, provided,  that  the
affirmative vote of at least one-third of all the directors then in office shall
be necessary for the passage of any resolution.
    Section 8. Order of Business. At meetings of the Board of Directors business
shall be transacted in such order as, from time to time, the Board may determine
by resolution.
    At  all meetings of the Board of Directors, the Chairman of the Board or  in
his  absence  the Vice Chairman of the Board designated by the Chairman  of  the
Board, or the President, in the order named, shall preside.
   Section 9. Compensation of Directors. Each director of the Corporation who is
not a salaried officer or employee of the Corporation, or of a subsidiary of the
Corporation,  shall receive such allowances for serving as a director  and  such
fees  for  attendance  at meetings of the Board of Directors  or  any  committee
appointed by the Board as the Board may from time to time determine.
    Section 10. Election of Officers. At the first regular meeting of the  Board
of  Directors in each year (at which a quorum shall be present) held next  after
the  annual meeting, the Board of Directors shall proceed to the election of the
principal  officers of the Corporation to be elected by the Board  of  Directors
under the provisions of Article III of these
By-Laws.

                                  ARTICLE III.
                                    Officers.
                                        
    Section  1. Officers. The principal officers of the Corporation shall  be  a
Chairman  of the Board of Directors, one or more Vice Chairmen of the  Board  of
Directors,  a President, one or more Executive-Directors, one or more  Executive
Vice  Presidents, one or more Group Presidents, a Senior Vice President-Finance,
a General Counsel, a Treasurer, a Secretary and a Comptroller, none of whom need
be  directors.  All such principal officers shall be elected  by  the  Board  of
Directors.  Each  principal  officer who shall be  a  member  of  the  Board  of
Directors shall be considered an Officer-Director.
    The  Board  of Directors or any committee or officer designated  by  it  may
appoint  such  other officers as it or he shall deem necessary, who  shall  have
such  authority  and  shall perform such duties as from  time  to  time  may  be
assigned to them by or with the authority of the Board of Directors.
   One person may hold two or more offices.
   In its discretion, the Board of Directors may leave unfilled any office.
   All officers, agents and employees shall be subject to removal at any time by
the  Board of Directors. All officers, agents and employees, other than officers
elected  by the Board of Directors, shall hold office at the discretion  of  the
committee or of the officer appointing them.
    Each  of  the salaried officers of the Corporation shall devote  his  entire
time,  skill and energy to the business of the Corporation, unless the  contrary
is expressly consented to by the Board of Directors.
    Section  2. Powers and Duties of the Chairman of the Board. The Chairman  of
the  Board  of Directors shall be the chief executive officer of the Corporation
and,  subject  to  the  Board of Directors, shall be in general  charge  of  the
affairs of the Corporation. He shall preside at all meetings of the stockholders
and of the Board of Directors.
   Section 3. Powers and Duties of the Vice Chairmen of the Vice Chairmen Board,
the  President and the Executive-Directors. Subject to the Chairman of the Board
of Directors and the Board itself, the Vice Chairmen of the Board, the President
and the Executive-Directors shall have such duties as may be assigned to them by
the Chairman of the Board of Directors or the Board itself.
    Section  4.  Executive  Vice Presidents, Group Presidents  and  Senior  Vice
President-Finance. Each Executive Vice President, each Group President  and  the
Senior Vice President-Finance shall have such authority, and shall perform  such
duties, as may be assigned to him.
    Section  5.  The  General Counsel. The General Counsel shall  be  the  chief
consulting officer of the Corporation in all legal matters, and, subject to  the
Chairman  of  the  Board of Directors and the Board itself, shall  have  general
control of all matters of legal import concerning the Corporation.
    Section 6. Powers and Duties of Treasurer. Subject to the officer designated
by the Board of Directors, the Treasurer shall have custody of all the funds and
securities of the Corporation which may have come into his hands; when necessary
or  proper  he  shall  endorse,  or cause to  be  endorsed,  on  behalf  of  the
Corporation,  for  collection, checks, notes and other  obligations,  and  shall
cause the deposit of same to the credit of the Corporation in such bank or banks
or  depositary  as  the Board of Directors may designate  or  as  the  Board  of
Directors  by resolution may authorize; he shall sign all receipts and  vouchers
for  payments made to the Corporation other than routine receipts and  vouchers,
the  signing  of  which he may delegate; he shall sign all checks  made  by  the
Corporation;  provided, however, that the Board of Directors may  authorize  and
prescribe  by  resolution  the  manner  in  which  checks  drawn  on  banks   or
depositaries shall be signed, including the use of facsimile signatures, and the
manner  in which officers, agents or employees shall be authorized to  sign;  he
may  sign  with the President or a vice president all certificates of shares  in
the  capital stock; whenever required by the Board of Directors, he shall render
a  statement  of  his cash account; he shall enter regularly, in  books  of  the
Corporation to be kept by him for the purpose, full and accurate account of  all
moneys received and paid by him on account of the Corporation; he shall, at all
reasonable  times,  exhibit  his  books and accounts  to  any  director  of  the
Corporation upon application at his office during business hours; and  he  shall
perform all acts incident to the position of treasurer.
    He shall give a bond for the faithful discharge of his duties in such sum as
the Board of Directors may require.
    Section  7.  Powers and Duties of Secretary. The Secretary  shall  keep  the
minutes  of  all  meetings of the Board and the minutes of all meetings  of  the
stockholders, and also (unless otherwise directed by the Board of Directors) the
minutes  of all committees, in books provided for that purpose; he shall  attend
to the giving and serving of all notices of the Corporation; he may sign with an
Officer-Director  or  any  other duly authorized person,  in  the  name  of  the
Corporation, all contracts authorized by the Board of Directors, and  affix  the
seal  of the Corporation thereto; he shall have charge of the certificate books,
transfer  books and stock ledgers, and such other books and papers as the  Board
of Directors may direct, all of which shall, at all reasonable times, be open to
the  examination  of  any director, upon application at the  Secretary's  office
during  business hours; and he shall in general perform all the duties  incident
to  the office of secretary, subject to the control of the Chairman of the Board
of Directors and the Board itself.
    Section  8. Comptroller. Subject to the officer designated by the  Board  of
Directors,  the  Comptroller  shall  be  in  charge  of  the  accounts  of   the
Corporation, and shall perform such duties as from time to time may be  assigned
to him.
    Section  9.  Voting upon Stocks. Unless otherwise ordered by  the  Board  of
Directors, any Officer-Director or any person or persons appointed in writing by
any of them, shall have full power and authority in behalf of the Corporation to
attend and to act and to vote at any meetings of stockholders of any corporation
in  which the Corporation may hold stock, and at any such meeting shall  possess
and may exercise any and all the rights and powers incident to the ownership  of
such  stock,  and  which,  as  the owner thereof,  the  Corporation  might  have
possessed and exercised if present. The Board of Directors, by resolution,  from
time to time, may confer like powers upon any other person or persons.

                                   ARTICLE IV.
                              Capital Stock - Seal.
                                        
    Section 1. Certificates of Shares. The certificates for shares of each class
of  the capital stock of the Corporation shall be in such form, not inconsistent
with  the  Certificate of Incorporation, as shall be prepared or be approved  by
the Board of Directors. No certificate shall be valid unless it is signed by the
Chairman or a Vice Chairman of the Board of Directors or the President or a vice
president, and either the Treasurer or an assistant treasurer, or the  Secretary
or  an  assistant secretary, but where such certificate is signed by a registrar
other  than  the Corporation or its employee the signatures of any such  officer
and,  where  authorized  by resolution of the Board of Directors,  any  transfer
agent  may  be  facsimiles.  In  case  any officer  or  transfer  agent  of  the
Corporation  who has signed, or whose facsimile signature has been placed  upon,
any  such certificate shall have ceased to be such officer or transfer agent  of
the  Corporation  before  such certificate is issued, such  certificate  may  be
issued  by the Corporation with the same effect as though the person or  persons
were such officer or transfer agent of the Corporation at the date of issue.
    All certificates for each class of capital stock of the Corporation shall be
consecutively  numbered. The name of the person owning  the  shares  represented
thereby,  with the class and number of such shares and the date of issue,  shall
be entered on the Corporation's books.
    All  certificates surrendered to the Corporation shall be cancelled, and  no
new  certificate shall be issued until the former certificate for the same class
and  number  of  shares  of  the  same class shall  have  been  surrendered  and
cancelled,  except in accordance with procedures established  by  the  Board  of
Directors or where required by law.
   Section 2. Transfer of Shares. Shares in the capital stock of the Corporation
shall  be transferred only on the books of the Corporation by the holder thereof
in  person,  or by his attorney, upon surrender and cancellation of certificates
for a like class and number of shares.
   Section 3. Regulations. The Board of Directors shall have power and authority
to  make all such rules and regulations as respectively they may deem expedient,
concerning  the issue, transfer and registration of certificates for  shares  of
the capital stock of the Corporation.
    The  Board of Directors may appoint one or more transfer agents or assistant
transfer  agents  and one or more registrars of transfers, and may  require  all
stock  certificates  to  bear  the signature of a transfer  agent  or  assistant
transfer agent and a registrar of transfers. The Board of Directors may  at  any
time  terminate the appointment of any transfer agent or any assistant  transfer
agent or any registrar of transfers.
    Section 4. Fixing Date for determination of Stockholders' Rights. The  Board
of  Directors  is  authorized from time to time to fix in advance  a  date,  not
exceeding 60 days preceding the date of any meeting of stockholders, or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date  when any change or conversion or exchange of capital stock shall  go  into
effect,  as a record date for the determination of the stockholders entitled  to
notice  of,  and  to vote at, any such meeting and any adjournment  thereof,  or
entitled  to  receive payment of any such dividend, or to any such allotment  of
rights,  or to exercise the rights in respect of any such change, conversion  or
exchange  of  capital stock, and in such case such stockholders  and  only  such
stockholders  as shall be stockholders of record on the date so fixed  shall  be
entitled  to  such notice of, and to vote at, such meeting and  any  adjournment
thereof, or to receive payment of such dividend, or to receive such allotment of
rights,  or  to  exercise such rights, as the case may be,  notwithstanding  any
transfer of any stock on the books of the Corporation after any such record date
fixed as aforesaid.
    Section  5. Dividends. The Board of Directors may from time to time  declare
such  dividends  as  they  shall deem advisable  and  proper,  subject  to  such
restrictions  as  may  be  imposed by law and the Corporation's  Certificate  of
Incorporation.
   Section 6. Facsimile Signatures. In addition to the provisions for the use of
facsimile  signatures  elsewhere  specifically  authorized  in  these   By-Laws,
facsimile signatures of any officer or officers of this Corporation may be  used
whenever and as authorized by the Board of Directors.
    Section  7. Corporate Seal. The Board of Directors shall provide a  suitable
seal,  containing the name of the Corporation, which seal shall be in charge  of
the Secretary. If and when so directed by the Board of Directors, duplicates  of
the  seal may be kept and be used by the Treasurer or by any assistant secretary
or assistant treasurer.

                                   ARTICLE V.
                                Indemnification.
                                        
   Section 1. Right to Indemnification. The Corporation shall indemnify and hold
harmless to the fullest extent permitted by law any person who was or is made or
is  threatened  to  be  made a party or is involved  in  any  action,  suit,  or
proceeding    whether   civil,   criminal,   administrative   or   investigative
("proceeding")  by reason of the fact that he, or a person for whom  he  is  the
legal  representative, is or was a director, officer, employee or agent  of  the
Corporation  or  is  or  was serving at the request  of  the  Corporation  as  a
director, officer, employee or agent of another corporation or of a partnership,
joint  venture, trust, enterprise or non-profit entity, including  service  with
respect  to  employee benefit plans, against all expenses, liability,  and  loss
reasonably incurred or suffered by such person. The Corporation shall  indemnify
any  person seeking indemnity in connection with a proceeding initiated by  such
person  only if the proceeding was authorized by the Board of Directors  of  the
Corporation.
    Section  2.  Prepayment of Expenses. The Corporation shall pay the  expenses
reasonably  incurred in defending any such proceeding in advance  of  its  final
disposition  provided however the payment of expenses incurred by a director  or
officer  in his capacity as a director or officer (except with regard to service
to  an  employee  benefit  plan or nonprofit entity) in  advance  of  the  final
disposition  of  the  proceeding shall be made only upon the  agreement  by  the
director  or  officer to repay all amounts advanced if it should  be  determined
that  the  director  or  officer is not entitled to be  indemnified  under  this
Article or otherwise, and provided, further, that the Corporation shall have  no
obligation to pay any expenses in advance
pursuant  to this Section 2 to any person who is or was an employee or agent  of
the  Corporation (other than a director or an officer) or is or was  serving  at
the request of the Corporation as an employee or agent of another corporation or
of  a  partnership, joint venture, trust, enterprise or nonprofit  entity,  with
respect  to  any proceeding by or in the right of the Corporation to  procure  a
judgment in its favor.
    Section 3. Claims. If a claim under this Article is not paid in full  within
ninety  days  after  a written claim has been received by the  Corporation,  the
claimant  may  file  suit to recover the unpaid amount of  such  claim  and,  if
successful  in  whole or in part, shall be entitled to be paid in  addition  the
expense of prosecuting such claim. In any such action the Corporation shall have
the  burden  of  proving that the claimant was not eligible for  indemnification
under applicable law.
    Section 4. Non-Exclusivity of Rights. The rights conferred on any person  by
this  Article  shall not be exclusive of any other right which such  person  may
have  or  hereafter acquire under any statute, provision of the  Certificate  of
Incorporation,   By-Law,  agreement,  vote  of  stockholders  or   disinterested
directors or otherwise.

                                   ARTICLE VI.
                                   Amendments.
                                        
   Section 1. The Board of Directors shall have power to adopt, amend and repeal
the By-Laws at any regular or special meeting of the Board, provided that notice
of  intention  to adopt, amend or repeal the By-Laws in whole or in  part  shall
have  been included in the notice of meeting; or, without any such notice, by  a
vote of two-thirds of the directors then in office.
    Stockholders  may  adopt, amend and repeal the By-Laws  at  any  regular  or
special  meeting  of  the  stockholders by an affirmative  vote  of  holders  of
outstanding shares of the capital stock of the Corporation having two-thirds  of
the  votes  entitled to be cast thereon, provided that notice  of  intention  to
adopt,  amend or repeal the By-Laws in whole or in part shall have been included
in the notice of the meeting.







Exhibit 10(h)
                                             1EXECUTION COPY


                    AMENDED AND RESTATED
             LIMITED LIABILITY COMPANY AGREEMENT
                              
                              
                              
                              
                             of
                              
                              
                              
                              
               MARATHON ASHLAND PETROLEUM LLC
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                Dated as of December 31, 1998


                  AMENDED AND RESTATED LIMITED
               LIABILITY COMPANY AGREEMENT dated as of
               December 31, 1998, of MARATHON ASHLAND
               PETROLEUM LLC (the "Company"), by and between
               Marathon Oil Company, an Ohio corporation
               ("Marathon"), and Ashland Inc., a Kentucky
               corporation ("Ashland"), as Members.


                   Preliminary Statement

          WHEREAS, on June 11, 1997, Marathon and Emro
Marketing Company ("Emro Marketing") formed the Company
(formerly known as "Emro Supply, LLC") by filing a
Certificate of Formation of the Company with the Secretary
of State of the State of Delaware and executed the Limited
Liability Company Agreement of the Company pursuant to which
Marathon received a 60% interest in the Company and Emro
Marketing received a 40% interest in the Company;

          WHEREAS, on July 18, 1997, Emro Marketing assigned
its interest in the Company to Marathon and Fuelgas Company,
Inc., a wholly owned subsidiary of Marathon ("Fuelgas"),
with Marathon receiving an additional 39% interest in the
Company and Fuelgas receiving a 1% interest in the Company,
which interest will be transferred to Marathon immediately
following
 the Closing (for purposes of this Agreement and
the other Transaction Documents, all references to
Marathon's interest in the Company shall be deemed to
include the 1% interest owned by Fuelgas);

          WHEREAS, on July 18, 1997, Marathon and Fuelgas
executed the First Amended and Restated Limited Liability
Company Agreement of the Company and filed an Amended and
Restated Certificate of Formation of the Company with the
Secretary of State of the State of Delaware;

          WHEREAS, on October 29, 1997, Marathon and Fuelgas
filed a Second Amended and Restated Certificate of Formation
of the Company with the Secretary of State of the State of
Delaware to change the name of the Company to Marathon
Ashland Petroleum LLC;

          WHEREAS, on December 8, 1997, Marathon and Fuelgas
executed the Second Amended and Restated Limited Liability
Company Agreement of the Company which became effective on
December 10, 1997;

          WHEREAS the parties hereto desire that the Company
(a) be a premier petroleum supply, refining, marketing and
transportation business, (b) create a highly efficient,
cost-effective and competitive petroleum supply, refining,
marketing and transportation system, (c) deliver to the
Members the highest possible economic value added, (d) be
customer-focused and market-driven in its business strategy,
(e) be a respected and responsible member of the communities
in which the Company will operate, with a high regard for
environmental responsibility and employee safety, and
(f) seek to maximize Distributable Cash to the Members
consistent with the foregoing, including capital spending
levels which over time are expected to be generally
equivalent to the level of non-cash charges; and

          WHEREAS the Members entered into this Agreement on
January 1, 1998 to set forth the rights and responsibilities
of each of them with respect to the governance, financing
and operation of the Company;

          WHEREAS, the Members have executed Amendment No. 1
to this Agreement as of August 21, 1998, and have executed
Amendment No. 2 to this Agreement as of September 1, 1998;
and

          WHEREAS, the Members wish to make certain
additional amendments to this Agreement, and to restate this
Agreement incorporating such additional amendments as well
as the amendments contained in Amendment No. 1 and Amendment
No. 2.

          NOW, THEREFORE, the parties hereto hereby agree as
follows:


                          ARTICLE I
                              
            Certain Definitions; Applicable GAAP

          SECTION 1.01.  Definitions.  Defined terms used in
this Agreement shall have the meanings ascribed to them by
definition in this Agreement or in Appendix A.  In addition,
when used herein the following terms have the following
meanings:

          "Accounting Determination" has the meaning set
forth in Section 1.02.

          "Acquisition Expenditures" means, in connection
with any acquisition by the Company and its subsidiaries,
without duplication (i) the purchase price paid or to be
paid for the net assets or capital stock or other equity
interests in connection with such acquisition, (ii) any
Indebtedness assumed by the Company and its subsidiaries in
connection with any such acquisition, (iii) any contingent
liabilities assumed or incurred by the Company and its
subsidiaries in connection with any such acquisition to the
extent that such contingent liabilities are required to be
reflected on the balance sheet of the Company and its
subsidiaries in accordance with Financial Accounting
Standard Number 5 (or any successor or superseding provision
of Applicable GAAP), and (iv) all other costs and expenses
incurred or to be incurred by the Company or any of its
subsidiaries in connection with any such acquisition to the
extent that such costs and expenses would be capitalized if
such acquisition were consummated.

          "Adjustable Amount" has the meaning set forth in
Section 8.13.

          "Additional Monetary Amount" has the meaning set
forth in Section 14.03(c).

          "Additional Required Cash Amount" has the meaning
set forth in Section 14.01(a).

          "Adjusted DD&A" means:

          (i) for the twelve-month periods ended
     December 31, 1995 and 1996, $348 million and
     $346 million, respectively;
     
          (ii) for the twelve-month period ended
     December 31, 1997, the total combined depreciation,
     depletion and amortization expense of the Marathon
     Business and the Ashland Business during such
     twelve-month period, including, without duplication,
     (a) any gains (deductions from depreciation, depletion
     and amortization) or losses (additions to depreciation,
     depletion and amortization) on asset retirements during
     such period and (b) pro forma depreciation, depletion
     and amortization expense related to the Financed
     Properties during such period (calculated in the same
     manner such pro forma depreciation, depletion and
     amortization expense was calculated in Schedule A,
     which considers the placed-in-service dates of the
     Financed Properties);
     
          (iii) for the twelve-month period ended
     September 30, 1998, the sum of:
     
               (a) the total combined depreciation,
          depletion and amortization expense of the Marathon
          Business and the Ashland Business during the
          period commencing on October 1, 1997, and ended on
          the date immediately preceding the Closing Date,
          including, without duplication, (1) any gains
          (deductions from depreciation, depletion and
          amortization) or losses (additions to
          depreciation, depletion and amortization) on asset
          retirements during such period and (2) pro forma
          depreciation, depletion and amortization expense
          related to the Financed Properties during such
          period (calculated in the same manner such pro
          forma depreciation, depletion and amortization
          expense was calculated in Schedule A, which
          considers the placed-in-service dates of the
          Financed Properties); and
          
               (b) the total depreciation, depletion and
          amortization expense of the Company and its
          subsidiaries for the period commencing on the
          Closing Date and ended on September 30, 1998,
          including (1) any gains (deductions from
          depreciation, depletion and amortization) or
          losses (additions to depreciation, depletion and
          amortization) on asset retirements during such
          period, (2) depreciation, depletion and
          amortization expense related to the Garyville
          Propylene Upgrade Project during such period and
          (3) depreciation, depletion and amortization
          expense related to all Company-funded Capital
          Expenditures, but excluding (4) depreciation,
          depletion and amortization expense related to
          Member-Funded Capital Expenditures and (5) the
          increase or decrease in such depreciation,
          depletion and amortization expense related to the
          Ashland Transferred Assets (including pro forma
          depreciation, depletion and amortization expense
          related to the Financed Properties) resulting from
          the application of purchase accounting treatment
          to the transactions contemplated by the
          Transaction Documents (such purchase accounting
          treatment causing an increase or decrease in the
          estimated useful lives and the net book value of
          the Ashland Transferred Assets); and
          
               (iv) for the twelve-month period ended
     September 30, 1999, and each twelve-month period ended
     September 30 thereafter, the total depreciation,
     depletion and amortization expense of the Company and
     its subsidiaries for such twelve-month period,
     including, without duplication, (a) any gains
     (deductions from depreciation, depletion and
     amortization) or losses (additions to depreciation,
     depletion and amortization) on asset retirements during
     such period, (b) depreciation, depletion and
     amortization expense related to the Garyville Propylene
     Upgrade Project during such period and (c)
     depreciation, depletion and amortization expense
     related to Company-funded Capital Expenditures but
     excluding (d) depreciation, depletion and amortization
     expense related to Member-Funded Capital Expenditures
     and (e) the increase or decrease in such depreciation,
     depletion and amortization expense related to the
     Ashland Transferred Assets (including pro forma
     depreciation, depletion and amortization expense
     related to the Financed Properties) resulting from the
     application of purchase accounting treatment to the
     transactions contemplated by the Transaction Documents
     (such purchase accounting treatment causing an increase
     or decrease in the estimated useful lives and the net
     book value of the Ashland Transferred Assets);
     
all as determined on a consolidated basis with respect to
(x) in the case of any period ending prior to the Closing
Date, Marathon and its subsidiaries or Ashland and its
subsidiaries, as applicable, or (y) in the case of any
period ending on or after the Closing Date, the Company and
its subsidiaries, in each case in accordance with
Applicable GAAP.

          "Adjusted EBITDA" means:

          (i) for the twelve-month periods ended
     December 31, 1995 and 1996, $657 million and
     $600 million, respectively;
     
          (ii) for the twelve-month period ended
     December 31, 1997, the sum of:
     
               (a)  Historical EBITDA for such twelve-month
          period, plus
          
               (b) $80 million, minus
          
               (c)  38% of an amount equal to (1) the sum of
          the amounts calculated pursuant to clauses (a) and
          (b) above for such twelve-month period less
          (2) the Adjusted DD&A for such twelve-month
          period.
          
          (iii) for the twelve-month period ended
     September 30, 1998, the sum of:
     
               (a) for the period commencing on October 1,
          1997, and ended on the date immediately preceding
          the Closing Date, the sum of:
               (1) Historical EBITDA for such period, plus
          
               (2) $20 million, minus
          
               (3) 38% of an amount equal to (A) the sum of
          the amounts calculated pursuant to clauses (1) and
          (2) above with respect to such period less (B) the
          Adjusted DD&A for such period; and
          
          (b) for the period commencing on the Closing Date
     and ended on September 30, 1998, the sum of:
     
               (1) EBITDA of the Company and its
          subsidiaries for such period, plus
          
               (2) $12.4 million, minus
          
               (3) the Tax Distribution Amounts paid or to
          be paid in respect of each of the three Fiscal
          Quarters (or portion thereof) included in such
          period; and
          
          (iv) for the twelve-month period ended
     September 30, 1999 and each twelve-month period ended
     September 30 thereafter, the sum of:
     
               (a) EBITDA of the Company and its
          subsidiaries for such twelve-month period, minus
          
               (b) the Tax Distribution Amounts paid or to
          be paid in respect of each of the four Fiscal
          Quarters included in such twelve-month period;
          
all as determined on a consolidated basis with respect to
(x) in the case of any period ending prior to the Closing
Date, Marathon and its subsidiaries or Ashland and its
subsidiaries, as applicable, or (y) in the case of any
period ending on or after the Closing Date, the Company and
its subsidiaries, in each case in accordance with then
Current GAAP (other than Ordinary Course Lease Expenses
which shall be calculated in accordance with Applicable
GAAP).

          "Advanced Amount" has the meaning set forth in
Section 14.01(b).

          "Affiliate Transaction" means any agreement or
transaction between the Company or any of its subsidiaries
and any Member or any Affiliate of any Member that:

          (a) for purposes of Section 7.03(a)(i), will
     result or is reasonably anticipated will result in
     expenditures, contingent or actual liabilities or
     benefits to the Company and its subsidiaries in excess
     of $2 million;
     
          (b) for purposes of Section 7.03(b), is either
     (i) outside the ordinary course of the Company and its
     subsidiaries' business and results or will result in
     contingent or actual liabilities or benefits to the
     Company and its subsidiaries in excess of $100,000 in
     the applicable Fiscal Year or (ii) within the ordinary
     course of the Company and its subsidiaries' business
     and results or will result in expenditures, contingent
     or actual liabilities or benefits to the Company and
     its subsidiaries (A) in excess of $2 million
     individually in the applicable Fiscal Year or (B) when
     taken together with all other agreements or
     transactions entered into the same Fiscal Year as such
     agreement or transaction which are either related to
     such agreement or transaction or are substantially the
     same type of agreement or transaction as such agreement
     or transaction, in excess of $2 million in the
     aggregate in the applicable Fiscal Year; and
     
          (c) for purposes of Section 8.08(k)(i), is either
     (i) outside the ordinary course of the Company and its
     subsidiaries' business and will result or is reasonably
     anticipated will result in expenditures, contingent or
     actual liabilities or benefits to the Company and its
     subsidiaries in excess of $2 million or (ii) within the
     ordinary course of the Company and its subsidiaries'
     business and will result or is reasonably anticipated
     will result in expenditures, contingent or actual
     liabilities or benefits to the Company and its
     subsidiaries in excess of $25 million.
     
