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                                                                    EXHIBIT 10.1
 
March 6, 1998
 
Mr. Lawrence W. Jacobs
32 Fox Pointe Drive
Pittsburgh, PA 15238
 
Dear Mr. Jacobs:
 
This Letter Agreement sets forth the basis upon which I have been authorized by
the Board of Directors of RMI Titanium Company ("Company") to employ you in the
executive officer position described in Paragraph 1 below for the Employment
Period (as hereinafter defined). The "Employment Period" shall initially be the
period May 1, 1998 through April 30, 2001; provided, however, that on May 1,
2001 and each May 1 thereafter, the Employment Period shall automatically be
extended for one additional year unless, not later than the immediately
preceding January 1, either you or the Company shall have given written notice
to the other that you or it does not wish to extend the Employment Period; and
provided further that the Employment Period shall terminate automatically when
you attain age sixty-five (65). In the event this Letter Agreement is terminated
for any reason other than your death, your obligations as set forth in Paragraph
9 shall survive and be enforceable notwithstanding such termination.
 
     1. During the Employment Period, you will serve as Vice President &
        Treasurer of the Company (or on any other executive officer position
        within the Company to which you may hereafter be elected by the
        Company's Board of Directors), performing all duties and functions
        appropriate to that office, as well as such additional duties as the
        Company's Executive Vice President & Chief Financial Officer or Board of
        Directors may, from time to time, assign to you. During the Employment
        Period, you will devote your full time and best efforts to the
        performance of all such duties.
 
     2. During the Employment Period, the Company will pay you, in equal monthly
        installments, as compensation for your services an annual salary of
        $100,000.00. This annual salary may be increased from time to time in
        the sole discretion of the Company, but may only be decreased by the
        Company with your written consent. Such annual salary, whether increased
        or decreased, shall constitute your "Base Salary". In addition, you may
        be awarded such bonuses as the Board of Directors of the Company
        determines to be appropriate under the Company's Annual Incentive
        Compensation Plan or any successor bonus plan. You will also be eligible
        to participate in the Company's 1995 Stock Plan, or any successor stock
        plan.
 
     3. In the event of your death during the Employment Period, your right to
        all compensation under this Letter Agreement allocable to days
        subsequent to your death shall terminate and no further payments shall
        be due to you, your personal representative, or your estate, except for
        that portion, if any, of your Base Salary that is accrued and unpaid
        upon the date of your death.
 
     4. In the event you become physically or mentally disabled, in the sole
        judgment of physicians selected by the Company's Board of Directors,
        such that you cannot perform the duties and functions contracted for
        pursuant to this Letter Agreement, and should such disability continue
        for at least 180 consecutive days (or in the judgment of such
        physicians, be likely to continue for at least 180 consecutive days),
        the Company may terminate your employment upon written notice to you. If
        your employment is terminated because of physical or mental disability,
        your right to all compensation under this Letter Agreement allocable to
        days subsequent to such termination shall terminate and no further
        payments shall be due to you, your personal representative, or your
        estate, except for that portion, if any, of your Base Salary that is
        accrued and unpaid upon the date of termination.
 
     5. The Company may, upon written notice to you fixing the date of
        termination, terminate your services during the Employment Period for
        Cause, (as Cause is defined in Paragraph 7(c) below). In such event,
        your right to receive continued compensation under this Letter Agreement
        will terminate and no further installments will be paid to you, except
        for that portion, if any, of your Base Salary that is accrued and unpaid
        upon the date of termination.
 
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     6. In addition to your annual Base Salary as set forth in Paragraph 2
        above, you will be entitled in each calendar year to a vacation with pay
        in accordance with the vacation policies of the Company. You will also
        be entitled to: (1) participate in all of the Company's existing and
        future employee benefit programs applicable to officers of the Company
        in accordance with the terms of such benefit program plan documents; (2)
        receive one comprehensive physical examination, at Company expense, in
        each calendar year, such examination to be conducted by the Cleveland
        Clinic or comparable facility and provided in accordance with terms and
        conditions comparable to those applicable to medical examinations for
        USX executive officers; and (3) tax preparation and financial planning
        advice under terms and conditions comparable to those applicable to USX
        executive management.
 
