Exhibit 10.1

 

December 5, 2005

 

«Title» «FirstName» «LastName»

«JobTitle»

«Company»

«Address1»

«City», «State» «PostalCode»

 

Dear «Title» «LastName»:

 

United States Steel Corporation, and its subsidiaries and affiliates (the
“Corporation”), recognizes that your contribution to the growth and success of
the Corporation will continue to be substantial and desires to assure the
Corporation of your continued employment. In this connection, the Board of
Directors of the Corporation (the “Board”) recognizes that, as is the case with
many publicly-held corporations, the possibility of a change in control may
exist and that such possibility, and the uncertainty and questions which it may
raise among management, may result in the departure or distraction of management
personnel to the detriment of the Corporation and its stockholders.

 

Accordingly, the Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Corporation’s management, including you, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Corporation.

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In order to induce you to remain in the employ of the Corporation, the
Corporation agrees that you shall receive the severance benefits set forth in
this letter agreement (“Agreement”) in the event your employment with the
Corporation is terminated subsequent to a “Change in Control of the Corporation”
(as defined in Section 2(a) hereof), and, in certain circumstances, in
connection with a “Potential Change in Control of the Corporation” (as defined
in Section 2(b) hereof), or under the other circumstances described below.

 

1. Term of Agreement. This Agreement will commence on the date hereof and shall
continue in effect until December 31, 2007; provided, however, that commencing
on December 31, 2006 and each December 31 thereafter, the term of this Agreement
shall automatically be extended for one additional year unless, not later than
September 1 of that year, the Corporation shall have given notice that it does
not wish to extend this Agreement; provided, further that, if (a) a Change in
Control of the Corporation shall have occurred during the original or extended
term of this Agreement, the term of this Agreement shall continue in effect for
a period of twenty-four (24) months beyond the month in which such Change in
Control of the Corporation occurred and (b) if a Potential Change in Control of
the Corporation shall have occurred during the original or extended term of this
Agreement, then the term of this Agreement shall continue in effect beginning on
the date the Potential Change in Control occurs and shall not end before the
earlier of (i) the end of the month in which a Change in Control occurs or
(ii) the date the Board makes a good faith determination that the risk of a
Change in Control has terminated (the “Potential Change in Control Period”). In
the

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event the Potential Change in Control Period ends due to a Change in Control
this Agreement shall continue in effect for a period of twenty-four (24) months
beyond the month in which such Change in Control occurred.

 

2. Change in Control and Potential Change in Control of the Corporation.

 

(a) For purposes of this Agreement, a “Change in Control of the Corporation” and
“Change in Control” shall mean a change in control of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), whether or not the Corporation is then subject to such
reporting requirement; provided, that, without limitation, such a change in
control shall be deemed to have occurred if:

 

(i) any person (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) (a “Person”) is or becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation (not including in the amount of the securities beneficially owned by
such person any such securities acquired directly from the Corporation or its
affiliates) representing twenty percent (20%) or more of the combined voting
power of the Corporation’s then outstanding voting securities; provided,
however, that for purposes of this Agreement the term “Person” shall not include
(A) the Corporation or any of its subsidiaries, (B) a trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation or any of
its subsidiaries, (C) an underwriter temporarily holding securities pursuant to
an offering of such securities, (D) a corporation owned,

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directly or indirectly, by the stockholders of the Corporation in substantially
the same proportions as their ownership of stock of the Corporation, or (E) any
individual, entity or group involved in the acquisition of the Corporation’s
voting securities in connection with which, pursuant to Rule 13d-1 promulgated
pursuant to the Exchange Act, such individual, entity or group is permitted to,
and actually does, report its beneficial ownership on Schedule 13G (or any
successor Schedule); provided that, if any such individual, entity or group
subsequently becomes required to or does report its beneficial ownership on
Schedule 13D (or any successor Schedule), then, for purposes of this paragraph,
such individual, entity or group shall be deemed to have first acquired, on the
first date on which such individual, entity or group becomes required to or does
so report, beneficial ownership of all of the Corporation’s then outstanding
voting securities beneficially owned by it on such date; and provided, further,
however, that for purposes of this paragraph (i), there shall be excluded any
Person who becomes such a beneficial owner in connection with an Excluded
Transaction (as defined in paragraph (iii) below); or

 

(ii) the following individuals (the “Incumbent Board”) cease for any reason to
constitute a majority of the number of directors then serving: individuals who,
on the date hereof, constitute the Board and any new director (other than a
director whose initial assumption of office is in connection with an actual or
threatened election contest including, but not limited to, a consent
solicitation, relating to the election of directors of the Corporation) whose
appointment or election by the Board or nomination for election by the
Corporation’s stockholders was approved or

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recommended by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved or recommended;
or

 