          For purposes of this definition of Affiliate
Transaction, any guarantee by a Member or any Affiliate of
any Member of any obligations of the Company or any of its
subsidiaries that is provided by such Member or such
Affiliate without cost to the Company and its subsidiaries
shall not be deemed to be an Affiliate Transaction.
Notwithstanding the foregoing, the term "Affiliate
Transaction" shall not include any distributions of cash or
other property to the Members pursuant to Article V.

          "Affiliate Transaction Dispute Notice" has the
meaning set forth in Section 8.11(b).

          "Aggregate Tax Rate" has the meaning set forth in
Section 5.01(a)(i).

          "Agreed Additional Capital Contributions" has the
meaning set forth in Section 4.02(c).

          "Agreement" means this Limited Liability Company
Agreement of the Company, as the same may be amended,
restated, supplemented or otherwise modified from time to
time.

          "Annual Capital Budget" has the meaning set forth
in Section 8.09(a).

          "Applicable GAAP" has the meaning set forth in
Section 1.02.

          "Approved Marathon Crude Oil Purchase Program" has
the meaning set forth in Section 8.12.

          "Arbitratable Dispute" has the meaning set forth
in Section 13.04(a).

          "Arbitration Payment Due Date" has the meaning set
forth in Section 14.03(a).

          "Arbitration Proceeding" has the meaning set forth
in Section 14.01(a).

          "Arbitration Tribunal" has the meaning set forth
in Appendix B.

          "Arm's-Length Transaction" has the meaning set
forth in Section 8.11(a).
          
          "Ashland Designated Sublease Agreements" shall
mean the Ashland Sublease Agreements attached as Exhibits L-
1, L-2, L-3 and L-4 to the Asset Transfer and Contribution
Agreement.

          "Ashland-Funded Capital Expenditures" has the
meaning set forth in Section 4.02(a).

          "Audited Financial Statements" has the meaning set
forth in Section 7.02(c).

          "Average Annual DD&A" means:

          (a) for Fiscal Year 1998, the average of the
     Adjusted DD&A for the three twelve-month periods ended
     December 31, 1995, 1996 and 1997;
          (b) for Fiscal Year 1999, the average of the
     Adjusted DD&A (i) for the two twelve-month periods
     ended December 31, 1996 and 1997 and (ii) for the one
     twelve-month period ended September 30, 1998;
     
          (c) for Fiscal Year 2000, the average of the
     Adjusted DD&A (i) for the twelve-month period ended
     December 31, 1997 and (ii) for the two twelve-month
     periods ending on September 30, 1998 and 1999; and
     
          (d) for Fiscal Year 2001 and each Fiscal Year
     thereafter, the average of the Adjusted DD&A for the
     three twelve-month periods ending on September 30 in
     each of the three Fiscal Years immediately preceding
     such Fiscal Year.
     
          "Average Adjusted EBITDA" means:

          (a) for Fiscal Year 1998, the average of the
     Adjusted EBITDA for the three twelve-month periods
     ended December 31, 1995, 1996 and 1997;
     
          (b) for Fiscal Year 1999, the average of the
     Adjusted EBITDA (i) for the two twelve-month periods
     ended December 31, 1996 and 1997 and (ii) for the one
     twelve-month period ended September 30, 1998;
     
          (c) for Fiscal Year 2000, the average of the
     Adjusted EBITDA (i) for the twelve-month period ended
     December 31, 1997 and (ii) for the two twelve-month
     periods ending on September 30, 1998 and 1999; and
     
          (d) for Fiscal Year 2001 and each Fiscal Year
     thereafter, the average of the Adjusted EBITDA for the
     three twelve-month periods ending on September 30 in
     each of the three Fiscal Years immediately preceding
     such Fiscal Year.
     
          "Average Annual Level" means for any twelve-month
period ending on September 30 of any calendar year, the
average of the level of the Price Index ascertained by
adding the twelve monthly levels of the Price Index during
such twelve-month period and dividing the total by twelve.

          "Bareboat Charters" has the meaning set forth in
Section 9.3(k) of the Asset Transfer and Contribution
Agreement.

          "Base Level" means 161.2.

          "Base Rate" has the meaning set forth in
Section 1.01 of the Put/Call, Registration Rights and
Standstill Agreement.

          "Board of Managers" has the meaning set forth in
Section 8.02(a).

          "Bulk Motor Oil Business" has the meaning set
forth in Section 14.03(h) of the Put/Call, Registration
Rights and Standstill Agreement.

          "Business Plan" has the meaning set forth in
Section 8.10.

          "Capital Account" has the meaning set forth in
Section 6.01.

          "Capital Expenditures" means, for any period, the
aggregate of all expenditures incurred by the Company and
its subsidiaries during such period that, in accordance
with Applicable GAAP, are or should be included in
additions to property, plant or equipment or similar items
reflected in the consolidated statement of cash flows of
the Company and its subsidiaries; provided, however, that
Capital Expenditures shall not include (a) exchanges of
such items for other items, (b) expenditures of proceeds of
insurance settlements by the Company or any of its
subsidiaries in respect of lost, destroyed or damaged
assets, equipment or other property to the extent such
expenditures are made to replace or repair such lost,
destroyed or damaged assets, equipment or other property
within 18 months of such loss, destruction or damage,
(c) funds expended by a Member or an Affiliate of a Member
to purchase any Subleased Property that is contributed to
the Company or a subsidiary of the Company pursuant to
Section 4.01(c)(i)(A) or (d) Member-Funded Capital
Expenditures; all as determined on a consolidated basis
with respect to the Company and its subsidiaries in
accordance with Applicable GAAP.

          "Capital Lease" means any lease of (or other
arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are
required to be classified and accounted for as capital
leases on a consolidated balance sheet of the Company and
its subsidiaries in accordance with Applicable GAAP.

          "Closing Date Affiliate Transactions" has the
meaning set forth in Section 8.08(k)(i)(A).

          "Company Independent Auditors" has the meaning
set forth in Section 7.01.

          "Company Investment Guidelines" has the meaning
set forth in Section 8.15.

          "Company Leverage Policy" has the meaning set
forth in Section 8.14.

          "Competitive Business" has the meaning set forth
in Section 14.01(a) of the Put/Call, Registration Rights
and Standstill Agreement.

          "Competitive Third Party" has the meaning set
forth in Section 14.01(d) of the Put/Call, Registration
Rights and Standstill Agreement.

          "Contracting Member" has the meaning set forth in
Section 8.11(b).

          "Covered Person" means any Member, any Affiliate
of a Member or any officers, directors, shareholders,
partners, employees, representatives or agents of a Member
or their respective Affiliates, or any Representative, or
any employee, officer or agent of the Company or its
Affiliates.

          "Critical Decision" means each Primary Critical
Decision and each Other Critical Decision.

          "Critical Decision Termination Date" means (a) in
the case of any Other Critical Decision, the first
anniversary of the Closing Date or (b) in the case of any
Primary Critical Decision, the first anniversary of the
Closing Date or, if the Critical Decision Termination Date
shall be extended with respect to such Primary Critical
Decision as provided in Section 8.19(c), the fifteen-month
anniversary of the Closing Date.

          "Crude Oil Purchases" means any purchase of crude
oil by the Company or any of its subsidiaries from Marathon
or any Affiliate of Marathon.

          "Current GAAP" means, at any time, GAAP as in
effect at such time.

          "Delinquent Member" has the meaning set forth in
Section 14.01(a).

          "Designated Sublease Agreements" means the
Ashland Designated Sublease Agreements and the Marathon
Designated Sublease Agreements.

          "Designated Sublease Amount" means any obligation
of a Member to the Company or a subsidiary of the Company
under Section 4.01(c) with respect to a Subleased Property
or a Designated Sublease Agreement.

          "Dispute" has the meaning set forth in
Section 13.01.

          "Dispute Notice" has the meaning set forth in
Section 13.02.

          "Disputed Capital Contribution Amount" has the
meaning set forth in Section 13.04(a).

          "Disputed Indemnification Amount" has the meaning
set forth in Section 14.01(a).

          "Disputed Monetary Amount" has the meaning set
forth in Section 14.01(a).

          "Distributable Cash" means, for each Fiscal
Quarter, without duplication:

          (a) the Short-Term Investments of the Company and
     its subsidiaries on the last day of such Fiscal
     Quarter, minus
     
          (b) the Ordinary Course Debt of the Company and
     its subsidiaries on the last day of such Fiscal
     Quarter, minus
     
          (c) the Tax Distribution Amount to be paid in
     respect of such Fiscal Quarter, minus
     
          (d) funds held on the last day of such Fiscal
     Quarter for financing Special Projects or Permitted
     Capital Projects/Acquisitions, minus
     
          (e) if the notional repayment of principal for
     Special Project Indebtedness or Permitted Capital
     Project/Acquisition Indebtedness during such Fiscal
     Quarter calculated using a notional repayment schedule
     established and approved by the Board of Managers in
     accordance with the Company Leverage Policy was more
     than the amount of actual principal repayments for such
     Special Project Indebtedness or Permitted Capital
     Project/Acquisition Indebtedness during such Fiscal
     Quarter, the amount of such excess, plus
     
          (f) if the amount of the actual principal
     repayments for Special Project Indebtedness or
     Permitted Capital Project/Acquisition Indebtedness
     during such Fiscal Quarter was more than the notional
     repayment of principal for such Special Project
     Indebtedness or Permitted Capital Project/Acquisition
     Indebtedness during such Fiscal Quarter (calculated in
     the manner described in clause (e) above), the amount
     of such excess, plus or minus
     
          (g) any adjustments or reserves (including any
     adjustments for minimum cash balance requirements,
     including cash reserves for accrued or withheld Taxes
     not yet due) in the amounts and for the time periods
     established and approved by the Board of Managers
     pursuant to a vote in accordance with Section 8.07(b).
     
          "Distribution Date" has the meaning set forth in
Section 5.01(a).

          "Distributions Calculation Statement" has the
meaning set forth in Section 5.01(c).

          "EBITDA" means for any period:

          (a) net income, plus
     
          (b) to the extent deducted in computing such net
     income, the sum of (i) estimated or actual Federal,
     state, local and foreign income tax expense,
     (ii) interest expense, (iii) depreciation, depletion
     and amortization expense, (iv) non-cash charges
     resulting from the cumulative effect of changes in
     accounting principles, and (v) non-cash lower of cost
     or market inventory or fixed asset writedowns; minus
     
          (c) to the extent added in computing such net
     income, (i) any interest income (excluding interest
     income on accounts receivable related to marketing
     programs), (ii) non-cash gains resulting from the
     cumulative effect of changes in accounting principles
     and (iii) non-cash lower of cost or market inventory or
     fixed asset gains;
     
all as determined on a consolidated basis (x) in the case of
any period ended prior to the Closing Date, Marathon and its
subsidiaries or Ashland and its subsidiaries, as applicable,
or (y) in the case of any period ending on or after the
Closing Date, with respect to the Company and its
subsidiaries, in each case in accordance with then Current
GAAP.  For purposes of this definition, depreciation,
depletion and amortization expense will include any gains
(deductions from depreciation, depletion and amortization)
or losses (additions to depreciation, depletion and
amortization) on asset retirements and excess purchase price
amortization adjustments.  For the avoidance of doubt,
EBITDA shall not include any revenues or expenses
constituting Member-Funded Capital Expenditures or
Member-Indemnified Expenditures.

          "Executive Officers" has the meaning set forth in
Section 9.01(a).

          "Final Monetary Amount" has the meaning set forth
in Section 14.03(a).

          "Financed Properties" means each of the properties
listed in Schedule 1.01.

          "Fiscal Quarter" means the three-month period
ended March 31, June 30, September 30 and December 31 of
each Fiscal Year.

          "Fiscal Year" has the meaning set forth in
Section 6.05.

          "Fuelgas Interest" means the 1% interest in the
Company which is owned by Fuelgas.

          "GAAP" means United States generally accepted
accounting principles applied on a consistent basis.

          "Garyville Propylene Upgrade Project" means the
propylene splitter with a capacity of approximately
800 million pounds per year that is being constructed at the
Garyville refinery for the production of propylene.

          "Historical EBITDA" means for any period ending
prior to the Closing Date the sum of:

          (a) EBITDA of the Marathon Business for such
     period as adjusted for each of the "EBIT Adjustment"
     items set forth in lines 10-55 of Schedule B-1 and each
     of the "Depreciation Adjustment" items set forth in
     lines 133 through 150 of Schedule B-1, in each case
     calculated for such period in the same manner that such
     adjustments were calculated in Schedule B-1, plus
     
          (b) EBITDA of the Ashland Business for such period
     as adjusted for each of the "EBIT Adjustment" items set
     forth in lines 11-56 of Schedule B-2 and each of the
     "Depreciation Adjustment" items set forth in
     lines 111-120 of Schedule B-2, in each case calculated
     for such period in the same manner that such
     adjustments were calculated in Schedule B-2;
     
all determined on a consolidated basis with respect to
Marathon and its subsidiaries or Ashland and its
subsidiaries, as applicable, in accordance with then Current
GAAP.

          "Initial GAAP" has the meaning set forth in
Section 1.02.

          "Initial Term" has the meaning set forth in
Section 2.03.

          "Make-Up Expense" has the meaning set forth in
Section 6.02(d).

          "Maralube Express Business" has the meaning set
forth in Section 14.03(d)(i) of the Put/Call, Registration
Rights and Standstill Agreement.

          "Marathon Crude Oil Purchase Program" has the
meaning set forth in Section 8.12.

          "Marathon Designated Sublease Agreements" shall
mean the Marathon Sublease Agreements attached as
Exhibits E-1, E-2 and E-3 to the Asset Transfer and
Contribution Agreement.

          "Marathon-Funded Capital Expenditures" has the
meaning set forth in Section 4.02(a).

          "Material Adverse Effect" has the meaning set
forth in the Asset Transfer and Contribution Agreement.

          "Member-Funded Capital Expenditures" has the
meaning set forth in Section 4.02(a).

          "Member-Indemnified Expenditures" has the meaning
set forth in Section 4.02(b).

          "Monetary Dispute" has the meaning set forth in
Section 14.01(a).

          "Non-Contracting Member" has the meaning set forth
in Section 8.11(b).
          "Non-Delinquent Member" has the meaning set forth
in Section 14.01.

          "Non-Terminating Member" has the meaning set forth
in the Put/Call, Registration Rights and Standstill
Agreement.

          "Normal Annual Capital Budget Amount" means, for
each Fiscal Year, an amount equal to the sum of:

          (i) an amount equal to 130% of the Average Annual
     DD&A for such Fiscal Year, plus
     
          (ii) if, with respect to any Fiscal Year, (a) the
     Average Adjusted EBITDA for such Fiscal Year less the
     amount calculated pursuant to clause (i) above for such
     Fiscal Year exceeds (b) $240 million (such excess, the
     "Excess EBITDA" for such Fiscal Year), the sum of
     (1) the lesser of: (x) 10% of the Average Annual DD&A
     for such Fiscal Year and (y) the Excess EBITDA for such
     Fiscal Year and (2) 50% of the amount by which the
     Excess EBITDA for such Fiscal Year exceeds an amount
     equal to 10% of the Average Annual DD&A for such Fiscal
     Year.
     
An example of the calculation of Adjusted DD&A, Adjusted
EBITDA, Average Annual DD&A, Average Adjusted EBITDA and the
Normal Annual Capital Budget Amount is shown in Schedule A.
In the event of any inconsistency between such Schedule A
and the language of this definition of Normal Annual Capital
Budget Amount, neither shall control over the other.

          "Offer Notice" has the meaning set forth in
Section 10.04(a).

          "Ordinary Course Debt" means, without duplication,
the aggregate outstanding principal amount of all loans and
advances under any committed or uncommitted credit
facilities (including any commercial paper borrowings or
borrowings under the Revolving Credit Agreement, but
excluding trade payables), provided that Ordinary Course
Debt shall not include any Permitted Intercompany Debt, any
Special Project Indebtedness or any Permitted Capital
Project Indebtedness.

          "Ordinary Course Lease Expense" means, with
respect to any Fiscal Year, the rental or lease expense for
such Fiscal Year of assets rented or financed by operating
leases (as determined in accordance with Applicable GAAP).

          "Original Lease" means the lease or charter
underlying a Marathon Designated Sublease Agreement or an
Ashland Designated Sublease Agreement in which Marathon or
Ashland, as applicable, is the lessee or charterer.

          "Other Critical Decision" means each of the
Level III decisions set forth in paragraphs 2(c)(iii), (v),
(vii), (viii) and (ix) of the Retail Integration Protocol.

          "Packaged Motor Oil Business" has the meaning set
forth in Section 14.03(h) of the Put/Call, Registration
Rights and Standstill Agreement.

          "Percentage Interest" has the meaning set forth in
Section 3.01.

          "Permitted Capital Project/Acquisition
Indebtedness" has the meaning set forth in the Company
Leverage Policy.

          "Permitted Intercompany Debt" has the meaning set
forth in the Company Leverage Policy.

          "Price Index" means the Consumer Price Index for
All Urban Consumers of the United States Department of Labor
Bureau of Labor Statistics for all Urban Areas (on the 1982-
84 equals 100 standard).

          "Primary Critical Decision" means each of the
Level III decisions set forth in paragraphs 2(c)(i), (ii),
(iv) and (vi) of the Retail Integration Protocol.

          "Prime Rate" means the rate of interest per annum
publicly announced from time to time by Citibank, NA, as its
prime rate in effect at its principal office in New York;
each change in the Prime Rate shall be effective on the date
such change is publicly announced as being effective.

          "Private Label Packaged Motor Oil Business" has
the meaning set forth in Section 14.03(h) of the Put/Call
Registration Rights and Standstill Agreement.

          "Profit and Loss", as appropriate, means, for any
period, the taxable income or tax loss of the Company and
its subsidiaries under Code Section 703(a) and Treasury
Regulation Section 1.703-1 for the Fiscal Year, adjusted as
follows:

          (a)  All items of income, gain, loss or deduction
required to be separately stated pursuant to Code
Section 703(a)(1) shall be included;
          (b)  Tax exempt income as described in Code
Section 705(a)(1)(B) realized by the Company during such
Fiscal Year shall be taken into account as if it were
taxable income;

          (c)  Expenditures of the Company described in Code
Section 705(a)(2)(B) for such Fiscal Year, including items
treated under Treasury Regulation
Section 1.704-1(b)(2)(iv)(i) as items described in Code
Section 705(a)(2)(B), shall be taken into account as if they
were deductible items;

          (d)  With respect to any property (other than
money) which has been contributed to the capital of the
Company, "Profit" and "Loss" shall be computed in accordance
with the provisions of Treasury Regulation
Section 1.704-1(b)(2)(iv)(g) by computing depreciation,
amortization, income, gain, loss or deduction based upon the
fair market value of such property at the date of
contribution.  Book depreciation (as that term is used in
Treasury Regulation Section 1.704-(b)(2)(iv)(g)(3)) for any
asset contributed to the Company that was fully depreciated
for federal income tax purposes as of the date of its
contribution shall be based on the applicable recovery
period (as determined in Code Section 168(c)) for new assets
of the same type;

          (e)  With respect to any property of the Company
which has been revalued as required or permitted by Treasury
Regulations under Code Section 704(b), "Profit" or "Loss"
shall be determined based upon the fair market value of such
property as determined in such revaluation; and

          (f)   With respect to any property of the Company
which (i) is distributed in kind to a Member, or (ii) has
been revalued under Section 6.03 upon the occurrence of any
event specified in Treasury Regulation Section 1.704-
1(b)(2)(iv)(f), the difference between the adjusted basis
for federal income tax purposes and the fair market value
shall be treated as gain or loss upon the disposition of
such property.

          "Qualified Candidate" has the meaning set forth in
Section 9.02(c).

          "Quick Lube Business" has the meaning set forth in
Section 14.03(h) of the Put/Call, Registration Rights and
Standstill Agreement.

          "Refundable Amount" has the meaning set forth in
Section 14.03(d).
          "Representatives" has the meaning set forth in
Section 8.01

          "Response" has the meaning set forth in
Section 13.02.

          "Retail Integration Protocol" means the Speedway
SuperAmerica LLC Retail Integration Protocol attached hereto
as Exhibit A.

          "Revolving Credit Agreement" has the meaning set
forth in Section 2.2(a) of the Master Formation Agreement.

          "Section 8.11(b) Affiliate Transaction" has the
meaning set forth in Section 8.11(b).

          "Security Interest" has the meaning set forth in
Section 14.05(a).

          "Selling Member" has the meaning set forth in
Section 10.04(a).

          "Senior Manager" has the meaning set forth in
Section 13.02.

          "Shared Service" means an administrative service
that is provided to the Company or its subsidiaries by
Marathon, Ashland or any of their respective Affiliates
pursuant to the Shared Services Agreement or provided to
Marathon, Ashland or any of their respective Affiliates by
the Company or its subsidiaries pursuant to the Shared
Services Agreement.

          "Shared Services Agreement" means the Shared
Services Agreement by and among Marathon, Ashland and the
Company, including the Schedules thereto, attached as
Exhibit U to the Asset Transfer and Contribution Agreement.

          "Short-Term Investments" means, without
duplication, collected or available bank cash balances, the
fair market value of any investment made by the Company or
any of its subsidiaries pursuant to the Company's Investment
Guidelines and the fair market value of any investment made
by the Company or any of its subsidiaries that should have
been made pursuant to the Company's Investment Guidelines,
but excluding Incidental Cash and any cash balances that
represent uncollected funds.

          "Significant Shared Service" means (a) any Shared
Service related to the Treasury and Cash Management function
and (b) any Shared Service (or group of related Shared
Services) that results or is reasonably anticipated to
result in the payment by or to the Company or any of its
subsidiaries of more than $2 million in any contract year in
the period during which such Shared Service will be
provided.  For purposes of determining whether the
$2 million threshold of this definition has been satisfied,
payments for all Shared Services in each of the following
general administrative areas shall be aggregated within each
area specified below and considered related Shared Services:
Human Resources; Health, Environment and Safety; Law; Public
Affairs; Governmental Affairs; Finance and Accounting
(including Internal Audit); Administrative Services;
Information Technology Services; Procurement; Business
Development; Aviation; Engineering and Technology;
Economics; and Security.

          "Sole Arbitrator" has the meaning set forth in
Appendix B.

          "Special Project" has the meaning set forth in the
Company Leverage Policy.

          "Special Project Indebtedness" has the meaning set
forth in the Company Leverage Policy.

          "Special Termination Right" has the meaning set
forth in Section 2.01(a) of the Put/Call, Registration
Rights and Standstill Agreement.

          "Subleased Property" has the meaning set forth in
Section 4.01(c).

          "Super Majority Decision" has the meaning set
forth in Section 8.08.

          "Surplus Cash" has the meaning assigned to such
term in the Company Leverage Policy.
          
          "Tax Distribution Amount" has the meaning set
forth in Section 5.01(a).

          "Tax Liability" means, with respect to a Fiscal
Year, a Member's liability for Federal, state, local and
foreign taxes attributable to taxable income allocated to
such Member pursuant to Section 6.03 and Section 10.03,
taking into account any Tax deduction or loss specifically
allocated to a Member pursuant to this Agreement or any
other Transaction Document.

          "Term of the Company" has the meaning set forth in
Section 2.03.
          "Terminating Member" has the meaning set forth in
Section 2.01(a) of the Put/Call, Registration Rights and
Standstill Agreement.

          "Unaudited Financial Statements" has the meaning
set forth in Section 7.02(a).

          "Valvoline Business" has the meaning set forth in
Section 14.03(h) of the Put/Call, Registration Rights and
Standstill Agreement.

          SECTION 1.02.  Applicable GAAP.  In connection
with the calculation pursuant to this Agreement of Adjusted
DD&A, Capital Expenditures or Ordinary Course Lease
Expenses, the determination of whether a lease is a Capital
Lease or the determination of whether the Company has
entered into an operating lease for purposes of Section 8.16
(each such calculation or determination, an "Accounting
Determination"), the Company shall apply then Current GAAP;
provided, however, that if at any time after January 1,
1998, a change shall occur in GAAP which would result in any
Accounting Determination being different under Current GAAP
than such Accounting Determination would have been under
GAAP as in effect on January 1, 1998 ("Initial GAAP"), then
(a) the Members shall negotiate in good faith to make such
amendments to the relevant provisions of this Agreement as
shall be required to preserve the economic and other results
intended by the Members as of January 1, 1998 with respect
to such Accounting Determination and (b) unless and until
such time as the Members shall in good faith mutually agree
to such amendments, Initial GAAP shall be applied to make
such Accounting Determination or, if the Members shall have
previously amended the relevant provisions of this Agreement
pursuant to this Section 1.02 in response to a prior change
in GAAP, then GAAP as in effect at the time the most recent
such previous amendment was made shall be used to make such
Accounting Determination (the GAAP that is actually applied
by the Company in making any such Accounting Determination
pursuant to this Agreement being the "Applicable GAAP").


                         ARTICLE II
                              
                     General Provisions
                              
          SECTION 2.01.  Formation; Effectiveness.  The
Company has been formed as a limited liability company
pursuant to the provisions of the Delaware Act by the filing
of the Certificate of Formation with the Secretary of State
of the State of Delaware.  Pursuant to Section 18-201(d) of
the Delaware Act, the provisions of this Agreement shall be
effective as of the Closing Date.  Each Member hereby
adopts, confirms and ratifies the Certificate of Formation
and all acts taken in connection therewith.  Ashland shall
be admitted as a member of the Company upon its execution
and delivery of this Agreement.  Except as provided in this
Agreement, the rights, duties, liabilities and powers of the
Members shall be as provided in the Delaware Act.

          SECTION 2.02.  Name.  The name of the Company
shall be Marathon Ashland Petroleum LLC.  The Board of
Managers may adopt such trade or fictitious names as it may
determine.

          SECTION 2.03.  Term.  Subject to the provisions of
Article XV providing for early termination in certain
circumstances and the provisions of Article IX of the
Put/Call, Registration Rights and Standstill Agreement, the
initial term of the Company (the "Initial Term") began on
the date the Certificate of Formation was filed with the
Secretary of State of the State of Delaware, and shall
continue until the close of business on December 31, 2022
and, thereafter, the term of the Company shall be
automatically extended for successive 10-year periods unless
at least two years prior to the end of the Initial Term or
any succeeding 10-year period, as applicable, a Member
notifies the Board of Managers and the other Member in
writing that it wants to terminate the term of the Company
at the end of the Initial Term or such 10-year period, in
which event, the term of the Company shall not thereafter be
extended for a successive ten-year term.  The President of
the Company shall notify each Member in writing at least six
months prior to each such two-year notification date that
the Term of the Company will be automatically extended
unless a Member provides a notice to the contrary pursuant
to this Section 2.03.  The failure of the President of the
Company to give such notice, or any defect in any notice so
given, shall not affect the Members' rights to terminate the
Term of the Company pursuant to this Section 2.03, and shall
not result in a termination of the Term of the Company
unless a Member provides a notice to the contrary pursuant
to this Section 2.03.  The Initial Term, together with any
such extensions, is hereinafter referred to as the "Term of
the Company".  The existence of the Company as a separate
legal entity shall continue until the cancelation of the
Certificate of Formation in the manner provided in the
Delaware Act.