     7. Change of Control Provisions
 
        (a) For purposes of this Letter Agreement, a "Change in Control" of the
            Company shall mean a change in control of a nature that would be
            required to be reported by it 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 Company
            is then subject to such reporting requirement; provided, that,
            without limitation, such a change in control shall be deemed to have
            occurred if:
 
           (1) Any person (within the meaning of that term as 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
               Company representing twenty percent (20%) or more of the combined
               voting power of the Company's then outstanding voting securities;
               provided, however, that for purposes of this Agreement the term
               "Person" shall not include (i) the Company or any of its
               majority-owned subsidiaries, (ii) a trustee or other fiduciary
               holding securities under an employee benefit plan of the Company
               or any of its subsidiaries, (iii) an underwriter temporarily
               holding securities pursuant to an offering of such securities, or
               (iv) a corporation owned, directly or indirectly, by the
               stockholders of the Company in substantially the same proportions
               as their ownership of stock of the Company, (v) USX Corporation;
               or
 
           (2) The following individuals cease for any reason to constitute a
               majority of the number of directors then serving on the Board of
               Directors of the Company; individuals who, on the date hereof,
               are serving as directors on 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 Company) whose appointment or
               election by the Board or nomination for election by the Company's
               stockholders was approved by a vote of at least two-thirds ( 2/3)
               of the directors then still in office who either were directors
               on the date hereof or whose appointment, election or nomination
               for election was previously so approved, or
 
           (3) There is consummated a merger or consolidation of the Company or
               a subsidiary thereof with any other corporation, other than a
               merger or consolidation which would result in the holders of the
               voting securities of the Company outstanding immediately prior
               thereto holding securities which represent immediately after such
               merger or consolidation at least 50% of the combined voting power
               of the voting securities of the entity surviving the merger or
               consolidation, (or the parent of such surviving entity) or the
               shareholders of the Company approve a plan of complete
               liquidation of the Company, or there is consummated the sale or
               other disposition of all or substantially all of the
               Corporation's assets.
 
        (b) If any of the events described above constituting a Change in
            Control of the Company shall have occurred, you shall be entitled to
            the benefits provided in Paragraph 7(f) hereof upon the termination
            of your employment during the term of this Letter Agreement unless
            such termination is (i) because of your death or disability, (ii) by
            the Company for Cause, (iii) by you other than for Good Reason, or
            (iv) on or after the date that you attain age sixty-five (65). In
            the event your employment with the Company is terminated for any
            reason prior to the
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           occurrence of a Change in Control, you shall not be entitled to any
           benefits under this Paragraph 7; provided, however, that if your
           employment is terminated prior to a Change in Control without Cause
           at the direction of a person who has entered into an agreement with
           the Company, the consummation of which will constitute a Change in
           Control, your employment shall be deemed to have terminated following
           a Change in Control. Your entitlement to benefits under any of the
           Company's retirement plans will not adversely affect your rights to
           receive payments hereunder.
 
        (c) Termination by the Company of your employment for "Cause" shall mean
            termination upon (i) the willful and continued failure by you to
            substantially perform your duties with the Company (other than any
            such failure resulting from termination by you for Good Reason),
            after a demand for substantial performance is delivered to you that
            specifically identifies the manner in which the Company 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 Company, monetarily or otherwise or
            (iii) your conviction of any felony or conviction of a misdemeanor
            which impairs your ability substantially to perform your duties with
            the Company. For purposes of this paragraph, 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
            Company.
 
        (d) For purposes of this Letter Agreement, "Good Reason" shall mean,
            without your express written consent, the occurrence after a Change
            in Control of the Company of any one or more of the following:
 
           (1) The assignment to you of duties inconsistent with your position
               immediately prior to the Change in Control;
 
           (2) A reduction or alteration in the nature of your position, duties,
               status or responsibilities from those in effect immediately prior
               to the Change in Control;
 