(iii) there is consummated a merger or consolidation of the Corporation or any
direct or indirect subsidiary thereof with any other corporation (a “Business
Combination”), other than a merger or consolidation (an “Excluded Transaction”)
which would result in:

 

(A) at least a majority of the members of the board of directors of the
resulting or surviving entity (or any ultimate parent thereof) in such Business
Combination (the “New Board”) consisting of individuals (“Continuing Directors”)
who were members of the Incumbent Board (as defined in subparagraph (ii) above)
immediately prior to consummation of such Business Combination or were
appointed, elected or recommended for appointment or election by members of the
Incumbent Board prior to consummation of such Business Combination (excluding
from Continuing Directors for this purpose, however, any individual whose
election or appointment, or recommendation for election or appointment, to the
New Board was at the request, directly or indirectly, of the entity which
entered into the definitive agreement providing for such Business Combination
with the Corporation or any direct or indirect subsidiary thereof), unless the
Board determines, prior to such consummation, that there does not exist a
reasonable assurance that, for at least a two-year period following

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consummation of such Business Combination, at least a majority of the members of
the New Board will continue to consist of Continuing Directors and individuals
whose election, or nomination for election by shareholders of the resulting or
surviving entity (or any ultimate parent thereof) in such Business Combination,
would be approved by a vote of at least a majority of the Continuing Directors
and individuals whose election or nomination for election has previously been so
approved; or

 

(B) a Business Combination that in substance constitutes a disposition of a
division, business unit, or subsidiary; or

 

(iv) the shareholders of the Corporation approve a plan of a complete
liquidation or dissolution of the Corporation or there is consummation of a sale
or other disposition of all or substantially all of the assets of the
Corporation, other than to a corporation with respect to which, following such
sale or other disposition, more than 50% of the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners of the Corporation’s then outstanding voting securities
immediately prior to such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such sale or other
disposition, of the Corporation’s then outstanding voting securities.

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(b) For purposes of this Agreement, a “Potential Change in Control of the
Corporation” and “Potential Change in Control” shall be deemed to have occurred,
if:

 

(i) the Corporation enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control of the Corporation;

 

(ii) any Person (including the Corporation) publicly announces an intention to
take or to consider taking actions which if consummated would constitute a
Change in Control of the Corporation;

 

(iii) any Person becomes the beneficial owner, directly or indirectly, of
securities of the Corporation representing 15% or more of the combined voting
power of the Corporation’s then outstanding securities (not including in the
amount of the securities beneficially owned by such Person any such securities
acquired directly from the Corporation or its affiliates); or

 

(iv) the Board adopts a resolution to the effect that, for purposes of this
Agreement, a Potential Change in Control of the Corporation has occurred.

 

(c) You agree that, subject to the terms and conditions of this Agreement, in
the event of a Change in Control of the Corporation, you will remain in the
employ of the Corporation for a period of three (3) months from and after the
occurrence of such Change in Control of the Corporation; provided, however, that
if during such three-month period (A) your employment is involuntarily
terminated by the

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Corporation other than for Cause or (B) you terminate your employment during
such three-month period for Good Reason, you shall not be required to remain in
the Corporation’s employ. The foregoing shall in no event limit or otherwise
affect your rights under any other provision of this Agreement.

 

(d) You agree that, subject to the terms and conditions of this Agreement, in
the event of a Potential Change in Control of the Corporation, you will remain
in the employ of the Corporation until the earliest of (A) a date which is six
(6) months from the occurrence of such Potential Change in Control of the
Corporation, (B) the termination of your employment by reason of your death or
Disability, as defined in Subsection 3(a), or (C) a date which is three
(3) months from and after the occurrence of a Change in Control of the
Corporation; provided, however, that if during any such period (A) your
employment is involuntarily terminated by the Corporation other than for Cause
or (B) you terminate your employment during any such period for Good Reason, you
shall not be required to remain in the Corporation’s employ. The foregoing shall
in no event limit or otherwise affect your rights under any other provision of
this Agreement.

 

3. Termination Following a Change in Control or Potential Change in Control of
the Corporation. If any of the events described in Section 2(a) hereof
constituting a Change in Control of the Corporation shall have occurred, you
shall be entitled to the benefits provided in Section 4(d) hereof upon the
termination of your employment upon or following the Change in Control and
during the term of this Agreement unless such termination is (i) because of your
death or Disability, (ii) by the

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Corporation for Cause, (iii) by you other than for Good Reason or (iv) on or
after the date that you attain age sixty-five (65). If your employment is
terminated prior to a Change in Control, if such termination is other than
(i) because of your death or Disability, (ii) by the Corporation for Cause,
(iii) due to your voluntary resignation, unless such resignation is for Good
Reason or (iv) on or after the date that you attain age sixty-five (65), and
either you reasonably demonstrate that such termination (I) was at the request
of or as a result of actions by a third party who has taken steps reasonably
calculated to effect a Change in Control or (II) occurs during a Potential
Change in Control Period, and (III) a 409A Change in Control occurs within
twenty-four (24) months following your termination of employment, then your
employment shall be deemed to have terminated following a Change in Control. For
purposes of this Agreement, (a) the term “termination” when used in the context
of a condition to payment hereunder shall be interpreted to mean a “separation
from service” as that term is used under Section 409A of the Internal Revenue
Code (the “Code”) and (b) the term “409A Change in Control” shall mean a change
in ownership or effective control of the Corporation or in the ownership of a
substantial portion of its assets within the meaning of Section 409A of the Code
that constitutes a Change in Control.