          SECTION 2.04.  Registered Agent and Office.  The
name of the registered agent of the Company for service of
process on the Company in the State of Delaware is The
Corporation Trust Company, and the address of the registered
agent and the address of the office of the Company in the
State of Delaware is c/o The Corporation Trust Company,
1209 Orange Street, Wilmington, Delaware 19801.  The Board
of Managers may change such office and such agent from time
to time in its sole discretion.

          SECTION 2.05.  Purpose.  (a)  The purpose of the
Company is to engage in any lawful act or activity for which
a limited liability company may be formed under the Delaware
Act (either directly or indirectly through one or more
subsidiaries).  It is the Members' understanding and intent
that (i) the Company will be an independent, self-funding
entity, (ii) no additional capital contributions are
expected to be required by the Members and (iii) the
administrative requirements of the Company will generally be
provided by the Company's own employees.  In furtherance of
this understanding and intent, and without limiting the
generality of the foregoing, unless the Members shall
mutually agree otherwise, the following administrative
functions and services shall be provided substantially by
the Company and its subsidiaries' employees (or by its
unaffiliated third party contractors) under the supervision
and control of the Company's officers:  Human Resources;
Health, Environment and Safety; Law; Finance and Accounting;
Internal Audit; Treasury and Cash Management; and
Information Technology.  For the avoidance of doubt, the
Members acknowledge and agree that the provision at any time
of the specific Shared Services identified and described in
Schedule 10.2(e) to the Marathon Asset Transfer and
Contribution Agreement Disclosure Letter and Schedule
10.2(e) to the Ashland Asset Transfer and Contribution
Agreement Disclosure Letter to the Company and its
subsidiaries by the Members shall not be deemed to violate
the requirements of the immediately preceding sentence.

          (b)  The Company, and the President on behalf of
the Company, may enter into and perform the Transaction
Documents and the Commercial Documents to which the Company
is a party without any further act, vote or approval of the
Board of Managers or the Members notwithstanding any other
provision of this Agreement, the Delaware Act or other
Applicable Law.  The President of the Company is hereby
authorized to enter into such Transaction Documents and such
Commercial Documents on behalf of the Company, but such
authorization shall not be deemed a restriction on the power
of the Board of Managers to enter into other agreements on
behalf of the Company.

          SECTION 2.06.  Powers.  In furtherance of its
purposes, but subject to all the provisions of this
Agreement, the Company shall have the power and is hereby
authorized to:

         (a) acquire by purchase, lease, contribution of
    property or otherwise, own, operate, hold, sell,
    convey, transfer or dispose of any real or personal
    property which may be necessary, convenient or
    incidental to the accomplishment of the purpose of the
    Company;
    
         (b) act as a trustee, executor, nominee, bailee,
    director, officer, agent or in some other fiduciary
    capacity for any person or entity and to exercise all
    the powers, duties, rights and responsibilities
    associated therewith;
    
         (c) take any and all actions necessary, convenient
    or appropriate as trustee, executor, nominee, bailee,
    director, officer, agent or other fiduciary, including
    the granting or approval of waivers, consents or amend
    ments of rights or powers relating thereto and the
    execution of appropriate documents to evidence such
    waivers, consents or amendments;
    
         (d) borrow money and issue evidences of
    indebtedness in furtherance of any or all of the
    purposes of the Company, and secure the same by
    mortgage, pledge or other lien on the assets of the
    Company;
    
         (e) invest any funds of the Company pending
    distribution or payment of the same pursuant to the
    provisions of this Agreement;
    
         (f) prepay in whole or in part, refinance, recast,
    increase, modify or extend any Indebtedness of the
    Company and, in connection therewith, execute any
    extensions, renewals or modifications of any mortgage
    or security agreement securing such Indebtedness;
    
         (g) enter into, perform and carry out contracts of
    any kind, including, without limitation, contracts with
    any person or entity affiliated with any of the
    Members, necessary to, in connection with, convenient
    to, or incidental to the accomplishment of the purposes
    of the Company;
    
         (h) employ or otherwise engage employees,
    managers, contractors, advisors, attorneys and
    consultants and pay reasonable compensation for such
    services;
         (i) enter into partnerships, limited liability
    companies, trusts, associations, corporations or other
    ventures with other persons or entities in furtherance
    of the purposes of the Company; and
    
         (j) do such other things and engage in such other
    activities related to the foregoing as may be
    necessary, convenient or incidental to the conduct of
    the business of the Company, and have and exercise all
    of the powers and rights conferred upon limited
    liability companies formed pursuant to the Delaware
    Act.
    
    
                         ARTICLE III
                              
                           Members

          SECTION 3.01.  Members; Percentage Interests.  The
names and addresses of the Members and their respective
percentage interests in the Company ("Percentage Interests")
are as follows:

<TABLE>
<CAPTION>
                    
                                      Percentage
          Members                      Interests

     <C>                                 <C>
     Marathon Oil Company                 62%
     5555 San Felipe
     P.O. Box 3128
     Houston, TX 77056-2723

     Ashland Inc.                         38%
     50 East RiverCenter Boulevard
     P.O. Box 391
     Covington, KY 41012-0391
</TABLE>

Marathon's Percentage Interest shall be deemed to include
the Fuelgas Interest.  Promptly after the Closing, Marathon
will cause Fuelgas to merge with and into Marathon.

          SECTION 3.02.  Adjustments in Percentage
Interests.  Marathon's and Ashland's Percentage Interests,
and the Percentage Interests of each other Member, if any,
shall be adjusted (a) at the time of any Transfer of such
Member's Membership Interests pursuant to Section 10.02 and
(b) at the time of the admission of each new Member pursuant
to such terms and conditions as the Board of Managers from
time to time shall determine pursuant to a vote in
accordance with Section 8.07(b), in each case to take into
account such Transfer or admission of a new Member.

                         ARTICLE IV
                              
  Capital Contributions; Assumption of Assumed Liabilities

          SECTION 4.01.  Contributions.  (a)  On or before
the Closing Date, Marathon shall contribute, convey,
transfer, assign and deliver to the Company or shall have
contributed, conveyed, transferred, assigned and delivered
to the Company, the Marathon Transferred Assets, and Ashland
shall contribute, convey, transfer, assign and deliver to
the Company or shall have contributed, conveyed,
transferred, assigned and delivered to the Company, the
Ashland Transferred Assets, in each case pursuant to terms
and conditions of the Asset Transfer and Contribution
Agreement.  In addition, any additional assets that Marathon
or Ashland are required to contribute, convey, transfer,
assign and deliver to the Company at a later date pursuant
to the terms and conditions of the Asset Transfer and
Contribution Agreement shall be so contributed at such later
date.

          (b)  The Company shall assume, as of the Closing
Date, the Assumed Liabilities pursuant to the terms of the
Asset Transfer and Contribution Agreement.

          (c)  Payments or Damages under Designated Sublease
Agreements as Contributions.  (i)  Each Member has agreed,
pursuant to the Designated Sublease Agreements to which it
is a party, to sublease to the Company or one of its
subsidiaries the assets or property listed on
Schedule 4.01(c) ("Subleased Property") for a nominal
consideration in lieu of transferring such property to the
Company or such subsidiary, free of any Liens, other than
Permitted Encumbrances, as a capital contribution.

          (A) If at any time after January 1, 1998 a Member
     in its capacity as a sublessor shall become the owner
     of any Subleased Property, such Member shall promptly
     contribute, convey, transfer, assign and deliver to the
     Company (or, if the Company so directs, to one of its
     subsidiaries) at no cost to the Company or such
     subsidiary, and the Company hereby agrees to accept, or
     to cause such subsidiary to accept, such Subleased
     Property and the related Designated Sublease Agreement
     shall be terminated with respect to such Subleased
     Property, all as more specifically set forth in such
     Designated Sublease Agreement.  In addition, if at any
     time after January 1, 1998 a Member assigns to the
     Company (or a subsidiary of the Company) a purchase
     option with respect to a Subleased Property pursuant to
     a Designated Sublease Agreement and the Company or such
     subsidiary exercises such purchase option and pays all
     or a portion of the purchase price therefor, such
     Member shall promptly reimburse the Company or such
     subsidiary such amount so paid and, if not so
     reimbursed, such amount shall be subject to set-off
     pursuant to Section 14.04.  Any such payment by the
     Company shall be treated as a distribution to the
     appropriate Member for capital account purposes, and
     any such amount paid to the Company or such subsidiary
     by a Member in connection with such reimbursement
     obligation, or to the extent of a set-off applied
     pursuant to Section 14.04 as a result of such failure
     to so reimburse, shall be treated as a capital
     contribution to the Company.
     
          (B) Any amount paid by the Company or any of its
     subsidiaries under a Designated Sublease Agreement to
     cure or prevent a payment default by the sublessor
     Member under the underlying Original Lease shall be
     reimbursed to the Company or such subsidiary by such
     Member, and if not so reimbursed, shall be subject to
     set-off pursuant to Section 14.04.  Any such payment by
     the Company shall be treated as a distribution to the
     appropriate Member for capital account purposes, and
     any such amount paid to the Company or such subsidiary
     by a Member in connection with a default of its payment
     obligations under its respective Designated Sublease
     Agreements, or to the extent of a set-off applied
     pursuant to Section 14.04 as a result of such default,
     shall be treated as a capital contribution to the
     Company.
     
          (C) None of the capital contributions pursuant to
     (A) and (B) above shall result in any adjustment to the
     Members' respective Percentage Interests in the
     Company.
     
          (ii)  If (A) a Member commences a voluntary case
     under any applicable bankruptcy, insolvency,
     liquidation, receivership, reorganization or other
     similar law now in effect, or an order for relief is
     entered against such Member in an involuntary case
     under any such law and (B) a trustee of such Member
     rejects a Designated Sublease Agreement of such Member,
     then (1) the Member shall be obligated to reimburse the
     Company for the Loss to the Company as a result of such
     rejected Designated Sublease Agreement, which Loss, if
     not so reimbursed, shall be subject to set-off pursuant
     to Section 14.04 prior to the interest of such Member
     in any distributions hereunder and (2) the amount of
     such Loss shall be deemed to be the loss of use of such
     Subleased Property for the economic life thereof rather
     than any other period.
               
          SECTION 4.02.  Additional
Contributions.  (a)  Member-Funded Capital Expenditures.
For each Capital Expenditure project identified on Schedule
4.02(a)-1, Marathon shall contribute to the Company the
amount of funds necessary to comply with its obligations
under Section 7.1(j) of the Asset Transfer and Contribution
Agreement with respect to such Capital Expenditure project
as, when and if the Company actually incurs Capital
Expenditures related to such Capital Expenditure project
(such Capital Expenditures, as, when and if they are funded
by Marathon, are referred to herein as the "Marathon-Funded
Capital Expenditures").  For each Capital Expenditure
project identified on Schedule 4.02(a)-2, Ashland shall
contribute to the Company the amount of funds necessary to
comply with its obligations under Section 7.2(k) of the
Asset Transfer and Contribution Agreement with respect to
such Capital Expenditure project as, when and if the Company
actually incurs Capital Expenditures related to such Capital
Expenditure project (such Capital Expenditures, as, when and
if they are funded by Ashland, are referred to herein as the
"Ashland-Funded Capital Expenditures", and together with the
Marathon-Funded Capital Expenditures, the "Member-Funded
Capital Expenditures").  Each Member-Funded Capital
Expenditure shall be treated as a capital contribution to
the Company, but shall not result in any adjustment to the
Members' respective Percentage Interests in the Company.  To
the extent permitted by applicable Tax law, any Tax
deduction by the Company of a Member-Funded Capital
Expenditure shall be specially allocated so that each Member
will have the Tax benefit of its Member-Funded Capital
Expenditures.

          (b)  Indemnification Payments as Contributions.
Any indemnity amount paid by Marathon or Ashland to the
Company under Article IX of the Asset Transfer and
Contribution Agreement (each a "Member-Indemnified
Expenditure") shall be treated as a capital contribution to
the Company, but shall not result in any adjustment to the
Members' respective Percentage Interests in the Company.  A
determination of whether the associated Loss will be
deducted or capitalized by the Company for Tax purposes
shall be made by the Company at the direction of the
Indemnifying Party.  Any Tax deduction or loss claimed by
the Company with respect to the indemnified amount shall be
specially allocated to the Indemnifying Party.

          (c)  Other Additional Capital Contributions.  The
Members shall make other additional capital contributions
("Agreed Additional Capital Contributions") pro rata based
on their respective Percentage Interests if and to the
extent such capital contributions are approved by the Board
of Managers pursuant to a vote in accordance with
Section 8.07(b).

          (d)  No Third-Party Beneficiaries.  The provisions
of this Agreement, including without limitation, this
Section 4.02, are intended solely to benefit the Members
and, to the fullest extent permitted by Applicable Law,
shall not be construed as conferring any benefit upon any
creditor of the Company other than the Members, and no such
creditor of the Company other than the Members shall be a
third-party beneficiary of this Agreement, and no Member or
member of the Board of Managers shall have any duty or
obligation to any creditor of the Company to issue any call
for capital pursuant to this Agreement.

          SECTION 4.03.  Negative Balances; Withdrawal of
Capital; Interest.  Neither of the Members shall have any
obligation to the Company or to the other Member to restore
any negative balance in its Capital Account.  Neither Member
may withdraw capital or receive any distributions from the
Company except as specifically provided herein.  No interest
shall be paid by the Company on any capital contributions.


                          ARTICLE V
                              
                        Distributions

          SECTION 5.01.  Distributions.  (a)  Within 45 days
after the end of each Fiscal Quarter during each Fiscal
Year, the Company shall distribute to the Members (the date
of such distribution being a "Distribution Date") an amount
in cash (the "Tax Distribution Amount") determined as
follows:

          (i)  The maximum Tax Liability of each Member with
     respect to its allocable portion (as provided in
     Section 6.03) of the Company's estimated taxable income
     for the portion of such Fiscal Year ending on the last
     day of such Fiscal Quarter shall be determined, based
     upon the highest aggregate marginal statutory Federal,
     state and local income tax rate (determined taking into
     account the deductibility, to the extent allowed, of
     income-based taxes paid to governmental entities) to
     which any Member may be subject for the related Fiscal
     Year (and excluding any deferred taxes) (the "Aggregate
     Tax Rate").
     
          (ii)  If the Tax Liability determined in
     clause (i) is positive with respect to either Member,
     there shall be a cash distribution to each of the
     Members, in accordance with their Percentage Interests,
     of an aggregate amount such that neither Member shall
     have received distributions under this clause and
     subsection (b) below for such portion of such Fiscal
     Year in an amount less than its Tax Liability for such
     portion of such Fiscal Year.
     
          (iii)  Following a determination by the Company of
     the Company's actual net taxable income with respect to
     a Fiscal Year, the maximum Tax Liability of each Member
     with respect to its allocable portion (as provided in
     Section 6.03) of the Company's net taxable income for
     such Fiscal Year shall be determined, based upon the
     Aggregate Tax Rate.  If the maximum Tax Liability of
     any Member for the Fiscal Year is in excess of the cash
     distributions previously made to the Member for such
     Fiscal Year under clause (ii) above and subsection (b)
     below, the Company shall make a cash distribution to
     all the Members, in accordance with their Percentage
     Interests, of an aggregate amount such that the excess
     is eliminated for all the Members.  Such distribution
     shall be made within 45 days of the date the Company's
     actual net taxable income is determined.
     
          (iv)  In the event that the Company Independent
     Auditors determine pursuant to Section 7.02(d) that the
     Company's actual net taxable income with respect to a
     Fiscal Year is greater than the amount determined by
     the Company pursuant to clause (iii) above, the Company
     shall make a determination of the amount of cash, if
     any, required to be distributed to the Members, in
     accordance with their Percentage Interests, such that,
     after taking into account cash distributions previously
     made to a Member under clauses (ii) and (iii) above and
     subsection (b) below, no Member shall receive less than
     its Tax Liability for such Fiscal Year based on such
     higher net taxable income amount.  The Company shall,
     within 15 days after the determination is made,
     distribute such additional amount of cash to the
     Members, in accordance with their Percentage Interests.
     
          (v)  In the event that the Company Independent
     Auditors determine pursuant to Section 7.02(d) that the
     Company's actual net taxable income with respect to a
     Fiscal Year is less than the amount determined by the
     Company pursuant to clause (iii) above, a determination
     shall be made of the excess Tax Distribution Amount
     that was distributed to the Members in respect of such
     Fiscal Year based on the Company's determination of its
     actual net taxable income and the Company shall deduct
     from the next Tax Distribution Amount payable to the
     Members pursuant to this Section 5.01, the amount of
     such excess distribution.
     
          (b)  In addition to the distributions pursuant to
Section 5.01(a), on each Distribution Date, the Company
shall distribute to the Members all Distributable Cash for
the Fiscal Quarter to which such Distribution Date relates
provided, however, that the distribution of
(i) Distributable Cash pursuant to this paragraph 5.01(b) or
(ii) cash pursuant to Section 5.01(a) above, in each case
with respect to any Fiscal Quarter may be made in such other
manner and in such other amount as the Members shall agree
with respect to such Fiscal Quarter; provided, further,
however, that any agreement by any Member with respect to
the distribution of either Distributable Cash pursuant to
this paragraph 5.01(b) or cash pursuant to Section 5.01(a)
for any Fiscal Quarter pursuant to the preceding proviso
shall not alter or waive any of the rights of either Member
under this Agreement with respect to distributions of
Distributable Cash pursuant to this paragraph 5.01(b) or
cash pursuant to Section 5.01(a) with respect to any
subsequent Fiscal Quarter.  Subject to Section 5.02(b), each
such distribution shall be allocated between the Members
pro rata based upon their respective Percentage Interests.

          (c)  The Company shall prepare and distribute to
each Member within 45 days after the end of each Fiscal
Quarter a statement (a "Distributions Calculation
Statement") setting forth the calculations (in reasonable
detail) used by the Company for purposes of distributions
pursuant to this Section 5.01 of (i) the Tax Distribution
Amount for each Member for such Fiscal Quarter, (ii) the
amount of Distributable Cash for such Fiscal Quarter and
(iii) the allocation of such Distributable Cash between the
Members.

          (d)  Notwithstanding anything to the contrary in
this Agreement, any agreement reached between the Members to
distribute any amount of cash different from the amounts
which would be calculated in accordance with the methodology
set forth in Section 5.01(a) and Section 5.01(b) above shall
not alter or waive in any manner the obligations of the
Company to prepare and deliver the Distributions Calculation
Statement as set forth in Section 5.01(c) above, and after
any such agreement has been reached the Company shall
continue to prepare and deliver such Distribution
Calculation Statement with respect to each Fiscal Quarter as
if no such agreement had been reached.
          SECTION 5.02.  Certain General Limitations.
(a)  Notwithstanding any provision to the contrary contained
in this Agreement, the Company, and the Board of Managers on
behalf of the Company, shall not be required to make a
distribution to either Member with respect to such Member's
Membership Interests if such distribution would violate
Section 18-607 of the Delaware Act or other applicable law.

          (b)  Notwithstanding any other provision of this
Article V, all amounts distributed to the Members in
connection with a dissolution of the Company or the sale or
other disposition of all or substantially all the assets of
the Company that results in a dissolution of the Company
shall be distributed to the Members in accordance with their
respective Capital Account balances, as adjusted pursuant to
Article VI for all Company operations up to and including
the date of such distribution.

          SECTION 5.03.  Distributions in Kind.  The Company
shall not distribute to the Members any assets in kind
unless approved by the Board of Managers pursuant to a vote
in accordance with Section 8.07(b).  If cash and property in
kind are to be distributed simultaneously, the Company shall
distribute such cash and property in kind in the same
proportion to each Member, unless otherwise approved by the
Board of Managers pursuant to a vote in accordance with
Section 8.07(b).  For purposes of determining amounts
distributable to Members under Section 5.01, for purposes of
determining Profit and Loss under Section 1.01, for purposes
of making adjustments to Capital Accounts under Article VI
and for purposes of allocations under Article VI, any
property to be distributed in kind shall have the value
assigned to such property by the Board of Managers pursuant
to a vote in accordance with Section 8.07(b) and such value
shall be deemed to be part of and included in Distributable
Cash for purposes of determining distributions to the
Members under this Agreement.

          SECTION 5.04.  Distributions in the Event of an
Exercise of the Marathon Call Right, Ashland Put Right or
the Special Termination Rights.  In the event of an exercise
by Marathon of its Marathon Call Right or its Special
Termination Right or the exercise by Ashland of its Ashland
Put Right or its Special Termination Right pursuant to the
Put/Call, Registration Rights and Standstill Agreement,
certain distributions to Ashland or Marathon, as applicable,
will be suspended in accordance with the provisions of
Section 5.01 thereof.


                         ARTICLE VI
                              
              Allocations and Other Tax Matters

          SECTION 6.01.  Maintenance of Capital Accounts.
An account (a "Capital Account") shall be established and
maintained in the Company's books for each Member in
accordance with Treasury Regulation Section 1.704-
1(b)(2)(iv) and to which the following provisions apply to
the extent not inconsistent with such Regulation:

          (a)  There shall be credited to each Member's
Capital Account (i) the amount of money contributed by such
Member to the Company (including liabilities of the Company
assumed by such Member as provided in Treasury Regulation
Section 1.704-1(b)(2)(iv)(c)), (ii) the fair market value of
any property contributed by the Member to the Company (net
of liabilities secured by such contributed property that the
Company is considered to assume or take subject to under
Code Section 752), and (iii) such Member's share of the
Company's Profit;

          (b)  There shall be debited from each Member's
Capital Account (i) the amount of money distributed to such
Member by the Company (including liabilities of such Member
assumed by the Company as provided in Treasury Regulation
Section 1.704-1(b)(2)(iv)(c)) other than amounts which are
in repayment of debt obligations of the Company to such
Member, (ii) the fair market value of property distributed
to such Member (net of liabilities secured by such property
that such Member is considered to assume or take subject to
under Code Section 752), and (iii) such Member's share of
the Company's Loss;

          (c)  To each Member's Capital Account there shall
be credited, in the case of an increase, or debited, in the
case of a decrease, such Member's share of any adjustment to
the adjusted basis of Company assets pursuant to Code
Section 734(b) or Code Section 743(b) to the extent provided
by Treasury Regulation Section 1.704-(b)(2)(iv)(m); and

          (d)  Upon the transfer of all or any part of the
Membership Interests of a Member, the Capital Account of the
transferee Member shall include the portion of the Capital
Account of the transferor Member attributable to such
transferred Membership Interest (or portion thereof).

          SECTION 6.02.  Allocations.  (a)  Except as
provided in Section 6.02(b), 6.02(c), 6.02(d) and 6.02(e),
Profit or Loss for any Fiscal Year shall be allocated
between the Members in proportion to their respective
Percentage Interests.

          (b)  To the extent any Tax deduction or loss is
specifically allocated to a Member pursuant to this
Agreement (other than pursuant to Section 6.03) or any other
Transaction Document, including any deduction or loss
indemnified by a Member, any Member-Funded Capital
Expenditure, any Member-Indemnified Expenditure and any
special allocations pursuant to Sections 6.12, 6.13, 6.14,
6.15 and 6.16 the associated Profit and Loss shall be
allocated to the same Member.

          (c)  Depreciation and amortization with respect to
any asset contributed by a Member to the Company shall be
allocated solely to such Member.

          (d)  If any asset contributed by a Member is sold
or otherwise disposed of prior to the time such asset has
been completely depreciated or amortized for Federal income
tax purposes, the Member contributing such property shall be
allocated an expense ("Make-Up Expense") equal to (i) the
remaining tax basis of the asset at the time of the sale or
other disposition, multiplied by (ii) the other Member's
Percentage Interest at the time of such sale or other
disposition.  The contributing Member shall be allocated
Make-Up Expense over the remaining tax life of the asset at
the time of sale or other disposition at the same rate as
depreciation or amortization would have been allocated to
such Member if the sale or other disposition had not
occurred.  Make-Up Expense allocated to a Member shall be
taken from and reduce the amount of expenses allocated to
the other Member.  The purpose for this provision is to
allocate to a Member, with respect to depreciable or
amortizable assets contributed by such Member, a total
amount of deductions and cost recovery allowances equal to
100% of the basis of such assets at the time of
contribution.

          (e)  In the event that the Company sells or
otherwise disposes of all or substantially all its assets or
engages in any other transaction that will lead to a
liquidation of the Company, then, notwithstanding the
foregoing provisions of this Section 6.02, (i) any Profit or
Loss realized by the Company in such transaction and (ii),
to the extent necessary, any other Profit or Loss in the
Fiscal Year such transaction occurs or thereafter (and, in
each case, to the extent necessary, constituent items of
income, gain, loss, deduction and credit) shall be specially
allocated as between the Members as required so as to cause
in so far as possible each Member's Capital Account balance
to be proportionate to its Percentage Interest.

          SECTION 6.03.  Tax Allocations.  (a)  For income
tax purposes only, each item of income, gain, loss,
deduction and credit of the Company as determined for income
tax purposes shall be allocated between the Members in
accordance with the corresponding allocation in
Section 6.02, subject to the requirements of Section 704(c)
of the Code.

          (b)  The Members acknowledge and agree that
Section 704(c) shall be applied using the so-called
"traditional method with curative allocations" set forth in
Treasury Regulation Section 1.704-3(c).  Curative
allocations of income, gain, loss or deduction shall, to the
extent possible, have substantially the same effect on each
Member's Federal income tax liability as the item of income,
gain, loss or deduction for which allocation is limited.

          (c)  By reason of the special allocation of book
depreciation and amortization with respect to the assets
contributed by the Members pursuant to Section 6.02(c), tax
depreciation and amortization with respect to each such
asset shall be allocated solely to the contributing Member.

          (d)  Items described in this Section 6.03 shall
neither be credited nor charged to the Members' Capital
Accounts.

          SECTION 6.04.  Tax Elections.  (a) The Members
intend that the Company be treated as a partnership for
Federal income tax purposes.  Accordingly, neither the Tax
Matters Partner nor either Member shall file any election or
return on its own behalf or on behalf of the Company that is
inconsistent with that intent.

          (b)  Any elections or other decisions relating to
tax matters that are not expressly provided for herein,
including the determination of the fair market value of
contributed property and the decision to adjust the Capital
Accounts to reflect the fair market value of the Company's
assets upon the occurrence of any event specified in
Treasury Regulation Section 1.704-1(b)(2)(iv)(f), shall be
made jointly by the Members in any manner that reasonably
reflects the purpose and intention of this Agreement.