           (3) The failure by the Company to continue in effect any of the
               Company's employee benefit plans, programs, policies, practices
               or arrangements in which you participate (or substantially
               equivalent successor or replacement employee benefit plans,
               programs, policies, practices or arrangements) or the failure by
               the Company to continue your participation therein on
               substantially the same basis, both in terms of the amount of
               benefits provided and the level of your participation relative to
               other participants, as existed immediately prior to the Change in
               Control;
 
           (4) The failure of the Company to obtain a satisfactory agreement
               from any successor to the Company to assume and agree to perform
               this Letter Agreement;
 
           (5) Any purported termination by the Company of your employment that
               is not effected pursuant to a Notice of Termination satisfying
               the requirements of Subparagraph (e) below, and for purposes of
               this Letter Agreement, no such purported termination shall be
               effective; and
 
           (6) The Company'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 Change in Control.
 
        (e) Any termination by the Company for Cause or by you for Good Reason
            shall be communicated by Notice of Termination to the other party
            hereto. For purposes of this Letter Agreement, a "Notice of
            Termination" shall mean a written notice which shall indicate the
            specific termination provision in this Letter Agreement relied upon
            and shall set forth in reasonable detail the facts and circumstances
            claimed to provide a basis for termination of your employment under
            the provision so indicated.
 
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        (f) Following a Change in Control of the Company, as defined above, upon
            termination of your employment you shall be entitled to the
            following benefits:
 
           (1) If your employment shall be terminated by the Company for Cause
               or by you other than for Good Reason, the Company shall pay you
               your full Base Salary through the date of termination at the rate
               in effect at the time Notice of Termination is given, plus all
               other amounts to which you are entitled under any compensation
               plan of the Company at the time such payments are due, and the
               Company shall have no further obligations to you under this
               Agreement.
 
           (2) If your employment terminates by reason of your death or
               disability, your benefits shall be determined in accordance with
               Paragraphs 3 and 4 of this Letter Agreement and the Company's
               retirement, survivor's benefits, insurance and other applicable
               programs and plans, then in effect.
 
           (3) If your employment by the Company shall be terminated (i) by the
               Company other than for Cause, your death or disability, or (ii)
               by you for Good Reason, you shall be entitled to the benefits
               (the "Severance Payments") provided in Paragraphs 7(f)(3), (i),
               (ii), (iii), (iv) and (v) following, which Severance Payments
               shall be in lieu of and cancel any further rights you have to
               receive any Base Salary that would be otherwise due under
               Paragraph 2 of this Letter Agreement:
 
               (i)   The Company shall pay you your full Base Salary through the
                     date of termination at the rate in effect at the time
                     Notice of Termination is given;
 
               (ii)  The Company will pay as severance benefits to you, not
                     later than the fifth day following the date of termination,
                     a lump sum severance payment (the "Severance Payment")
                     equal to the product of (1) a fraction, the numerator of
                     which is equal to the lesser of (x) twenty-four (24) or (y)
                     the number of full and partial months existing between the
                     date of termination and your sixty-fifth (65th) birthday
                     and the denominator of which is equal to twelve (12), and
                     (2) the sum of (x) your annual Base Salary in effect
                     immediately prior to the occurrence of the circumstances
                     giving rise to such termination, and (y) the amount, if
                     any, of the arithmetic average of the annual bonuses
                     awarded to you under any annual bonus plan of the Company
                     calculated using the two (2) years immediately preceding
                     date of termination;
 
               (iii) The Options previously issued to you under any option or
                     incentive plan of the Company to purchase shares of Common
                     Stock of the Company (Option Shares), as well as any
                     previously unvested shares of Restricted Stock granted to
                     you, shall irrevocably vest upon any such termination and
                     the stock options for such Option Shares shall become
                     thereafter uncancellable by the Company;
 
               (iv) In the event that you become entitled to the Severance
                    Payments, if any of the Severance Payments or other portion
                    of the Total Payments (as defined below) will be subject to
                    the tax (the "Excise Tax") imposed by Section 4999 of the
                    Internal Revenue Code of 1986, as amended (the "Code"), the
                    Company shall pay to you at the time specified below, an
                    additional amount (the "Gross-Up Payment") such that the net
                    amount retained by you, after deduction of (1) any Excise
                    Tax on the Severance Payments and such other Total Payments,
                    and (2) any federal, state and local income tax, FICA-Health
                    Insurance tax, and Excise Tax upon the payment provided for
                    by this paragraph, shall be equal to the Severance Payments
                    and such other total Payments. For purposes of determining
                    whether any of the payments will be subject to the Excise
                    Tax and the amount of such Excise Tax, (1) any other
                    payments or benefits received or to be received by you in
                    connection with a Change in Control of the Company or your
                    termination of employment whether pursuant to the terms of
                    this Letter Agreement or any other plan, arrangement or
                    agreement with the
 