 

(a) Disability. If, as a result of your incapacity due to physical or mental
illness which in the opinion of a licensed physician renders you incapable of
performing your assigned duties with the Corporation, you shall have been absent
from the full-time performance of your duties with the Corporation for six
(6) consecutive months, and within thirty (30) days after written Notice of
Termination is given you shall not have returned to the full-time performance of
your duties, the Corporation may terminate your employment for “Disability.”

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(b) Cause. Termination by the Corporation of your employment for “Cause” shall
mean termination upon (i) the willful and continued failure by you to
substantially perform your duties with the Corporation (other than any such
failure resulting from termination by you for Good Reason or any such failure
resulting from your incapacity due to physical or mental illness), after a
demand for substantial performance is delivered to you that specifically
identifies the manner in which the Corporation believes that you have not
substantially performed your duties, and you have failed to resume substantial
performance of your duties on a continuous basis within fourteen (14) days of
receiving such demand, (ii) the willful engaging by you in conduct which is
demonstrably and materially injurious to the Corporation, monetarily or
otherwise or (iii) your conviction of a felony or conviction of a misdemeanor
which impairs your ability substantially to perform your duties with the
Corporation. For purposes of this Subsection, no act, or failure to act, on your
part shall be deemed “willful” unless done, or omitted to be done, by you not in
good faith and without reasonable belief that your action or omission was in the
best interest of the Corporation.

 

(c) Good Reason. You shall be entitled to terminate your employment for Good
Reason. For purposes of this Agreement, “Good Reason” shall mean, without your
express written consent, the occurrence after a Change in Control of the
Corporation, or after and at the request of or as a result of actions by a third
party

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who has taken steps reasonably calculated to effect a Change in Control or after
the first day of but during a Potential Change in Control Period (each an
“Applicable Event”), of any one or more of the following:

 

(i) the assignment to you of duties inconsistent with your position immediately
prior to the Applicable Event or a reduction or adverse alteration in the nature
of your position, duties, status or responsibilities from those in effect
immediately prior to the Applicable Event;

 

(ii) a reduction by the Corporation in your annualized and monthly or
semi-monthly rate of base salary (as increased to incorporate your foreign
service premium, if any) (“Base Salary”) as in effect on the date hereof or as
the same shall be increased from time to time;

 

(iii) the Corporation’s requiring you to be based at a location in excess of
fifty (50) miles from the location where you are based immediately prior to the
Applicable Event;

 

(iv) the failure by the Corporation to continue, substantially as in effect
immediately prior to the Applicable Event, all of the Corporation’s employee
benefit, incentive compensation, bonus, stock option and stock award plans,
programs, policies, practices or arrangements in which you participate (or
substantially equivalent successor plans, programs, policies, practices or
arrangements) or the failure by the Corporation to continue your participation
therein on substantially the same basis, both in terms of the amount of benefits
provided and the level of your participation relative to other participants, as
existed immediately prior to the Applicable Event;

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(v) the failure of the Corporation to obtain an agreement from any successor to
the Corporation to assume and agree to perform this Agreement, as contemplated
in Section 6 hereof; and

 

(vi) any purported termination by the Corporation of your employment that is not
effected pursuant to a Notice of Termination satisfying the requirements of
subparagraph (d) below, and for purposes of this Agreement, no such purported
termination shall be effective.

 

Your right to terminate your employment pursuant to this Subsection shall not be
affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder. Your determination of
the existence of Good Reason shall be final and conclusive unless such
determination is not made in good faith and is made without reasonable belief in
the existence of Good Reason.

 

(d) Notice of Termination. Any termination by the Corporation for Cause or for
Disability or by you for Good Reason shall be communicated by Notice of
Termination to the other party hereto. For purposes of this Agreement, a “Notice
of Termination” shall mean a written notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under

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the provision so indicated. The failure by you to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason shall not waive any of your rights hereunder or preclude you from
asserting such fact or circumstance in enforcing your rights hereunder.

 

(e) Date of Termination. “Date of Termination” shall mean the date specified in
the Notice of Termination, when such a notice is required, or in any other case
upon ceasing to perform services to the Corporation.