          SECTION 6.05.  Fiscal Year.  The fiscal year (the
"Fiscal Year") of the Company for tax and accounting
purposes shall be the 12-month (or shorter) period ending on
the last day of December of each year.
          SECTION 6.06.  Tax Returns.  (a)  The Company
shall cause to be prepared and timely filed all Federal,
state, local and foreign income tax returns and reports
required to be filed by the Company and its subsidiaries.
The Company shall provide copies of all the Company's
Federal, state, local and foreign tax returns (and any
schedules or other required filings related to such returns)
that reflect items of income, gain, deduction, loss or
credit that flow to separate Member returns, to the Members
for their review and comment prior to filing, except as
otherwise agreed by the Members.  The Members agree in good
faith to resolve any difference in the tax treatment of any
item affecting such returns and schedules.  However, if the
Members are unable to resolve the dispute, the position of
the Tax Matters Partner shall be followed if nationally
recognized tax counsel acceptable to both Members provides
an opinion that substantial authority exists for such
position.  Substantial authority shall be given the meaning
ascribed to it in Code Section 6662.  If the Members are
unable to resolve the dispute prior to the due date for
filing the return, including approved extensions, the
position of the Tax Matters Partner shall be followed, and
amended returns shall be filed if necessary at such time the
dispute is resolved.  The costs of the dispute shall be
borne by the Company.  The Members agree to file their
separate Federal income tax returns in a manner consistent
with the Company's return, the provisions of this Agreement
and in accordance with applicable Federal income tax law.

          (b)  The Company shall elect the most rapid method
of depreciation and amortization allowed under Applicable
Law, unless the Members agree otherwise.  The failure of
either Member to agree that the Company should elect a less
rapid method of depreciation or amortization is not subject
to any dispute resolution provisions.

          (c)  The Members shall provide each other with
copies of all correspondence or summaries of other
communications with the Internal Revenue Service or any
state, local or foreign taxing authority (other than routine
correspondence and communications) regarding the tax
treatment of the Company's operations.  No Member shall
enter into settlement negotiations with the Internal Revenue
Service or any state, local or foreign taxing authority with
respect to any issue concerning the Company's income, gains,
losses, deductions or credits if the tax adjustment
attributable to such issue (assuming the then current
Aggregate Tax Rate) would be $2 million or greater, without
first giving reasonable advance notice of such intended
action to the other Member.

          SECTION 6.07.  Tax Matters Partner.
(a)  Initially, Marathon shall be the "Tax Matters Partner"
of the Company within the meaning of Section 6231(a)(7) of
the Code, and shall act in any similar capacity under state,
local or foreign law, but only with respect to returns for
which items of income, gain, loss, deduction or credit flow
to the separate returns of the Members.  In the event of a
transfer of any Member's interest in the Company, the Tax
Matters Partner shall be the Member with the largest
Percentage Interest following such transfer.

          (b) The Tax Matters Partner shall incur no
liability (except as a result of the gross negligence or
willful misconduct of the Tax Matters Partner) to the other
Member including, but not limited to, liability for any
additional taxes, interest or penalties owed by the other
Member due to adjustments of Company items of income, gain,
loss, deduction or credit at the Company level.

          SECTION 6.08.  Duties of Tax Matters
Partner.  (a)  Except as provided in Section 6.08(b), the
Tax Matters Partner shall cooperate with the other Member
and shall promptly provide the other Member with copies of
notices or other materials from, and inform the other Member
of discussions engaged in with, the Internal Revenue Service
or any state, local or foreign taxing authority and shall
provide the other Member with notice of all scheduled
administrative proceedings, including meetings with agents
of the Internal Revenue Service or any state, local or
foreign taxing authority, technical advice conferences,
appellate hearings, and similar conferences and hearings, as
soon as possible after receiving notice of the scheduling of
such proceedings, but in any case prior to the date of such
scheduled proceedings.

          (b)  The duties of the Tax Matters Partner under
Section 6.08(a) shall not apply with respect to notices,
materials, discussions, proceedings, meetings, conferences,
or hearings involving any issue concerning the Company's
income, gains, losses, deductions or credits if the tax
adjustment attributable to such issue (assuming the then
current Aggregate Tax Rate) would be less than $2 million
except as otherwise required under Applicable Law.

          (c)  The Tax Matters Partner shall not extend the
period of limitations or assessments without the consent of
the other Member, which consent shall not be unreasonably
withheld.

          (d)  The Tax Matters Partner shall not file a
petition or complaint in any court, or file any claim,
amended return or request for an administrative adjustment
with respect to partnership items, after any return has been
filed, with respect to any issue concerning the Company's
income, gains, losses, deductions or credits if the tax
adjustment attributable to such issue (assuming the then
current Aggregate Tax Rate) would be $2 million or greater,
unless agreed by the other Member.  If the other Member does
not agree, the position of the Tax Matters Partner shall be
followed if nationally recognized tax counsel acceptable to
both Members issues an opinion that a reasonable basis
exists for such position.  Reasonable basis shall be given
the meaning ascribed to it for purposes of applying Code
Section 6662.  The costs of the dispute shall be borne by
the Company.

          (e)  The Tax Matters Partner shall not enter into
any settlement agreement with the Internal Revenue Service
or any state, local or foreign taxing authority, either
before or after any audit of the applicable return is
completed, with respect to any issue concerning the
Company's income, gains, losses, deductions or credits,
unless any of the following apply:

          (i)  both Members agree to the settlement;
     
          (ii)  the tax effect of the issue if resolved
     adversely would be, and the tax effect of settling the
     issue is, proportionately the same for both Members
     (assuming each otherwise has substantial taxable
     income);
     
          (iii)  the Tax Matters Partner determines that the
     settlement of the issue is fair to both Members and the
     amount of the tax adjustment attributable to such issue
     (assuming the then current Aggregate Tax Rate) would be
     less than $2 million; or
     
          (iv)  nationally recognized tax counsel acceptable
     to both Members determines that the settlement is fair
     to both Members and is one it would recommend to the
     Company if both Members were owned by the same person
     and each had substantial taxable income.
     
In all events, the costs incurred by the Tax Matters Partner
in performing its duties hereunder shall be borne by the
Company in accordance with the Shared Services Agreement.

          (f)  The Tax Matters Partner may request
extensions to file any tax return or statement without the
written consent of, but shall so inform, the other Member.

          SECTION 6.09.  Survival of Provisions.  The
provisions of this Agreement regarding the Company's tax
returns and Tax Matters Partner shall survive the
termination of the Company and the transfer of any Member's
interest in the Company and shall remain in effect for the
period of time necessary to resolve any and all matters
regarding the federal, state, local and foreign taxation of
the Company and items of Company income, gain, loss,
deduction and credit.

          SECTION 6.10.  Section 754 Election.  In the event
that a Member purchases the Membership Interests of a
Selling Member pursuant to Section 10.04, the purchasing
Member shall have the right to direct the Tax Matters
Partner to make an election under Section 754 of the Code.
The purchasing Member shall pay all costs incurred by the
Company in connection with such election, including any
costs borne by the Company to maintain records required as a
result of such election.  The purchasing Member, at its
option and expense, may maintain on behalf of the Company
any records required as a result of such election.

          SECTION 6.11.  Qualified Income Offset, Minimum
Gain Chargeback.  Notwithstanding anything to the contrary
in this Agreement, there is hereby incorporated a qualified
income offset provision which complies with Treasury
Regulation Section 1.704-1(b)(2)(ii)(d) and minimum gain
chargeback and partner minimum gain chargeback provisions
which comply with the requirements of Treasury Regulation
Section 1.704-2 and such provisions shall apply to the
allocation of Profits and Losses.

          SECTION 6.12.  Tax Treatment of Designated
Sublease Agreements.  (a)  For purposes of Article VI,
Ashland or Marathon, as the case may be, shall be treated as
transferring to the Company all of its interest in Subleased
Property pursuant to an Ashland Designated Sublease
Agreement or a Marathon Designated Sublease Agreement, as if
the leasehold interest in such Subleased Property was an
Ashland Transferred Asset or a Marathon Transferred Asset.

          (b)  Payments under the Original Lease made by
Ashland or Marathon, as the case may be, after the effective
date of the Ashland Designated Sublease Agreement or
Marathon Designated Sublease Agreement, as the case may be,
shall be treated as made by the Company or its subsidiaries,
and then immediately reimbursed by Ashland or Marathon, as
the case may be.

          (c)  All items of loss, deduction and credit
attributable to payments under the Original Lease made by
Ashland or Marathon, as the case may be, including payments
by the Company or any of its subsidiaries that are charged
to Ashland or Marathon by set-off or other means, shall be
allocated entirely to the Member incurring such payments.

          (d)  Depreciation and amortization deductions, if
any, as well as any deductions or offsets to taxable income
or gain, attributable to property described in the Ashland
Designated Sublease Agreements or the Marathon Designated
Sublease Agreements, as the case may be, shall be allocated
entirely to Ashland or Marathon, as the case may be, except
to the extent such deductions or offsets are attributable to
amounts paid by the Company or any of its subsidiaries and
not reimbursed by Ashland or Marathon, as the case may be,
either directly or indirectly.

          SECTION 6.13.  Tax Treatment of Reimbursed
Liability Payments.  Any tax deduction or loss attributable
to payments by the Company or any of its subsidiaries of
Assumed Liabilities, as described in Schedules 2.3(d) and
3.3(d) to the Asset Transfer and Contribution Agreement,
that are reimbursed by a Member either directly or
indirectly, shall be allocated entirely to such Member.

          SECTION 6.14.  Tax Treatment of Disproportionate
Payments.  Except as otherwise provided in this Agreement or
in any other Transaction Document, any Tax deduction or loss
reflected on a Tax return, report or other Tax filing by the
Company, attributable to (i) payments made or costs incurred
by a Member, (ii) payments made or costs incurred by the
Company and reimbursed or to be reimbursed by a Member and
(iii) payments made or costs incurred by the Company and not
shared among the Members based on their Percentage
Interests, shall be allocated among the Members to take into
account the amounts paid, incurred, reimbursed or shared by
each.

          SECTION 6.15.  Allocation of Income, Gains, Losses
and Other Items from LOOP LLC and LOCAP, Inc.  (a) Income,
gains, losses, deductions, credits, adjustments, tax
preferences and other distributive share items with respect
to the Company's interest in LOOP LLC, a tax partnership,
for periods beginning on or after the Closing, shall be
allocated between the Members in such a manner so that, when
such items are included with the same items allocated to
Ashland with respect to the Ashland LOOP/LOCAP Interest,
each Member is allocated all such items in proportion to its
respective Percentage Interest in the Company.

          (b)  In determining the Capital Account for each
Member, (i) Ashland shall be treated as contributing the
Ashland LOOP/LOCAP Interest to the Company, (ii) Profit and
Loss shall be treated as including taxable income, gain,
loss and distributions arising from Ashland's 4% interest in
LOOP LLC and (iii) dividends and distributions that Ashland
receives from LOOP LLC or LOCAP, Inc. in respect of the
Ashland LOOP/LOCAP Interest and paid to the Company pursuant
to Section 7.2(i) of the Asset Transfer and Contribution
Agreement shall be treated as being received directly by the
Company.

          SECTION 6.16.  Allocation of Income, Gain, Loss,
Deduction and Credits Attributable to Stock-Based
Compensation.  Each item of income, gain, loss, deduction
(excluding deductions for administrative costs incurred by
the Company) and credit attributable to the grant to, or the
exercise by or on behalf of, an employee or retired employee
of the Company of a stock option, stock appreciation right,
or other stock-based incentive compensation involving the
stock of a Member or an Affiliate of a Member shall be
allocated to the Member whose stock or whose Affiliate's
stock is involved.  Any exercise price paid by or on behalf
of the employee or retired employee to the Company shall be
paid over to the Member whose stock (or whose Affiliate's
stock) is involved.  A Member's Capital Account shall be
(i) increased by the fair market value of its (or its
Affiliate's) stock delivered to or on behalf of an employee
or retired employee as aforesaid (without duplication to the
extent such stock is first contributed to the Company),
(ii) decreased (pursuant to Section 6.01(a)(iii) or
(b)(iii)) by the deduction allocated to such Member as
aforesaid and (iii) decreased by the amount of the exercise
price so paid over by the Company or deemed to be paid over
by the Company under principles analogous to those in
Treasury Regulation Section 1.83-6(d)(1).

                         ARTICLE VII
                              
                      Books and Records
                              
          SECTION 7.01.  Books and Records; Examination.
The Board of Managers shall keep or cause to be kept such
books of account and records with respect to the Company's
business as they may deem appropriate.  Each Member and its
duly authorized representatives shall have the right at any
time to examine, or to appoint independent certified public
accountants (the fees of which shall be paid by such Member)
to examine, the books, records and accounts of the Company
and its subsidiaries, their operations and all other matters
that such Member may wish to examine, including, without
limitation, all documentation relating to actual or proposed
transactions with either Member or any Affiliate of either
Member.  The Company, and the Board of Managers, shall not
have the right to keep confidential from the Members any
information that the Board of Managers would otherwise be
permitted to keep confidential from the Members pursuant to
Section 18-305(c) of the Delaware Act.  The Company's books
of account shall be kept using the method of accounting
determined by the Board of Managers.  The Company
Independent Auditors (the "Company Independent Auditors")
shall be an independent public accounting firm selected by
the Board of Managers pursuant to a vote in accordance with
Section 8.07(b) or Section 8.07(c), as applicable, and shall
initially be Price Waterhouse LLP.

          SECTION 7.02.  Financial Statements and
Reports.  (a)  Unaudited Monthly Financial
Statements.  (i)  The Company shall prepare and send to each
Member (at the same time) promptly, but in no event later
than noon on the 15th Business Day after the last day of
each month, the following unaudited financial statements
with respect to the Company and its subsidiaries:  a balance
sheet, a statement of operations, a statement of cash flows
and a statement of changes in capital (collectively,
"Unaudited Financial Statements") as at the end of and for
such month.

          (ii)  The Company shall prepare and send to each
     Member promptly, but in no event later than noon on the
     20th Business Day after the last day of each month, an
     unaudited financial summary booklet containing a
     breakdown of such operating and financial information
     by major department or division of the Company and its
     subsidiaries as at the end of and for such month as
     either Member shall reasonably request; provided that
     each Member shall be provided with the same information
     at the same time as the other Member.
     
          (b)  Unaudited Quarterly Financial Statements.
The Company shall prepare and send to each Member (at the
same time) promptly, but in no event later than the 30th day
after the last day of each Fiscal Quarter, (i) Unaudited
Financial Statements as at the end of and for such Fiscal
Quarter; (ii) a management's discussion and analysis of
financial condition and results of operations section
prepared in accordance with Rule 303 of Regulation S-K of
the Securities Act with respect to such Fiscal Quarter; and
(iii) an unaudited statement of changes in the Members'
capital accounts as at the end of and for such Fiscal
Quarter.

          (c)  Audited Annual Financial Statements.  Within
75 days after the end of each Fiscal Year, the Board of
Managers shall cause (i) an examination to be made, at the
expense of the Company, by the Company Independent Auditors,
covering (A) the assets, liabilities and capital of the
Company and its subsidiaries, and the Company's and its
subsidiaries' operations during such Fiscal Year, (B) an
examination of the Distributions Calculation Statement for
such Fiscal Year, and (C) all other matters customarily
included in such examinations and (ii) to be delivered to
each Member (at the same time) a copy of the report of such
examination, stating that such examination has been
performed in accordance with generally accepted auditing
standards, together with (1) the following financial
statements with respect to the Company and its subsidiaries
certified by such accountants as having been prepared in
accordance with GAAP:  a balance sheet, a statement of
operations, a statement of cash flows and a statement of
changes in capital as at the end of and for such Fiscal Year
(collectively, the "Audited Financial Statements") and (2) a
management's discussion and analysis of financial condition
and results of operations section prepared in accordance
with Rule 303 of Regulation S-K of the Securities Act with
respect to such Fiscal Year.  The Company shall prepare the
Audited Financial Statements in such manner and form as is
necessary to enable Ashland to file such Audited Financial
Statements with the Commission in accordance with Item 3-09
of Regulation S-X under the Exchange Act.

          (d)  Schedule of Members' Capital
Accounts.  (i)  Preliminary Annual Capital Account Schedule.
The Company shall prepare and send to each Member (at the
same time) promptly, but in no event later than the 75th day
after the last day of each Fiscal Year, a schedule showing
the respective Capital Accounts of the Members based on the
Company's estimated taxable income for such Fiscal Year.

          (ii)  Examination.  Unless otherwise agreed by the
     Members, within 15 days after the date the Company
     determines its net taxable income with respect to any
     Fiscal Year, but in no event later than 7 months after
     the end of such Fiscal Year, the Board of Managers
     shall cause (i) an examination to be made, at the
     expense of the Company, by the Company Independent
     Auditors, covering (A) the determination of the
     Company's taxable income with respect to such Fiscal
     Year and (B) the respective Capital Accounts of the
     Members based on the Company's taxable income for such
     Fiscal Year and (ii) to be delivered to each Member (at
     the same time) a copy of the report of such
     examination, stating that such examination has been
     performed in accordance with generally accepted
     auditing standards.
          (iii)  Final Annual Capital Account Schedule.  The
     Company shall prepare and send to each Member (at the
     same time) promptly, but in no event later than the
     15th day after the date the Company files its federal
     income tax return with respect to each Fiscal Year, a
     schedule showing the respective Capital Accounts of the
     Members based on the Company's actual taxable income
     for such Fiscal Year.
     
          (e)  Other Financial Information.  The Company
shall prepare and send to each Member (at the same time)
promptly such other financial information as a Member shall
from time to time reasonably request.

          SECTION 7.03.  Notice of Affiliate Transactions;
Annual List.  (a)  (i)  The Company shall notify each Member
of any Affiliate Transaction (other than an Affiliate
Transaction that is a Significant Shared Service) that the
Company or any of its subsidiaries is considering entering
into or renewing or extending the term thereof (whether
pursuant to contractual provisions thereof or otherwise),
which notice shall be given, to the extent reasonably
possible, sufficiently in advance of the time that the
Company intends to enter into, renew or extend the term of
such Affiliate Transaction so as to provide the Members with
a reasonable opportunity to examine the documentation
related to such Affiliate Transaction.

          (ii)  The Company shall notify each Member of any
     Affiliate Transaction that is a Significant Shared
     Service that the Company or any of its subsidiaries is
     considering entering into or renewing or extending the
     term thereof (whether pursuant to contractual
     provisions thereof or otherwise), which notice shall be
     given, to the extent reasonably possible, sufficiently
     in advance of the time that the Company intends to
     enter into, renew or extend the term of such Affiliate
     Transaction so as to provide the Members with a
     reasonable opportunity to examine the documentation
     related to such Affiliate Transaction.
          
          (b)  Within 60 days after the end of each Fiscal
Year, the Company shall prepare and distribute to each
Member a list setting forth a description of each Affiliate
Transaction entered into by the Company or any of its
subsidiaries during such Fiscal Year and identifying all of
the parties to such Affiliate Transactions; provided that if
two or more Affiliate Transactions either (i) constitute a
series of related transactions or agreements or (ii) are
substantially the same type of transaction or agreement, the
Company need not separately describe each such Affiliate
Transaction but instead can describe such related or similar
Affiliated Transactions as a group.


                        ARTICLE VIII
                              
                  Management of the Company

          SECTION 8.01.  Managing Members.  The business and
affairs of the Company shall be managed by the Members
acting through their respective representatives on the Board
of Managers ("Representatives").  The President and the
Representatives shall be deemed "managers" of the Company
within the meaning of the Delaware Act.  Except for such
matters as may be delegated to a Member from time to time by
the Board of Managers pursuant to a vote in accordance with
Section 8.07(b), and subject to the provisions of
Sections 6.07 and 6.08, no Member shall act unilaterally on
behalf of the Company or any of its subsidiaries without the
approval of the other Member and no Member shall have the
power unilaterally to bind the Company or any of its
subsidiaries.

          SECTION 8.02.  Board of Managers.  (a)  The
Members shall exercise their management authority through a
board of managers (the "Board of Managers") consisting of
(i) the President of the Company, who shall not be deemed a
Representative hereunder and who shall not be entitled to
vote on any matter coming before the Board of Managers, and
(ii) eight Representatives, each of whom shall be entitled
to vote, five of whom shall be designated by Marathon and
three of whom shall be designated by Ashland.  In the event
of a Transfer by a Member of its Membership Interests
pursuant to Article X, effective at the time of such
Transfer, (i) such Member's Representatives shall
automatically be removed from the Board of Managers and
(ii) the transferee of such Membership Interests shall be
permitted to designate the number of Representatives to the
Board of Managers as is equal to the number previously
designated by the transferor of such Membership Interests.
Such transferee shall promptly notify the other Member as to
the names of the persons who such transferee has designated
as its Representatives on the Board of Managers.

          (b)  Each Representative may be removed and
replaced, with or without cause, at any time by the Member
designating him or her, but, except as provided in
Section 8.02(a), may not be removed or replaced by any other
means.  A Member who removes one or more of its
Representatives from the Board of Managers shall promptly
notify the other Member as to the names of its replacement
Representatives.

          SECTION 8.03.  Responsibility of the Board of
Managers.  The Board of Managers shall be responsible for
overseeing the operations of the Company and shall, in
particular, have sole jurisdiction to approve each of the
following matters:

          (i) hiring senior executives of the Company,
     evaluating their performance and planning for their
     succession;
     
          (ii) reviewing and approving Company strategies,
     Business Plans and Annual Capital Budgets;
     
          (iii) reviewing and approving significant external
     business opportunities for the Company, including
     acquisitions, mergers and divestitures;
     
          (iv)  reviewing and approving policies of the
     Company that maintain high standards in areas of
     environmental responsibility, employee safety and
     health, community, government, employee and customer
     relations;
     
          (v) reviewing external and internal audits and
     management responses thereto; and
     
          (vi) establishing compensation and benefits
     policies for employees of the Company.
     
          SECTION 8.04.  Meetings.  (a)  Except as set forth
in Section 8.04(h), all actions of the Board of Managers
shall be taken at meetings of the Board of Managers in
accordance with this Section 8.04.

          (b)  As soon as practicable after the appointment
of the Representatives, the Board of Managers shall meet for
the purpose of organization and the transaction of other
business.

          (c)  Regular meetings of the Board of Managers
shall be held at such times as the Board of Managers shall
from time to time determine, but no less frequently than
once each Fiscal Quarter; provided that an annual meeting of
the Board of Managers (which annual meeting shall count as
one of the regular quarterly meetings) shall be held no
later than June 30 of each Fiscal Year.

          (d)  Special meetings of the Board of Managers
shall be held whenever called by any Member.  Any and all
business may be transacted at a special meeting that may be
transacted at a regular meeting of the Board of Managers.

          (e)  The Board of Managers may hold its meetings
at such place or places as the Board of Managers may from
time to time by resolution determine or as shall be
designated in the respective notices or waivers of notice
thereof; however, the Board of Managers shall consider
holding meetings from time to time at each of the Member's
corporate headquarters and at the operational sites of the
Company.

          (f)  Notices of regular meetings of the Board of
Managers or of any adjourned meeting shall be given at least
two weeks prior to such meeting, unless otherwise agreed by
each Member.  Notices of special meetings of the Board of
Managers shall be mailed by the Secretary or an Assistant
Secretary to each member of the Board of Managers addressed
to him or her at his or her residence or usual place of
business, so as to be received at least two Business Days
before the day on which such meeting is to be held, or shall
be sent to him or her by telegraph, cable, facsimile or
other form of recorded communication or be delivered
personally, by overnight courier or by telephone so as to be
received not later than two Business Days before the day on
which such meeting is to be held.  Such notice shall include
the purpose, time and place of such meeting and shall set
forth in reasonable detail the matters to be considered at
such meeting.  However, notice of any such meeting need not
be given to any member of the Board of Managers if such
notice is waived by him or her in writing or by telegraph,
cable, facsimile or other form of recorded communication,
whether before or after such meeting shall be held, or if he
or she shall be present at such meeting.

          (g)  Action by Communication Equipment.  The
members of the Board of Managers may participate in a
meeting of the Board of Managers by means of video or
telephonic conferencing or similar communications equipment
by means of which all persons participating in the meeting
can hear each other, and such participation shall constitute
presence in person at such meeting.

          (h)  Unanimous Action by Written Consent.  Any
action required or permitted to be taken at any meeting of
the Board of Managers may be taken without a meeting if all
the Representatives consent thereto in writing and such
writing is filed with the minutes of the proceedings of the
Board of Managers.
          (i)  Organization.  Meetings of the Board of
Managers shall be presided over by a chair, who will be a
member of the Board of Managers selected by a majority of
the Board of Managers.  The Secretary of the Company or, in
the case of his or her absence, any person whom the person
presiding over the meeting shall appoint, shall act as
secretary of such meeting and keep the minutes thereof.

          SECTION 8.05.  Compensation.  Unless the Members
otherwise agree, no person shall be entitled to any
compensation from the Company in connection with his or her
services as a Representative.

          SECTION 8.06.  Quorum.  (a)  Quorum for Super
Majority Decisions.  Subject to Section 14.01(e) of the
Put/Call, Registration Rights and Standstill Agreement and
Sections 14.01 and 14.05 and Section 5 of Schedule 8.14, at
all meetings of the Board of Managers, the quorum required
for the transaction of any business that constitutes a Super
Majority Decision shall be the presence, either in person or
by proxy, of (i) at least one Representative of each Member
and (ii) a majority of all the Representatives on the Board
of Managers (which may include the Representatives referred
to in the preceding clause (i)).

          (b)  Quorum for Other Decisions.  Subject to
Sections 14.01 and 14.05 and Section 5 of Schedule 8.14, at
all meetings of the Board of Managers, the quorum required
for the transaction of any business that does not constitute
a Super Majority Decision shall be (i) in the case of all
matters that were described in the notice in reasonable
detail for such meeting delivered to the members of the
Board of Managers pursuant to Section 8.04(f), the presence,
either in person or by proxy, of a majority of all the
Representatives on the Board of Managers and (ii) in the
case of all matters that were not described in the notice in
reasonable detail for such meeting delivered to the members
of the Board of Managers pursuant to Section 8.04(f), the
presence, either in person or by proxy, of (A) at least one
Representative of each Member and (B) a majority of all the
Representatives on the Board of Managers (which may include
the Representatives referred to in the preceding
clause (A)).
          
          (c)  Rescheduled Meetings.  The Company shall use
its reasonable best efforts to schedule the time and place
of each meeting of the Board of Managers so as to ensure
that a quorum will be present at each such meeting and that
at least one Representative of each Member will be present
at each such meeting.  In the absence of a quorum at any
such meeting or any adjournment or adjournments thereof, a
majority in voting interest of those present in person or by
proxy and entitled to vote thereat may reschedule such
meeting from time to time until the Representatives
requisite for a quorum, as aforesaid, be present in person
or by proxy.  At any such rescheduled meeting at which a
quorum is present, any business may be transacted that might
have been transacted at the meeting as originally called.
          