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                   Company, any person whose actions result in a Change of
                   Control of the Company or any person affiliated with the
                   Company or such person (together with the Severance Payment,
                   the "Total Payments") shall be treated as "parachute
                   payments" within the meaning of Section 280G(b)(2) of the
                   Code, and all "excess parachute payments" within the meaning
                   of Section 280G(b)(1) shall be treated as subject to the
                   Excise Tax, except to the extent that in the opinion of tax
                   counsel selected by the Company's independent auditors and
                   acceptable by you such other payments or benefits (in whole
                   or in part) do not constitute parachute payments, or such
                   excess parachute payments (in whole or in part) represent
                   reasonable compensation for services actually rendered within
                   the meaning of Section 280G(b)(4) of the Code in excess of
                   the base amount within the meaning of Section 280G(b)(3) of
                   the Code, or are otherwise not subject to the Excise Tax, (2)
                   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 (1), above), and (3) the
                   value of any non-cash benefits or any deferred payment or
                   benefit shall be determined by the Company's independent
                   auditors in accordance with the principles of Sections
                   280G(d)(3) and (4) of the Code. For purposes of determining
                   the amount of the Gross-Up Payment, you shall be deemed to
                   pay federal income taxes at the highest marginal rate of
                   federal income taxation in the calendar year in which the
                   Gross-Up Payment is to be made and state and local income
                   taxes at the highest marginal rate of taxation in the state
                   and locality of your residence on the date of termination,
                   net of the maximum reduction in federal income taxes which
                   could be obtained from deduction of such state and local
                   taxes. In the event that the Excise Tax is subsequently
                   determined to be less than the amount taken into account
                   hereunder at the time of termination of your employment, you
                   shall repay to the Company 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 imposed on the Gross-Up Payment being repaid
                   by you if such repayment results in a reduction in Excise Tax
                   and/or a federal and state and local income tax deduction)
                   plus interest on the amount of such repayment at the rate
                   provided in Section 1274(b)(2)(B) of the Code. In the event
                   that the Excise Tax is determined to exceed the amount taken
                   into account hereunder at the time of the termination of your
                   employment (including by reason of any payment the existence
                   or amount of which cannot be determined at the time of the
                   Gross-Up Payment), the Company shall make an additional
                   Gross-Up Payment in respect of such excess (plus any interest
                   payable with respect to such excess) at the time that the
                   amount of such excess is finally determined.
 
                   The payments provided for in the paragraph above shall be
                   made not later than the fifth day following the date of
                   termination; provided, however, that if the amounts of such
                   payments cannot be finally determined on or before such day,
                   the Company shall pay to you on such day an estimate as
                   determined in good faith by the Company of the minimum amount
                   of such payments and shall pay the remainder of such payments
                   (together with interest at the rate provided in Section
                   1274(b)(2)(B) of the Code) as soon as the amount thereof can
                   be determined but in no event later than the thirtieth day
                   after the date of termination. In the event that the amount
                   of the estimated payments exceeds the amount subsequently
                   determined to have been due, such excess shall constitute a
                   loan by the Company to you payable on the fifth day after
                   demand by the Company (together with interest at the rate
                   provided in Section 1274(b)(2)(B) of the Code);
 
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               (v) The Company shall also pay to you all legal fees and expenses
                   incurred by you as a result of such termination of employment
                   (including all such fees and expenses, if any, incurred in
                   contesting or disputing any such termination or in seeking to
                   obtain or enforce any right or benefit provided by this
                   Letter Agreement or in connection with any tax audit or
                   proceeding to the extent attributable to the application of
                   Section 4999 of the Code to any payment or benefit provided
                   hereunder); and
 
               (vi) For a twenty-four (24) month period after date of
                    termination, the Company will arrange to provide you at the
                    Company's expense with life, disability, accident and health
                    insurance benefits substantially similar to those which you
                    were receiving immediately prior to the Notice of
                    Termination; but benefits otherwise receivable by you
                    pursuant to this paragraph shall be reduced to the extent
                    comparable benefits are actually received by you during the
                    twenty-four (24) month period following your termination,
                    and any such benefits actually received by you shall be
                    reported to the Company.
 