 

4. Compensation Upon Termination or During Disability. After an Applicable Event
has occurred, if, during the term of this Agreement, your employment is
terminated or you are in a period of Disability the following shall be
applicable:

 

(a) During any period prior to your Date of Termination that you fail to perform
your full-time duties with the Corporation as a result of Disability, your total
compensation, including your Base Salary, bonus and any benefits, will continue
unaffected until either you return to the full-time performance of your duties
or your employment is terminated pursuant to Section 3(a) hereof. Base Salary
shall be payable to you on a monthly basis, in accordance with the Corporation’s
standard payroll practices. Bonuses shall be payable to you within 2 1/2 months
following the year for which the amount is earned, in accordance with the
Corporation’s annual incentive plan payment practices. Benefits shall be payable
in accordance with the terms of the applicable plan, program or arrangement. In
the event you return to the full-time performance of your duties, you shall
continue to receive your full Base Salary and bonus plus all other amounts to
which you are entitled under any compensation or other

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employee benefit plan of the Corporation without interruption. In the event your
employment is terminated pursuant to Section 3(a) hereof, your benefits shall be
determined in accordance with the Corporation’s retirement, insurance and other
applicable programs and plans then in effect.

 

(b) If your employment shall be terminated by the Corporation for Cause or by
you other than for Good Reason, the Corporation shall pay you your full Base
Salary, payable in accordance with the Corporation’s standard payroll practices,
through the Date of Termination at the rate in effect at the time Notice of
Termination is given or on the Date of Termination if no Notice of Termination
is required hereunder plus all other amounts to which you are entitled under any
compensation or benefit plan of the Corporation at the time such payments are
due in accordance with the applicable plan, and the Corporation shall have no
further obligations to you under this Agreement.

 

(c) If your employment terminates by reason of your death, your benefits shall
be determined in accordance with the Corporation’s retirement, survivor’s
benefits, insurance and other applicable programs and plans then in effect.

 

(d) If your employment by the Corporation is either terminated by the
Corporation (other than for Cause or Disability) or terminated by you for Good
Reason, in either case (I) upon or following a Change in Control, or (II) during
a Potential Change in Control Period which is followed within twenty-four
(24) months thereafter by a 409A Change in Control, you shall be entitled to the
following benefits.

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(i) Accrued Compensation and Benefits. The Corporation shall provide you:

 

(A) the compensation and benefits accrued through the Date of Termination to the
extent not theretofore provided;

 

(B) a lump sum cash amount equal to the value of your unused vacation days
accrued through the Date of Termination; and

 

(C) your normal post-termination compensation and benefits under the
Corporation’s retirement, insurance and other compensation and benefit plans as
in effect immediately prior to the Date of Termination, or if more favorable to
you, immediately prior to the Applicable Event.

 

The amounts set forth in (A) and (B) above shall be payable on your next regular
payroll date following the Date of Termination. The amounts set forth in
(C) above shall be payable in accordance with the terms of the applicable plan,
program or arrangement.

 

(ii) Lump Sum Severance Payment. The Corporation shall provide to you a
severance payment in the form of a cash lump sum distribution equal to your
Current Annual Compensation (as defined below) multiplied times three (3);
provided, however, that if you attain age 65 within three years of the Date of
Termination, your benefit will be limited to a pro rata portion of such benefit
based on a fraction equal to the number of full and partial months existing
between the Date of Termination and your sixty-fifth (65th) birthday divided by
36 months.

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For purposes of this paragraph, the term “Current Annual Compensation” shall
mean the sum of:

 

(A) your Base Salary in effect immediately prior to the occurrence of the
circumstances giving rise to such termination or, if higher, immediately prior
to the Applicable Event; and

 

(B) an amount equal to the higher of the (i) average actual bonus awarded to
you, if any, under any annual bonus plan of the Corporation or its predecessor
for the three (3) years immediately preceding the Date of Termination or, if
higher, for the three (3) years immediately preceding the Applicable Event or
(ii) target bonus available to you under any annual bonus plan of the
Corporation or its predecessor for the year in which your termination of
employment occurs or, if higher, for the year in which the Applicable Event
occurs.

 

The severance payment shall be payable upon the first day following the six
(6) month anniversary of the Date of Termination or, in the case where your
employment was terminated prior to a Change in Control, the first day following
the six (6) month anniversary of the date of the 409A Change in Control;
provided, however, if such six month delay is not required to avoid the
imposition of additional taxes and interest under section 409A of the Code, then
payment shall be made immediately following separation from service.