          SECTION 8.07.  Voting.  (a)  General.  Each
Representative shall be entitled to cast one vote on all
matters coming before the Board of Managers.  In exercising
their voting rights under this Agreement, the
Representatives may act by proxy.

          (b)  Super Majority Decisions.  Subject to
Section 14.01(e) of the Put/Call, Registration Rights and
Standstill Agreement and Sections 14.01 and 14.05 and
Section 5 of Schedule 8.14, all Super Majority Decisions to
be decided by the Board of Managers shall be approved by the
unanimous affirmative vote of the votes cast by the
Representatives who are present, either in person or by
proxy, at a duly called meeting of the Board of Managers at
which a quorum is present.  The parties acknowledge and
agree that all references in this Agreement, any other
Transaction Document and any appendices, exhibits or
schedules hereto or thereto to any determination, decision,
approval or other form of authorization by the Board of
Managers pursuant to a vote in accordance with
Section 8.07(b) shall be deemed to mean that such
determination, decision, approval or other form of
authorization shall constitute a Super Majority Decision
which requires the approval of the Board of Managers in
accordance with this Section 8.07(b).

          (c)  Other Decisions.  Subject to Sections 14.01
and 14.05 and Section 5 of Schedule 8.14, all matters other
than Super Majority Decisions to be decided by the Board of
Managers shall be approved by the affirmative vote of a
majority of the votes cast by the Representatives who are
present, either in person or by proxy, at a duly called
meeting of the Board of Managers at which a quorum is
present, unless the vote of a greater number of
Representatives is required by Applicable Law or this
Agreement.

          SECTION 8.08.  Matters Constituting Super Majority
Decisions.  Subject to the provisions of Section 8.07(b),
each of the following matters, and only the following
matters, shall constitute a "Super Majority Decision" which
requires the approval of the Board of Managers pursuant to
Section 8.07(b):
          (a) (i) the purchase or investment by the Company
     or any of its subsidiaries of or in any assets or
     securities, or any group of assets or securities, that
     have an aggregate purchase price or cost of more than
     $20 million, if the purpose or effect of such purchase
     or investment is to enable the Company to enter into a
     line of business other than (A) the Company's Business
     as such Business is conducted on the Closing Date or
     (B) any other line of business that is approved after
     the Closing Date by the Board of Managers as a Super
     Majority Decision under this Section 8.08(a)(i)
     pursuant to a vote in accordance with Section 8.07(b),
     provided that any such purchase or investment by the
     Company or any of its subsidiaries shall not require a
     Super Majority Decision under this Section 8.08(a) if
     and to the extent such purchase or investment is being
     made to enable the Company to enter into the Bulk Motor
     Oil Business, the Packaged Motor Oil Business, the
     Private Label Packaged Motor Oil Business and/or the
     Quick Lube Business and, at the time of such purchase
     or investment, (1) the Company and its subsidiaries are
     permitted to engage in such business under
     Section 14.03(b) of the Put/Call, Registration Rights
     and Standstill Agreement and (2) Ashland and its
     Affiliates shall own (beneficially or otherwise) 20% or
     more of the Valvoline Business (it being understood and
     agreed that this proviso shall not limit or constitute
     an exception to any other provision of Section 8.08);
     and
     
          (ii) the determination of whether any new line of
     business approved by the Board of Managers as a Super
     Majority Decision under Section 8.08(a)(i) should
     constitute a "Competitive Business" for purposes of
     Section 14.01 of the Put/Call, Registration Rights and
     Standstill Agreement;
     
          (b) (i) any reorganization, merger, consolidation
     or similar transaction between the Company and any
     person (other than a direct or indirect Wholly Owned
     Subsidiary of the Company) or any sale or lease of all
     or substantially all of the Company's assets to any
     person (other than a direct or indirect Wholly Owned
     Subsidiary of the Company);
          
          (ii) any (A) reorganization, merger, consolidation
     or similar transaction or series of transactions
     between any of the Company's subsidiaries and any
     person (other than the Company or a direct or indirect
     Wholly Owned Subsidiary of the Company) or (B) sale or
     lease of all or substantially all of any of the
     Company's subsidiaries' assets to any person (other
     than the Company or a direct or indirect Wholly Owned
     Subsidiary of the Company) which in either case
     involves an aggregate consideration of over
     $50,000,000;
     
     
          c) the admission of a new Member (other than as a
     result of a Transfer of an existing Member's Membership
     Interests pursuant to Article X) or the issuance of any
     additional Membership Interests or other equity
     interests to any person, including any existing Member;
     
          (d) except as expressly provided in
     Sections 4.01(c), 4.02(a) and 4.02(b), the acceptance
     or requirement of any additional capital contributions
     to the Company by either Member;
     
          (e) the initial hiring of the following officers
     of the Company:  the President; the Executive Vice
     President; the officers principally in charge of
     (i) refining, (ii) wholesale and branded marketing,
     (iii) retail marketing (two initially), (iv) supply and
     transportation and (v) environmental health and safety
     and human resources; the Senior Vice President-Finance
     and Commercial Services of the Company; and the general
     counsel of the Company;
     
          (f) (i) the approval of Acquisition Expenditures,
     Capital Expenditures and such other expenditures of the
     type to be included in the Annual Capital Budget for
     any Fiscal Year (other than (A) Ordinary Course Lease
     Expenses, (B) up to $100 million in the aggregate for
     all periods in Capital Expenditures of the Company and
     its subsidiaries directly associated with the Garyville
     Propylene Upgrade Project, (C) Member-Funded Capital
     Expenditures, (D) Member-Indemnified Expenditures and
     (E) Acquisition Expenditures or Capital Expenditures of
     the Company and its subsidiaries directly associated
     with Permitted Capital Projects/Acquisitions that are
     funded with Permitted Capital Project/Acquisition
     Indebtedness) that when taken together with (x) the
     other expenditures already approved as part of the
     Annual Capital Budget for such Fiscal Year and (y) all
     other expenditures already made in such Fiscal Year,
     would reasonably be expected to exceed the Normal
     Annual Capital Budget Amount for such Fiscal Year; and
          
          (ii) the incurrence of rentals or operating leases
     which result in aggregate Ordinary Course Lease
     Expenses (other than Ordinary Course Lease Expenses
     incurred under the Bareboat Charters) for any Fiscal
     Year that exceed $80 million; provided, however, in the
     event the Company or one of its subsidiaries shall make
     any acquisition or divestiture, the Members shall
     negotiate in good faith to adjust the dollar amount set
     forth in this Section 8.08(f)(ii) to take into account
     the effect of such acquisition or divestiture;
     
          (g) (i) except for any acquisition or capital
     project related to the Bulk Motor Oil Business, the
     Packaged Motor Oil Business, the Private Label Motor
     Oil Business and/or the Quick Lube Business, any
     acquisition, divestiture or individual capital project
     (other than (i) Ordinary Course Lease Expenses, (ii) up
     to $100 million in the aggregate for all periods in
     Capital Expenditures of the Company and its
     subsidiaries directly associated with the Garyville
     Propylene Upgrade Project, (iii) Member-Funded Capital
     Expenditures, (iv) Member-Funded Indemnified
     Expenditures and (v) Acquisition Expenditures
     or Capital Expenditures of the Company and its
     subsidiaries directly associated with Permitted Capital
     Projects/Acquisitions that are funded with Permitted
     Capital Project/Acquisition Indebtedness) where the
     liability or consideration involved is more than
     $50 million in the aggregate (including contingent
     liabilities only to the extent required to be reflected
     on the balance sheet of the Company in accordance with
     Financial Accounting Standard Number 5 (or any
     successor or superseding provision of Current GAAP));
     
          (ii) any acquisitions or individual capital
     projects related to the Bulk Motor Oil Business, the
     Packaged Motor Oil Business, the Private Label Motor
     Oil Business and/or the Quick Lube Business during any
     Fiscal Year where the liability or consideration
     involved is more than $50 million in the aggregate in
     such Fiscal Year (including contingent liabilities only
     to the extent required to be reflected on the balance
     sheet of the Company in accordance with Financial
     Accounting Standard Number 5 (or any successor or
     superseding provision of Current GAAP)); provided that
     nothing in this Section 8.08(g)(ii) shall be deemed or
     interpreted to permit the Company or any of its
     subsidiaries to engage in any of such businesses except
     as and to the extent expressly permitted under
     Section 14.03 of the Put/Call, Registration Rights and
     Standstill Agreement;
     
          (iii) for the avoidance of doubt, acquisitions or
     individual capital projects related to the Maralube
     Express Business shall be subject to clause (i) of this
     Section 8.08(g) and not clause (ii) of this
     Section 8.08(g);
     
          (h) the initiation or settlement of any action,
     suit, claim or proceeding involving (i) an amount in
     excess of $50 million (with respect to initiation) or
     $25 million (with respect to settlement), (ii) material
     non-monetary relief (including, without limitation,
     entering into any consent decree that has or could
     reasonably be expected to (A) impose any material
     obligation on Ashland or any of its Affiliates or the
     Company or any of its subsidiaries or (B) have a
     material adverse effect on the business, operations,
     assets, liabilities, results of operations, cash flows,
     condition (financial or otherwise) or prospects of
     Ashland or any of its Affiliates or the Company or any
     of its subsidiaries) or (iii) the initiation or
     settlement of any criminal action, suit, claim or
     proceeding (other than a misdemeanor) if such criminal
     action, suit or proceeding has or could reasonably be
     expected to (A) impose any material obligation on
     Ashland or any of its Affiliates or (B) have a material
     adverse effect on the business, operations, assets,
     liabilities, results of operations, cash flows,
     condition (financial or otherwise) or prospects of
     Ashland or any of its Affiliates;
     
          (i) any change in the Company Independent Auditors
     unless the new firm is one of the "Big Six" accounting
     firms (or any successor thereto) or a firm of
     comparable stature in Ashland's opinion;
     
          (j) any modification, alteration, amendment or
     termination of any Transaction Document to which the
     Company or any of its subsidiaries is a party and all
     Members are not a party;
     
          (k) (i) in the case of any Affiliate Transaction
     that is not a Crude Oil Purchase, a Significant Shared
     Service or a Designated Sublease Agreement, (A) any
     Affiliate Transaction (other than the Affiliate
     Transactions listed on Schedule 8.08(k)(i)(A) (the
     "Closing Date Affiliate Transactions")), (B) any
     material amendment to or change in the terms or
     provisions of any Affiliate Transaction that was either
     a Closing Date Affiliate Transaction or previously
     approved by the Board of Managers pursuant to
     Section 8.08(k)(i)(A) (it being understood that a
     renewal or extension of the term of an Affiliate
     Transaction pursuant to contractual provisions that
     were previously approved by the Board of Managers
     pursuant to this Section 8.08(k)(i) or that were
     included in a Closing Date Affiliate Transaction on the
     Closing Date shall be deemed for purposes of this
     Agreement not to constitute a new Affiliate Transaction
     or a material amendment to or change in an Affiliate
     Transaction) or (C) any amendment or change in the
     terms or provisions of any agreement or transaction
     between the Company or any of its subsidiaries and any
     Member or any Affiliate of any Member which causes such
     agreement or transaction to become an Affiliate
     Transaction;
     
          (ii) in the case of Crude Oil Purchases, the
     approval of such Crude Oil Purchases in accordance with
     Section 8.12(a);
     
          (iii) in the case of any Significant Shared
     Service, (A) any agreement or transaction constituting
     a Significant Shared Service (other than the specific
     Significant Shared Services identified and described in
     Schedule 10.2(e) to the Asset Transfer and Contribution
     Agreement), (B) any material amendment to or change in
     the terms and provisions of any Significant Shared
     Service identified and described in Schedule 10.2(e) to
     the Asset Transfer and Contribution Agreement or
     thereafter approved by the Board of Managers in
     accordance with this Section 8.08(k)(iii), (C) subject
     to the provisions of Section 8.11(b) and except as
     expressly provided in Section 8.12(b), any cancelation
     or failure by the Company or any of its subsidiaries to
     renew any Significant Shared Service provided by
     Ashland or any Affiliate of Ashland to the Company or
     any of its subsidiaries or provided by the Company or
     any of its subsidiaries to Ashland or any Affiliate of
     Ashland and (D) the periodic review and approval of
     Significant Shared Services in accordance with Section
     8.12(b); and
     
          (iv) any material amendment to or change in the
     terms or provisions of, cancelation, termination or
     failure to renew, any Designated Sublease Agreement or
     any election by the Company to refuse or reject the
     contribution of any Subleased Property to the Company
     or any of its subsidiaries;
     
          (l) the commencement of a voluntary case under any
     applicable bankruptcy, insolvency or other similar law
     now or hereafter in effect, or the consent to the entry
     of an order for relief in an involuntary case under any
     such law, or the consent to the appointment of or the
     taking possession by a receiver, liquidator, assignee,
     custodian, trustee or sequestrator (or similar
     official) of the Company or any of its subsidiaries or
     for any substantial part of the Company's or any of its
     subsidiaries' property, or the making of any general
     assignment for the benefit of creditors;
     
          (m) (i) the modification, alteration or amendment
     of the amount, timing, frequency or method of
     calculation of distributions to the Members from that
     provided in Article V or (ii) an adjustment to the
     amount of Distributable Cash pursuant to clause (g) of
     the definition of "Distributable Cash" in Section 1.01;
     
          (n) (i) the modification, alteration or amendment
     of the Company Leverage Policy, or (ii) the approval of
     any matter which the Company Leverage Policy provides
     is to be approved by the Board of Managers as a Super
     Majority Decision;
     
          (o) (i) the approval of any distribution by the
     Company to the Members of any assets in kind, (ii) the
     approval of any distribution by the Company to the
     Members of cash and property in kind on a non-pro rata
     basis, and (iii) the determination of the value
     assigned to such assets in kind;
     
          (p) each Critical Decision or material amendment
     thereto made on or prior to the Critical Decision
     Termination Date for such Critical Decision; and
     
          (q) the delegation to a Member of the power to
     unilaterally bind the Company or any of its
     subsidiaries with respect to any matter.
     
          SECTION 8.09.  Annual Capital Budget.  (a)  In
Fiscal Year 1999 and in each Fiscal Year thereafter, the
Executive Officers of the Company shall timely prepare or
cause to be prepared a draft capital budget (the "Draft
Annual Capital Budget") for such Fiscal Year, which shall
set forth in reasonable line item detail the proposed
Acquisition Expenditures, Capital Expenditures and the
Ordinary Course Lease Expenditures of the Company and its
subsidiaries for such Fiscal Year, including all Ordinary
Course Lease Expenditures and all Capital Expenditures of
the Company and its subsidiaries directly associated with
the Garyville Propylene Upgrade Project.  In addition, to
the extent that information can reasonably be obtained on
the nature of assets rented or financed by operating leases,
such information shall be presented along with the Annual
Capital Budget.  Copies of the Draft Annual Capital Budget
shall be provided to each Member (at the same time) and to
the Board of Managers.  No later than the last regular
meeting of the Board of Managers for a Fiscal Year, the
Executive Officers shall present to the Board of Managers
the Draft Annual Capital Budget for the following Fiscal
Year for the Board of Managers' review, consideration and
approval, with such additions, deletions and changes thereto
as the Board of Managers shall deem necessary.  Upon its
approval by the Board of Managers (and taking into account
any additions, deletions or other changes deemed necessary
by the Board of Managers) the Draft Annual Capital Budget
for a Fiscal Year shall become the "Annual Capital Budget"
for such Fiscal Year.

          (b)  If the Board of Managers shall fail to
approve an Annual Capital Budget for any Fiscal Year, the
total expenditures provided for in the Annual Capital Budget
for such Fiscal Year shall be in an amount equal to the
Normal Annual Capital Budget Amount for such Fiscal Year.

          (c)  No later than August 30 of each Fiscal Year,
the Board of Managers shall review the Annual Capital Budget
for such Fiscal Year and shall make such additions,
deletions and changes thereto as the Board of Managers shall
deem necessary.

          SECTION 8.10.  Business Plan.  In Fiscal Year 1999
and in each Fiscal Year thereafter, the Executive Officers
of the Company shall timely prepare or cause to be prepared
a draft business plan (the "Draft Business Plan") for the
next three Fiscal Years.  Copies of the Draft Business Plan
shall be provided to each Member (at the same time) and to
the Board of Managers.  No later than the last regular
meeting of the Board of Managers for a Fiscal Year, the
Executive Officers shall present to the Board of Managers
the Business Plan for their review, consideration and
approval, with such additions, deletions and changes thereto
as the Board of Managers shall deem necessary.  Upon its
approval by the Board of Managers (and taking into account
any such additions, deletions or other changes deemed
necessary by the Board of Managers), the Draft Business Plan
for a Fiscal Year shall become the "Business Plan" for such
Fiscal Year.
          SECTION 8.11.  Requirements as to Affiliate
Transactions.  (a)  The Company and its subsidiaries shall
only be permitted to enter into or renew or extend the term
thereof (whether pursuant to contractual provisions thereof
or otherwise) an agreement or a transaction with a Member or
an Affiliate of a Member (which, solely for purposes of this
Section 8.11, shall be deemed to include any entity more
than 10% of the voting stock or other ownership interests
of, or economic interest in, which is owned by a Member
(other than the Company or any of its subsidiaries)) on the
same terms or on terms no less favorable to the Company or
such subsidiary than could be obtained from a third party on
an arm's-length basis (an "Arm's-Length Transaction").

          (b) (i) If (A) the Company or any subsidiary of
     the Company enters into, renews or extends the term of
     (pursuant to contractual provisions thereof that were
     previously approved by the Board of Managers or
     otherwise) or materially amends or changes the terms or
     provisions of, any agreement or transaction between the
     Company or any of its subsidiaries and any Member or
     any Affiliate of any Member (a "Section 8.11(b)
     Affiliate Transaction") or proposes to do any of the
     foregoing and (ii) not later than 90 days after
     receiving written notice thereof from the Company
     pursuant to Section 7.03 or otherwise (which notice
     describes the material terms and conditions of such
     transaction in reasonable detail), the Member that is
     not (or whose Affiliate is not) a party to such
     Section 8.11(b) Affiliate Transaction (the
     "Non-Contracting Member") notifies the Company and the
     Member that is (or whose Affiliate is) a party to such
     Section 8.11(b) Affiliate Transaction (the "Contracting
     Member") in writing that the Non-Contracting Member
     believes in good faith that either such Affiliate
     Transaction is not an Arm's-Length Transaction or that
     the quality of the service being provided or to be
     provided by the Contracting Member is inferior to that
     which the Company and its subsidiaries could otherwise
     obtain on comparable terms and conditions, then the
     Company shall promptly (and, in any event within
     30 days) provide the Non-Contracting Member with a
     reasonably detailed explanation of the basis for the
     Company's determination that such new, renewed or
     extended Affiliate Transaction is an Arm's-Length
     Transaction or the quality of the service being
     provided or to be provided to the Company and its
     subsidiaries is not inferior.

          (ii) If following receipt of such evidence, the
     Non-Contracting Member is not reasonably satisfied that
     such Affiliate Transaction is an Arm's-Length
     Transaction or the quality of the service being
     provided or to be provided to the Company and its
     subsidiaries is not inferior, then, at the written
     request of the Non-Contracting Member (such written
     request being an "Affiliate Transaction Dispute
     Notice"), the Company shall (A) modify the terms of
     such Affiliate Transaction so that it becomes an Arm's-
     Length Transaction, (B) if the Company had given the
     Members written notice pursuant to Section 7.03(a)
     prior to entering into, renewing or extending such
     Affiliate Transaction, not enter into, renew or extend
     such Affiliate Transaction or (C) if the Company had
     given the Members written notice pursuant to Section
     7.03(a) prior to entering into, renewing or extending
     such Affiliate Transaction, enter into, renew or extend
     such Affiliate Transaction in which event the
     determination of whether such Affiliate Transaction is
     an Arm's Length Transaction and/or whether the quality
     of the service being provided is inferior shall be in
     accordance with the Dispute Resolution Procedures set
     forth in Article XIII or (D) if the Company shall not
     have given the Members written notice pursuant to
     Section 7.03(a) prior to entering into, renewing or
     extending such Affiliate Transaction, commence the
     dispute resolution procedures set forth in Article
     XIII.

          (iii)  For purposes of Article XIII, a Non-
     Contracting Member's delivery of an Affiliate
     Transaction Dispute Notice to the Company shall
     constitute delivery of a Dispute Notice thereunder, and
     the Company shall be required to deliver a Response to
     the Non-Contracting Member within 30 days thereafter.
     If it is finally determined pursuant to such Dispute
     Resolution Procedures that such Affiliate Transaction
     is an Arm's-Length Transaction and, if disputed, that
     the quality of service being so provided is not
     inferior, then the Company shall be permitted to enter
     into, renew or extend such Affiliate Transaction.  If
     it is finally determined pursuant to such Dispute
     Resolution Procedures that such Affiliate Transaction
     is not an Arm's-Length Transaction or that the quality
     of service being so provided is inferior, then the
     Company shall either modify the terms of such Affiliate
     Transaction so that it becomes an Arm's-Length
     Transaction and, if disputed, with an adequate level of
     quality of service or not enter into, renew or extend
     such Affiliate Transaction.  In the event that such
     Affiliate Transaction has already been entered into,
     renewed or extended, then (A) the Company and the
     Contracting Member shall make such modifications to the
     terms of such Affiliate Transaction as are necessary so
     that such Affiliate Transaction becomes an Arm's-Length
     Transaction and, if disputed, with an adequate level of
     quality of service and (B) the Contracting Member shall
     pay the Company an amount equal to the difference
     between (I) the costs incurred by the Company under
     such Affiliate Transaction since the time of such
     entering into, renewal or extension and (II) the costs
     that the Company would have incurred under such
     Affiliate Transaction during such time period had such
     Affiliate Transaction been an Arm's-Length Transaction
     and, if disputed, with an adequate level of quality of
     service at the time of such initial agreement, renewal
     or extension.

          SECTION 8.12.  Review of Certain Affiliate
Transactions Related to Crude Oil Purchases and Shared
Services.  (a) (i) Not less than 30 days prior to the
regular meeting of the Board of Managers during the fourth
Fiscal Quarter of each Fiscal Year (or, if no regular
meeting of the Board of Managers is scheduled during such
Fiscal Quarter, at a special meeting of the Board of
Managers during such Fiscal Quarter), the Company shall
submit to the Board of Managers a reasonably detailed
description of any proposed transactions or agreements
related to crude oil purchases by the Company and its
subsidiaries from Marathon or any Affiliate of Marathon that
are intended to remain in effect or to be put into effect
during such next Fiscal Year (collectively, the "Marathon
Crude Oil Purchase Program").  Following such submission,
the Company shall provide the Board of Managers promptly
with such information with respect to such Marathon Crude
Oil Purchase Program and the Company's other proposed crude
oil purchases and policies for such next Fiscal Year as any
Representative shall reasonably request.  At each such
regular or special meeting during the fourth Fiscal Quarter
of each Fiscal Year, the Board of Managers shall review such
Marathon Crude Oil Purchase Program.  During such next
Fiscal Year, the Company and its subsidiaries shall be
permitted to purchase crude oil from Marathon or any
Affiliate of Marathon only on the terms and conditions of
the proposed transactions and agreements submitted to and
approved by the Board of Managers at such regular or special
meeting pursuant to a vote in accordance with
Section 8.07(b) (the "Approved Marathon Crude Oil Purchase
Program").  Any purchase (or group of related purchases) of
crude oil by the Company or any of its subsidiaries from
Marathon or any Affiliate of Marathon during such Fiscal
Year that is an Affiliate Transaction for purposes of
Section 8.08(k) and is not made under or in accordance with
the Approved Marathon Crude Oil Purchase Program and any
material amendment to or change in the Approved Marathon
Crude Oil Purchase Program during such Fiscal Year shall be
made only with the prior approval of the Board of Managers
pursuant to a vote in accordance with Section 8.07(b).

          (ii) The Company shall prepare and send to each
     Member (at the same time) promptly, but in no event
     later than the 30th day after the last day of each
     Fiscal Quarter, (A) a summary of all Crude Oil
     Purchases during such Fiscal Quarter, (B) a description
     of any amendments to, changes in or deviations from the
     Approved Marathon Crude Oil Purchase Program in effect
     during such Fiscal Quarter, (C) a description of any
     then known proposed amendments to, changes in or
     deviations from the Approved Marathon Crude Oil
     Purchase Program in effect during the remaining balance
     of the Fiscal Year and (D) such other information with
     respect to purchases of crude oil by the Company and
     its subsidiaries as either Member shall reasonably
     request.

          (b)(i) All administrative services that Marathon,
     Ashland and each of their respective Affiliates provide
     to the Company or any of its subsidiaries, and that the
     Company and its subsidiaries provide to Marathon,
     Ashland or any of their respective Affiliates, shall be
     pursuant to the Shared Services Agreement.  To the
     extent that there is a conflict between the Shared
     Services Agreement, Schedule 10.2(e) to the Marathon
     Asset Transfer and Contribution Agreement Disclosure
     Letter or Schedule 10.2(e) to the Ashland Asset
     Transfer and Contribution Agreement Disclosure Letter,
     on the one hand, and this Agreement, on the other hand,
     this Agreement shall control.

          (ii)  Not less than 90 days prior to each of the
     annual meetings of the Board of Managers held in 2000,
     2003 and every three years thereafter, the Company
     shall submit to the Board of Managers the provisions of
     the Shared Services Agreement that relate to each
     Significant Shared Service then in effect or that is
     proposed to be put into effect.  Following such
     submission, the Company shall provide the Board of
     Managers promptly with such information with respect to
     such Significant Shared Services and with respect to
     any other Shared Services then being provided or
     proposed to be provided as any Representative shall
     reasonably request.  At each such annual meeting,
     unless all the Representatives otherwise agree, the
     Board of Managers shall review each such Significant
     Shared Service and shall determine pursuant to a vote
     in accordance with Section 8.07(b) whether such
     Significant Shared Service should be continued (or, in
     the case of any proposed Significant Shared Service,
     put into effect).  Unless the Board of Managers
     approves pursuant to a vote in accordance with
     Section 8.07(b) the continuation or effectiveness of a
     Significant Shared Service, the Shared Service
     Agreement to the extent it relates to such Significant
     Shared Service shall be terminated effective 90 days
     after such annual meeting or at such later date as the
     Board of Managers shall specify pursuant to a vote in
     accordance with Section 8.07(b) and the Company shall
     be deemed at the time of such annual meeting to have
     given notice to the Member providing or receiving (or
     whose Affiliate is providing or receiving) such
     Significant Shared Service that the Company is
     terminating the Shared Service Agreement with respect
     to such Significant Shared Service.