        (h) You shall not be required to mitigate the amount of any Severance
            Payments provided for in this Paragraph 7 by seeking other
            employment or otherwise, nor, except as provided in Paragraph (vi)
            above, shall the amount of any payment or benefit provided for in
            this Paragraph 7 be reduced by any compensation or benefit earned by
            you as the result of employment by another employer after the date
            of termination, or otherwise.
 
               (i) The Company 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
                   Company or of any division or subsidiary thereof employing
                   you to expressly assume and agree to perform this Letter
                   Agreement in the same manner and to the same extent that the
                   Company would be required to perform it if no such succession
                   had taken place. Failure of the Company to obtain such
                   assumption and agreement prior to the effectiveness of any
                   such succession shall be a breach of this Letter Agreement
                   and shall entitle you to compensation from the Company in the
                   same amount and on the same terms as you would be entitled
                   hereunder if you terminate your employment for Good Reason.
 
           8.  This Letter 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 Letter Agreement, to your
               devisee, legatee or other designee or, if there is not such
               designee, to your estate.
 
           9.  As additional consideration for the compensation and benefits
               provided to you pursuant to this Letter Agreement, you agree that
               you will not, for a period of twenty-four (24) months after the
               end of the Employment Period, or the termination of your
               employment with the Company (whichever first occurs), directly or
               indirectly, compete with, engage in the same business as, be
               employed by, act a consultant to, or be a director, officer,
               employee, owner or partner, or otherwise participate in or assist
               (including, without limitation, by soliciting customers for, or
               individuals to provide services to), any business or organization
               which competes with the Company; provided, that this restriction
               shall not apply if you terminate your employment with the Company
               for Good Reason after a Change in Control of the Company. For
               purposes of this Paragraph 9, you will not be deemed to have
               breached your commitment merely because you own, directly or
               indirectly, not more than one percent (1%) of the outstanding
               common stock of such a corporation if, at the time you acquire
               such stock, such stock is listed on a national securities
               exchange or is regularly traded in the over-the-counter market by
               a member of either a national securities exchange or the National
               Association of Securities Dealers, Inc. In order to protect the
               interest of the
 
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              Company, you will also maintain in strict confidence and not
              disclose to any other person or entity any information received
              from any source in the Company or developed by you in the course
              of performing your duties for the Company. This obligation shall
              not extend to: (a) anything you can establish as known to you from
              a source outside the Company, (b) anything which has been
              published or becomes published hereafter other than by you, or (c)
              anything which you receive from a non-Company source without
              restriction on its disclosure. Should you breach or threaten to
              breach the commitments in this Paragraph 9, and in recognition of
              the fact that the Company would not under such circumstances be
              adequately compensated by money damages, the Company shall be
              entitled, in addition to any other rights and remedies available
              to it, to an injunction restraining you from such breach. Further,
              you acknowledge and agree that the provisions of this Paragraph 9
              are necessary, reasonable, and proportionate to protect the
              Company during such non-competition period.
 
           10. The validity, interpretation, construction and performance of
               this Letter Agreement shall be governed by the laws of the State
               of Ohio.
 
If the provisions of this Letter Agreement are acceptable to you, please sign
one original copy of this Letter Agreement and return it to me. You may retain
the second signed original for your files.
 
Very truly yours,
 
RMI TITANIUM COMPANY
 
By:
    --------------------------------------------------------
    Timothy G. Rupert
    Executive Vice President &
    Chief Financial Officer
 
CONFIRMED:
 
                                          Date:
 
                                          --------------------------------------
---------------------------------------------
LAWRENCE W. JACOBS
 
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