 

(iii) Continuation of Welfare Benefits. Subject to the benefits offset described
below, the Corporation will arrange to make available to you life and health
insurance benefits during the Welfare Continuation Period (as defined below)
that are substantially similar to those which you were receiving under a

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Corporation-sponsored welfare benefit plan immediately prior to the Date of
Termination or, if more favorable to you, immediately prior to the Applicable
Event. These benefits will be provided at a cost to you that is no greater than
the amount paid for such benefits by active employees who participate in such
Corporation-sponsored welfare benefit plan or, if less, the amount paid for such
benefits by you immediately prior to the Applicable Event. The Welfare
Continuation Period extends from the Date of Termination for a period of
thirty-six (36) months, or, if earlier, until your 65th birthday. To the extent
any such benefits cannot be provided on a non-taxable basis to you and the
provision thereof would cause any part of the benefits to be subject to
additional taxes and interest under section 409A of the Code, then the provision
of such benefits shall be (a) deferred to the earliest date upon which such
benefits can be provided without being subject to such additional taxes and
interest or (b) if not capable of being deferred consistent with section 409A of
the Code, modified in amount, structure, timing and/or form of payment so that
the maximum portion of the benefit can be paid and the benefit is not subject to
additional taxes and interest under section 409A of the Code.

 

The benefits otherwise receivable by you pursuant to this paragraph (iii) shall
be reduced to the extent comparable benefits are actually received by you during
the Welfare Continuation Period. For purposes of complying with the terms of
this offset, you are obligated to report to the Corporation the amount of any
such benefits actually received.

 

(iv) Retiree Medical and Life Benefits. The Corporation will arrange to make
available to you retiree medical and life insurance benefits

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determined as if under the Corporation’s welfare benefit plans your actual
participation credit (or continuous service) and actual age as of the Date of
Termination were increased by the additional three years of service and age
provided in paragraph 4(d)(v)(A) below. If eligible for such coverage, you may
elect to commence participation in retiree medical benefits coverage at any time
following the expiration of the Welfare Continuation Period (or immediately
after the Date of Termination, or during the Welfare Continuation Period, if you
satisfy the eligibility requirements without taking into consideration the
additional three years of service and age). To the extent any such benefits
cannot be provided on a non-taxable basis to you and the provision thereof would
cause any part of the benefits to be subject to additional taxes and interest
under section 409A of the Code, then the provision of such benefits shall be
(a) deferred to the earliest date upon which such benefits can be provided
without being subject to such additional taxes and interest or (b) if not
capable of being deferred consistent with section 409A of the Code, modified in
amount, structure, timing and/or form of payment so that the maximum portion of
the benefit can be paid and the benefit is not subject to additional taxes and
interest under section 409A of the Code.

 

If because of the recognition of the additional three years of continuous
service and age described above, your service and/or age meets or exceeds the
service and/or age specified in the Steel (the term “Steel” is defined to mean
United States Steel Corporation, and its subsidiaries and successors) welfare
benefit plan for eligibility for retiree medical or life insurance coverage, the
Corporation will provide you with an additional lump sum severance payment equal
to the lump sum value of the

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contributions that the Corporation would have made on your behalf with respect
to the retiree medical and life (as if all such life insurance benefits were
group term life insurance benefits) benefits provided under the Steel welfare
benefit plan. Such additional lump sum severance benefit shall be in lieu of
monthly Corporation contributions on your behalf for retiree medical and life
insurance coverage under a Steel welfare benefit plan and shall be paid to you
upon the first day following the six (6) month anniversary of the Date of
Termination or, in the case where your employment was terminated prior to a
Change in Control, the first day following the six (6) month anniversary of the
date of the 409A Change in Control; provided, however, if such six month delay
is not required to avoid the imposition of additional taxes and interest under
section 409A of the Code, then payment shall be made immediately following
separation from service. If you elect to participate in retiree medical and life
insurance coverage through the Corporation, you will be responsible for the full
costs of the program. The methods and assumptions that existed under the Steel
Pension Plans (as defined in paragraph 4(d)(v)(B) below) immediately prior to
the Applicable Event for purposes of determining a lump sum distribution shall
be used for purposes of determining the lump sum value of the Corporation
contributions.

 

(v) Supplemental Retirement Benefit. In addition to the pension benefits to
which you are entitled (assuming Corporation consent, if necessary for
retirement prior to age 60) under the Corporation’s defined benefit pension
plans, the Corporation shall provide to you a benefit (the “Supplemental
Retirement Benefit”) equal to the difference between: (A) the lump sum value of
your Enhanced Pension Benefit

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(as defined in paragraph (A) below), and (B) the lump sum value of your Actual
Pension Benefit (as defined in paragraph (B) below). The Supplemental Retirement
Benefit shall be paid in the form of a lump sum cash distribution on first day
following the six (6) month anniversary of the Date of Termination or, in the
case where your employment was terminated prior to a Change in Control, the
first day following the six (6) month anniversary of the date of the 409A Change
in Control; provided, however, if such six month delay is not required to avoid
the imposition of additional taxes and interest under section 409A of the Code,
then payment shall be made immediately following separation from service. The
methods and assumptions that existed under the applicable Steel Pension Plans
immediately prior to the Applicable Event for purposes of determining a lump sum
distribution shall be used for purposes of determining the lump sum values in
(A) and (B). In determining the Enhanced Pension Benefit and the Actual Pension
Benefit, amendments to the Steel Pension Plans made subsequent to the Applicable
Event and on or prior to the Date of Termination, if any, shall be disregarded
if they adversely affect in any manner the computation of retirement benefits
thereunder.