          SECTION 8.13.  Adjustable Amounts.  Within 30 days
following the date on which the United States Department of
Labor Bureau of Labor Statistics for all Urban Areas
publishes the Price Index for the month of September of each
Fiscal Year commencing September, 1998, the Company shall
determine whether the Average Annual Level for the
immediately preceding twelve-month period exceeds the Base
Level.  If the Company determines that the Average Annual
Level for such twelve-month period exceeds the Base Level,
then the Company shall increase or decrease each of the
dollar amounts set forth in this Agreement (other than the
$348 million and $346 million amounts set forth in the
definition of Adjusted DD&A, the $657 million, $600 million,
$80 million, $20 million and $12.4 million amounts set forth
in the definition of Adjusted EBITDA, the $240 million
amount set forth in the definition of "Normal Annual Capital
Budget Amount" in Section 1.01, the $100 million amount set
forth in Section 8.08(f)(i) and any dollar amount set forth
in any Appendix, Exhibit or Schedule to this Agreement,
including Schedule 8.14) (each dollar amount that is
adjusted pursuant to this Section 8.13 being an "Adjustable
Amount"), including, without limitation, the following
amounts, to an amount calculated by multiplying the relevant
Adjustable Amount by a fraction whose numerator is the
Average Annual Level for such twelve-month period and whose
denominator is the Base Level:  (i) the $100,000, $2 million
and $25 million amounts set forth in the definition of
"Affiliate Transaction" and the $2 million amount set forth
in the definition of "Significant Shared Service" in each
case in Section 1.01; (ii) the $2 million amount set forth
in Section 6.06(c); (iii) the $2 million amounts set forth
in Sections 6.08(b), (d) and (e); (iv) the $20 million
amount set forth in Section 8.08(a)(i); (v) the $80 million
amount set forth on Section 8.08(f)(ii) (or such other
dollar amount as shall be agreed pursuant to the proviso to
Section 8.08(f)(ii)); (vi) the $50 million amount set forth
in Section 8.08(g); (vii) the $50 million and $25 million
amounts set forth in Section 8.08(h)(i); and (viii) each
$7.5 million amount set forth in Section 14.01(a); provided
that in no event shall any Adjustable Amount be decreased
below the initial amount thereof set forth herein.  Within
five Business Days after making such determinations, the
Company shall distribute to each Member a notice setting
forth: (A) the amount by which the Average Annual Level for
such Fiscal Year exceeded the Base Level and (B) the
calculations of any adjustments made to the Adjustable
Amounts pursuant to this Section 8.13.  Any adjustment made
to the Adjustable Amounts pursuant to this Section 8.13
shall be effective as of January 1st of the next Fiscal
Year.

          SECTION 8.14.  Company Leverage Policy.  The
leverage policy for the Company shall be the leverage policy
set forth on Schedule 8.14, with such modifications,
alterations or amendments thereto as the Board of Managers
shall from time to time approve pursuant to a vote in
accordance with Section 8.07(b) (such leverage policy, as so
modified, altered or amended, is referred to herein as the
"Company Leverage Policy").

          SECTION 8.15.  Company's Investment Guidelines.
The Company's Senior Vice President-Finance and Commercial
Services, Vice President-Finance and Controller and
Treasurer (or Treasury Manager) shall constitute an
Investment Policy Committee of the Company and shall
establish investment guidelines for the Company and its
subsidiaries (such investment guidelines, as they may be
modified, altered or amended by such Investment Policy
Committee from time to time, are referred to herein as the
"Company Investment Guidelines").  The initial Company
Investment Guidelines is set forth on Schedule 8.15.  The
Company and its subsidiaries shall only make investments
that are permitted under the Company Investment Guidelines
at the time of such investments.  In addition, the Company
and its subsidiaries shall invest all Surplus Cash (after
meeting daily cash requirements) in accordance with the
Company Investment Guidelines.

          SECTION 8.16.  Requirements as to Operating
Leases.  The Company and its subsidiaries shall not enter
into any operating lease (as determined in accordance with
Applicable GAAP) if the purpose or intent of entering into
such operating lease is to circumvent the Company Leverage
Policy or the super majority voting requirement for Capital
Expenditures of the Company set forth in Section 8.08(f).
The lease by the Company and its subsidiaries of vehicles,
railcars and computers in accordance with the historical
practices of the Ashland Business and the Marathon Business
shall not be deemed to violate this Section 8.16, provided,
for the avoidance of doubt, that all Ordinary Course Lease
Expenses related to any such leases shall be considered
Ordinary Course Lease Expenses for the purposes of
Section 8.08(f)(ii).

          SECTION 8.17.  Limitations on Actions Relating to
the Calculation of Distributable Cash.  Notwithstanding
anything to the contrary contained in this Agreement, the
Company shall not, and shall cause its subsidiaries not to
(a) modify, alter or amend the Company Investment
Guidelines, (b) accelerate the payment of the Company's and
its subsidiaries' accounts payable, (c) delay the collection
of the Company's and its subsidiaries' accounts receivable
or (d) take any other action, if the purpose or intent of
such action is to reduce the amount of Distributable Cash in
a manner that is inconsistent with the intent of the Members
to maximize the amount of Distributable Cash distributions
to the Members.

          SECTION 8.18.  Reliance by Third Parties. Persons
dealing with the Company are entitled to rely conclusively
upon the power and authority of the Board of Managers herein
set forth.  Except as provided in this Agreement, neither
the President, nor a Representative, nor any Member shall
have any authority to bind the Company or any of its
subsidiaries.

          SECTION 8.19.  Integration of Retail
Operations.  (a)  Until the Critical Decision is made
regarding the location of the Company's retail operations'
headquarters, the Company's retail operations' business
shall have headquarters in both Enon, Ohio and Lexington,
Kentucky.

          (b) (i) The Company shall make a formal
     recommendation to the Board of Managers with respect to
     each Critical Decision not later than the ten-month
     anniversary of the Closing Date.  Following receipt of
     a formal recommendation with respect to any Critical
     Decision, Marathon and Ashland shall negotiate in good
     faith to reach an agreement with respect to such
     Critical Decision not later than the first anniversary
     of the Closing Date.

          (ii)  Each formal recommendation with respect to
     any Critical Decision shall be accompanied by a report
     on the business and economic analyses used by the
     Company to arrive at such recommendation, including but
     not limited to, a reasonably detailed description of
     the risks and benefits of the recommended decision and
     the anticipated impact of the recommended decision on
     the Speedway and SuperAmerica brand images and business
     models.

          (iii)  Following receipt of any formal
     recommendation with respect to any Critical Decision,
     each Member may request, and the Company shall promptly
     provide to both Members, such additional information
     and analyses (including studies by outside consultants)
     as such Member may reasonably request; provided,
     however, any additional information request shall not
     extend the Critical Decision Termination Date.

          (c)  If any Primary Critical Decision shall not
have been agreed by the Board of Managers pursuant to a vote
in accordance with Section 8.07(b) prior to the first
anniversary of the Closing Date, the Critical Decision
Termination Date with respect to such Primary Critical
Decision shall be automatically, and without any further
action required by either Member, the Company or the Board
of Managers, extended until the fifteen-month anniversary of
the Closing Date.  During the period of such extension, the
Company shall provide promptly to each Member such
additional information or analyses (including studies by
outside consultants) as either Member shall reasonably
request.  Not later than 30 days prior to the fifteen-month
anniversary of the Closing Date, the Company shall, if
requested by either Member, again make a formal
recommendation to the Board of Managers with respect to such
Primary Critical Decision.  Such formal recommendation shall
include a report on the supporting business and economic
analyses described in Section 8.19(b)(ii).  Any request for
additional information shall not extend the Critical
Decision Termination Date.

          (d)  Until such time as the implementation of any
Critical Decision shall have been completed in all material
respects, the President of the Company shall report to the
Board of Managers at each regular meeting of the Board of
Managers on the implementation of such Critical Decision and
on any material modifications or changes to such Critical
Decision.

          (e)  To the extent there is any conflict between
the terms and provisions of this Agreement and the terms and
provisions of the Retail Integration Protocol, the terms and
provisions of this Agreement shall control.


                         ARTICLE IX
                              
                          Officers

          SECTION 9.01.  (a)  Election, Appointment and Term
of Office.  The executive officers of the Company (the
"Executive Officers") shall consist solely of:  a President;
an Executive Vice President; an officer principally in
charge of refining; an officer principally in charge of
wholesale and branded marketing; the officer or officers
(two initially) principally in charge of retail marketing;
an officer principally in charge of supply and
transportation; an officer who shall be the Senior Vice
President-Finance and Commercial Services of the Company;
and an officer who shall be the general counsel of the
Company; provided, however, that Marathon and Ashland may
make additions or deletions to the positions which shall be
considered executive officers of the Company by mutual
agreement.  Schedule C sets forth a list of (i) the persons
who Marathon and Ashland have chosen to serve initially as
the Executive Officers of the Company, (ii) the executive
office for which each such person is to serve and
(iii) whether each such person was designated by Marathon or
Ashland.  Marathon and Ashland agree that the composition of
the initial Executive Officers is intended to reflect their
respective Percentage Interests in the Company.
Accordingly, if any person identified on Schedule C is for
any reason unable or unwilling to serve as an Executive
Officer at the Closing Date, the Member who designated such
person shall have the right to designate a substitute
person, subject to the right of the other Member to consent
to such substitute nominee (which consent shall not be
unreasonably withheld).  Marathon and Ashland shall cause
their respective Representatives to promptly approve the
appointment of each person listed on Schedule C to the
related executive office position listed on Schedule C.

          (b)  Except as otherwise determined by the Board
of Managers, each Executive Officer shall hold office until
his or her death or until his or her earlier resignation or
removal in the manner hereinafter provided.  Except as
otherwise expressly provided herein, the Executive Officers
shall have such powers and duties in the management of the
Company as generally pertain to their respective offices as
if the Company were a corporation governed by the General
Corporation Law of the State of Delaware.

          (c)  The Board of Managers may elect or appoint
such other officers to assist and report to the Executive
Officers as it deems necessary.  Subject to the preceding
sentence, each such officer shall have such authority and
shall perform such duties as may be provided herein or as
the Board of Managers may prescribe.  The Board of Managers
may delegate to any Executive Officer the power to choose
such other officers and to prescribe their respective duties
and powers.

          (d)  Except as otherwise determined by the Board
of Managers, if additional officers are elected or appointed
during the year pursuant to Section 9.01(c), each such
officer shall hold office until his or her death or until
his or her earlier resignation or removal in the manner
hereinafter provided.

          SECTION 9.02.  Resignation, Removal and
Vacancies.  (a)  Any officer may resign at any time by
giving written notice to the President or the Secretary of
the Company, and such resignation shall take effect at the
time specified therein or, if the time when it shall become
effective shall not be specified therein, when accepted by
action of the Board of Managers.  Except as aforesaid, the
acceptance of such resignation shall not be necessary to
make it effective.

          (b)  All officers and agents elected or appointed
by the Board of Managers shall be subject to removal at any
time by the Board of Managers with or without cause.

          (c)  Vacancies in all Executive Officer positions
may only be filled by the majority vote of the Representa
tives on the Board of Managers. In each instance where a
vacant Executive Officer position is to be filled, Marathon,
after consultation with the Company, shall first send
Ashland a notice which discloses the name and details of the
candidate for the vacant Executive Officer position that the
Representatives of Marathon will nominate and vote in favor
of for such position.  Ashland shall thereafter have the
right, by notice to the Company and Marathon within ten days
after receipt of such notice from Marathon, to veto such
candidate.  Each candidate that Marathon proposes for a
vacant Executive Officer position shall be a bona fide
candidate who is willing and able to serve and who Marathon
in good faith believes is qualified to fill such vacant
Executive Officer position (a "Qualified Candidate").  In
the event Ashland exercises its veto with respect to a
Qualified Candidate, the vacancy will be filled by the
majority vote of the Representatives on the Board of
Managers.
          SECTION 9.03.  Duties and Functions of Executive
Officers.  (a)  President.  The President of the Company,
who shall be a non-voting member of the Board of Managers,
shall be in charge of the day-to-day operations of the
Company and shall preside at all meetings of the Board of
Managers and shall perform such other duties and exercise
such powers, as may from time to time be prescribed by the
Board of Managers.

          (b)  Executive Vice President.  The Executive Vice
President of the Company initially shall report to the
President and be the officer principally in charge of all
supply, refining, marketing and transportation operations of
the Company other than the Company's retail operations.

          (c)  Other Executive Officers.  The Executive
Officers of the Company other than the President and the
Executive Vice President shall perform such duties and
exercise such powers, as may from time to time be prescribed
by the President or the Board of Managers.


                          ARTICLE X
                              
              Transfers of Membership Interests

          SECTION 10.01.  Restrictions on
Transfers.  (a)  General.  Except as expressly provided by
this Article X, neither Member shall Transfer all or any
part of its Membership Interests to any person without first
obtaining the written approval of the other Member, which
approval may be granted or withheld in its sole discretion.
Notwithstanding anything to the contrary contained in this
Agreement, no Transfer by a Member of its Membership
Interests to any person shall be made except to a permitted
assignee under Article XV of the Put/Call, Registration
Rights and Standstill Agreement.

          (b)  Transfer by Operation of Law.  In the event a
Member shall be party to a merger, consolidation or similar
business combination transaction with a third party or sell
all or substantially all its assets to a third party, such
Member may Transfer all (but not part) of its Membership
Interests to such third party; provided, however, that such
Member shall not be permitted to Transfer its Membership
Interests to such third party as aforesaid if the purpose or
intent of such merger, consolidation, similar business
combination transaction or sale is to circumvent or avoid
the application of Sections 10.01(c) and 10.04 to the
Transfer of such Member's Membership Interests to such third
party.
          (c)  Transfer by Sale to Third Party.  At any time
after December 31, 2002, a Member may sell all (but not
part) of its Membership Interests (and, in the case of
Ashland, the Ashland LOOP/LOCAP Interest) to any person
(other than a Transfer by operation of law pursuant to
Section 10.01(b), a Transfer to a Wholly Owned Subsidiary
pursuant to Section 10.01(d) or a Transfer by Ashland to
Marathon pursuant to Section 10.01(e)) if (i) it shall first
have offered the other Member the opportunity to purchase
such Membership Interests (and, in the case of Ashland, the
Ashland LOOP/LOCAP Interest) pursuant to the right of first
refusal procedures set forth in Section 10.04, (ii) such
sale is completed within the time periods specified in
Section 10.04, (iii) the other Member shall have approved
the purchaser of such Membership Interests (and, in the case
of Ashland, the Ashland LOOP/LOCAP Interest), which approval
shall not be unreasonably withheld or delayed and (iv) it
shall use its commercially reasonable best efforts to
(A) terminate the outstanding Original Lease underlying each
of its Designated Sublease Agreements on or prior to the
date of such Transfer and (B) contribute the related
Subleased Property to the Company or one of its subsidiaries
at no cost to the Company or such subsidiary on or prior to
the date of such Transfer; provided, however, that (i) such
Member shall not be obligated to pay more than a reasonable
amount as consideration therefor to, or make more than a
reasonable financial accommodation in favor of, or commence
litigation against, a third party lessor with respect to any
such underlying Original Lease in order to obtain any
consent required from such lessor and (ii) any additional
cost associated with exercising an option under the Original
Lease to purchase Subleased Property or to terminate the
Original Lease shall be deemed not to constitute an
obligation to pay more than a reasonable amount.  In the
event that such Member is unable to terminate an outstanding
Original Lease in accordance with this Section 10.02(b),
then (i) the Company shall be entitled to continue to
sublease the Subleased Property pursuant to the related
Designated Sublease Agreement until the term of the Original
Lease expires, (ii) the Member shall continue to use its
commercially reasonable best efforts to terminate the
Original Lease and contribute the Subleased Property to the
Company as provided above; provided, however that (A) such
Member shall not be obligated to pay more than a reasonable
amount as consideration therefor to, or make more than a
reasonable financial accommodation in favor of, or commence
litigation against, a third party lessor with respect to any
such Original Lease in order to obtain any consent required
from such lessor and (b) any additional cost associated with
exercising an option under the Original Lease to purchase
Subleased Property or to terminate the Original Lease shall
be deemed not to constitute an obligation to pay more than a
reasonable amount and (iii) if such Member subsequently
acquires fee title to the Subleased Property, such Member
shall contribute such Subleased Property to the Company or
one of its subsidiaries at no cost to the Company or such
subsidiary at such time.  It is expressly understood and
agreed that, in determining whether to reasonably withhold
its approval of a proposed purchaser of Marathon's
Membership Interests pursuant to this Section 10.01(c),
Ashland shall be entitled to consider the creditworthiness
of such proposed purchaser, including whether such proposed
purchaser is likely to be able to perform all of Marathon's
and USX's respective obligations under the Put/Call,
Registration Rights and Standstill Agreement.

          (d)  Transfer to Wholly Owned Subsidiary.  A
Member may Transfer all (but not part) of its Membership
Interests at any time to a Wholly Owned Subsidiary of such
Member if (i) such Member shall have received an opinion
from nationally recognized tax counsel acceptable to both
Members that such Transfer will not result in a termination
of the status of the Company as a partnership for Federal
income tax purposes and (ii) the transferring Member enters
into an agreement with the other Member providing that so
long as such Wholly Owned Subsidiary holds such transferring
Member's Membership Interests, such Wholly Owned Subsidiary
shall remain a Wholly Owned Subsidiary of such transferring
Member.

          (e)  Transfer Pursuant to Put/Call, Registration
Rights and Standstill Agreement.  Ashland may Transfer all
of its Membership Interests to Marathon in connection with
the exercise by Marathon of its Marathon Call Right or its
Special Termination Right or the exercise by Ashland of its
Ashland Put Right.  In addition, Marathon may Transfer all
of its Membership Interests to Ashland in connection with
the exercise by Ashland of its Special Termination Right.

          (f)  Consequences of Permitted Transfers.  (i)  In
connection with any Transfer by a Member to a third party
transferee pursuant to Section 10.01(b), (A) such third
party transferee shall at the time of such Transfer become
subject to all of such transferring Member's obligations
hereunder and shall succeed to all of such transferring
Member's rights hereunder and (B) such transferring Member
shall be relieved of all of its obligations hereunder other
than with respect to any default hereunder by such
transferring Member or any of its Affiliates hereunder that
occurred prior to the time of such Transfer.

          (ii)  In connection with any Transfer by a Member
     to a third party transferee or to the other Member
     pursuant to Section 10.01(c), (A) such third party
     transferee or such other Member shall at the time of
     such Transfer become subject to all of such
     transferring Member's obligations hereunder and shall
     succeed to all of such transferring Member's rights
     hereunder and (B) such transferring Member shall at the
     time of such Transfer be relieved of all of its
     obligations hereunder other than with respect to any
     default hereunder by such transferring Member or any of
     its Affiliates that occurred prior to the time of such
     Transfer.
     
          (iii)  In connection with any Transfer by a Member
     to a Wholly Owned Subsidiary of such Member pursuant to
     Section 10.01(d), (A) such Wholly Owned Subsidiary
     shall at the time of such Transfer become subject to
     all of such Member's obligations hereunder and shall
     succeed to all of such Member's rights hereunder and
     (B) such Member shall not be relieved of its
     obligations hereunder without the prior written consent
     of the other Member, which consent shall not be
     unreasonably withheld or delayed.
     
          (iv)  In connection with any Transfer by Ashland
     to Marathon pursuant to Section 10.01(e), (A) Marathon
     shall at the time of such Transfer become subject to
     all of Ashland's obligations hereunder and shall
     succeed to all of Ashland's rights hereunder and (B)
     Ashland shall at the time of such Transfer be relieved
     of all of its obligations hereunder other than with
     respect to any default hereunder by Ashland or any of
     its Affiliates that occurred prior to the Exercise Date
     (as such term is defined in the Put/Call, Registration
     Rights and Standstill Agreement).
     
          (v)  In connection with any Transfer by Marathon
     to Ashland pursuant to Section 10.01(e), (A) Ashland
     shall at the time of such Transfer become subject to
     all of Marathon's obligations hereunder and shall
     succeed to all of Marathon's rights hereunder and (B)
     Marathon shall at the time of such Transfer be relieved
     of all of its obligations hereunder other than with
     respect to any default hereunder by Marathon or any of
     its Affiliates that occurred prior to the Special
     Termination Exercise Date (as such term is defined in
     the Put/Call, Registration Rights and Standstill
     Agreement).
     
          (vi)  In connection with any Transfer by Ashland
     to a third party transferee pursuant to Section
     10.01(b), 10.01(c) or 10.01(d), such third party
     transferee shall at the time of such Transfer succeed
     to all of Ashland's veto rights under Section 9.02(c);
     provided, that if Ashland Transfers its Membership
     Interests to a third party transferee pursuant to
     Section 10.01(c), such third party transferee shall not
     thereafter be permitted to transfer its veto rights
     under Section 9.02(c) to another third party transferee
     pursuant to Section 10.01(c).
     
          (vii)  In connection with any Transfer by a Member
     to a third party transferee pursuant to this Article X,
     such transferring Member shall retain all of the rights
     granted to a Member under Article VII to examine the
     books and records of the Company and to receive
     financial statements and reports prepared by the
     Company until such time following such Transfer as such
     transferring Member ceases to have any liability under
     Article IX of the Asset Transfer and Contribution
     Agreement.
     
          (g)  Consequences of an Unpermitted Transfer.  Any
Transfer of a Member's Membership Interests made in
violation of the applicable provisions of this Agreement
shall be void and without legal effect.

          SECTION 10.02.  Conditions for Admission.  No
transferee of all of the Membership Interests of any Member
shall be admitted as a Member hereunder unless (a) such
Membership Interests are Transferred to a person in
compliance with the applicable provisions of this Agreement,
(b) such transferee shall have executed and delivered to the
Company such instruments as the Board of Managers deems
necessary or desirable in its reasonable discretion to
effectuate the admission of such transferee as a Member and
to confirm the agreement of such transferee or recipient to
be bound by all the terms and provisions of this Agreement
with respect to the Membership Interests acquired by such
transferee and (c) such transferee shall have executed and
delivered an assignment and assumption agreement pursuant to
Section 15.04 of the Put/Call, Registration Rights and
Standstill Agreement.

          SECTION 10.03.  Allocations and Distributions.
Subject to applicable Treasury Regulations, upon the
Transfer of all the Membership Interests of a Member as
herein provided, the Profit or Loss of the Company
attributable to the Membership Interests so transferred for
the Fiscal Year during which such Transfer occurs shall be
allocated between the transferor and transferee as of the
date set forth on the written assignment, and such
allocation shall be based upon any permissible method agreed
to by the Members that is provided for in Code Section 706
and the Treasury Regulations issued thereunder.  Except as
otherwise expressly provided in Section 5.01 of the
Put/Call, Registration Rights and Standstill Agreement,
distributions shall be made to the holder of record of the
Membership Interests on the date of distribution.

          SECTION 10.04.  Right of First Refusal.  (a)  If a
Member (the "Selling Member") shall desire to sell all (but
not part) of its Membership Interests (which, for purposes
of this Section 10.04, shall be deemed to include, in the
case of Ashland, the Ashland LOOP/LOCAP Interest) pursuant
to Section 10.01(c), then the Selling Member shall give
notice (the "Offer Notice") to the other Member, identifying
the proposed purchaser from whom it has received a bona fide
offer and setting forth the proposed sale price (which shall
be payable only in cash or purchase money obligations
secured solely by the Membership Interests being sold) and
the other material terms and conditions upon which the
Selling Member is proposing to sell such Membership
Interests to such proposed purchaser.  No such sale shall
encompass or be conditioned upon the sale or purchase of any
property other than such Membership Interests (other than,
in the case of Ashland, the Ashland LOOP/LOCAP Interest).
The other Member shall have 30 days from receipt of the
Offer Notice to elect, by notice to the Selling Member, to
purchase the Membership Interests offered for sale on the
terms and conditions set forth in the Offer Notice.

          (b)  If a Member makes such election, the notice
of election shall state a closing date not later than
60 days after the date of the Offer Notice.  If such Member
breaches its obligation to purchase the Membership Interests
of the Selling Member on the same terms and conditions as
those contained in the Offer Notice after giving notice of
its election to make such purchase (other than where such
breach is due to circumstances beyond such Member's
reasonable control), then, in addition to all other remedies
available, the Selling Member may, at any time for a period
of 270 days after such default, sell such Membership
Interests to any person at any price and upon any other
terms without further compliance with the procedures set
forth in Section 10.04.

          (c)  If the other Member gives notice within the
30-day period following the Offer Notice from the Selling
Member that it elects not to purchase the Membership
Interests, the Selling Member may, within 120 days after the
end of such 30-day period (or 270 days in the case where
such parties have received a second request under HSR), sell
such Membership Interests to the identified purchaser
(subject to clause (iii) of Section 10.01(c)) on terms and
conditions no less favorable to the Selling Member than the
terms and conditions set forth in such Offer Notice.  In the
event the Selling Member shall desire to offer the
Membership Interests for sale on terms and conditions less
favorable to it than those previously set forth in an Offer
Notice, the procedures set forth in this Section 10.04 must
again be initiated and applied with respect to the terms and
conditions as modified.

          SECTION 10.05.  Restriction on Resignation or
Withdrawal.  Except in connection with a Transfer permitted
pursuant to Section 10.01, neither Member shall resign or
withdraw from the Company without the consent of the other
Member.  Any purported resignation or withdrawal from the
Company in violation of this Section 10.05 shall be null and
void and of no force or effect.


                         ARTICLE XI
                              
         Liability, Exculpation and Indemnification

          SECTION 11.01.  Liability.  Except as otherwise
provided by the Delaware Act, the debts, obligations and
liabilities of the Company, whether arising in contract,
tort or otherwise, shall be solely the debts, obligations
and liabilities of the Company, and no Covered Person shall
be obligated personally for any such debt, obligation or
liability of the Company solely by reason of being a Covered
Person.

          SECTION 11.02.  Exculpation.  (a)  No Covered
Person shall be liable to the Company or any other Covered
Person for any cost, expense, loss, damage, claim or
liability incurred by reason of any act or omission
performed or omitted by such Covered Person in such
capacity, whether or not such person continues to be a
Covered Person at the time of such cost, expense, loss,
damage, claim or liability is incurred or imposed, if the
Covered Person acted in good faith and in a manner the
Covered Person reasonably believed to be in or not opposed
to the best interests of the Company, and if, with respect
to any criminal action or proceeding, such Covered Person
had no reasonable cause to believe its conduct was unlawful,
except that a Covered Person shall be liable for any such
cost, expense, loss, damage, claim or liability incurred by
reason of such Covered Person's breach of Section 12.02.
          (b)  A Covered Person shall be fully protected in
relying in good faith upon the records of the Company and
upon such information, opinions, reports or statements
presented to the Company by any person as to any matters the
Covered Person reasonably believes are within such other
person's professional or expert competence and who has been
selected with reasonable care by or on behalf of the
Company, including information, opinions, reports or
statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent
to the existence and amount of assets from which
distributions to Members might properly be paid.

          SECTION 11.03.  Indemnification.  (a)  To the
fullest extent permitted by Applicable Law, a Covered Person
shall be entitled to indemnification from the Company for
any reasonable cost and expense, loss, damage, claim or
liability incurred by such Covered Person in connection with
any pending, threatened or completed claim, action, suit or
proceeding by reason of being a Covered Person or by reason
of any act or omission performed or omitted by such Covered
Person in such capacity, whether or not such person
continues to be a Covered Person at the time such cost,
expense, loss, damage, claim or liability is incurred or
imposed, if the Covered Person (i) has been successful on
the merits or otherwise with respect to such claim, action,
suit or proceeding, or (ii) acted in good faith and in a
manner the Covered Person reasonably believed to be in or
not opposed to the best interests of the Company, and if,
with respect to any criminal action or proceeding, such
Covered Person had no reasonable cause to believe its
conduct was unlawful, except that no Covered Person shall be
entitled to be indemnified in respect of any such cost,
expense, loss, damage, claim or liability incurred by such
Covered Person by reason of such Covered Person's breach of
Section 12.02 with respect to such acts or omissions;
provided, however, that any indemnity under this Section
11.03 shall be provided out of and to the extent of Company
assets only, and no Covered Person shall have any personal
liability on account of such indemnification of any other
Covered Person, and provided further that, in the case of
officers, employees and agents of the Company, such right to
indemnification shall be subject to any further limitations
or requirements that may be adopted by the Board of
Managers, provided such limitations or requirements were
adopted prior to the events that gave rise to the claim for
indemnification.

          (b)  Expenses incurred with respect to any claim,
action, suit or proceeding of the character described in
Section 11.03(a) shall be advanced to a Covered Person by
the Company prior to the final disposition thereof, but the
Covered Person shall be obligated to repay such advances if
it is ultimately determined that the Covered Person is not
entitled to indemnification under Section 11.03(a).  As a
condition to advancing expenses hereunder, the Company may
require the Covered Person to sign a written instrument
acknowledging his obligation to repay any advances hereunder
if it is ultimately determined he is not entitled to such
indemnity.

          (c)  Notwithstanding anything in this Section
11.03 to the contrary, no Covered Person shall be
indemnified in respect of any claim, action, suit or
proceeding initiated by such Covered Person or his personal
or legal representative, or which involved the voluntary
solicitation or intervention of such person or his personal
or legal representative (other than an action to enforce
indemnification rights hereunder or any action initiated
with the approval of a majority of the Board of Managers).

          (d)  The rights of indemnification provided in
this Section 11.03 shall be in addition to any other rights
to which any Covered Person may otherwise be entitled to by
contract or otherwise; and in the event of any Covered
Person's death, such rights shall extend to such Covered
Person's heirs and personal representatives.


                         ARTICLE XII
                              
                      Fiduciary Duties

          SECTION 12.01.  Duties and Liabilities of Covered
Persons.  To the extent that, at law or in equity, a Covered
Person has duties (including fiduciary duties) and
liabilities relating thereto to the Company or to any other
Covered Person, a Covered Person acting under this Agreement
shall not be liable to the Company or to any other Covered
Person for its good faith reliance on the provisions of this
Agreement.  The provisions of this Agreement, to the extent
that they expand or restrict the duties and liabilities of a
Covered Person otherwise existing at law or in equity, are
agreed by the parties hereto to replace such other duties
and liabilities of such Covered Person.

          SECTION 12.02.  Fiduciary Duties of Members of the
Company and Members of the Board of Managers.  Each Member
and each member of the Board of Managers shall have the
fiduciary duties of loyalty and care (similar to the
fiduciary duties of loyalty and care of directors of a
business corporation governed by the General Corporation Law
of the State of Delaware) to the Company and all of the
Members.  Notwithstanding any provision of this Agreement to
the contrary, each Member and each member of the Board of
Managers agrees to and shall exercise good faith, fairness
and loyalty to the Company and to all of the Members, and
shall make all decisions in a manner that such Member or
such member of the Board of Managers reasonably believes to
be in the best interest of the Company and all of the
Members.  Notwithstanding the foregoing, this Section 12.02
is not intended to limit a Member's ability to exercise or
enforce any of its rights and remedies under this Agreement
and the other Transaction Documents in good faith,
including, without limitation, Article IX of the Asset
Transfer and Contribution Agreement.


                        ARTICLE XIII
                              
                Dispute Resolution Procedures

          SECTION 13.01.  General.  All controversies,
claims or disputes between the Members or between the
Company and either Member that arise out of or relate to
this Agreement or the construction, interpretation,
performance, breach, termination, enforceability or validity
of this Agreement, or the commercial, economic or other
relationship of the parties hereto, whether such claim is
based on rights, privileges or interests recognized by or
based upon statute, contract, tort, common law or otherwise
and whether such claim existed prior to or arises on or
after January 1, 1998 (a "Dispute") shall be resolved in
accordance with the provisions of this Article XIII (except
as otherwise expressly provided in Sections 6.06 and 6.08).
Notwithstanding anything to the contrary contained in this
Article XIII, nothing in this Article XIII shall limit the
ability of the directors and officers of either Member from
communicating directly with the directors and officers of
the other Member.

          SECTION 13.02.  Dispute Notice and Response.
Either Member may give the other Member written notice
(a "Dispute Notice") of any Dispute which has not been
resolved in the normal course of business.  Within fifteen
Business Days after delivery of the Dispute Notice, the
receiving Member shall submit to the other Member a written
response (the "Response").  The Dispute Notice and the
Response shall each include (i) a statement setting forth
the position of the Member giving such notice, a summary of
the arguments supporting such position and, if applicable,
the relief sought and (ii) the name and title of a senior
manager of such Member who has authority to settle the
Dispute and will be responsible for the negotiations related
to the settlement of the Dispute (the "Senior Manager").

          SECTION 13.03.  Negotiation Between Senior
Managers.  (a)  Within 10 days after delivery of the
Response provided for in Section 13.02, the Senior Managers
of both Members shall meet or communicate by telephone at a
mutually acceptable time and place, and thereafter as often
as they reasonably deem necessary, and shall negotiate in
good faith to attempt to resolve the Dispute that is the
subject of such Dispute Notice.  If such Dispute has not
been resolved within 45 days after delivery of the Dispute
Notice, then the Members shall attempt to settle the Dispute
pursuant to Section 13.04.

          (b)  All negotiations between the Senior Managers
pursuant to this Section 13.03 shall be treated as
compromise and settlement negotiations.  Nothing said or
disclosed, nor any document produced, in the course of such
negotiations which is not otherwise independently
discoverable shall be offered or received as evidence or
used for impeachment or for any other purpose in any current
or future arbitration or litigation.

          SECTION 13.04.  Negotiation Between Chief
Executive Officer and President.  (a)  If the Dispute has
not been resolved by negotiation between the Senior Managers
pursuant to Section 13.03, then within 10 Business Days
after the expiration of the 45 day period provided in
Section 13.03, the Chief Executive Officer of Ashland and
the President of Marathon shall meet or communicate by
telephone at a mutually acceptable time and place, and
thereafter as often as they reasonably deem necessary, and
shall negotiate in good faith to attempt to resolve the
Dispute that is the subject of such Dispute Notice.  If such
Dispute has not been resolved within 20 Business Days after
the expiration of the 45 day period provided in
Section 13.03, then (i) if the Dispute relates solely to
(A) a claim by a Member or the Board of Managers that the
other Member has failed to pay the Company a Designated
Sublease Amount or an amount in respect of a Member-Funded
Capital Expenditure, a Member-Funded Indemnity Expenditure
or an Agreed Additional Capital Contribution required to be
made by it pursuant to Section 4.02 (a "Disputed Capital
Contribution Amount"), (B) the determination of any of the
following amounts with respect to any period:  distributions
pursuant to Article V; the Aggregate Tax Rate; Adjusted
DD&A; Adjusted EBITDA; EBITDA; Distributable Cash; the
Average Annual Level and adjustments to Adjustable Amounts;
the Normal Annual Capital Budget Amount; Ordinary Course
Lease Expenses; Profit and Loss; the Tax Distribution
Amount; the Tax Liability of any Member; and the
determination of fair market value of property distributed
in kind under Section 15.03, (C) the resolution of any
dispute arising under Section 8.11(b) with respect to
Affiliate Transactions or (D) the resolution of any dispute
arising under Section 8.12 with respect to certain Affiliate
Transactions related to Crude Oil Purchases and Shared
Services (any Dispute relating to any of the matters set
forth in clause (A), (B), (C) or (D) above being referred to
herein as an "Arbitratable Dispute"), such Dispute shall be
settled pursuant to the arbitration procedures set forth in
Appendix B and (ii) if the Dispute does not relate primarily
to an Arbitratable Dispute, each party hereto shall be
permitted to take such actions at law or in equity as it is
otherwise permitted to take or as may be available under
Applicable Law.

          (b)  All negotiations between the Chief Executive
Officer of Ashland and the President of Marathon  pursuant
to this Section 13.04 shall be treated as compromise and
settlement negotiations.  Nothing said or disclosed, nor any
document produced, in the course of such negotiations which
is not otherwise independently discoverable shall be offered
or received as evidence or used for impeachment or for any
other purpose in any current or future arbitration or
litigation.

          SECTION 13.05.  Right to Equitable Relief
Preserved.  Notwithstanding anything in this Agreement or
Appendix B to the contrary, either Member or the Company may
at any time seek from any court of the United States located
in the State of Delaware or from any Delaware state court,
any interim, provisional or injunctive relief that may be
necessary to protect the rights or property of such party or
maintain the status quo before, during or after the pendency
of the negotiation process or the arbitration proceeding or
any other proceeding contemplated by Section 13.03 or 13.04.


                         ARTICLE XIV
                              
    Rights and Remedies with Respect to Monetary Disputes

          SECTION 14.01.  Ability of Company to Borrow to
Fund Disputed Monetary Amounts.  (a)  If the Company or a
Member on behalf of the Company (a "Non-Delinquent Member")
claims that the other Member (a "Delinquent Member") owes
the Company a monetary amount in respect of either (i) a
Disputed Capital Contribution Amount or (ii) an
indemnification obligation under Article IX of the Asset
Transfer and Contribution Agreement that the Company or the
Non-Delinquent Member claims the Delinquent Member owes the
Company and is either (A) past due or (B) in dispute
(a "Disputed Indemnification Amount") (each such claim
described in clauses (i) and (ii) above being a "Monetary
Dispute", and each such claimed amount being a "Disputed
Monetary Amount"), and if (1) the Disputed Monetary Amount
itself, or when added together all other Disputed Monetary
Amounts, exceeds $7.5 million; (2) the Board of Managers (by
vote of a majority of the Representatives of the
Non-Delinquent Member at a special or regular meeting of the
Board of Managers (which majority shall constitute a quorum
for purposes of the transaction of such business)) has
determined that an out-of-pocket disbursement of such
Disputed Monetary Amount or any portion thereof by the
Company or one of its subsidiaries within the next twelve
months is reasonably necessary for the operation and conduct
of the Company's Business and, accordingly, that such amount
should be paid within the next twelve months; (3) the
aggregate amount of all Disputed Monetary Amounts (or
portions thereof) that the Board of Managers shall have
determined pursuant to clause (2) above should be paid
within the next twelve months (such aggregate amount being
the "Additional Required Cash Amount") exceeds $7.5 million;
(4) postponement by the Company or such subsidiary of such
disbursement until such time as the Monetary Dispute is
reasonably likely to be finally resolved pursuant to an
arbitration proceeding in accordance with Appendix B to this
Agreement or Appendix B to the Asset Transfer and
Contribution Agreement, as applicable (an "Arbitration
Proceeding"), would have, or would reasonably be expected to
have, a Material Adverse Effect on the Company's Business;
and (5) the Delinquent Member has not paid the Company the
Disputed Monetary Amount pursuant to Section 14.02 or
otherwise, then the Board of Managers (by vote of a majority
of the Representatives of the Non-Delinquent Member at a
special or regular meeting of the Board of Managers (which
majority shall constitute a quorum for purposes of the
transaction of such business)) shall be permitted to cause
the Company to incur an amount of Indebtedness equal to such
Additional Required Cash Amount, which Indebtedness may be
borrowed from a third party or the Non-Delinquent Member.

          (b) If the Non-Delinquent Member lends the Company
the Additional Required Cash Amount pursuant to Section
14.01(a), then (i) the amount actually lent by the
Non-Delinquent Member (the "Advanced Amount") and all
accrued interest thereon shall be due and payable on the
Arbitration Payment Due Date (provided that the Company
shall be permitted to prepay the Advanced Amount in whole or
in part at any time prior to such date); and (ii) the
Advanced Amount shall bear interest at the Base Rate from
the date on which such advance is made until the date that
the Advanced Amount, together with all interest accrued
thereon, is repaid to the Non-Delinquent Member.

          SECTION 14.02.  Interim Payment of Disputed
Monetary Amount.  In order to reduce the amount of
liquidated damages that a Delinquent Member would be
required to pay to the Company pursuant to Section 14.03 in
the event that such Delinquent Member loses in an
Arbitration Proceeding with respect to a Monetary Dispute,
the Delinquent Member shall be permitted to pay the Company
the related Disputed Monetary Amount prior to the
commencement of such Arbitration Proceeding.  The
Arbitration Tribunal or Sole Arbitrator, as applicable,
shall not take into consideration in determining the
liability of the Delinquent Member, a decision by such
Delinquent Member to pay the Disputed Monetary Amount prior
to the commencement of the Arbitration Proceeding.

          SECTION 14.03.  Liquidated Damages.  (a)  No
Interim Payment of Disputed Monetary Amount--Delinquent
Member is Found Liable for Final Monetary Amount.  If (i) it
is finally determined in an Arbitration Proceeding that a
Delinquent Member owes the Company a monetary amount in
respect of (A) a Disputed Capital Contribution Amount or
(B) a Disputed Indemnification Amount (each such finally
determined amount being a "Final Monetary Amount") and
(ii) the Delinquent Member had not paid the Company the
Disputed Monetary Amount prior to the commencement of such
Arbitration Proceeding pursuant to Section 14.02, then the
Delinquent Member shall promptly, and in any event on or
before the tenth Business Day following the date on which
the Arbitration Tribunal or Sole Arbitrator makes its final
determination (such tenth Business Day being the
"Arbitration Payment Due Date"), pay to the Company (A) the
Final Monetary Amount, together with interest, accrued from
the commencement of the Arbitration Proceeding to the date
that the Delinquent Member pays the Final Monetary Amount to
the Company, on the Final Monetary Amount, at a rate per
annum equal to (1) during the period from the commencement
of the Arbitration Proceeding to the Arbitration Payment Due
Date, the Prime Rate and (2) at any time thereafter, 150% of
the Prime Rate, in each case, with daily accrual of
interest, plus (B) an amount equal to 25% of the Final
Monetary Amount.

         (b)  Interim Payment of Disputed Monetary Amount--
Delinquent Member is Found Liable for the Same Amount.  If
(i) it is finally determined in an Arbitration Proceeding
that a Delinquent Member owes the Company a Final Monetary
Amount, (ii) the Final Monetary Amount is equal to the
Disputed Monetary Amount and (iii) the Delinquent Member had
paid the Company the Disputed Monetary Amount prior to the
commencement of such Arbitration Proceeding pursuant to
Section 14.02, then if the Final Monetary Amount is equal to
the Disputed Monetary Amount, the Delinquent Member shall
not owe the Company any other amount in respect of the
Monetary Dispute.

         (c)  Interim Payment of Disputed Monetary Amount--
Delinquent Member is Found Liable for a Greater Amount.  If
(i) it is finally determined in an Arbitration Proceeding
that a Delinquent Member owes the Company a Final Monetary
Amount, (ii) the Final Monetary Amount is greater than the
Disputed Monetary Amount and (iii) the Delinquent Member had
paid the Company the Disputed Monetary Amount prior to the
commencement of such Arbitration Proceeding pursuant to
Section 14.02, then the Delinquent Member shall promptly,
and in any event on or before the Arbitration Payment Due
Date, pay to the Company an amount (an "Additional Monetary
Amount") equal to (A) the Final Monetary Amount less (B) the
Disputed Monetary Amount, together with interest, accrued
from the commencement of the Arbitration Proceeding to the
date that the Delinquent Member pays the Additional Monetary
Amount to the Company, on the Additional Monetary Amount, at
a rate per annum equal to (1) during for the period from the
commencement of the Arbitration Proceeding to the
Arbitration Payment Due Date, the Prime Rate and (2) at any
time thereafter, 150% of the Prime Rate, in each case, with
daily accrual of interest.

          (d)  Interim Payment of Disputed Monetary Amount--
Delinquent Member is Found Liable for a Lesser Amount.  If
(i) it is finally determined in an Arbitration Proceeding
that a Delinquent Member owes the Company a Final Monetary
Amount, (ii) the Final Monetary Amount is less than the
Disputed Monetary Amount and (iii) the Delinquent Member had
paid the Company the Disputed Monetary Amount prior to the
commencement of such Arbitration Proceeding, then the
Company shall promptly, and in any event on or before the
Arbitration Payment Due Date, repay to the Delinquent Member
an amount (a "Refundable Amount") equal to (A) the Disputed
Monetary Amount less (B) the Final Monetary Amount, together
with interest, accrued from the commencement of the
Arbitration Proceeding to the date that the Company repays
the Refundable Amount to the Delinquent Member, on the
Refundable Amount, at a rate per annum equal to (1) during
the period from the commencement of the Arbitration
Proceeding to the Arbitration Payment Due Date, the Prime
Rate and (2) at any time thereafter, 150% of the Prime Rate,
in each case, with daily accrual of interest.

          (e)  Interim Payment of Disputed Monetary Amount--
Delinquent Member is Found Not Liable for Disputed Monetary
Amount.  If (i) it is finally determined in an Arbitration
Proceeding that a Delinquent Member does not owe the Company
the related Disputed Monetary Amount and (ii) the Delinquent
Member had paid the Company the Disputed Monetary Amount
prior to the commencement of such Arbitration Proceeding,
then the Company shall promptly, and in any event on or
before the Arbitration Payment Due Date, repay to the
Delinquent Member an amount equal to the Disputed Monetary
Amount, together with interest, accrued from the
commencement of the Arbitration Proceeding to the date that
the Company repays the Disputed Monetary Amount to the
Delinquent Member, on the Disputed Monetary Amount, at a
rate per annum equal to (A) during the period from the
commencement of the Arbitration Proceeding to the
Arbitration Payment Due Date, the Prime Rate and (B) at any
time thereafter, 150% of the Prime Rate, in each case, with
daily accrual of interest.

          SECTION 14.04.  Right of Set-Off.  Notwithstanding
any provision to the contrary contained in this Agreement,
if at the time of a Distribution Date a Delinquent Member
has failed to pay the Company an amount that it was required
pursuant to Section 14.03 to pay to the Company on or before
such Distribution Date, then on such Distribution Date, the
Company shall be permitted to set off from the distribution
that it would otherwise be required to make to such
Delinquent Member pursuant to Section 5.01 on such
Distribution Date, an amount equal to such unpaid amount.
If the amount of the distribution that such Delinquent
Member was otherwise entitled to receive pursuant to
Section 5.01 on such Distribution Date is less than the
aggregate amount that such Delinquent Member owes to the
Company pursuant to Section 14.03, then the Company shall be
permitted to set off from subsequent distributions that it
would otherwise make to such Delinquent Member pursuant to
Section 5.01 the remaining unpaid amount until such time as
such remaining unpaid amount shall have been paid in full.
A Delinquent Member's interest in distributions to be made
to such Delinquent Member pursuant to Section 5.01 shall be
reduced by any amount set off by the Company against such
distributions pursuant to this Section 14.04(a).

          SECTION 14.05.  Security Interest.  (a) Each
Member hereby agrees that if (i) it has failed to pay the
Company an amount that it was required to pay to the Company
pursuant to Section 14.03 on or prior to the related
Arbitration Payment Due Date, and (ii) the Board of Managers
(by vote of a majority of the Representatives of the other
Member at a special or regular meeting of the Board of
Managers (which majority shall constitute a quorum for
purposes of the transaction of such business) so requests,
such Member shall (A) on the Business Day next following
such Arbitration Payment Due Date, grant to the Company, as
security for the performance of its obligation to pay the
Company such amount owed (but for no other amount), a first
priority security interest in its Membership Interests and
the proceeds thereof (a "Security Interest"), all under the
Uniform Commercial Code of the State of Delaware and (ii)
promptly thereafter, execute and deliver to the Company all
financing statements and other instruments that the Board of
Managers (by vote of a majority of the Representatives of
the other Member at a special or regular meeting of the
Board of Managers (which majority shall constitute a quorum
for purposes of the transaction of such business)) may
request to effectuate and carry out the preceding provisions
of this Section 14.05(a).  The Company shall be entitled to
all the rights and remedies of a secured party under the
Uniform Commercial Code of the State of Delaware with
respect to any Security Interest granted by such Member.  At
the option of the Company, this Agreement or a carbon,
photographic, or other copy hereof may serve as a financing
statement with respect to any such Security Interest.  For
purposes of perfecting a Security Interest, a Member's
Membership Interests shall be deemed to be a "security"
governed by Chapter 8 of the Delaware Uniform Commercial
Code and as such term is therein defined in Section 8-102(c)
thereunder.

          (b)  If the Company incurs Indebtedness pursuant
to Section 14.01 by borrowing from a Non-Delinquent Member,
the Company shall be permitted to assign all its rights with
respect to a Security Interest granted to it pursuant to
Section 14.05(a) to such Non-Delinquent Member as security
for such Indebtedness; provided that such Non-Delinquent
Member shall not be permitted to assign such Security
Interest to a third party.


                         ARTICLE XV
                              
                 Dissolution and Termination

          SECTION 15.01.  Dissolution.  The Company shall be
dissolved and its business and affairs wound up upon the
earliest to occur of any one of the following events:

          (a) the expiration of the Term of the Company;
     
          (b) the sale or other disposition of all or
     substantially all the property of the Company;
          (c) the written consent of both Members;
     
          (d) the unanimous agreement of all Representatives
     on the Board of Managers;
     
          (e) the bankruptcy, involuntary liquidation or
     dissolution of either Member; or
     
          (f) the entry of a decree of judicial dissolution
     pursuant to Section 18-802 of the Delaware Act.
     
The bankruptcy, involuntary liquidation of dissolution of a
Member shall cause a Member to cease to be a member of the
Company.  Notwithstanding the foregoing, the Company shall
not be dissolved and its business and affairs shall not be
wound up upon the occurrence of any event specified in
(i) clause (e) above if within 90 days after the date on
which such event occurs, the remaining Member elects in
writing to continue the business of the Company or (ii)
clause (a) above if a Non-Terminating Member purchases the
Membership Interests of the Terminating Member pursuant to
its Special Termination Right.  Except as provided in this
paragraph and Section 15.01(e), and to the fullest extent
permitted by the Delaware Act, the occurrence of an event
that causes a Member to cease to be a member of the Company
shall not cause the Company to be dissolved or its business
or affairs to be wound up, and upon the occurrence of such
an event, the business of the Company shall continue without
dissolution.

          SECTION 15.02.  Winding Up of Company.  Upon
dissolution, the Company's business shall be liquidated in
an orderly manner.  The Board of Managers shall act as the
liquidating trustee (unless the Board of Managers elects to
appoint a liquidating trustee) to wind up the affairs of the
Company pursuant to this Agreement.  In performing its
duties, the liquidating trustee is authorized to sell,
distribute, exchange or otherwise dispose of the assets of
the Company in accordance with the Delaware Act and in any
reasonable manner that the liquidating trustee shall
determine to be in the best interest of the Members or their
successors-in-interest.

          SECTION 15.03.  Distribution of Property.  In the
event the Board of Managers determines that it is necessary
in connection with the liquidation of the Company to make a
distribution of property in kind, such property shall be
transferred and conveyed to the Members so as to vest in
each of them as a tenant in common an undivided interest in
the whole of such property equal to their interests in the
property based upon the amount of cash that would be
distributed to each of the Members in accordance with
Article V if such property were sold for an amount of cash
equal to the fair market value of such property, as
determined and approved by the Board of Managers pursuant to
a vote in accordance with Section 8.07(b).

          SECTION 15.04.  Time Limitation.  Any liquidating
distribution pursuant to this Article XV shall be made no
later than the later of (a) the end of the taxable year
during which such liquidation occurs and (b) 90 days after
the date of such liquidation.

          SECTION 15.05.  Termination of Company.  The
Company shall terminate when all assets of the Company,
after payment of or due provision for all debts, liabilities
and obligations of the Company, shall have been distributed
to the Members in the manner provided for in this Agreement,
and the Certificate of Formation shall have been canceled in
the manner provided by the Delaware Act.


                         ARTICLE XVI
                              
                        Miscellaneous

          SECTION 16.01.  Notices.  Any notice, consent or
approval to be given under this Agreement shall be in
writing and shall be deemed to have been given if delivered:
(i) personally by a reputable courier service that requires
a signature upon delivery; (ii) by mailing the same via
registered or certified first-class mail, postage prepaid,
return receipt requested; or (iii) by telecopying the same
with receipt confirmation (followed by a first-class mailing
of the same) to the intended recipient.  Any such writing
will be deemed to have been given:  (a) as of the date of
personal delivery via courier as described above; (b) as of
the third calendar day after depositing the same into the
custody of the postal service as evidenced by the
date-stamped receipt issued upon deposit of the same into
the mails as described above; and (c) as of the date and
time electronically transmitted in the case of telecopy
delivery as described above, in each case addressed to the
intended party at the address set forth below:

     To the Board of Managers:
     
     Marathon Ashland Petroleum LLC
     539 South Main Street
     Findlay, Ohio 45840
     Attn:  General Counsel
     Phone: (419) 422-2121
     Fax:   (419) 421-4115
     
     To Marathon:
     
     Marathon Oil Company
     5555 San Felipe
     P.O. Box 3128
     Houston, TX 77056-2723
     Attn:  General Counsel
     Phone: (713) 296-4137
     Fax:   (713) 296-4171
     
     To Ashland:
     
     Ashland Inc.
     50 E. RiverCenter Boulevard
     P.O. Box 391
     Covington, KY 41012-0391
     Attn:  General Counsel
     Phone: (606) 815-4711
     Fax:   (606) 815-3823
     
Any party may designate different addresses or telecopy
numbers by notice to the other parties.

          SECTION 16.02.  Merger and Entire Agreement.  This
Agreement (including the Exhibits, Schedules and Appendices
attached hereto), together with the other Transaction
Documents (including the exhibits, schedules and appendices
thereto) and certain other agreements executed
contemporaneously with the Master Formation Agreement
constitutes the entire Agreement of the parties hereto and
supersedes any prior understandings, agreements, or
representations by or among the parties hereto, written or
oral, to the extent they relate in any way to the subject
matter hereof.