 

(A) Enhanced Pension Benefit. The amount of your Enhanced Pension Benefit shall
be equal to the Actual Pension Benefit for which you are eligible under the
Steel Pension Plans as of the Date of Termination, as adjusted to incorporate
the enhancements outlined in paragraphs (1) through (5) below. The enhancements
shall be applied only to your benefits under the Steel Pension Plans.

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(1) Normal Retirement Benefit - Service. For purposes of determining your
monthly normal retirement benefit payable at normal retirement age, service used
in the formula(s) shall be deemed to be equal to the sum of your actual service
for benefit accrual purposes plus three years. For this purpose, your actual
service shall be determined as of the Date of Termination.

 

(2) Normal Retirement Benefit - Final Average Pay. For purposes of determining
your monthly normal retirement benefit payable at normal retirement age, final
average pay shall be calculated using the sum of:

 

  I. your Base Salary in effect immediately prior to the occurrence of the
circumstances giving rise to such termination or, if higher, immediately prior
to the Applicable Event; and

 

  II. if bonus is considered covered compensation under the applicable pension
plan, an amount equal to the higher of the (i) average actual bonus awarded to
you, if any, under any annual bonus plan of the Corporation or its predecessor
with respect to the three (3) years immediately preceding the Date of
Termination or, if higher, the three (3) years immediately preceding the
Applicable Event (but not less

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than the amount of bonus taken into account in your Actual Pension Benefit) or
(ii) target bonus available to you under any annual bonus plan of the
Corporation or its predecessor for the year in which your termination of
employment occurs or, if higher, the year in which the Applicable Event occurs.

 

Final average pay taken into account for this paragraph shall not be less than
the amount of final average pay taken into account in the determination of your
Actual Pension Benefit.

 

(3) Early Commencement Factors - Enhanced Service and Age. For purposes of
determining the early commencement factors that apply to your monthly normal
retirement benefit, your service and age shall be deemed equal to your actual
service and age plus three years of service and three years of age,
respectively. For this purpose, your actual service and actual age shall be
determined as of the Date of Termination. In addition, if you satisfy the age
and service requirements for a Rule-of-65, -70, or -80 retirement option under
the pension rules applicable to the Steel Pension Plans as of the Date of
Termination (taking into consideration the three years of age and service
provided in this paragraph), you shall be eligible for an immediate pension
under such retirement option in accordance with the terms of such pension rules
even though the leave of absence requirements have not been satisfied.

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(4) Full Vesting. Your accrued benefits under the Steel Pension Plans shall be
deemed to be fully vested or, to the extent not so vested, paid as an additional
benefit under this Agreement as provided above.

 

(5) Determination of Age - All other purposes. Except as specifically provided
otherwise in this paragraph (A), your age, as well as the age of your spouse,
survivor, and/or co-pensioner, used in the determination of the amount of
benefits payable under the applicable pension plan shall be determined using
your age and their actual ages as of the Date of Termination.

 

(B) Actual Pension Benefit. The amount of your Actual Pension Benefit is
determined as the sum of the monthly pension benefits payable to you as of the
Date of Termination, regardless of the actual timing of such payments, under the
tax-qualified defined benefit pension plans, non-qualified defined benefit
excess benefit plans, and non-qualified top-hat or supplemental defined benefit
plans sponsored or maintained by Steel (or any successor plans or similar
plans), including individual employment contracts which provide for
non-qualified defined benefit supplements (the “Steel Pension Plans”).

 

(vi) Supplemental Savings Benefit. In addition to the benefits you are entitled
to under the United States Steel Corporation Savings Fund

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Plan for Salaried Employees and the related non-qualified supplemental savings
plan (“Savings Plans”), the Corporation shall provide to you in the form of a
cash lump sum distribution a benefit equal to the excess, if any, of:

 

  (A) the amount you would have been entitled to under the Savings Plans
determined as if you were fully vested thereunder on the Date of Termination,
over

 

  (B) the amount you are entitled to under the Savings Plans on the Date of
Termination.

 

The payments provided for in this subparagraph (vi) shall be made to you upon
the first day following the six (6) month anniversary of the Date of Termination
or, in the case where your employment was terminated prior to a Change in
Control, the first day following the six (6) month anniversary of the date of
the 409A Change in Control; provided, however, if such six month delay is not
required to avoid the imposition of additional taxes and interest under section
409A of the Code, then payment shall be made immediately following separation
from service.