          SECTION 16.03.  Assignment.  A party hereto shall
not assign all or any of its rights, obligations or benefits
under this Agreement to any third party otherwise than
(i) in connection with a Transfer of its Membership
Interests pursuant to Article X, (ii) with the prior written
consent of the other party hereto, which consent may be
withheld in such party's sole discretion, (iii) the granting
by a Member of a Security Interest to the Company pursuant
to Section 14.05 or (iv) pursuant to Article V of the
Put/Call, Registration Rights and Standstill Agreement, and
any attempted assignment not in compliance with this
Section 16.03 shall be void ab initio.

          SECTION 16.04.  Parties in Interest.  This
Agreement shall inure to the benefit of, and be binding
upon, the parties hereto and their respective successors,
legal representatives and permitted assigns.

          SECTION 16.05.  Counterparts.  This Agreement may
be executed in counterparts, each of which shall be deemed
an original, but all of which together shall constitute one
and the same instrument.

          SECTION 16.06.  Amendment; Waiver.  This Agreement
may not be amended except in a written instrument signed by
each of the parties hereto and expressly stating it is an
amendment to this Agreement.  Any failure or delay on the
part of any party hereto in exercising any power or right
hereunder shall not operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power
preclude any other or further exercise thereof or the
exercise of any other right or power hereunder or otherwise
available at law or in equity.

          SECTION 16.07.  Severability.  If any term,
provision, covenant, or restriction of this Agreement or the
application thereof to any person or circumstance, at any
time or to any extent, is held by a court of competent
jurisdiction or other Governmental Authority to be invalid,
void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement (or
the application of such provision in other jurisdictions or
to persons or circumstances other than those to which it was
held invalid or unenforceable) shall in no way be affected,
impaired or invalidated, and to the extent permitted by
Applicable Law, any such term, provision, covenant or
restriction shall be restricted in applicability or reformed
to the minimum extent required for such to be enforceable.
This provision shall be interpreted and enforced to give
effect to the original written intent of the parties hereto
prior to the determination of such invalidity or
unenforceability.

          SECTION 16.08.  GOVERNING LAW.  THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO THE
PRINCIPLES OF CONFLICTS OF LAW THEREOF.  THIS AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH SECTION 18-1101 OF THE
DELAWARE ACT.  ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO
ANY CLAIM OR PROCEEDING RELATED TO OR ARISING OUT OF THIS
AGREEMENT, OR ANY TRANSACTION OR CONDUCT IN CONNECTION
HEREWITH, IS WAIVED.

          SECTION 16.09.  Enforcement.  The parties hereto
agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed
in accordance with their specific terms or were otherwise
breached.  It is accordingly agreed that the parties hereto
shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the
terms and provisions of this Agreement in the Delaware
Chancery Court; provided that if the Delaware Chancery Court
does not have jurisdiction with respect to such matter, the
parties hereto shall be entitled to enforce specifically the
terms and provisions of this Agreement in any court of the
United States located in the State of Delaware or in
Delaware state court, this being in addition to any other
remedy to which they are entitled at law or in equity.  In
addition, each of the parties hereto (i) consents to submit
itself to the personal jurisdiction of the Delaware Chancery
Court in the event that any dispute arises out of this
Agreement or any of the transactions contemplated by this
Agreement; provided that if the Delaware Chancery Court does
not have jurisdiction with respect to any such dispute, such
party consents to submit itself to the personal jurisdiction
of any Federal court located in the State of Delaware or any
Delaware state court, (ii) agrees to appoint and maintain an
agent in the State of Delaware for service of legal process,
(iii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave
from any such court, (iv) agrees that it will not plead or
claim in any such court that any action relating to this
Agreement or any of the transactions contemplated by this
Agreement in any such court has been brought in an
inconvenient forum and (v) agrees that it will not initiate
any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court
other than (1) the Delaware Chancery Court, or (2) if the
Delaware Chancery Court does not have jurisdiction with
respect to such action, a Federal court sitting in the State
of Delaware or a Delaware state court.

          SECTION 16.10.  Creditors.  None of the provisions
of this Agreement shall be for the benefit of or enforceable
by any creditor of the Company or of any Member.

          SECTION 16.11.  No Bill for Accounting.  In no
event shall either Member have any right to file a bill for
an accounting or any similar proceeding.

          SECTION 16.12.  Waiver of Partition.  Each Member
hereby waives any right to partition of the Company
property.

          SECTION 16.13.  Table of Contents, Headings and
Titles.  The table of contents and section headings of this
Agreement and titles given to Exhibits and Schedules to this
Agreement are for reference purposes only and are to be
given no effect in the construction or interpretation of
this Agreement.

          SECTION 16.14.  Use of Certain Terms; Rules of
Construction.  As used in this Agreement, the words
"herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to
any particular paragraph, subparagraph, section, subsection
or other subdivision.  Whenever the context may require, any
pronoun used in this Agreement shall include the corres
ponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the
plural and vice versa.  Each party hereto agrees that any
rule of construction to the effect that any ambiguities are
to be resolved against the drafting party shall not be
employed in the interpretation or construction of this
Agreement or any Transaction Document.

          SECTION 16.15.  Holidays.  Notwithstanding any
deadline for payment, performance, notice or election under
this Agreement, if such deadline falls on a date that is not
a Business Day, then the deadline for such payment, perform
ance, notice or election will be extended to the next
succeeding Business Day.

          SECTION 16.16.  Third Parties.  Nothing herein
expressed or implied is intended or shall be construed to
confer upon or give any person and their respective
successors, legal representatives and permitted assigns any
rights, remedies or basis for reliance upon, under or by
reason of this Agreement.

          SECTION 16.17.  Liability for Affiliates.  Except
where and to the extent that a contrary intention otherwise
appears, where a Member undertakes to cause its Affiliates
to take or abstain from taking any action, such undertaking
shall mean (i) in the case of any Affiliate that is
controlled by such Member, that such Member shall cause such
Affiliate to take or abstain from taking such action and
(ii) in the case of an Affiliate that controls or is under
common control with such Member, that such Member shall use
its commercially reasonable best efforts to cause such
Affiliates to take or abstain from taking such action;
provided, however, that such Member shall not be required to
violate, or cause any director of such Affiliate to violate,
any fiduciary duty to minority shareholders of such
Affiliate.

          IN WITNESS WHEREOF, this Agreement has been duly
executed by the Members as of the day and year first above
written.


                              MARATHON OIL COMPANY
                              
                                by       /s/ Victor G. Beghini
                                  Name:   Victor G. Beghini
                                  Title:  President
                              
                              
                              ASHLAND INC.
                              
                                by        /s/Paul W. Chellgren
                                  
                                  Name:   Paul W. Chellgren
                                  Title:  Chairman of the
                                          Board and Chief
                                          Executive Officer





                     TABLE OF CONTENTS

                                                        Page


                      ARTICLE I

          Certain Definitions; Applicable GAAP

SECTION 1.01.  Definitions                                 2
SECTION 1.02.  Applicable GAAP                            21


                     ARTICLE II

               General Provisions

     SECTION 2.01.  Formation; Effectiveness             22
     SECTION 2.02.  Name                                 22
     SECTION 2.03.  Term                                 22
     SECTION 2.04.  Registered Agent and Office          23
     SECTION 2.05.  Purpose                              23
     SECTION 2.06.  Powers                               24


ARTICLE III

Members

     SECTION 3.01.  Members; Percentage Interests        25
     SECTION 3.02.  Adjustments in Percentage Interests  26


ARTICLE IV

Capital Contributions; Assumption of Assumed
Liabilities

     SECTION 4.01.  Contributions                        26
     SECTION 4.02.  Additional Contributions             28
     SECTION 4.03.  Negative Balances; Withdrawal
                     of Capital; Interest                29


ARTICLE V

Distributions

     SECTION 5.01.  Distributions                        29
     SECTION 5.02.  Certain General Limitations          32
     SECTION 5.03.  Distributions in Kind                32
     SECTION 5.04.  Distributions in the Event of an
                     Exercise of the Marathon Call Right,
                     Ashland Put Right or the Special
                     Termination Rights                 33


ARTICLE VI

Allocations and Other Tax Matters

     SECTION 6.01.  Maintenance of Capital Accounts      33
     SECTION 6.02.  Allocations                          34
     SECTION 6.03.  Tax Allocations                      35
     SECTION 6.04.  Tax Elections                        35
     SECTION 6.05.  Fiscal Year                          36
     SECTION 6.06.  Tax Returns                          36
     SECTION 6.07.  Tax Matters Partner                  37
     SECTION 6.08.  Duties of Tax Matters Partner        37
     SECTION 6.09.  Survival of Provisions               39
     SECTION 6.10.  Section 754 Election                 39
     SECTION 6.11.  Qualified Income Offset,
                     Minimum Gain Chargeback            39
     SECTION 6.12.  Tax Treatment of Designated Sublease
                     Agreements                         39
     SECTION 6.13.  Tax Treatment of Reimbursed Liability
                     Payments                           40
     SECTION 6.14.  Tax Treatment of Disproportionate
                     Payments                           40
     SECTION 6.15.  Allocation of Income, Gains, Losses
                     and Other Items from LOOP LLC and
                     LOCAP, Inc                         41
     SECTION 6.16.  Allocation of Income, Gain, Loss,
                     Deduction and Credits Attributable
                     to Stock-Based Compensation        41


ARTICLE VII

Books and Records

     SECTION 7.01.  Books and Records; Examination       42
     SECTION 7.02.  Financial Statements and Reports     42
     SECTION 7.03.  Notice of Affiliate Transactions;
                     Annual List                        44


ARTICLE VIII

Management of the Company

     SECTION 8.01.  Managing Members                     45
     SECTION 8.02.  Board of Managers                    45
     SECTION 8.03.  Responsibility of the Board of
                     Managers                            46
     SECTION 8.04.  Meetings                             46
     SECTION 8.05.  Compensation                         48
     SECTION 8.06.  Quorum                               48
     SECTION 8.07.  Voting                               49
     SECTION 8.08.  Matters Constituting Super Majority
                     Decisions                           50
     SECTION 8.09.  Annual Capital Budget                56
     SECTION 8.10.  Business Plan                        56
     SECTION 8.11.  Requirements as to Affiliate
                     Transactions                        57
     SECTION 8.12.  Review of Certain Affiliate Transactions
                     Related to Crude Oil Purchases
                     and Shared Services                 59
     SECTION 8.13.  Adjustable Amounts                   61
     SECTION 8.14.  Company Leverage Policy              62
     SECTION 8.15.  Company's Investment Guidelines      62
     SECTION 8.16.  Requirements as to Operating Leases  63
     SECTION 8.17.  Limitations on Actions Relating to the
                     Calculation of Distributable Cash   63
     SECTION 8.18.  Reliance by Third Parties            63
     SECTION 8.19.  Integration of Retail Operations     63


ARTICLE IX

Officers

     SECTION 9.01.  Election, Appointment and Term
                      of Office                          65
     SECTION 9.02.  Resignation, Removal and Vacancies   66
     SECTION 9.03.  Duties and Functions of Executive
                      Officers                           67


ARTICLE X

Transfers of Membership Interests

     SECTION 10.01.  Restrictions on Transfers           67
     SECTION 10.02.  Conditions for Admission            71
     SECTION 10.03.  Allocations and Distributions       72
     SECTION 10.04.  Right of First Refusal              72
     SECTION 10.05.  Restriction on Resignation
                      or Withdrawal                      73


ARTICLE XI

Liability, Exculpation and Indemnification

     SECTION 11.01.  Liability                           73
     SECTION 11.02.  Exculpation                         73
     SECTION 11.03.  Indemnification                     74


ARTICLE XII

Fiduciary Duties

     SECTION 12.01.  Duties and Liabilities
                     of Covered Persons                 75
     SECTION 12.02.  Fiduciary Duties of Members
                     of the Company and Members
                     of the Board of Managers           76


ARTICLE XIII

Dispute Resolution Procedures

     SECTION 13.01.  General                             76
     SECTION 13.02.  Dispute Notice and Response         76
     SECTION 13.03.  Negotiation Between Senior
     Managers                                            77
     SECTION 13.04.  Negotiation Between Chief Executive
                     Officer and President               77
     SECTION 13.05.  Right to Equitable Relief
     Preserved                                           78


ARTICLE XIV

Rights and Remedies with Respect to Monetary Disputes

     SECTION 14.01.  Ability of Company to Borrow to Fund
                     Disputed Monetary Amounts          79
     SECTION 14.02.  Interim Payment of Disputed  Monetary
                     Amount                             80
     SECTION 14.03.  Liquidated Damages                  80
     SECTION 14.04.  Right of Set-Off                    82
     SECTION 14.05.  Security Interest                   83


ARTICLE XV

Dissolution and Termination

     SECTION 15.01.  Dissolution                         84
     SECTION 15.02.  Winding Up of Company               84
     SECTION 15.03.  Distribution of Property            85
     SECTION 15.04.  Time Limitation                     85
     SECTION 15.05.  Termination of Company              85


ARTICLE XVI

Miscellaneous

     SECTION 16.01.  Notices                             85
     SECTION 16.02.  Merger and Entire Agreement         86
     SECTION 16.03.  Assignment                          87
     SECTION 16.04.  Parties in Interest                 87
     SECTION 16.05.  Counterparts                        87
     SECTION 16.06.  Amendment; Waiver                   87
     SECTION 16.07.  Severability                        87
     SECTION 16.08.  GOVERNING LAW                       88
SECTION 16.09.  Enforcement                               88
SECTION 16.10.  Creditors                                 89
     SECTION 16.11.  No Bill for Accounting              89
     SECTION 16.12.  Waiver of Partition                 89
     SECTION 16.13.  Table of Contents, Headings and
                       Titles                            89
     SECTION 16.14.  Use of Certain Terms;
                     Rules of Construction              89
     SECTION 16.15.  Holidays                            89
     SECTION 16.16.  Third Parties                       89
     SECTION 16.17.  Liability for Affiliates            89


Appendix A               Certain Definitions
Appendix B               Procedures for Dispute Resolution

Exhibit A                Speedway SuperAmerica LLC Retail Integration
                         Protocol
Schedule 1.01            Financed Properties
Schedule 4.01(c)         Subleased Property
Schedule 4.02(a)-1       Marathon Capital Expenditures
Schedule 4.02(a)-2       Ashland Capital Expenditures
Schedule 8.01(k)(i)(A)   Closing Date Affiliate Transactions
Schedule 8.14            Company Leverage Policy
Schedule 8.15            Company Investment Guidelines
Schedule A                         Calculations re: Normal
                         Annual Capital Budget Amount
Schedule B-1                       Adjustments to Historical
                         EBITDA (Marathon)
Schedule B-2                       Adjustments to Historical
                         EBITDA (Ashland)
Schedule C               Initial Executive Officers


_______________________________
1NOTE:  THIS DOCUMENT (VERSION 5) HAS BEEN MARKED FOR
AUTOMATIC TABLE OF CONTENTS GENERATION



                                                           

Exhibit 10(i)
                                              EXECUTION COPY
                    AMENDMENT NO. 1, dated as of
               December 31, 1998 (this "Amendment") to the
               PUT/CALL, REGISTRATION RIGHTS AND STANDSTILL
               AGREEMENT dated as of January 1, 1998 (the
               "Agreement") among MARATHON OIL COMPANY, an
               Ohio corporation, USX CORPORATION, a Delaware
               corporation, ASHLAND INC., a Kentucky
               corporation and MARATHON ASHLAND PETROLEUM
               LLC, a Delaware limited liability company
               (collectively, the "Parties").

          WHEREAS, the Parties have heretofore entered into
the Agreement (capitalized terms used in this Amendment and
not defined herein shall have the meanings given such terms
in the Agreement); and

          WHEREAS, the Parties wish to amend the Agreement
to reflect certain changes to the prices set forth therein.

          NOW, THEREFORE, in consideration of the mutual
agreements herein contained and other good and valuable
consideration, the sufficiency and receipt of which are
hereby acknowledged, the Parties agree as follows:

          Section 1.  Amendments:

          (a)  Section 1.01 of the Agreement is amended to
insert the following definition after the definition of
"Price Index" and prior to the definition of "Private Label
Packaged Motor Oil Business":

          "'Price Reduction' shall have the meaning set
     forth in Section 2.02(b) of the Put/Call,
 Registration
     Rights and Standstill Agreement."

          (b)  Section 2.02(a) of the Agreement is amended
to read in its entirety as follows:

          "(a)  Amount.  The Special Termination Price shall
     be an amount equal to (i) the product of (x) 100% of
     the Appraised Value of the Company multiplied by
     (y) the Terminating Member's Percentage Interest, less
     (ii) if the Terminating Member is Ashland, the Price
     Reduction."
          
          (c)  Sections 2.02(b) and 2.02(c) as numbered in
the Agreement are numbered Sections 2.02(c) and 2.02(d)
respectively and a new Section 2.02(b) of the Agreement is
added to read in its entirety as follows:
          
          "(b) Price Reduction.  Price Reduction means an
     amount equal to the excess of (i) $14,139,519, which is
     the agreed present value at January 1, 1998, of the tax
     cost to Ashland ("Present Value Tax Cost") of
     allocating to it depreciation deductions as shown in
     Chart A in Schedule 2.02(b)(1) ("Chart A
     Depreciation"), as compared to allocating to Ashland
     depreciation deductions as shown in Chart B in
     Schedule 2.02(b)(1) ("Chart B Depreciation"), over
     (ii) the present value at January 1, 1998, of the tax
     cost to Ashland of allocating to it Chart A
     Depreciation as compared to Chart B Depreciation,
     taking into account Ashland's decreased taxable gain or
     increased taxable loss on the sale of all of its
     Membership Interest in the Company when Chart A
     Depreciation as compared to Chart B Depreciation is
     allocated to it ("Present Value Tax Cost on Sale").

          "Chart A Depreciation represents the agreed
     depreciation deductions with respect to property
     contributed by Ashland on the Closing of the Asset
     Transfer and Contribution Agreement allocated to it
     through the depreciable life of such property as set
     forth in Section 6.03 of the LLC Agreement as amended
     and restated as of December 31, 1998.  Chart B
     Depreciation represents the agreed depreciation
     deductions with respect to property contributed by
     Ashland on the Closing of the Asset Transfer and
     Contribution Agreement allocated to it through the
     depreciable life of such property as set forth in
     Sections 6.03, 6.12 and 4.01(c) of such agreement as in
     effect prior to such restatement as if it were in
     effect through such depreciable life, but treating the
     assets comprising the Merrill Lynch Master Lease
     Program as Subleased Property listed on Schedule
     4.01(c) for purposes of Sections 4.01(c) and 6.12.
     Chart A Depreciation and Chart B Depreciation shall not
     be revised to reflect the actual amount of depreciation
     deductions with respect to property contributed by
     Ashland on the Closing of the Asset Transfer and
     Contribution Agreement allocated to Ashland, or to take
     into account the sale or other disposition by the
     Company of any of the property contributed by Ashland
     on the Closing of the Asset Transfer and Contribution
     Agreement.

          "Solely for purposes of determining the Present
     Value Tax Cost and the Present Value Tax Cost on Sale,
     the following factors and assumptions have been and
     will be used: (i) discount rate of 9% per annum,
     (ii) combined Federal/State income tax rate of 39%,
     (iii) the cash flow impact of a reduction in Ashland's
     income taxes for a year as the result of Chart A or
     Chart B Depreciation is realized on the last day of
     that year and (iv) the cash flow impact of Ashland's
     income tax expense or benefit arising from a sale of
     all of its membership interest in the Company is
     incurred or realized on the last day of the year of
     sale.

          "Schedule 2.02(b)(2) reflects, for purposes of
     illustration, the Present Value Tax Cost on Sale if
     Ashland sells all of its 38% membership interest in the
     Company on January 1, 2005.  The Present Value Tax Cost
     on Sale with respect to Ashland's sale of all of its
     interest in the Company at a date different than
     January 1, 2005, shall be computed in the same manner
     as the Present Value Tax Cost on Sale illustrated in
     Schedule 2.02(b)(2).

          "Consistent with the foregoing principle, if
     Ashland sells all or part of its Membership Interest to
     Marathon in a transaction not otherwise described in
     this Agreement, the price paid by or on behalf of
     Marathon for such interest shall be appropriately
     reduced."

          (d)  Attached new Schedules 2.02(b)(1) and
2.02(b)(2) are inserted between Schedule 1.03(d) and
Schedule 14.01(a).

          (e)  Section 3.02(a) of the Agreement is amended
to read in its entirety as follows:

          "(a)  Amount.  The Marathon Call Price shall be an
     amount equal to (i) the product of (x) 115% of the
     Appraised Value of the Company multiplied by
     (y) Ashland's Percentage Interest, less (ii) the Price
     Reduction."

          (f)  Section 4.02(a) of the Agreement is amended
     to read in its entirety as follows:
          "(a)  Amount.  The Ashland Put Price shall be an
     amount equal to the sum of (i) for that portion of the
     Ashland Put Price to be paid to Ashland in Cash or in
     Marathon Debt Securities, an amount equal to the
     product of (1) the excess of (x) the product of (A) 85%
     of the Appraised Value of the Company multiplied by
     (B) Ashland's Percentage Interest over (y) the Price
     Reduction, multiplied by (2) the percentage of the
     Ashland Put Price to be paid to Ashland in Cash and/or
     in Marathon Debt Securities, plus (ii) for that portion
     of the Ashland Put Price to be paid to Ashland in
     Marathon Equity Securities the same as above but
     substituting 90% for 85% in Clause (A) and substituting
     Marathon Equity Securities for Cash and/or Marathon
     Debt Securities in clause (2)."

          Section 2.  Parties in Interest.  This Amendment
shall inure to the benefit of, and be binding upon, the
Parties hereto and their respective successors, legal
representatives and permitted assigns.

          Section 3.  Counterparts.  This Amendment may be
executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.

          Section 4.  Governing Law.  THIS AMENDMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO THE
PRINCIPLES OF CONFLICTS OF LAW THEREOF.  ANY RIGHT TO TRIAL
BY JURY WITH RESPECT TO ANY CLAIM OR PROCEEDING RELATED TO
OR ARISING OUT OF THIS AMENDMENT, OR ANY TRANSACTION OR
CONDUCT IN CONNECTION HEREWITH, IS WAIVED.


          IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed as of the day and year
first above written.


MARATHON OIL COMPANY              ASHLAND INC.
                                 
                                 
By:/s/ V. G. Beghini            By:/s/Paul W. Chellgren
    Name:V. G. Beghini          Name:Paul W. Chellgren
    Title: President            Title: Chairman of the Board and
                                        Chief Executive Officer      

USX CORPORATION                   MARATHON ASHLAND PETROLEUM,
                                    LLC
                                 
                                 
By:/s/ Thomas J. Usher              By: /s/ J. L. Frank
    Name:Thomas J. Usher            Name:J. L. Frank
    Title:Chairman of the Board    Title:President
          and Chief Executive 
          Officer
              
   Put/Call, Registration Rights and Standstill Agreement
                     Schedule 2.02(b)(1)
              Chart A and Chart B Depreciation


<TABLE>
<CAPTION>
Chart A

 Calendar    Depreciation      Combined      Present Value
     Year     Allocated      Fed. & State      Tax Effect
             to Ashland     Inc. Tax @ 39%        @ 9%
  <S>   <C>              <C>               <C>
  1998   $ 116,601,400    $  45,474,546     $ 41,719,767
  1999     209,882,520       81,854,183       68,895,028
  2000     167,906,016       65,483,346       50,565,158
  2001     134,324,816       52,386,678       37,112,044
  2002     107,506,491       41,927,531       27,250,019
  2003      85,935,232       33,514,740       19,983,745
  2004      76,373,917       29,785,828       16,293,868
  2005      76,373,917       29,785,828       14,948,502
  2006      76,373,917       29,785,828       13,714,222
  2007      76,373,917       29,785,828       12,581,855
  2008      38,361,861       14,961,126        5,797,928
Totals  $1,166,014,004   $  454,745,462   $  308,862,136

</TABLE>


<TABLE>
<CAPTION>
Chart B

 Calendar    Depreciation      Combined      Present Value
     Year     Allocated      Fed. & State      Tax Effect
             to Ashland     Inc. Tax @ 39%       @ 9%
  <S>     <C>           <C>               <C>
  1998   $ 134,434,575   $   52,429,484    $  48,100,444
  1999     213,507,942       83,268,097       70,085,092
  2000     171,643,459       66,940,949       51,690,695
  2001     138,302,064       53,937,805       38,210,901
  2002     111,275,746       43,397,541       28,205,424
  2003      89,884,379       35,054,908       20,902,096
  2004      77,757,082       30,325,262       16,588,957
  2005      77,057,057       30,052,252       15,082,212
  2006      77,057,057       30,052,252       13,836,892
  2007      77,057,057       30,052,252       12,694,396
  2008      50,315,315       19,622,973        7,604,547
Totals  $1,218,291,733  $   475,133,776  $   323,001,655
                                                           
Present Value tax cost                   $     14,139,519
</TABLE>

             Put/Call, Registration Rights and Standstill Agreement
                               Schedule 2.02(b)(2)
                                        
                         Present Value Tax Cost on Sale
                                  Illustration

<TABLE>
<CAPTION>
Sale of 100% Interest 1/1/2005

Calendar                                       Decr. Gain/
 Year     Depreciation Allocated               Incr. Loss
               to  Ashland
           Chart A    Chart B     Difference   Chart A vs. B
  <S>   <C>           <C>          <C>         <C>
  1998  $116,601,400 $134,434,575 $17,833,175
  1999   209,882,520  213,507,942   3,625,422                
  2000   167,906,016  171,643,459   3,737,443                
  2001   134,324,816  138,302,064   3,977,248                
  2002   107,506,491  111,275,746   3,769,255                
  2003    85,935,232   89,884,379   3,949,147                
  2004    76,373,917   77,757,082   1,383,165                
  2005            -           -           -    (38,274,855)(1)
  2006            -          -           -                
  2007            -          -           -                
  2008            -          -           -
Totals $ 898,530,392 $936,805,247 $38,274,855 $(38,274,855)
</TABLE>


<TABLE>
<CAPTION>
           Increase                                
          (Decrease)   Combined        
            Taxable  Federal/State  Present
 Calendar    Income   Income Tax     Value
  Year     Chart A        @ 39%    Tax Cost on
              vs. B                   Sale
  <C>   <C>          <C>           <C>
  1998   $17,833,175  $6,954,938   $6,380,677
  1999     3,625,422   1,413,915    1,190,064              
  2000     3,737,443   1,457,603    1,125,537              
  2001     3,977,248   1,551,127    1,098,857              
  2002     3,769,255   1,470,009      955,405              
  2003     3,949,147   1,540,167      918,351              
  2004     1,383,165     539,434      295,089              
  2005  (38,274,855) (14,927,193)  (7,491,455)              
  2006            -           -            -               
  2007            -          -            -              
  2008             -         -             -                                   
Totals  $         -     $    -     $4,472,526
Present Value Tax Cost (Schedule
        2.02 (b)(1))              $14,139,519              
Price Reduction                   $ 9,666,993

<FN>
(1) 100% of cumulative difference between Chart A and Chart B depreciation
through 2004.
</TABLE>