 

(e) Following your separation from service, the Corporation shall also reimburse
you for all legal fees and expenses incurred by you, on a monthly basis, payable
on the first of each month, for such legal fees and expenses billed to you for
services actually rendered in the prior month and submitted for reimbursement by
the end of such month, as a result of your termination of employment (including
all such fees and expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit provided by
this Agreement or in

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connection with any tax audit or proceeding to the extent attributable to the
application of section 4999 or 409A of the Code to any payment or benefit
provided hereunder). Notwithstanding the foregoing sentence, no such payments
may be made to you until the first day following the six (6) month anniversary
of the Date of Termination or, in the case where your employment was terminated
prior to a Change in Control, the first day following the six (6) month
anniversary of the date of the 409A Change in Control; provided, however, if
such six month delay is not required to avoid imposition of additional taxes and
interest under section 409A of the Code, then payment shall be made to you as
set forth in the preceding sentence. To the extent the provision of such
reimbursements would cause any such amounts to be subject to additional taxes
and interest under section 409A of the Code, then the provision of such
reimbursements (i) shall be deferred to the earliest date upon which such
amounts can be provided without being subject to such additional taxes and
interest or (ii) if not capable of being deferred consistent with section 409A,
modified in amount, structure, timing and/or form of payment so that the maximum
portion of the benefit can be paid and the benefit is not subject to additional
taxes and interest under section 409A of the Code.

 

(f) Following your separation from service, the Corporation shall also reimburse
you on a timely basis for reasonable costs incurred by you for outplacement
services; provided such expenses must be incurred and reimbursed before the end
of the second calendar year following the calendar year in which the Date of
Termination occurs.

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(g) Other than as provided in Section 4(d)(iii), you shall not be required to
mitigate the amount of any payment provided for in this Section 4 by seeking
other employment or otherwise, nor shall the amount of any payment provided for
in this Section 4 be reduced by any compensation earned by you as the result of
employment by another employer, including self-employment, after the Date of
Termination, or otherwise.

 

5. Additional Payment.

 

(a) In the event that there is made any payment in the nature of compensation to
or for your benefit that would be subject to the tax (the “Excise Tax”) imposed
by section 4999 of the Code, the Corporation shall pay to you, at the time
specified in paragraph (b) below, an additional amount (the “Gross-Up Payment”)
such that the net amount retained by you shall be equal to the compensation and
benefits you would have received had there been no Excise Tax imposed; provided,
however, that if you are not entitled to any benefits under Section 4, above, no
Gross-Up Payment shall be made unless there is a 409A Change in Control. For
purposes of determining whether any of the payments will be subject to the
Excise Tax and the amount of such Excise Tax, (i) any payments or benefits
received or to be received by you in connection with a Change in Control of the
Corporation or your termination of employment, whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the Corporation
or with any person whose actions result in a Change in Control of the
Corporation or with any person affiliated with the Corporation or such person
(the “Total Payments”) shall be treated as “parachute

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payments” within the meaning of section 280G(b)(2) of the Code, and all “excess
parachute payments” within the meaning of section 280G(b)(1) shall be treated as
subject to the Excise Tax, except to the extent that in the opinion of tax
counsel reasonably acceptable to you and selected by the accounting firm which,
immediately prior to the Change in Control, served as the Corporation’s
independent auditor (the “Auditor”) such other payments or benefits (in whole or
in part) do not constitute parachute payments, or such excess parachute payments
(in whole or in part) represent reasonable compensation for services actually
rendered within the meaning of section 280G(b)(4) of the Code in excess of the
base amount within the meaning of section 280G(b)(3) of the Code, or are
otherwise not subject to the Excise Tax, (ii) the amount of the Total Payments
which shall be treated as subject to the Excise Tax shall be equal to the lesser
of (A) the total amount of the Total Payments or (B) the amount of excess
parachute payments within the meaning of section 280G(b)(1) (after applying
clause (i), above), and (iii) the value of the Total Payments, including the
value of any non-cash benefits or any deferred payment or benefit, shall be
determined by the Auditor in accordance with the principles of section 280G of
the Code. For purposes of determining the amount of the Gross-Up Payment, you
shall be deemed to pay (i) federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up Payment is to
be made, together with (ii) state and local income taxes at the highest marginal
rate of taxation in the state and locality of your residence on the Date of
Termination (or, if there is no Date of Termination, then on the date of the
409A Change in Control), net of the maximum reduction in federal

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income taxes which could be obtained from deduction of such state and local
taxes. In the event that the Excise Tax is subsequently determined to be less
than the amount taken into account hereunder in calculating the Gross-Up
Payment, you shall repay to the Corporation, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the Gross-Up
Payment attributable to such reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax, and federal and state and local income tax, and
FICA-Health Insurance tax imposed on the portion of the Gross-Up Payment being
repaid by you if such repayment results in a reduction in Excise Tax,
FICA-Health Insurance tax, and/or a federal and state and local income tax
deduction) plus interest on the amount of such repayment at the rate provided in
section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder (including by
reason of any payment the existence or amount of which cannot be determined at
the time of the Gross-Up Payment), the Corporation shall make an additional
gross-up payment in respect of such excess (plus any penalty, interest or Excise
Taxes payable with respect to such excess) at the time that the amount of such
excess is finally determined, such that you retain the same amount of
compensation and benefits you would have received had there been no Excise Tax
imposed.

 

(b) The payments provided for in paragraph (a) above shall be made on the first
day following the six month anniversary of the Date of Termination or, in the
case where your employment was terminated prior to a Change in Control, the
first day following the six (6) month anniversary of the date of the 409A Change
in

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Control; provided, however, if such six month delay is not required to avoid
imposition of additional taxes and interest under section 409A of the Code,
payment will be made to you immediately following your separation from service
(or, if there is no Date of Termination, as promptly as practicable following
the date of the 409A Change in Control, but in no event more than 30 days
following the date of such change). If the amounts of such payments cannot be
finally determined on or before such payment day, the Corporation shall pay to
you on such day an estimate as determined in good faith by the Corporation of
the minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as promptly as practicable following calculation thereof, but in no event
more than 30 days following the initial estimate. In the event that the amount
of the estimated payments exceeds the amount subsequently determined to have
been due, you shall repay such excess to the Corporation on the fifth day after
calculation of the correct amount and notice by the Corporation (together with
interest at the rate provided in section 1274(b)(2)(B) of the Code).

 

6. Successors; Binding Agreement.

 

(a) The Corporation will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Corporation or of any division or subsidiary
thereof employing you to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Corporation would be required to
perform it if no such succession had taken place. Failure of the Corporation to
obtain such assumption

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and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to compensation from the
Corporation in the same amount and on the same terms as you would be entitled
hereunder if you terminate your employment for Good Reason following an
Applicable Event, except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be deemed the Date of
Termination.

 

(b) This Agreement shall inure to the benefit of and be enforceable by your
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If you should die while any amount would
still be payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to your devisee, legatee or other designee or, if there
is no such designee, to your estate.

 

7. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement.

 

8. Miscellaneous.

 

(a) No provision of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing and signed by you
and such officer as may be specifically designated by the Board. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Delaware.

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(b) The Corporation’s obligation to pay benefits under this Agreement shall be
merely an unfunded and unsecured promise of the Corporation to pay money in the
future. Prior to, or following, the occurrence of a Potential Change in Control,
the Corporation, in its sole discretion, may elect to make contributions to an
irrevocable trust to assist the Corporation in satisfying all or any portion of
its obligations under this Agreement; provided that any such funds contributed
to an irrevocable trust pursuant to this Section 8(b) shall remain subject to
the claims of the Corporation’s general creditors. Regardless of whether the
Corporation elects to or otherwise contributes to an irrevocable trust, you,
your beneficiaries, and your heirs, successors and assigns shall have no secured
interest or right, title or claim in any property or assets of the Corporation.

 

9. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.

 

10. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

 

11. Claims and Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
accordance with the rules of the American Arbitration Association then in
effect. Any such

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arbitration shall be held in Pittsburgh, Pennsylvania. Judgment may be entered
on the arbitrator’s award in any court having jurisdiction; provided, however,
that you shall be entitled to seek specific performance of your right to be paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.

 

12. Entire Agreement. This Agreement supersedes any other agreement or
understanding between the parties hereto with respect to the issues that are the
subject matter of this Agreement.

 

13. Amendment. This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective successors
and legal representatives, except that the Corporation may amend this Agreement
from time to time without your consent to the extent deemed necessary or
appropriate, in its sole discretion, to effect compliance with section 409A of
the Code, including regulations and interpretations thereunder, which amendments
may result in a reduction of benefits provided hereunder and/or other
unfavorable changes to you. You hereby irrevocably consent to such amendments.
This Agreement shall be interpreted and administered in accordance with section
409A of the Code and the regulations and interpretations that may be promulgated
thereunder.

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14. Effective Date. This Agreement shall become effective as of the date first
set forth above.

 

If this letter sets forth our agreement on the subject matter hereof, kindly
sign and return to the Corporation the enclosed copy of this letter which will
then constitute our agreement on this subject.

 

Sincerely,

UNITED STATES STEEL CORPORATION

By:

 

 

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Agreed to this      day of             , 2005

 

BY:

 

 

 

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